BETHESDA, Md., Jan. 28,
2020 /PRNewswire/ -- Lockheed Martin Corporation (NYSE: LMT) today
reported fourth quarter 2019 net sales of $15.9 billion, compared to $14.4 billion in the fourth quarter of 2018.
Net earnings in the fourth quarter of 2019 was $1.5 billion, or $5.29 per share, compared to $1.3 billion, or $4.39 per share, in the fourth quarter of 2018.
Cash from operations in the fourth quarter of 2019 was $1.5 billion, after discretionary pension
contributions of $1.0 billion,
compared to cash from operations of $2.2 billion in the fourth quarter
of 2018.
Net sales in 2019 was $59.8 billion, compared to $53.8 billion in 2018. Net earnings in 2019
was $6.2 billion, or
$21.95 per share, compared to
$5.0 billion, or $17.59 per share, in 2018. Cash from operations
in 2019 was $7.3 billion, after
discretionary pension contributions of $1.0 billion, compared to cash from
operations of $3.1 billion in
2018, after annual pension contributions of $5.0 billion.
"The corporation delivered outstanding performance throughout
2019, achieving exceptional sales growth, strong earnings, cash
from operations, and a record backlog," said Lockheed Martin
Chairman, President and CEO Marillyn
Hewson. "As we look ahead to 2020, we remain focused on
providing innovative global solutions for our customers, investing
for growth across our portfolio, and generating long-term value for
our shareholders."
Summary Financial Results
The following table presents the corporation's summary financial
results.
|
(in millions,
except per share data)
|
|
Quarters Ended
Dec. 31,
|
|
Years Ended Dec.
31,
|
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
Net
sales
|
|
$
|
15,878
|
|
|
$
|
14,411
|
|
|
$
|
59,812
|
|
|
$
|
53,762
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business segment
operating profit1
|
|
$
|
1,640
|
|
|
$
|
1,515
|
|
|
$
|
6,574
|
|
|
$
|
5,877
|
|
|
|
Unallocated
items
|
|
|
|
|
|
|
|
|
|
|
FAS/CAS operating
adjustment
|
|
512
|
|
|
450
|
|
|
2,049
|
|
|
1,803
|
|
|
|
Severance and
restructuring charges2
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(96)
|
|
|
|
Other,
net3,4,5
|
|
(3)
|
|
|
(114)
|
|
|
(78)
|
|
|
(250)
|
|
|
|
Total unallocated
items
|
|
509
|
|
|
336
|
|
|
1,971
|
|
|
1,457
|
|
|
|
Consolidated
operating profit
|
|
$
|
2,149
|
|
|
$
|
1,851
|
|
|
$
|
8,545
|
|
|
$
|
7,334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings6
|
|
$
|
1,498
|
|
|
$
|
1,253
|
|
|
$
|
6,230
|
|
|
$
|
5,046
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
per share
|
|
$
|
5.29
|
|
|
$
|
4.39
|
|
|
$
|
21.95
|
|
|
$
|
17.59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash from
operations7
|
|
$
|
1,490
|
|
|
$
|
2,217
|
|
|
$
|
7,311
|
|
|
$
|
3,138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Business segment
operating profit is a non-GAAP measure. See the Non-GAAP Financial
Measures section of this news release for more
information.
|
2
|
In the year ended
Dec. 31, 2018, the corporation recognized severance and
restructuring charges totaling $96 million ($76 million, or
$0.26 per share, after-tax) associated with planned workforce
reductions and the consolidation of certain operations at the
corporation's Rotary and Mission Systems business
segment.
|
3
|
In the year ended
Dec. 31, 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
|
In the quarter and
year ended Dec. 31, 2019, the corporation recognized a gain of $34
million (approximately $0 after-tax) for the sale of its
Distributed Energy Solutions (DES) business, a commercial energy
service provider that was part of its Missiles and Fire Control
business segment. The operating results, financial position and
cash flows for the DES business were not significant to the
corporation and, accordingly, have not been reclassified to
discontinued operations.
|
5
|
In the quarter and
year ended Dec. 31, 2018, the corporation recognized a non-cash
asset impairment charge of $110 million ($83 million, or $0.29 per
share, after tax) related to its investment in Advanced Military
Maintenance, Repair and Overhaul Center (AMMROC).
|
6
|
Net earnings for the
year ended Dec. 31, 2019 include benefits of $127 million ($0.45
per share) for additional tax deductions for the prior year,
primarily attributable to foreign derived intangible income
treatment based on proposed tax regulations released on March 4,
2019 and the corporation's change in tax accounting method.
Net earnings for the year ended Dec. 31, 2018 include benefits of
$146 million ($0.51 per share) for additional tax deductions for
the prior year, primarily attributable to true-ups to the net
one-time charges related to the Tax Cuts and Jobs Act enacted on
Dec. 22, 2017 and the corporation's change in tax accounting
method. See the "Income Taxes" section for further
discussion.
|
7
|
Cash from operations
in the quarter and year ended Dec. 31, 2019 is after discretionary
pension contributions of $1.0 billion. Cash from operations
for the year ended Dec. 31, 2018 is after annual pension
contributions of $5.0 billion and includes $870 million of tax
refunds.
|
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 typical
practice not to incorporate adjustments into its financial outlook
for proposed acquisitions, divestitures, joint 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)
|
|
|
|
2020
Current
Outlook3
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
|
$62,750 -
$64,250
|
|
|
|
|
|
|
|
|
|
Business segment
operating profit
|
|
|
|
$6,800 -
$6,950
|
|
|
|
|
|
|
|
|
|
Net FAS/CAS pension
adjustment1
|
|
|
|
~$2,090
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share2
|
|
|
|
$23.65 -
$23.95
|
|
|
|
|
|
|
|
|
|
Cash from
operations
|
|
|
|
≥$7,600
|
|
|
|
|
|
|
1
|
The net FAS/CAS
pension adjustment above is presented as a single amount and
includes total expected 2020 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 is 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.
|
|
2
|
Although the
corporation typically does not update its outlook for proposed
changes in law, the above includes the effect of proposed tax
regulations confirming that foreign military sales (FMS) qualify
for tax deductions for foreign derived intangible income. The
corporation believes incorporating the effect of the proposed
regulations more accurately reflects its expectations because the
proposed regulations describe the tax treatment of FMS sales in
accordance with the corporation's analysis of the Internal Revenue
Code.
|
|
3
|
The corporation's
financial outlook for 2020 does not include potential impacts to
the corporation's programs, including the F-35 program, resulting
from U.S. Government actions related to Turkey. Currently, the
corporation does not expect this event will have a material impact
on its 2020 financial results.
|
|
The corporation expects the 2020 net FAS/CAS pension benefit to
be approximately $2.1 billion based
on a 3.25 percent discount rate (a 100 basis point decrease
from the end of 2018), an approximate 21 percent return on plan
assets in 2019, a 7.0 percent expected long-term rate of return on
plan assets in future years (unchanged from the end of 2018), and
the revised longevity assumptions released during the fourth
quarter of 2019 by the Society of Actuaries. As a result of the
$1.0 billion in contributions to its
qualified defined benefit pension plans in 2019, the corporation
does not expect to make contributions to its qualified defined
benefit pension plans in 2020.
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, 2018.
Cash Activities
The corporation's cash activities in the quarter and year ended
Dec. 31, 2019 consisted of the following:
- repurchasing 1.3 million shares for $490
million and 3.5 million shares for $1.2 billion during the quarter and year ended
Dec. 31, 2019, compared to 2.2
million shares for $666 million and
4.7 million shares for $1.5 billion
during the quarter and year ended Dec. 31,
2018;
- paying cash dividends of $675
million and $2.6 billion
during the quarter and year ended Dec. 31,
2019, compared to $622 million
and $2.3 billion during the quarter
and year ended Dec. 31, 2018;
- making discretionary pension contributions of $1.0 billion during the quarter and year ended
Dec. 31, 2019, compared to making no
pension contributions for the quarter ended Dec. 31, 2018 and $5.0
billion in pension contributions during the year ended
Dec. 31, 2018;
- repayments of $900 million of
long-term debt upon scheduled maturity during the quarter and year
ended Dec. 31, 2019; compared to
repayments of $750 million of
long-term debt during the quarter and year ended Dec. 31, 2018; and
- making capital expenditures of $643
million and $1.5 billion
during the quarter and year ended Dec. 31,
2019, compared to $459 million
and $1.3 billion during the quarter
and year ended Dec. 31, 2018.
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
Dec. 31,
|
|
Years Ended Dec.
31,
|
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
Net
sales
|
|
|
|
|
|
|
|
|
|
|
Aeronautics
|
|
$
|
6,381
|
|
|
$
|
5,881
|
|
|
$
|
23,693
|
|
|
$
|
21,242
|
|
|
|
Missiles and Fire
Control
|
|
2,769
|
|
|
2,427
|
|
|
10,131
|
|
|
8,462
|
|
|
|
Rotary and Mission
Systems
|
|
3,889
|
|
|
3,613
|
|
|
15,128
|
|
|
14,250
|
|
|
|
Space
|
|
2,839
|
|
|
2,490
|
|
|
10,860
|
|
|
9,808
|
|
|
|
Total net
sales
|
|
$
|
15,878
|
|
|
$
|
14,411
|
|
|
$
|
59,812
|
|
|
$
|
53,762
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
|
|
|
|
|
|
|
|
|
Aeronautics
|
|
$
|
679
|
|
|
$
|
626
|
|
|
$
|
2,521
|
|
|
$
|
2,272
|
|
|
|
Missiles and Fire
Control
|
|
348
|
|
|
376
|
|
|
1,441
|
|
|
1,248
|
|
|
|
Rotary and Mission
Systems
|
|
353
|
|
|
289
|
|
|
1,421
|
|
|
1,302
|
|
|
|
Space
|
|
260
|
|
|
224
|
|
|
1,191
|
|
|
1,055
|
|
|
|
Total business
segment operating profit
|
|
1,640
|
|
|
1,515
|
|
|
6,574
|
|
|
5,877
|
|
|
|
Unallocated
items
|
|
|
|
|
|
|
|
|
|
|
FAS/CAS operating
adjustment
|
|
512
|
|
|
450
|
|
|
2,049
|
|
|
1,803
|
|
|
|
Severance and
restructuring charges
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(96)
|
|
|
|
Other, net
|
|
(3)
|
|
|
(114)
|
|
|
(78)
|
|
|
(250)
|
|
|
|
Total unallocated
items
|
|
509
|
|
|
336
|
|
|
1,971
|
|
|
1,457
|
|
|
|
Total consolidated
operating profit
|
|
$
|
2,149
|
|
|
$
|
1,851
|
|
|
$
|
8,545
|
|
|
$
|
7,334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 CAS pension cost. The
non-service FAS pension expense component is included in other
non‑operating expense on the corporation's consolidated statements
of earnings. 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, cost recoveries on severance and
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 certain assets.
The corporation's consolidated net adjustments not related to
volume, including net profit booking rate adjustments, represented
approximately 25 percent and 28 percent of total segment operating
profit in the quarter and year ended Dec. 31, 2019 as
compared to 29 percent and 32 percent in the quarter and year ended
Dec. 31, 2018.
Aeronautics
|
(in millions)
|
|
Quarters Ended
Dec. 31,
|
|
Years Ended Dec.
31,
|
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
Net
sales
|
|
$
|
6,381
|
|
|
$
|
5,881
|
|
|
$
|
23,693
|
|
|
$
|
21,242
|
|
|
|
Operating
profit
|
|
$
|
679
|
|
|
$
|
626
|
|
|
$
|
2,521
|
|
|
$
|
2,272
|
|
|
|
Operating
margin
|
|
10.6
|
%
|
|
10.6
|
%
|
|
10.6
|
%
|
|
10.7
|
%
|
|
Aeronautics' net sales in the fourth quarter of 2019 increased
$500 million, or 9 percent, compared
to the same period in 2018. The increase was primarily attributable
to higher net sales of approximately $390 million for the F-35
program due to increased volume on sustainment and development
contracts; and about $100 million for
higher volume on classified programs.
Aeronautics' operating profit in the fourth quarter of 2019
increased $53 million, or 8 percent,
compared to the same period in 2018. Operating profit increased
approximately $70 million for the
F-35 program due to higher volume and risk retirements on
sustainment and development contracts and higher risk retirements
on production contracts. Adjustments not related to volume,
including net profit booking rate adjustments, were comparable in
the fourth quarter of 2019 compared to the same period in 2018.
Aeronautics' net sales in 2019 increased $2.5 billion, or 12 percent, compared to 2018.
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,
sustainment and development contracts; and about $350 million for higher volume on classified
programs.
Aeronautics' operating profit in 2019 increased $249 million, or 11 percent, compared to 2018.
Operating profit increased approximately $210 million for the F-35 program due to
increased volume on production, sustainment and development
contracts; and about $50 million for
the F-16 program due to higher risk retirements on sustainment
contracts. These increases were partially offset by a decrease of
$20 million on the F-22 program due
to lower risk retirements. Adjustments not related to volume,
including net profit booking rate adjustments, were $25 million lower in 2019 compared to 2018.
Missiles and Fire Control
|
(in millions)
|
|
Quarters Ended
Dec. 31,
|
|
Years Ended Dec.
31,
|
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
Net
sales
|
|
$
|
2,769
|
|
|
$
|
2,427
|
|
|
$
|
10,131
|
|
|
$
|
8,462
|
|
|
|
Operating
profit
|
|
$
|
348
|
|
|
$
|
376
|
|
|
$
|
1,441
|
|
|
$
|
1,248
|
|
|
|
Operating
margin
|
|
12.6
|
%
|
|
15.5
|
%
|
|
14.2
|
%
|
|
14.7
|
%
|
|
MFC's net sales in the fourth quarter of 2019 increased
$342 million, or 14 percent, compared
to the same period in 2018. The increase was primarily attributable
to higher net sales of approximately $250
million for tactical and strike missile programs due to
increased volume (primarily precision fires and new hypersonic
development programs); about $85
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)); and about
$50 million for sensors and global
sustainment programs due to higher volume (primarily Special
Operations Forces Global Logistics Support Services (SOF GLSS)).
These increases were partially offset by a decrease of $35 million as a result of lower volume on energy
programs and the divestiture of the Distributed Energy Solutions
business in November 2019.
MFC's operating profit in the fourth quarter of 2019 decreased
$28 million, or 7 percent, compared
to the same period in 2018. Operating profit decreased
approximately $25 million for sensors
and global sustainment programs due to lower risk retirements
(primarily Low Altitude Navigation and Targeting Infrared for Night
(LANTIRN®) and Sniper Advanced Targeting Pod (SNIPER®)).
Operating profit on tactical and strike missile programs was
comparable as higher volume (primarily precision fires) was offset
by lower risk retirements (primarily Javelin). Adjustments not
related to volume, including net profit booking rate adjustments,
were $55 million lower in the fourth
quarter of 2019 compared to the same period in 2018.
MFC's net sales in 2019 increased $1.7
billion, or 20 percent, compared to 2018. The increase was
primarily attributable to higher net sales of approximately
$940 million for tactical and strike missile programs due to
increased volume (primarily precision fires, new hypersonic
development programs, and classified development programs); about
$465 million for integrated air and
missile defense programs due to increased volume (primarily PAC-3
and THAAD); and about $300 million for sensors and global
sustainment programs due to increased volume (primarily SOF GLSS
and Apache).
MFC's operating profit in 2019 increased $193 million, or 15 percent, compared to 2018.
Operating profit increased approximately $100 million for integrated air and missile
defense programs due to higher volume and higher risk retirements
(primarily PAC-3 and THAAD); and about $60
million for tactical and strike missile programs due to
higher volume (primarily precision fires), partially offset by
lower risk retirements (primarily Hellfire and Javelin). Operating
profit on sensors and global sustainment programs was comparable as
higher volume (primarily Apache and SOF GLSS) was offset by lower
risk retirements (primarily LANTIRN and SNIPER), after a net
decrease in charges of $55 million on
international military programs. Adjustments not related to volume,
including net profit booking rate adjustments, were
$30 million lower in 2019 compared to 2018.
Rotary and Mission Systems
|
(in millions)
|
|
Quarters Ended
Dec. 31,
|
|
Years Ended Dec.
31,
|
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
Net
sales
|
|
$
|
3,889
|
|
|
$
|
3,613
|
|
|
$
|
15,128
|
|
|
$
|
14,250
|
|
|
|
Operating
profit
|
|
$
|
353
|
|
|
$
|
289
|
|
|
$
|
1,421
|
|
|
$
|
1,302
|
|
|
|
Operating
margin
|
|
9.1
|
%
|
|
8.0
|
%
|
|
9.4
|
%
|
|
9.1
|
%
|
|
RMS' net sales in the fourth quarter of 2019 increased
$276 million, or 8 percent, compared
to the same period in 2018. The increase was primarily attributable
to higher net sales of approximately $160
million for training and logistics (TLS) programs due to
higher volume (primarily an army sustainment program); about
$110 million for C6ISR (command,
control, communications, computers, cyber, combat systems,
intelligence, surveillance, and reconnaissance) programs due to
higher volume (primarily undersea combat systems programs); and
about $45 million for integrated
warfare systems and sensors (IWSS) programs due to higher volume
(primarily Littoral Combat Ship (LCS) and Aegis). These increases
were partially offset by a decrease of approximately $40 million for Sikorsky helicopter programs due
to lower volume (primarily mission systems programs).
RMS' operating profit in the fourth quarter of 2019 increased
$64 million, or 22 percent, compared
to the same period in 2018. Operating profit increased
approximately $70 million for
Sikorsky helicopter programs due to better cost performance across
the portfolio, customer mix, and higher risk retirements; and about
$20 million for IWSS primarily due to
reserves recorded for performance matters on two programs in the
fourth quarter of 2018. These increases were partially offset
by a $20 million decrease for C6ISR
due to lower risk retirements (primarily undersea combat systems
programs). Operating profit on TLS programs was comparable as
increased volume was offset by lower risk retirements.
Adjustments not related to volume, including net profit booking
rate adjustments, were $20 million
lower during the fourth quarter of 2019 compared to the same period
in 2018.
RMS' net sales in 2019 increased $878
million, or 6 percent, compared to 2018. The increase was
primarily attributable to higher net sales of approximately
$535 million for IWSS programs due to higher volume (primarily
LCS, radar surveillance systems programs, Multi Mission Surface
Combatant (MMSC), and Aegis); about $290
million for various TLS programs due to higher volume
(primarily an army sustainment program); and about
$200 million for various C6ISR programs due to higher volume
(primarily undersea combat systems and cyber solutions programs).
These increases were partially offset by a decrease of
approximately $145 million for
Sikorsky helicopter programs due to lower volume (primarily Black
Hawk production, mission systems programs, and commercial
aircraft).
RMS' operating profit in 2019 increased $119 million, or 9
percent, compared to 2018. Operating profit increased approximately
$105 million for Sikorsky helicopter
programs primarily due to better cost performance across the
portfolio, customer mix, and higher risk retirements; and about
$55 million for IWSS programs due to
higher volume (primarily radar surveillance systems programs, LCS,
and Aegis), after $50 million in
charges in the first quarter of 2019 for a ground-based radar
program. These increases were partially offset by a decrease of
$50 million for TLS programs due to
$80 million in charges primarily
recorded in the second quarter of 2019 for an army sustainment
program partially offset by lower charges on various other
programs. Adjustments not related to volume, including net profit
booking rate adjustments, were $65
million lower in 2019 compared to 2018.
Space
|
(in millions)
|
|
Quarters Ended
Dec. 31,
|
|
Years Ended Dec.
31,
|
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
Net
sales
|
|
$
|
2,839
|
|
|
$
|
2,490
|
|
|
$
|
10,860
|
|
|
$
|
9,808
|
|
|
|
Operating
profit
|
|
$
|
260
|
|
|
$
|
224
|
|
|
$
|
1,191
|
|
|
$
|
1,055
|
|
|
|
Operating
margin
|
|
9.2
|
%
|
|
9.0
|
%
|
|
11.0
|
%
|
|
10.8
|
%
|
|
Space's net sales in the fourth quarter of 2019 increased
$349 million, or 14 percent, compared
to the same period in 2018. The increase was primarily attributable
to higher net sales of approximately $190
million for strategic and missile defense programs due to
higher volume (primarily new hypersonic development programs); and
about $160 million for government
satellite programs due to higher volume (primarily Next Generation
Overhead Persistent Infrared (Next Gen OPIR), Global Positioning
System (GPS) III and government satellite services).
Space's operating profit in the fourth quarter of 2019 increased
$36 million, or 16 percent, compared
to the same period in 2018. Operating profit increased
approximately $40 million for
government satellite programs due to higher risk retirements
(primarily Advanced Extremely High Frequency (AEHF)) and higher
volume (primarily Next Gen OPIR and GPS III); and about
$25 million for strategic and missile
defense programs due to higher volume and risk retirements
(primarily fleet ballistic missile programs). These increases
were partially offset by a decrease of $25
million due to lower equity earnings at United Launch
Alliance (ULA). Adjustments not related to volume, including net
profit booking rate adjustments, were $35
million higher in the fourth quarter of 2019 compared to the
same period in 2018.
Space's net sales in 2019 increased $1.1
billion, or 11 percent, compared to 2018. The increase was
primarily attributable to higher net sales of approximately
$690 million for government satellite
programs due to higher volume (primarily Next Gen OPIR, GPS III and
government satellite services); and about $355 million for
strategic and missile defense programs due to higher volume
(primarily new hypersonic development programs).
Space's operating profit in 2019 increased $136 million, or 13 percent, compared to 2018.
Operating profit increased approximately $125 million for government satellite programs
due to higher risk retirements (primarily AEHF) and higher volume
(primarily GPS III and government satellite services); and about
$45 million for commercial satellite
programs, which reflect a lower amount of charges recorded for
performance matters. These increases were partially offset by a
decrease of approximately $65 million
due to lower equity earnings for ULA. Operating profit on
strategic and missile defense programs was comparable as higher
volume (primarily hypersonic development programs) was offset by
lower risk retirements (primarily missile defense programs).
Adjustments not related to volume, including net profit booking
rate adjustments, were $120 million higher in 2019 compared to
2018.
Total equity earnings recognized by Space (primarily ULA)
represented approximately $5 million,
or 2 percent, and approximately $145 million, or 12
percent, of this business segment's operating profit during the
quarter and year ended Dec. 31, 2019, compared to
approximately $30 million, or 13 percent and approximately
$210 million, or 20 percent, during the quarter and year ended
Dec. 31, 2018.
Income Taxes
The corporation's effective income tax rate was 18.2 percent and
14.0 percent in the quarter and year ended Dec. 31, 2019,
compared to 15.5 percent and 13.6 percent in the quarter and year
ended Dec. 31, 2018. The rate for the quarter ended
Dec. 31, 2019 is higher than the rate
for the quarter ended Dec. 31, 2018
primarily due to less tax deductions for foreign derived intangible
income and research and development tax credits. The rate for the
year ended Dec. 31, 2019 benefited
from additional tax deductions for the prior year, primarily
attributable to foreign derived intangible income treatment based
on proposed tax regulations released on March 4, 2019. The rate for the year ended
Dec. 31, 2018 benefited from
additional tax deductions for the prior year, primarily
attributable to true-ups to the net one-time charges related to the
Tax Cuts and Jobs Act enacted on Dec.
22, 2017. The rates for the years ended Dec. 31, 2019 and Dec. 31,
2018 benefited from the corporation's changes in tax
accounting method, recorded discretely in the third quarter of each
year, 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 all periods
also benefited from tax deductions for foreign derived intangible
income, the research and development tax credit, tax deductions for
employee equity awards, and tax deductions for dividends paid to
the corporation's defined contribution plans with an employee stock
ownership plan feature.
Pension Transaction
In December 2019, certain of the
corporation's pension plans used pension trust assets to purchase a
group annuity contract from an insurance company for $1.9 billion. This contract transferred
$1.9 billion of outstanding defined
benefit pension obligations related to approximately 20,000 U.S.
retirees and beneficiaries to an insurance company. As a result of
this transaction, the insurance company is now required to pay and
administer the retirement benefits owed to these retirees and
beneficiaries. This transaction has no impact on the amount,
timing, or form of the monthly retirement benefit payments to the
covered retirees and beneficiaries. Additionally, this transaction
did not impact the corporation's earnings or cash flows in
2019.
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, included in the corporation's 2020
financial outlook.
|
(in
millions)
|
|
|
|
2020
Current
Outlook
|
|
|
|
|
|
|
|
|
|
Business segment
operating profit (non-GAAP)
|
|
$6,800 -
$6,950
|
|
|
Net FAS/CAS operating
adjustment1
|
|
|
~1,875
|
|
|
Other, net
|
|
|
|
~(230)
|
|
|
Consolidated
operating profit (GAAP)
|
|
$8,445 -
$8,595
|
|
|
|
|
1
|
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,
Jan. 28, 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 our 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:
- 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);
- trade policies or sanctions (including Turkey's removal from the F-35 program, the
impact of U.S. Government sanctions on Turkey and potential sanctions on 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;
- 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;
- 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 and the
potential further impairment of our equity investment in Advanced
Military Maintenance, Repair and Overhaul Center LLC (AMMROC);
- the availability and adequacy of our insurance and
indemnities;
- the effect of changes in (or in the interpretation of)
procurement and other regulations and policies affecting our
industry, including export of our products, cost allowability or
recovery and potential changes to the U.S. Department of Defense's
acquisition regulations relating to progress payments and
performance-based payments and a preference for fixed-price
contracts;
- our ability to benefit fully from or adequately protect our
intellectual property rights;
- 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, 2018 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 Earnings
|
|
|
|
|
|
|
|
|
(unaudited; in
millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended
Dec. 31,
|
|
Years Ended Dec.
31,
|
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Net
sales
|
|
$
15,878
|
|
$
14,411
|
|
$
59,812
|
|
$
53,762
|
|
Cost of sales
1
|
|
(13,755)
|
|
(12,469)
|
|
(51,445)
|
|
(46,488)
|
|
Gross
profit
|
|
2,123
|
|
1,942
|
|
8,367
|
|
7,274
|
|
Other income
(expense), net 2,3,4
|
|
26
|
|
(91)
|
|
178
|
|
60
|
|
Operating
profit
|
|
2,149
|
|
1,851
|
|
8,545
|
|
7,334
|
|
Interest
expense
|
|
(157)
|
|
(171)
|
|
(653)
|
|
(668)
|
|
Other non-operating
expense, net
|
|
(160)
|
|
(197)
|
|
(651)
|
|
(828)
|
|
Earnings before
income taxes
|
|
1,832
|
|
1,483
|
|
7,241
|
|
5,838
|
|
Income tax expense
5
|
|
(334)
|
|
(230)
|
|
(1,011)
|
|
(792)
|
|
Net
earnings
|
|
$
1,498
|
|
$
1,253
|
|
$
6,230
|
|
$
5,046
|
|
Effective tax
rate
|
|
18.2
%
|
|
15.5 %
|
|
14.0
%
|
|
13.6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
common share
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
5.32
|
|
$
4.43
|
|
$
22.09
|
|
$
17.74
|
|
Diluted
|
|
$
5.29
|
|
$
4.39
|
|
$
21.95
|
|
$
17.59
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
|
|
|
|
|
|
|
|
Basic
|
|
281.4
|
|
283.1
|
|
282.0
|
|
284.5
|
|
Diluted
|
|
283.3
|
|
285.5
|
|
283.8
|
|
286.8
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares
reported in stockholders' equity at end of period
|
|
|
|
|
|
280
|
|
281
|
|
|
|
|
|
|
|
|
|
|
|
1
|
In the year ended
Dec. 31, 2018, the corporation recognized severance and
restructuring charges totaling $96 million ($76 million, or
$0.26 per share, after tax) associated with planned workforce
reductions and the consolidation of certain operations at the
corporation's Rotary and Mission Systems business
segment.
|
2
|
In the year ended
Dec. 31, 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.
|
3
|
In the quarter and
year ended Dec. 31, 2019, the corporation recognized a gain of $34
million (approximately $0 after-tax) for the sale of its
Distributed Energy Solutions (DES) business, a commercial energy
service provider that was part of its MFC business segment. The
operating results, financial position and cash flows for the DES
business were not significant to the corporation and, accordingly,
have not been reclassified to discontinued operations.
|
4
|
In the quarter and
year ended Dec. 31, 2018, the corporation recognized a non-cash
asset impairment charge of $110 million ($83 million, or $0.29 per
share, after tax) related to its investment in Advanced Military
Maintenance, Repair and Overhaul Center (AMMROC).
|
5
|
Net earnings for the
year ended Dec. 31, 2019 include benefits of $127 million ($0.45
per share) for additional tax deductions for the prior year,
primarily attributable to foreign derived intangible income
treatment based on proposed tax regulations released on March 4,
2019 and the corporation's change in tax accounting method.
Net earnings for the year ended Dec. 31, 2018 include benefits of
$146 million ($0.51 per share) for additional tax deductions for
the prior year, primarily attributable to true-ups to the net
one-time charges related to the Tax Cuts and Jobs Act enacted on
Dec. 22, 2017 and the corporation's change in tax accounting
method. See the "Income Taxes" section for further
discussion.
|
Lockheed Martin
Corporation
|
Business Segment
Summary Operating Results
|
(unaudited; in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended
Dec. 31,
|
|
|
|
Years Ended Dec.
31,
|
|
|
|
|
|
2019
|
|
2018
|
|
%
Change
|
|
2019
|
|
2018
|
|
%
Change
|
Net
sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Aeronautics
|
|
$
6,381
|
|
$
5,881
|
|
9 %
|
|
$
23,693
|
|
$
21,242
|
|
12 %
|
Missiles and Fire
Control
|
|
2,769
|
|
2,427
|
|
14 %
|
|
10,131
|
|
8,462
|
|
20 %
|
Rotary and Mission
Systems
|
|
3,889
|
|
3,613
|
|
8 %
|
|
15,128
|
|
14,250
|
|
6 %
|
Space
|
|
2,839
|
|
2,490
|
|
14 %
|
|
10,860
|
|
9,808
|
|
11 %
|
Total net
sales
|
|
$
15,878
|
|
$
14,411
|
|
10 %
|
|
$
59,812
|
|
$
53,762
|
|
11 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
|
|
|
|
|
|
|
|
|
|
|
Aeronautics
|
|
$
679
|
|
$
626
|
|
8 %
|
|
$
2,521
|
|
$
2,272
|
|
11 %
|
Missiles and Fire
Control
|
|
348
|
|
376
|
|
(7)%
|
|
1,441
|
|
1,248
|
|
15 %
|
Rotary and Mission
Systems
|
|
353
|
|
289
|
|
22 %
|
|
1,421
|
|
1,302
|
|
9 %
|
Space
|
|
260
|
|
224
|
|
16 %
|
|
1,191
|
|
1,055
|
|
13 %
|
Total business
segment operating profit
|
|
1,640
|
|
1,515
|
|
8 %
|
|
6,574
|
|
5,877
|
|
12 %
|
Unallocated
items
|
|
|
|
|
|
|
|
|
|
|
|
|
FAS/CAS operating
adjustment
|
|
512
|
|
450
|
|
|
|
2,049
|
|
1,803
|
|
|
Severance and
restructuring charges 1
|
|
-
|
|
-
|
|
|
|
-
|
|
(96)
|
|
|
Other, net
2,3,4
|
|
(3)
|
|
(114)
|
|
|
|
(78)
|
|
(250)
|
|
|
Total unallocated
items
|
|
509
|
|
336
|
|
|
|
1,971
|
|
1,457
|
|
|
Total consolidated
operating profit
|
|
$
2,149
|
|
$
1,851
|
|
16 %
|
|
$
8,545
|
|
$
7,334
|
|
17 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
|
|
|
|
|
|
|
|
|
|
|
Aeronautics
|
|
10.6
%
|
|
10.6 %
|
|
|
|
10.6
%
|
|
10.7 %
|
|
|
Missiles and Fire
Control
|
|
12.6
%
|
|
15.5 %
|
|
|
|
14.2
%
|
|
14.7 %
|
|
|
Rotary and Mission
Systems
|
|
9.1
%
|
|
8.0 %
|
|
|
|
9.4
%
|
|
9.1 %
|
|
|
Space
|
|
9.2
%
|
|
9.0 %
|
|
|
|
11.0
%
|
|
10.8 %
|
|
|
Total business
segment operating margin
|
|
10.3
%
|
|
10.5 %
|
|
|
|
11.0
%
|
|
10.9 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consolidated
operating margin
|
|
13.5
%
|
|
12.8 %
|
|
|
|
14.3
%
|
|
13.6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Unallocated items in
2018 includes the previously announced severance and restructuring
charges totaling $96 million ($76 million, or $0.26 per
share, after tax) associated with planned workforce reductions and
the consolidation of certain operations at the corporation's RMS
business.
|
|
|
2
|
For the year ended
Dec. 31, 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.
|
|
|
3
|
In the quarter and
year ended Dec. 31, 2019, the corporation recognized a gain of $34
million (approximately $0 after-tax) for the sale of its DES
business, a commercial energy service provider that was part of its
MFC business segment. The operating results, financial position and
cash flows for the DES business were not significant to the
corporation and, accordingly, have not been reclassified to
discontinued operations.
|
|
|
4
|
In the quarter and
year ended Dec. 31, 2018, the corporation recognized a non-cash
asset impairment charge of $110 million ($83 million, or $0.29 per
share, after tax) related to its investment in AMMROC.
|
|
|
Lockheed Martin
Corporation
|
Consolidated
Balance Sheets
|
(unaudited; in
millions, except par value)
|
|
|
|
|
|
|
|
Dec. 31,
2019
|
|
Dec. 31,
2018
|
|
Assets
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
1,514
|
|
$
772
|
|
Receivables,
net
|
|
2,337
|
|
2,444
|
|
Contract
assets
|
|
9,094
|
|
9,472
|
|
Inventories
|
|
3,619
|
|
2,997
|
|
Other current
assets
|
|
531
|
|
418
|
|
Total current
assets
|
|
17,095
|
|
16,103
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
6,591
|
|
6,124
|
|
Goodwill
|
|
10,604
|
|
10,769
|
|
Intangible assets,
net
|
|
3,213
|
|
3,494
|
|
Deferred income
taxes
|
|
3,319
|
|
3,208
|
|
Other noncurrent
assets1
|
|
6,706
|
|
5,178
|
|
Total
assets
|
|
$
47,528
|
|
$
44,876
|
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Accounts
payable
|
|
$
1,281
|
|
$
2,402
|
|
Contract
liabilities
|
|
7,054
|
|
6,491
|
|
Salaries, benefits
and payroll taxes
|
|
2,466
|
|
2,122
|
|
Current maturities of
long-term debt and commercial paper
|
|
1,250
|
|
1,500
|
|
Other current
liabilities1
|
|
1,921
|
|
1,883
|
|
Total current
liabilities
|
|
13,972
|
|
14,398
|
|
|
|
|
|
|
|
Long-term debt,
net
|
|
11,404
|
|
12,604
|
|
Accrued pension
liabilities
|
|
13,234
|
|
11,410
|
|
Other postretirement
benefit liabilities
|
|
337
|
|
704
|
|
Other noncurrent
liabilities1
|
|
5,410
|
|
4,311
|
|
Total
liabilities
|
|
44,357
|
|
43,427
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
Common stock, $1 par
value per share
|
|
280
|
|
281
|
|
Additional paid-in
capital
|
|
-
|
|
-
|
|
Retained
earnings
|
|
18,401
|
|
15,434
|
|
Accumulated other
comprehensive loss
|
|
(15,554)
|
|
(14,321)
|
|
Total stockholders'
equity
|
|
3,127
|
|
1,394
|
|
Noncontrolling
interests in subsidiary
|
|
44
|
|
55
|
|
Total
equity
|
|
3,171
|
|
1,449
|
|
Total liabilities and
equity
|
|
$
47,528
|
|
$
44,876
|
|
|
|
|
|
|
1
|
Effective Jan. 1,
2019, the corporation adopted Accounting Standards Update (ASU)
2016-02, Leases (Topic 842). As of Dec. 31, 2019,
right-of-use operating lease assets were $1.0 billion and
operating lease liabilities were $1.1 billion. Approximately
$855 million of operating lease liabilities were classified as
noncurrent. There was no impact to the corporation's consolidated
operating results or cash flows as a result of adopting this
standard. The 2018 periods were not restated for the adoption of
ASU 2016-02.
|
Lockheed Martin
Corporation
|
Consolidated
Statements of Cash Flows
|
(unaudited; in
millions)
|
|
|
|
|
|
|
|
|
|
Years Ended Dec.
31,
|
|
|
|
2019
|
|
2018
|
|
Operating
activities
|
|
|
|
|
|
Net
earnings
|
|
$
6,230
|
|
$
5,046
|
|
Adjustments to
reconcile net earnings to net cash provided by operating
activities
|
|
|
|
|
|
Depreciation and
amortization
|
|
1,189
|
|
1,161
|
|
Stock-based
compensation
|
|
189
|
|
173
|
|
Deferred income
taxes
|
|
222
|
|
(244)
|
|
Severance and
restructuring charges
|
|
-
|
|
96
|
|
Gain on property
sale
|
|
(51)
|
|
-
|
|
Changes in assets and
liabilities
|
|
|
|
|
|
Receivables,
net
|
|
107
|
|
(179)
|
|
Contract
assets
|
|
378
|
|
(1,480)
|
|
Inventories
|
|
(622)
|
|
(119)
|
|
Accounts
payable
|
|
(1,098)
|
|
914
|
|
Contract
liabilities
|
|
563
|
|
(537)
|
|
Postretirement
benefit plans
|
|
81
|
|
(3,574)
|
|
Income
taxes
|
|
(151)
|
|
1,077
|
|
Other, net
|
|
274
|
|
804
|
|
Net cash provided
by operating activities1
|
|
7,311
|
|
3,138
|
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
Capital
expenditures
|
|
(1,484)
|
|
(1,278)
|
|
Other, net
|
|
243
|
|
203
|
|
Net cash used for
investing activities
|
|
(1,241)
|
|
(1,075)
|
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
Dividends
paid
|
|
(2,556)
|
|
(2,347)
|
|
Repurchases of common
stock
|
|
(1,200)
|
|
(1,492)
|
|
(Repayments of)
proceeds from commercial paper, net
|
|
(600)
|
|
600
|
|
Repayments of
long-term debt
|
|
(900)
|
|
(750)
|
|
Other, net
|
|
(72)
|
|
(163)
|
|
Net cash used for
financing activities
|
|
(5,328)
|
|
(4,152)
|
|
|
|
|
|
|
|
Net change in cash
and cash equivalents
|
|
742
|
|
(2,089)
|
|
Cash and cash
equivalents at beginning of period
|
|
772
|
|
2,861
|
|
Cash and cash
equivalents at end of period
|
|
$
1,514
|
|
$
772
|
|
|
|
|
|
|
1
|
Cash provided by
operating activities for the year ended Dec. 31, 2019 is after
discretionary pension contributions of $1.0 billion. Cash provided
by operating activities for the year ended Dec. 31, 2018 is after
annual pension contributions of $5.0 billion and includes $870
million of tax refunds.
|
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, 2018
|
|
$
281
|
|
$
-
|
|
$
15,434
|
|
$
(14,321)
|
|
$
1,394
|
|
$
55
|
|
$
1,449
|
|
Net
earnings
|
|
-
|
|
-
|
|
6,230
|
|
-
|
|
6,230
|
|
-
|
|
6,230
|
|
Other comprehensive
loss, net of tax1
|
|
-
|
|
-
|
|
-
|
|
(1,233)
|
|
(1,233)
|
|
-
|
|
(1,233)
|
|
Repurchases of common
stock
|
|
(4)
|
|
(483)
|
|
(713)
|
|
-
|
|
(1,200)
|
|
-
|
|
(1,200)
|
|
Dividends
declared2
|
|
-
|
|
-
|
|
(2,550)
|
|
-
|
|
(2,550)
|
|
-
|
|
(2,550)
|
|
Stock-based awards,
ESOP activity and
other
|
|
3
|
|
483
|
|
-
|
|
-
|
|
486
|
|
-
|
|
486
|
|
Net decrease in
noncontrolling interests in
subsidiary
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(11)
|
|
(11)
|
|
Balance at Dec.
31, 2019
|
|
$
280
|
|
$
-
|
|
$
18,401
|
|
$
(15,554)
|
|
$
3,127
|
|
$
44
|
|
$
3,171
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
At Dec. 31, 2019 the
corporation recognized a non-cash, after-tax reduction to
stockholders' equity of $2.2 billion as a result of the year-end
re-measurement of its postretirement benefit plans. This reduction
was offset by about $900 million due to recognition of previously
deferred amounts.
|
2
|
Represents dividends
of $2.40 per share declared for the fourth quarter of 2019 and
$2.20 per share declared for the first, second and third quarters
of 2019.
|
Lockheed Martin
Corporation
|
Other Financial
and Operating Information
|
(unaudited; in
millions, except aircraft deliveries)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
Outlook
|
|
2019
Actual
|
|
Total FAS 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 credit (cost) 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,
2018.
|
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 credit (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
|
|
|
|
|
|
Dec. 31,
2019
|
|
Dec. 31,
2018
|
|
Aeronautics
|
|
|
|
|
|
$
55,636
|
|
$
55,601
|
|
Missiles and Fire
Control
|
|
|
|
|
|
25,796
|
|
21,363
|
|
Rotary and Mission
Systems
|
|
|
|
|
|
34,296
|
|
31,320
|
|
Space
|
|
|
|
|
|
28,253
|
|
22,184
|
|
Total
backlog
|
|
|
|
|
|
$
143,981
|
|
$
130,468
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarters
Ended
|
|
Years
Ended
|
|
Aircraft
Deliveries
|
|
Dec. 31,
2019
|
|
Dec. 31,
2018
|
|
Dec. 31,
2019
|
|
Dec. 31,
2018
|
|
F-35
|
|
51
|
|
32
|
|
134
|
|
91
|
|
C-130J
|
|
9
|
|
7
|
|
28
|
|
25
|
|
C-5
|
|
-
|
|
-
|
|
-
|
|
4
|
|
Government helicopter
programs
|
|
24
|
|
32
|
|
85
|
|
107
|
|
Commercial helicopter
programs
|
|
2
|
|
3
|
|
2
|
|
5
|
|
International
military helicopter programs
|
|
8
|
|
8
|
|
13
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
Number of Weeks in
Reporting Period1
|
|
|
|
|
|
2019
|
|
2018
|
|
First
quarter
|
|
|
|
|
|
13
|
|
12
|
|
Second
quarter
|
|
|
|
|
|
13
|
|
13
|
|
Third
quarter
|
|
|
|
|
|
13
|
|
14
|
|
Fourth
quarter
|
|
|
|
|
|
13
|
|
13
|
|
|
|
|
|
|
|
|
|
|
1
|
The corporation
closes its books and records for the first three quarters on the
last Sunday of the calendar quarter to align its financial closing
with its business processes. This practice only affects interim
periods, as the corporation's fiscal year ends on Dec. 31.
Typically, the corporation's fiscal quarters are 13 weeks in length
but due to its fiscal year ending on Dec. 31, the
number of weeks in the corporation's quarters may vary slightly
from year to year. Consequently, the difference in the number of
weeks in the current and comparable prior period could affect
period-to-period comparisons.
|
View original
content:http://www.prnewswire.com/news-releases/lockheed-martin-reports-fourth-quarter-and-full-year-2019-results-300993972.html
SOURCE Lockheed Martin