BETHESDA, Md., Oct. 26, 2021 /PRNewswire/
-- Lockheed Martin Corporation [NYSE: LMT] today
reported third quarter 2021 net sales of $16.0 billion, compared to $16.5 billion in the third quarter of 2020. Net
earnings from continuing operations in the third quarter of 2021
were $614 million, or $2.21 per share, compared to $1.8 billion, or $6.25 per share, in the third quarter of
2020. Cash from operations was $1.9
billion in the third quarter of 2021 and 2020.
"During the third quarter, the men and women of Lockheed Martin
continued to deliver essential products and capabilities for
domestic and allied national defense, and for pioneering civil
space endeavors," said Lockheed Martin Chairman, President and CEO
James Taiclet. "At the same time, we
continued to advance the state of the art and innovation across key
technologies, including Future Vertical Lift, Integrated Air and
Missile Defense, hypersonic weapon systems, next generation
satellites, and many others.
"In addition, we have recently undertaken a reassessment of our
five-year business plan given recent external and programmatic
events. Our conclusions, which are reflected in our updated 2021
guidance and subsequent trend information, reflect continuing
strong cash flow generation, but a slight reduction in revenue in
2022 and roughly flat to low-single-digit growth rates in both
revenue and segment operating profit over the next few years, with
increasing growth opportunities in the years that follow.
"Consequently, we are adjusting our capital allocation strategy
with two major objectives. First, to expand further our robust
reinvestment in the company to serve our customers' evolving needs
through capital projects and independent research and development
for mid- to long-term enhanced growth performance. Simultaneously,
we plan to reward shareholders with continued dividend growth and
meaningful increases to the scale and rate of our share repurchase
program. Over the short-, mid- and long-term, we will strive to
maximize cash flow per share dynamically, based on revenue growth
opportunities, inorganic investments, and share repurchases to take
full advantage of our significant cash flow generation and strong
balance sheet."
Third quarter 2021 net earnings include a noncash pension
settlement charge of $1.7 billion
($1.3 billion, or $4.72 per share, after-tax) related to the
purchase of group annuity contracts to transfer $4.9 billion of gross pension obligations and
related plan assets to an insurance company, and unrealized gains
of $98 million ($74 million, or $0.27 per share, after-tax) due to increases in
the fair value of investments held in the Lockheed Martin Ventures
Fund.
Summary Financial Results
The following table presents the company's summary financial
results.
|
(in millions,
except per share data)
|
|
Quarters
Ended1
|
|
Nine Months
Ended1
|
|
|
|
|
Sept.
26
2021
|
|
Sept.
27
2020
|
|
Sept.
26
2021
|
|
Sept.
27
2020
|
|
|
Net
sales
|
|
$
|
16,028
|
|
|
$
|
16,495
|
|
|
$
|
49,315
|
|
|
$
|
48,366
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business segment
operating profit2
|
|
$
|
1,850
|
|
|
$
|
1,762
|
|
|
$
|
5,365
|
|
|
$
|
5,277
|
|
|
|
Unallocated
items
|
|
|
|
|
|
|
|
|
|
|
FAS/CAS operating
adjustment
|
|
491
|
|
|
469
|
|
|
1,469
|
|
|
1,407
|
|
|
|
Severance and
restructuring charges
|
|
—
|
|
|
—
|
|
|
(36)
|
|
|
—
|
|
|
|
Other, net
|
|
(47)
|
|
|
(84)
|
|
|
(130)
|
|
|
(329)
|
|
|
|
Total unallocated
items
|
|
444
|
|
|
385
|
|
|
1,303
|
|
|
1,078
|
|
|
|
Consolidated
operating profit
|
|
$
|
2,294
|
|
|
$
|
2,147
|
|
|
$
|
6,668
|
|
|
$
|
6,355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
(loss) from
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations3,4
|
|
$
|
614
|
|
|
$
|
1,753
|
|
|
$
|
4,266
|
|
|
$
|
5,096
|
|
|
|
Discontinued
operations5
|
|
—
|
|
|
(55)
|
|
|
—
|
|
|
(55)
|
|
|
|
Net
earnings
|
|
$
|
614
|
|
|
$
|
1,698
|
|
|
$
|
4,266
|
|
|
$
|
5,041
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share from
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations3,4
|
|
$
|
2.21
|
|
|
$
|
6.25
|
|
|
$
|
15.32
|
|
|
$
|
18.12
|
|
|
|
Discontinued
operations5
|
|
—
|
|
|
(0.20)
|
|
|
—
|
|
|
(0.20)
|
|
|
|
Diluted earnings
per share
|
|
$
|
2.21
|
|
|
$
|
6.05
|
|
|
$
|
15.32
|
|
|
$
|
17.92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash from
operations6
|
|
$
|
1,937
|
|
|
$
|
1,880
|
|
|
$
|
4,953
|
|
|
$
|
6,376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
The company closes
its books and records on the last Sunday of the interim calendar
quarter to align its financial closing with its business processes,
which was on Sept. 26 for the third quarter of 2021 and Sept. 27
for the third quarter of 2020. 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 company's fiscal year ends on
Dec. 31.
|
|
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
|
Net earnings from
continuing operations for the third quarter of 2021 include a
noncash, non-operating pension settlement charge of $1.7 billion
($1.3 billion, or $4.72 per share, after-tax) related to the
purchase of group annuity contracts to transfer $4.9 billion of
gross pension obligations and related plan assets to an insurance
company, which represents the accelerated recognition of actuarial
losses that were included in the accumulated other comprehensive
loss account within stockholders' equity.
|
|
4
|
Net earnings from
continuing operations for the third quarter of 2021 include
unrealized gains of $98 million ($74 million, or $0.27
per share, after-tax) due to increases in the fair value of
investments held in the Lockheed Martin Ventures Fund.
|
|
5
|
Net loss from
discontinued operations for the third quarter of 2020 include a $55
million ($0.20 per share) noncash charge resulting from the
resolution of certain tax matters related to the former Information
Systems & Global Solutions business divested in
2016.
|
|
6
|
Cash from operations
in the third quarter of 2021 is after federal income tax payments
of $285 million and employer payroll tax payments of $177 million,
compared to federal income tax payments of $810 million and no
employer payroll tax payments in the third quarter of
2020.
Third quarter 2020
federal income tax payments include $400 million that was deferred
from the second quarter of 2020 pursuant to guidance from the
Internal Revenue Service (IRS) in addition to the third quarter
payment. No employer payroll tax payments were made in the third
quarter of 2020 as $155 million was deferred from the third quarter
of 2020 to the fourth quarters of 2021 and 2022 pursuant to the
Coronavirus Aid, Relief, and Economic Security Act (CARES
Act).
|
|
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)
|
|
Current
Update1
|
|
August
20211
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
~$67,000
|
|
$67,300 -
$68,700
|
|
|
|
|
|
|
|
|
|
Business segment
operating profit
|
|
~$7,350
|
|
$7,380 -
$7,520
|
|
|
|
|
|
|
|
|
|
Net FAS/CAS pension
adjustment2
|
|
~$665
|
|
~$655
|
|
|
Add: pension
settlement charge2
|
|
$1,665
|
|
$1,675
|
|
|
Net FAS/CAS pension
adjustment - adjusted2,3
|
|
~$2,330
|
|
~$2,330
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
~$22.45
|
|
$21.95 -
$22.25
|
|
|
Add: noncash
pension settlement charge2
|
|
$4.72
|
|
$4.75
|
|
|
Diluted earnings per
share - adjusted2,3
|
|
~$27.17
|
|
$26.70 -
$27.00
|
|
|
|
|
|
|
|
|
|
Cash from
operations
|
|
≥$8,300
|
|
≥$8,900
|
|
|
|
|
|
|
|
|
1
|
The company's current
2021 financial outlook reflects known impacts from the COVID-19
pandemic based on the company's understanding at the time of this
news release and what the company has experienced to date. However,
the company cannot predict how the pandemic will evolve or what
impact it will continue to have. Therefore, no additional impacts
to the company's operations or its supply chain as a result of
continued COVID-19 disruption or implementation of the vaccine
executive order for periods subsequent to the time of this news
release have been incorporated into the company's current 2021
financial outlook. The ultimate impacts of COVID-19 on the
company's financial results for 2021 and beyond remain 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 renationalization of the
Atomic Weapons Establishment program on June 30, 2021, the supply
chain impacts experienced in the third quarter of 2021 and the
impact of changes in fair value from investments held in the
Lockheed Martin Ventures Fund recognized through Sept. 26, 2021,
but does not include any future gains or losses related to changes
in valuations of the company's investment holdings. It also assumes
continued accelerated payments to suppliers at current
levels
|
|
2
|
The Net FAS/CAS
pension adjustment - adjusted 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, excluding the noncash, non-operating
pension settlement charge of $1,665 million ($1,310 million, or
$4.72 per share, after-tax) recognized in the third quarter of 2021
related to the purchase of group annuity contracts to transfer
approximately $4.9 billion of gross pension obligations and related
plan assets to an insurance company. 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
(expense) income are included in non-service FAS pension (expense)
income. For additional detail regarding the pension amounts
reported in operating and non-operating results, refer to the
supplemental table included at the end of this news
release.
|
|
3
|
Net FAS/CAS pension
adjustment – adjusted and diluted earnings per share – adjusted are
non-GAAP measures. See the "Use of Non-GAAP Financial Measures"
section of this news release for more information.
|
|
|
|
|
2022 Financial Trends
The company expects 2022 net sales to decline from expected 2021
levels to approximately $66 billion
and 2022 total business segment operating margin to be
approximately 11.0%. Cash from operations in 2022 is expected to be
greater than or equal to $8.4
billion, which excludes a potential decrease in 2022 cash
from operations of up to $2.0 billion
if the provisions in the Tax Cuts and Jobs Act of 2017 that
eliminate the option to immediately deduct research and development
expenditures in the period incurred and requires companies to
amortize such expenditures over five years is not modified or
repealed by Congress before it takes effect on Jan. 1, 2022. Although the company continues to
have ongoing discussions with members of Congress, both on its own
and with other industries through coalitions, it has no assurance
that these provisions will be modified or repealed.
The preliminary outlook for 2022 also assumes continued support
and funding of our programs, a statutory tax rate of 21%, known
impacts of COVID-19, and the continued acceleration of supplier
payments at current levels. No additional impacts to the company's
operations, supply chain, or financial results as a result of
continued COVID-19 disruption or implementation of the vaccine
executive order have been incorporated into the company's
preliminary outlook for 2022 as the company cannot predict how the
pandemic will evolve or what impact it will continue to have. The
ultimate impacts of COVID-19 on the company's financial results
beyond the time of this news release remain uncertain and there can
be no assurance that the company's underlying assumptions are
correct. Additionally, the company's preliminary outlook for 2022
assumes no significant reduction in customer budgets, changes in
funding priorities and that the U.S. Government will not operate
under a continuing resolution for an extended period in which new
contract and program starts are restricted. It also does not
incorporate the pending acquisition of Aerojet Rocketdyne Holdings,
Inc. Changes in circumstances may require the company to revise its
assumptions, which could materially change its current estimate of
2022 net sales, business segment operating margin, and cash
flows.
The company currently expects a total net FAS/CAS pension
benefit of approximately $2.2 billion
in 2022, which includes total expected U.S. Government cost
accounting standards (CAS) pension cost of approximately
$1.8 billion and total expected
financial accounting standards (FAS) pension income of
approximately $400 million. The
estimated FAS pension income amount assumes a 2.75% discount rate
(the same rate used for the remeasurement of the defined benefit
pension plans impacted by the pension risk transfer transaction in
the third quarter of 2021), a 10.0% return on plan assets in 2021,
and a 6.5% 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 $10
million to the estimated net 2022 FAS/CAS pension benefit. A
change of plus or minus 100 basis points to the return on plan
assets in 2021 only, with all other assumptions held constant,
would result in an incremental increase or decrease of
approximately $15 million to the
estimated net 2022 FAS/CAS pension benefit. The company does not
expect to make any contributions to its qualified defined benefit
pension plans in 2022. The company will complete the annual
remeasurement of its postretirement benefit plans and update its
estimated 2022 FAS/CAS pension adjustment on Dec. 31, 2021. The final assumptions, including
the discount rate and actual investment return for 2021, may differ
materially from those discussed above.
Cash Deployment Activities
The company's cash deployment activities in the third quarter of
2021, included the following:
- accelerating $1.5 billion of
payments to suppliers in the third quarter of 2021 that were due in
the fourth quarter of 2021; compared to accelerating $1.8 billion of payments to suppliers in the
third quarter 2020 that were due in the fourth quarter of
2020;
- making capital expenditures of $316
million, compared to $408
million in the third quarter of 2020;
- paying cash dividends of $718
million, compared to $672
million in the third quarter of 2020;
- repurchasing 1.4 million shares for $500
million pursuant to an accelerated share repurchase
agreement (ASR); compared to repurchasing 0.2 million shares for
$85 million in the third quarter of
2020, which includes $26 million paid
for shares repurchased in the second quarter of 2020; and
- making a scheduled repayment of $500
million of long-term debt in the third quarter of 2021;
compared to no proceeds or repayments of long-term debt in the
third quarter of 2020.
As previously announced on Sept. 23,
2021, the company increased its quarterly dividend by
$0.20 per share, to $2.80 per share, beginning with the dividend
payment in the fourth quarter of 2021. Additionally, the company
repurchased $2.0 billion in common
stock during the first nine months of 2021 and increased its share
repurchase authority by $5.0 billion
with $6.0 billion in total remaining
authorization for future repurchases of common stock under the
program as of Sept. 26, 2021.
Segment Results
The company 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 company's business segments and reconciles these amounts to
the company's consolidated financial results.
|
(in millions)
|
|
Quarters
Ended
|
|
Nine Months
Ended
|
|
|
|
|
Sept.
26
2021
|
|
Sept.
27
2020
|
|
Sept.
26
2021
|
|
Sept.
27
2020
|
|
|
Net
sales
|
|
|
|
|
|
|
|
|
|
|
Aeronautics
|
|
$
|
6,568
|
|
|
$
|
6,680
|
|
|
$
|
19,621
|
|
|
$
|
19,552
|
|
|
|
Missiles and Fire
Control
|
|
2,781
|
|
|
2,971
|
|
|
8,474
|
|
|
8,391
|
|
|
|
Rotary and Mission
Systems
|
|
3,980
|
|
|
3,998
|
|
|
12,329
|
|
|
11,783
|
|
|
|
Space
|
|
2,699
|
|
|
2,846
|
|
|
8,891
|
|
|
8,640
|
|
|
|
Total net
sales
|
|
$
|
16,028
|
|
|
$
|
16,495
|
|
|
$
|
49,315
|
|
|
$
|
48,366
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
|
|
|
|
|
|
|
|
|
Aeronautics
|
|
$
|
714
|
|
|
$
|
705
|
|
|
$
|
1,979
|
|
|
$
|
2,116
|
|
|
|
Missiles and Fire
Control
|
|
413
|
|
|
405
|
|
|
1,210
|
|
|
1,171
|
|
|
|
Rotary and Mission
Systems
|
|
459
|
|
|
404
|
|
|
1,350
|
|
|
1,209
|
|
|
|
Space
|
|
264
|
|
|
248
|
|
|
826
|
|
|
781
|
|
|
|
Total business
segment operating profit
|
|
1,850
|
|
|
1,762
|
|
|
5,365
|
|
|
5,277
|
|
|
|
Unallocated
items
|
|
|
|
|
|
|
|
|
|
|
FAS/CAS operating
adjustment
|
|
491
|
|
|
469
|
|
|
1,469
|
|
|
1,407
|
|
|
|
Severance and
restructuring charges
|
|
—
|
|
|
—
|
|
|
(36)
|
|
|
—
|
|
|
|
Other, net
|
|
(47)
|
|
|
(84)
|
|
|
(130)
|
|
|
(329)
|
|
|
|
Total unallocated
items
|
|
444
|
|
|
385
|
|
|
1,303
|
|
|
1,078
|
|
|
|
Total consolidated
operating profit
|
|
$
|
2,294
|
|
|
$
|
2,147
|
|
|
$
|
6,668
|
|
|
$
|
6,355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales and operating profit of the company's business
segments exclude intersegment sales, cost of sales, and profit as
these activities are eliminated in consolidation. Operating profit
of the company's business segments includes the company'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 company's business segments also
excludes the FAS/CAS pension 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 divestitures, and other
miscellaneous corporate activities.
The company 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 company's consolidated financial
statements must present pension and other postretirement benefit
plan income calculated in accordance with FAS requirements under
U.S. generally accepted accounting principles. The operating
portion of the net FAS/CAS pension adjustment represents the
difference between the service cost component of FAS pension
(expense) income and total CAS pension cost. The non-service FAS
pension (expense) income component is included in other
non-service FAS pension (expense) income in our consolidated
statements of earnings. The net FAS/CAS pension adjustment
increases or decreases CAS pension cost to equal total FAS pension
income (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 company's
segment sales, operating profit and operating margin may be
impacted favorably or unfavorably by changes in profit booking
rates on the company'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 company's consolidated net adjustments not related to
volume, including net profit booking rate adjustments, represented
approximately 31% of total segment operating profit in the third
quarter of 2021, compared to 24% in the third quarter of 2020.
Aeronautics
|
(in millions)
|
|
Quarters
Ended
|
|
Nine Months
Ended
|
|
|
|
|
Sept.
26
2021
|
|
Sept.
27
2020
|
|
Sept.
26
2021
|
|
Sept.
27
2020
|
|
|
Net
sales
|
|
$
|
6,568
|
|
|
$
|
6,680
|
|
|
$
|
19,621
|
|
|
$
|
19,552
|
|
|
|
Operating
profit
|
|
714
|
|
|
705
|
|
|
1,979
|
|
|
2,116
|
|
|
|
Operating
margin
|
|
10.9
|
%
|
|
10.6
|
%
|
|
10.1
|
%
|
|
10.8
|
%
|
|
Aeronautics' net sales during the third quarter of 2021
decreased $112 million, or 2%, compared to the same period in
2020. The decrease was primarily attributable to lower net sales of
approximately $220 million for the
F-35 program due to lower volume on development contracts and lower
volume and risk retirements on production contracts. This decrease
was partially offset by an increase in sales of about $35 million for the F-16 program due to higher
production volume that was partially offset by lower sustainment
volume; and approximately $30 million
for classified development contracts due to higher risk
retirements.
Aeronautics' operating profit during the third quarter of 2021
increased $9 million, or 1%, compared to the same period in
2020. The increase was primarily attributable to higher operating
profit of approximately $45 million
for classified development contracts due to higher risk
retirements; about $25 million for
the C-130 program primarily due to higher risk retirements on
sustainment activities; and about $15
million for the F-16 program due to higher risk retirements
on sustainment contracts and higher production volume. These
increases were partially offset by lower operating profit of
approximately $75 million for the
F-35 program due to lower risk retirements and volume on production
and development contracts that were partially offset by higher risk
retirements on sustainment contracts. Adjustments not related to
volume, including net profit booking rate adjustments, were
$15 million higher in the third
quarter of 2021 compared to the same period in 2020.
Missiles and Fire Control
|
(in millions)
|
|
Quarters
Ended
|
|
Nine Months
Ended
|
|
|
|
|
Sept.
26
2021
|
|
Sept.
27
2020
|
|
Sept.
26
2021
|
|
Sept.
27
2020
|
|
|
Net
sales
|
|
$
|
2,781
|
|
|
$
|
2,971
|
|
|
$
|
8,474
|
|
|
$
|
8,391
|
|
|
|
Operating
profit
|
|
413
|
|
|
405
|
|
|
1,210
|
|
|
1,171
|
|
|
|
Operating
margin
|
|
14.9
|
%
|
|
13.6
|
%
|
|
14.3
|
%
|
|
14.0
|
%
|
|
MFC's net sales during the third quarter of 2021 decreased
$190 million, or 6%, compared to the same period in 2020. The
decrease was primarily attributable to lower net sales of
approximately $130 million for
tactical and strike missile programs due to lower volume (Guided
Multiple Launch Rocket Systems (GMLRS) and Hellfire); and a net
decrease of about $50 million for
sensors and global sustainment programs due to lower volume
(primarily Sniper Advanced Targeting Pod (SNIPER®) and Infrared
Search and Track (IRST)) that was partially offset by higher risk
retirements due to close out activities related to the Warrior
Capability Sustainment Program (Warrior) that was terminated by the
customer in March 2021.
MFC's operating profit during the third quarter of 2021
increased $8 million, or 2%, compared to the same period in
2020. Operating profit increased approximately $20 million on integrated air and missile defense
programs due to higher risk retirements (primarily PAC-3), and
about $15 million for sensors and
global sustainment programs primarily due to the reversal of a
portion of previously recorded losses on the Warrior program in the
third quarter of 2021 that are no longer expected to be incurred as
a result of the program being terminated that was partially offset
by lower volume (primarily IRST and SNIPER). These increases were
offset by charges of approximately $25
million for performance issues on an energy program.
Operating profit for tactical and strike missile programs was
comparable as lower volume (primarily GMLRS and Hellfire) was
offset by higher risk retirements (primarily Hellfire). Adjustments
not related to volume, including net profit booking rate
adjustments, were approximately $70
million higher in the third quarter of 2021 compared to the
same period in 2020.
Rotary and Mission Systems
|
(in millions)
|
|
Quarters
Ended
|
|
Nine Months
Ended
|
|
|
|
|
Sept.
26
2021
|
|
Sept.
27
2020
|
|
Sept.
26
2021
|
|
Sept.
27
2020
|
|
|
Net
sales
|
|
$
|
3,980
|
|
|
$
|
3,998
|
|
|
$
|
12,329
|
|
|
$
|
11,783
|
|
|
|
Operating
profit
|
|
459
|
|
|
404
|
|
|
1,350
|
|
|
1,209
|
|
|
|
Operating
margin
|
|
11.5
|
%
|
|
10.1
|
%
|
|
10.9
|
%
|
|
10.3
|
%
|
|
RMS' net sales during the third quarter of 2021 were comparable
with the same period in 2020. Net sales decreased by approximately
$50 million for integrated warfare
systems and sensors (IWSS) programs due to lower volume on radar
surveillance systems (primarily TPQ-53) and the Littoral Combat
Ship (LCS) program; about $45
million for various C6ISR (command, control, communications,
computers, cyber, combat systems, intelligence, surveillance, and
reconnaissance) programs due to lower volume; and about
$30 million for various training and
logistics solutions programs primarily due to lower risk
retirements and volume. These decreases were offset by higher net
sales of approximately $120 million
for Sikorsky helicopter programs due to higher risk retirements
(Black Hawk, Seahawk and CH-53-K) and higher production volume
(Combat Rescue Helicopter (CRH) and Seahawk).
RMS' operating profit during the third quarter of 2021
increased $55 million, or 14%, compared to the same
period in 2020. The increase was primarily attributable to higher
operating profit of approximately $75
million for Sikorsky helicopter programs due to higher risk
retirements (Black Hawk, Seahawk and CH-53K) and higher production
volume (CRH). This increase was partially offset by a decrease of
approximately $20 million for
training and logistics solutions programs primarily due to lower
risk retirements and volume; and about $15
million for IWSS programs due to charges that were
$30 million higher on a ground-based
radar program partially offset by higher risk retirements on
Vertical Launching System (VLS) programs. Operating profit for
C6ISR programs was comparable as lower volume was offset by lower
charges on certain programs (primarily undersea combat systems
programs). Adjustments not related to volume, including net profit
booking rate adjustments, were $50
million higher in the third quarter of 2021 compared to
the same period in 2020.
Space
|
(in millions)
|
|
Quarters
Ended
|
|
Nine Months
Ended
|
|
|
|
|
Sept.
26
2021
|
|
Sept.
27
2020
|
|
Sept.
26
2021
|
|
Sept.
27
2020
|
|
|
Net
sales
|
|
$
|
2,699
|
|
|
$
|
2,846
|
|
|
$
|
8,891
|
|
|
$
|
8,640
|
|
|
|
Operating
profit
|
|
264
|
|
|
248
|
|
|
826
|
|
|
781
|
|
|
|
Operating
margin
|
|
9.8
|
%
|
|
8.7
|
%
|
|
9.3
|
%
|
|
9.0
|
%
|
|
Space's net sales during the third quarter of 2021 decreased
$147 million, or 5%, compared to the same period in 2020. The
decrease was primarily attributable to lower net sales of
approximately $340 million due to the
renationalization of the Atomic Weapons Establishment (AWE)
program, which is no longer included in the company's financial
results beginning in the third quarter of 2021. This decrease was
partially offset by higher sales of about $140 million for strategic and missile defense
programs due to higher volume (hypersonic development, Fleet
Ballistic Missile (FBM) and Next Generation Interceptor (NGI)
programs); and about $70 million for
national security space programs due to higher risk retirements and
volume (primarily Next Generation Overhead Persistent Infrared
(Next Gen OPIR)).
Space's operating profit during the third quarter of 2021
increased $16 million, or 6%, compared to the same period in
2020. The increase was primarily attributable to higher operating
profit of approximately $30 million
for strategic and missile defense programs due to higher risk
retirements (primarily FBM programs) and higher volume (primarily
hypersonic development). This increase was partially offset by a
decrease of approximately $10 million
due to the renationalization of the AWE program. Operating profit
for national security space programs was comparable as higher
volume and risk retirements (primarily Next Gen OPIR) were offset
by a charge of $45 million on a
commercial ground solutions program. Adjustments not related to
volume, including net profit booking rate adjustments, were
$30 million higher in the third
quarter of 2021 compared to the same period in 2020.
Total equity earnings (primarily United Launch Alliance (ULA))
recognized in Space's operating profit were not significant during
the third quarters of 2021 and 2020.
Income Taxes
The company's effective income tax rate was 9.6% for the third
quarter of 2021 and 14.7% for the third quarter of 2020. The rate
for the third quarter of 2021 is lower primarily due to lower
pretax earnings resulting from a noncash pension settlement charge
of $1.7 billion, which reduced the
tax expense by approximately $355
million. The rate for both periods benefited from tax
deductions for foreign derived intangible income, the research and
development tax credit, and dividends paid to the company's defined
contribution plans with an employee stock ownership plan
feature.
Renationalization of the Atomic Weapons Establishment
Program
As previously announced, on June 30,
2021 the UK Ministry of Defence terminated the contract to
operate the UK's nuclear deterrent program and assumed control of
the entity that manages the program (referred to as the
renationalization of the Atomic Weapons Establishment (AWE
program)). Accordingly, the AWE program, including the entity that
manages the program, is no longer included in the company's
financial results beginning in the third quarter of 2021. Because
of the renationalization, no sales or operating profit for the AWE
program are included in the company's financial results for the
third quarter of 2021. However, during the first six months of
2021, AWE generated sales of $865
million and operating profit of $15
million, which are included in the company's financial
results for the first nine months of 2021. During the third quarter
and first nine months of 2020, AWE generated sales of $350 million and $1.0
billion and operating profit of $10
million and $30 million, which
are included in the company's financial results for 2020.
Purchase of Group Annuity Contracts and Pension
Remeasurement
As previously announced, on Aug. 3,
2021 the company purchased group annuity contracts to
transfer $4.9 billion of gross
defined benefit pension obligations and related plan assets to an
insurance company for approximately 18,000 U.S. retirees and
beneficiaries. The group annuity contracts were purchased using
assets from Lockheed Martin's master retirement trust and no
additional funding contribution was required by the company. This
transaction has no impact on the amount, timing, or form of the
monthly retirement benefit payments to the affected retirees and
beneficiaries. In connection with this transaction, the company
recognized a noncash settlement charge of $1.7 billion ($1.3
billion, or $4.72 per share,
after-tax) for the affected plans in the quarter ended Sept. 26, 2021, which represents the accelerated
recognition of actuarial losses that were included in the
accumulated other comprehensive loss account within stockholders'
equity. As a result of this transaction, the company was required
to remeasure the benefit obligations and plan assets for the
affected defined benefit pension plans in the quarter ended
Sept. 26, 2021. The purchase of the
group annuity contracts and the pension remeasurement did not have
an impact on the company's CAS pension cost and did not
significantly impact the company's total FAS pension expense or
FAS/CAS pension adjustment for the quarter ended Sept. 26, 2021, or expected full year 2021,
except for the noncash settlement charge.
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
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. 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)
|
|
Current
Update1
|
|
August
20211
|
|
|
Business segment
operating profit (non-GAAP)
|
|
~$7,350
|
|
$7,380 -
$7,520
|
|
|
FAS/CAS operating
adjustment2
|
|
~1,955
|
|
~1,955
|
|
|
Other, net
|
|
~(230)
|
|
~(300)
|
|
|
Consolidated
operating profit (GAAP)
|
|
~$9,075
|
|
$9,035 -
$9,175
|
|
|
|
|
|
|
|
|
1
|
The company's 2021
financial outlook reflects known impacts from the COVID-19 pandemic
based on the company's understanding at the time of this news
release, including no additional impact to the company's operations
or the supply chain due to continued COVID-19 disruption or
implementation of the vaccine executive order. The ultimate impacts
of COVID-19 on the company's financial outlook for 2021 and beyond
remain 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
renationalization of the AWE program on June 30, 2021.
|
|
2
|
Reflects the amount
by which expected CAS pension cost, $2,065 million, exceeds the
expected FAS pension service cost, $110 million. Excludes $1,290
million of expected non-service FAS pension (expense) income. Refer
to the supplemental table "Other Supplemental Information" included
in this news release for a detail of the FAS/CAS operating
adjustment.
|
|
|
|
|
Net FAS/CAS pension adjustment – adjusted; Diluted earnings per
share – adjusted; Total FAS pension (income) - adjusted
Net FAS/CAS pension adjustment, diluted earnings per share and
total FAS pension (income) have been adjusted for the third quarter
2021 noncash, non-operating pension settlement charge of
$1,665 million ($1,310, or $4.72
per share, after-tax). The tax effect was calculated by multiplying
the gross settlement charge by a tax rate of 21%. Management
believes that the exclusion of the pension settlement charge
related to the accelerated recognition of actuarial losses
previously included in accumulated other comprehensive loss for
certain pension plans as a result of the purchase of group annuity
contracts from an insurance company, is useful to understanding the
company's underlying business performance and comparing performance
from period to period.
|
(in millions, except
per share data)
|
|
Current
Update
|
|
August
2021
|
|
|
Net FAS/CAS pension
adjustment - adjusted (non-GAAP)
|
|
~$2,330
|
|
~$2,330
|
|
|
Less: pension
settlement charge
|
|
(1,665)
|
|
(1,675)
|
|
|
Net FAS/CAS pension
adjustment (GAAP)
|
|
$665
|
|
$655
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share - adjusted (non-GAAP)
|
|
~$27.17
|
|
$26.70 -
$27.00
|
|
|
Less: pension
settlement charge
|
|
(4.72)
|
|
(4.75)
|
|
|
Diluted earnings per
share (GAAP)
|
|
~$22.45
|
|
$21.95 -
$22.25
|
|
|
|
|
|
|
|
Conference Call Information
Lockheed Martin Corporation will webcast live the earnings
results conference call (listen-only mode) on Tuesday, Oct. 26, 2021, at 11 a.m. EDT. 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 company'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 114,000 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 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, the company's ability to recover its costs under
contracts and impacts of implementation of vaccine mandates on our
workforce and business;
- 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 emerging competitors including startups and non-traditional
defense contractors, 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, our mix of fixed-price and cost-reimbursable contracts
and the impacts of cost overruns and significant increases in
inflation;
- 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 pension related legislation;
- 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.
Lockheed Martin
Corporation
Consolidated Statements of Earnings1
(unaudited; in millions, except per share data)
|
|
|
|
|
Quarters
Ended
|
|
Nine Months
Ended
|
|
|
|
Sept.
26
2021
|
|
Sept.
27
2020
|
|
Sept.
26
2021
|
|
Sept.
27
2020
|
|
Net
sales
|
|
$
|
16,028
|
|
|
$
|
16,495
|
|
|
$
|
49,315
|
|
|
$
|
48,366
|
|
|
Cost of
sales
|
|
(13,726)
|
|
|
(14,359)
|
|
|
(42,676)
|
|
|
(41,926)
|
|
|
Gross
profit
|
|
2,302
|
|
|
2,136
|
|
|
6,639
|
|
|
6,440
|
|
|
Other income
(expense), net
|
|
(8)
|
|
|
11
|
|
|
29
|
|
|
(85)
|
|
|
Operating
profit
|
|
2,294
|
|
|
2,147
|
|
|
6,668
|
|
|
6,355
|
|
|
Interest
expense
|
|
(141)
|
|
|
(145)
|
|
|
(423)
|
|
|
(442)
|
|
|
Non-service FAS
pension (expense)
income2
|
|
(1,572)
|
|
|
54
|
|
|
(1,385)
|
|
|
164
|
|
|
Other non-operating
income (expense),
net
|
|
98
|
|
|
—
|
|
|
200
|
|
|
(29)
|
|
|
Earnings from
continuing operations
before income taxes
|
|
679
|
|
|
2,056
|
|
|
5,060
|
|
|
6,048
|
|
|
Income tax
expense
|
|
(65)
|
|
|
(303)
|
|
|
(794)
|
|
|
(952)
|
|
|
Net earnings from
continuing operations
|
|
614
|
|
|
1,753
|
|
|
4,266
|
|
|
5,096
|
|
|
Net loss from
discontinued operations3
|
|
—
|
|
|
(55)
|
|
|
—
|
|
|
(55)
|
|
|
Net
earnings
|
|
$
|
614
|
|
|
$
|
1,698
|
|
|
$
|
4,266
|
|
|
$
|
5,041
|
|
|
Effective tax
rate
|
|
9.6
|
%
|
|
14.7
|
%
|
|
15.7
|
%
|
|
15.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
per common share
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
Continuing
operations2
|
|
$
|
2.22
|
|
|
$
|
6.28
|
|
|
$
|
15.37
|
|
|
$
|
18.19
|
|
|
Discontinued
operations3
|
|
—
|
|
|
(0.20)
|
|
|
—
|
|
|
(0.20)
|
|
|
Basic earnings per
common share
|
|
$
|
2.22
|
|
|
$
|
6.08
|
|
|
$
|
15.37
|
|
|
$
|
17.99
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
Continuing
operations2
|
|
$
|
2.21
|
|
|
$
|
6.25
|
|
|
$
|
15.32
|
|
|
$
|
18.12
|
|
|
Discontinued
operations3
|
|
—
|
|
|
(0.20)
|
|
|
—
|
|
|
(0.20)
|
|
|
Diluted earnings per
common share
|
|
$
|
2.21
|
|
|
$
|
6.05
|
|
|
$
|
15.32
|
|
|
$
|
17.92
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
|
|
|
|
|
|
|
|
Basic
|
|
276.2
|
|
|
279.3
|
|
|
277.5
|
|
|
280.1
|
|
|
Diluted
|
|
277.3
|
|
|
280.6
|
|
|
278.5
|
|
|
281.3
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares
reported in stockholders'
equity at end
of period
|
|
|
|
|
|
274
|
|
|
278
|
|
|
|
|
|
|
|
|
|
|
|
1
|
The company closes
its books and records on the last Sunday of the interim calendar
quarter to align its financial closing with its business processes,
which was on Sept. 26 for the third quarter of 2021 and Sept. 27
for the third quarter of 2020. 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 company's fiscal year ends on
Dec. 31.
|
2
|
In the third quarter
of 2021, the company recognized a $1.7 billion ($1.3 billion, or
$4.72 per share, after-tax) noncash pension settlement charge
related to the purchase of group annuity contracts to transfer $4.9
billion of gross pension obligations and related plan assets to an
insurance company, which represents the accelerated recognition of
actuarial losses that were included in the accumulated other
comprehensive loss account within stockholders' equity.
|
3
|
Net loss from
discontinued operations for the third quarter of 2020 include a $55
million ($0.20 per share) noncash charge resulting from the
resolution of certain tax matters related to the former Information
Systems & Global Solutions business divested in
2016.
|
Lockheed Martin
Corporation
Business Segment Summary Operating Results
(unaudited; in millions)
|
|
|
|
|
Quarters
Ended
|
|
|
|
Nine Months
Ended
|
|
|
|
|
|
Sept.
26
2021
|
|
Sept.
27
2020
|
|
%
Change
|
|
Sept.
26
2021
|
|
Sept.
27
2020
|
|
%
Change
|
|
Net
sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aeronautics
|
|
$
|
6,568
|
|
|
$
|
6,680
|
|
|
(2%)
|
|
$
|
19,621
|
|
|
$
|
19,552
|
|
|
—%
|
|
Missiles and Fire
Control
|
|
2,781
|
|
|
2,971
|
|
|
(6%)
|
|
8,474
|
|
|
8,391
|
|
|
1%
|
|
Rotary and Mission
Systems
|
|
3,980
|
|
|
3,998
|
|
|
—%
|
|
12,329
|
|
|
11,783
|
|
|
5%
|
|
Space
|
|
2,699
|
|
|
2,846
|
|
|
(5%)
|
|
8,891
|
|
|
8,640
|
|
|
3%
|
|
Total net
sales
|
|
$
|
16,028
|
|
|
$
|
16,495
|
|
|
(3%)
|
|
$
|
49,315
|
|
|
$
|
48,366
|
|
|
2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aeronautics
|
|
$
|
714
|
|
|
$
|
705
|
|
|
1%
|
|
$
|
1,979
|
|
|
$
|
2,116
|
|
|
(6%)
|
|
Missiles and Fire
Control
|
|
413
|
|
|
405
|
|
|
2%
|
|
1,210
|
|
|
1,171
|
|
|
3%
|
|
Rotary and Mission
Systems
|
|
459
|
|
|
404
|
|
|
14%
|
|
1,350
|
|
|
1,209
|
|
|
12%
|
|
Space
|
|
264
|
|
|
248
|
|
|
6%
|
|
826
|
|
|
781
|
|
|
6%
|
|
Total business
segment operating
profit
|
|
1,850
|
|
|
1,762
|
|
|
5%
|
|
5,365
|
|
|
5,277
|
|
|
2%
|
|
Unallocated
items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FAS/CAS operating
adjustment
|
|
491
|
|
|
469
|
|
|
|
|
1,469
|
|
|
1,407
|
|
|
|
|
Severance and
restructuring charges
|
|
—
|
|
|
—
|
|
|
|
|
(36)
|
|
|
—
|
|
|
|
|
Other, net
|
|
(47)
|
|
|
(84)
|
|
|
|
|
(130)
|
|
|
(329)
|
|
|
|
|
Total unallocated
items
|
|
444
|
|
|
385
|
|
|
15%
|
|
1,303
|
|
|
1,078
|
|
|
21%
|
|
Total consolidated
operating
profit
|
|
$
|
2,294
|
|
|
$
|
2,147
|
|
|
7%
|
|
$
|
6,668
|
|
|
$
|
6,355
|
|
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aeronautics
|
|
10.9%
|
|
10.6%
|
|
|
|
10.1%
|
|
10.8%
|
|
|
|
Missiles and Fire
Control
|
|
14.9%
|
|
13.6%
|
|
|
|
14.3%
|
|
14.0%
|
|
|
|
Rotary and Mission
Systems
|
|
11.5%
|
|
10.1%
|
|
|
|
10.9%
|
|
10.3%
|
|
|
|
Space
|
|
9.8%
|
|
8.7%
|
|
|
|
9.3%
|
|
9.0%
|
|
|
|
Total business
segment operating margin
|
|
11.5%
|
|
10.7%
|
|
|
|
10.9%
|
|
10.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consolidated
operating
margin
|
|
14.3%
|
|
13.0%
|
|
|
|
13.5%
|
|
13.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lockheed Martin
Corporation
Consolidated Balance Sheets
(in millions, except par value)
|
|
|
|
|
Sept.
26
2021
|
|
Dec.
31
2020
|
|
|
|
(unaudited)
|
|
|
|
Assets
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
2,727
|
|
|
$
|
3,160
|
|
|
Receivables,
net
|
|
2,267
|
|
|
1,978
|
|
|
Contract
assets
|
|
12,697
|
|
|
9,545
|
|
|
Inventories
|
|
2,903
|
|
|
3,545
|
|
|
Other current
assets
|
|
763
|
|
|
1,150
|
|
|
Total current
assets
|
|
21,357
|
|
|
19,378
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
7,332
|
|
|
7,213
|
|
|
Goodwill
|
|
10,815
|
|
|
10,806
|
|
|
Intangible assets,
net
|
|
2,768
|
|
|
3,012
|
|
|
Deferred income
taxes
|
|
2,664
|
|
|
3,475
|
|
|
Other noncurrent
assets
|
|
6,907
|
|
|
6,826
|
|
|
Total
assets
|
|
$
|
51,843
|
|
|
$
|
50,710
|
|
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Accounts
payable
|
|
$
|
1,520
|
|
|
$
|
880
|
|
|
Contract
liabilities
|
|
7,515
|
|
|
7,545
|
|
|
Salaries, benefits and
payroll taxes
|
|
3,122
|
|
|
3,163
|
|
|
Current maturities of
long-term debt
|
|
6
|
|
|
500
|
|
|
Other current
liabilities
|
|
2,863
|
|
|
1,845
|
|
|
Total current
liabilities
|
|
15,026
|
|
|
13,933
|
|
|
|
|
|
|
|
|
Long-term debt,
net
|
|
11,668
|
|
|
11,669
|
|
|
Accrued pension
liabilities
|
|
9,351
|
|
|
12,874
|
|
|
Other noncurrent
liabilities
|
|
6,167
|
|
|
6,196
|
|
|
Total
liabilities
|
|
42,212
|
|
|
44,672
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
Common stock, $1 par
value per share
|
|
274
|
|
|
279
|
|
|
Additional paid-in
capital
|
|
98
|
|
|
221
|
|
|
Retained
earnings
|
|
21,476
|
|
|
21,636
|
|
|
Accumulated other
comprehensive loss
|
|
(12,217)
|
|
|
(16,121)
|
|
|
Total stockholders'
equity
|
|
9,631
|
|
|
6,015
|
|
|
Noncontrolling
interests in subsidiary
|
|
—
|
|
|
23
|
|
|
Total
equity
|
|
9,631
|
|
|
6,038
|
|
|
Total liabilities and
equity
|
|
$
|
51,843
|
|
|
$
|
50,710
|
|
|
|
|
|
|
|
Lockheed Martin
Corporation
Consolidated Statements of Cash Flows
(unaudited; in millions)
|
|
|
|
Nine Months
Ended
|
|
|
Sept.
26
2021
|
|
Sept.
27
2020
|
Operating
activities
|
|
|
|
|
Net
earnings
|
|
$
|
4,266
|
|
|
$
|
5,041
|
|
Adjustments to
reconcile net earnings to net cash provided by operating
activities
|
|
|
|
|
Depreciation and
amortization
|
|
999
|
|
|
927
|
|
Stock-based
compensation
|
|
189
|
|
|
182
|
|
Equity method
investment impairment
|
|
—
|
|
|
128
|
|
Tax resolution related
to former IS&GS business
|
|
—
|
|
|
55
|
|
Pension settlement
charge
|
|
1,665
|
|
|
—
|
|
Severance and
restructuring charges
|
|
36
|
|
|
—
|
|
Changes in assets and
liabilities
|
|
|
|
|
Receivables,
net
|
|
(289)
|
|
|
(143)
|
|
Contract
assets
|
|
(3,152)
|
|
|
(1,294)
|
|
Inventories
|
|
642
|
|
|
326
|
|
Accounts
payable
|
|
653
|
|
|
247
|
|
Contract
liabilities
|
|
(30)
|
|
|
300
|
|
Income
taxes
|
|
55
|
|
|
58
|
|
Postretirement benefit
plans
|
|
(200)
|
|
|
(130)
|
|
Other, net
|
|
119
|
|
|
679
|
|
Net cash provided
by operating activities
|
|
4,953
|
|
|
6,376
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
Capital
expenditures
|
|
(915)
|
|
|
(1,044)
|
|
Other, net
|
|
296
|
|
|
27
|
|
Net cash used for
investing activities
|
|
(619)
|
|
|
(1,017)
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
Dividends
paid
|
|
(2,178)
|
|
|
(2,036)
|
|
Repurchases of common
stock
|
|
(2,000)
|
|
|
(1,100)
|
|
Issuance of long-term
debt, net of related costs
|
|
—
|
|
|
1,131
|
|
Repayments of
long-term debt
|
|
(500)
|
|
|
(1,150)
|
|
Other, net
|
|
(89)
|
|
|
(133)
|
|
Net cash used for
financing activities
|
|
(4,767)
|
|
|
(3,288)
|
|
|
|
|
|
|
Net change in cash
and cash equivalents
|
|
(433)
|
|
|
2,071
|
|
Cash and cash
equivalents at beginning of period
|
|
3,160
|
|
|
1,514
|
|
Cash and cash
equivalents at end of period
|
|
$
|
2,727
|
|
|
$
|
3,585
|
|
|
|
|
|
|
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, 2020
|
|
$
|
279
|
|
|
$
|
221
|
|
|
$
|
21,636
|
|
|
$
|
(16,121)
|
|
|
$
|
6,015
|
|
|
$
|
23
|
|
|
$
|
6,038
|
|
|
Net
earnings
|
|
—
|
|
|
—
|
|
|
4,266
|
|
|
—
|
|
|
4,266
|
|
|
—
|
|
|
4,266
|
|
|
Other comprehensive
income, net of tax1, 2
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,904
|
|
|
3,904
|
|
|
—
|
|
|
3,904
|
|
|
Dividends
declared3
|
|
—
|
|
|
—
|
|
|
(2,954)
|
|
|
—
|
|
|
(2,954)
|
|
|
—
|
|
|
(2,954)
|
|
|
Repurchases of common
stock
|
|
(6)
|
|
|
(522)
|
|
|
(1,472)
|
|
|
—
|
|
|
(2,000)
|
|
|
—
|
|
|
(2,000)
|
|
|
Stock-based awards,
ESOP activity and
other
|
|
1
|
|
|
399
|
|
|
—
|
|
|
—
|
|
|
400
|
|
|
—
|
|
|
400
|
|
|
Net decrease in
noncontrolling interests
in subsidiary
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
(23)
|
|
|
(23)
|
|
|
Balance at Sept.
26, 2021
|
|
$
|
274
|
|
|
$
|
98
|
|
|
$
|
21,476
|
|
|
$
|
(12,217)
|
|
|
$
|
9,631
|
|
|
$
|
—
|
|
|
$
|
9,631
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Includes the
reclassification adjustment of $387 million for the recognition of
prior period amounts related to pension and other postretirement
benefit plans.
|
2
|
The company increased
stockholders' equity by $1.3 billion, due to recognition of a
non-cash pension settlement charge related to the accelerated
recognition of actuarial losses included in accumulated other
comprehensive loss for certain defined benefit pension plans
resulting from the purchase of group annuity contracts from an
insurance company. As a result of the transaction, we were required
to remeasure the benefit obligations and assets for the affected
defined benefit pension plans resulting in an additional
corresponding increase to stockholders' equity by $2.3 billion.
(See "Purchase of Group Annuity Contracts and Pension
Remeasurement").
|
3
|
Represents dividends
of $2.60 per share declared for each of the first, second and third
quarters of 2021 and dividends of $2.80 per share declared for the
fourth quarter of 2021.
|
Lockheed Martin
Corporation
Other Supplemental Information
(unaudited; in millions)
Our pretax FAS expense (income) related to our qualified defined
benefit pension plans consisted of the following:
|
|
|
|
|
Quarters
Ended
|
|
Nine Months
Ended
|
|
Qualified defined
benefit pension plans
|
|
Sept.
26
2021
|
|
Sept.
27
2020
|
|
Sept.
26
2021
|
|
Sept.
27
2020
|
|
Operating:
|
|
|
|
|
|
|
|
|
|
Service
cost
|
|
$
|
26
|
|
|
$
|
25
|
|
|
$
|
80
|
|
|
$
|
76
|
|
|
Non-operating:
|
|
|
|
|
|
|
|
|
|
Interest
cost
|
|
302
|
|
|
385
|
|
|
923
|
|
|
1,154
|
|
|
Expected return on
plan assets
|
|
(517)
|
|
|
(566)
|
|
|
(1,655)
|
|
|
(1,698)
|
|
|
Recognized net
actuarial losses
|
|
210
|
|
|
213
|
|
|
714
|
|
|
637
|
|
|
Amortization of prior
service credits
|
|
(88)
|
|
|
(86)
|
|
|
(262)
|
|
|
(257)
|
|
|
Pension settlement
charge
|
|
1,665
|
|
|
—
|
|
|
1,665
|
|
|
—
|
|
|
Non-service FAS
pension expense
(income)
|
|
1,572
|
|
|
(54)
|
|
|
|
1,385
|
|
|
|
(164)
|
|
|
Total FAS pension
expense (income)
|
|
1,598
|
|
|
(29)
|
|
|
1,465
|
|
|
(88)
|
|
|
Less: pension
settlement charge
|
|
(1,665)
|
|
|
—
|
|
|
(1,665)
|
|
|
—
|
|
|
Total FAS
pension (income) -
adjusted1
|
|
$
|
(67)
|
|
|
$
|
(29)
|
|
|
$
|
(200)
|
|
|
$
|
(88)
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Total FAS pension
(income) – adjusted is a non-GAAP measure. See the "Use of Non-GAAP
Financial Measures" section of this news release for more
information.
|
|
|
Our total net FAS/CAS
pension adjustment for the quarters and nine months ended Sept. 26,
2021 and Sept. 27, 2020, including the service and non-service cost
components of FAS pension (expense) income for our qualified
defined benefit pension plans, were as follows:
|
|
|
|
|
|
Quarters
Ended
|
|
Nine Months
Ended
|
|
|
|
Sept.
26
2021
|
|
Sept.
27
2020
|
|
Sept.
26
2021
|
|
Sept.
27
2020
|
|
Total FAS
(expense) income and CAS costs
|
|
|
|
|
|
|
|
|
|
FAS pension (expense)
income
|
|
$
|
(1,598)
|
|
|
$
|
29
|
|
|
$
|
(1,465)
|
|
|
$
|
88
|
|
|
Less: CAS pension
cost
|
|
517
|
|
|
494
|
|
|
1,549
|
|
|
1,483
|
|
|
Net FAS/CAS pension
adjustment
|
|
(1,081)
|
|
|
523
|
|
|
84
|
|
|
1,571
|
|
|
Less: pension
settlement charge
|
|
1,665
|
|
|
—
|
|
|
1,665
|
|
|
—
|
|
|
Net FAS/CAS pension
adjustment - adjusted1
|
|
$
|
584
|
|
|
$
|
523
|
|
|
$
|
1,749
|
|
|
$
|
1,571
|
|
|
|
|
|
|
|
|
|
|
|
|
Service and
non-service cost reconciliation
|
|
|
|
|
|
|
|
|
|
FAS pension service
cost
|
|
$
|
(26)
|
|
|
$
|
(25)
|
|
|
$
|
(80)
|
|
|
$
|
(76)
|
|
|
Less: CAS pension
cost
|
|
517
|
|
|
494
|
|
|
1,549
|
|
|
1,483
|
|
|
FAS/CAS operating
adjustment
|
|
491
|
|
|
469
|
|
|
1,469
|
|
|
1,407
|
|
|
Non-service FAS pension
(expense) income
|
|
(1,572)
|
|
|
54
|
|
|
(1,385)
|
|
|
164
|
|
|
Net FAS/CAS pension
adjustment
|
|
(1,081)
|
|
|
523
|
|
|
84
|
|
|
1,571
|
|
|
Less: pension
settlement charge
|
|
1,665
|
|
|
—
|
|
|
1,665
|
|
|
—
|
|
|
Net FAS/CAS pension
adjustment - adjusted1
|
|
$
|
584
|
|
|
$
|
523
|
|
|
$
|
1,749
|
|
|
$
|
1,571
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Net FAS/CAS pension
adjustment – adjusted is a non-GAAP measure. See the "Use of
Non-GAAP Financial Measures" section of this news release for more
information.
|
Lockheed Martin
Corporation
Other Supplemental Information
(unaudited; in millions)
|
|
|
|
|
2021
Outlook
|
|
2020
Actual
|
|
Total FAS
(expense) income and CAS costs
|
|
|
|
|
|
FAS pension (expense)
income
|
|
$
|
(1,400)
|
|
|
$
|
118
|
|
|
Less: CAS pension
cost
|
|
2,065
|
|
|
1,977
|
|
|
Net FAS/CAS pension
adjustment
|
|
665
|
|
|
2,095
|
|
|
Less: pension
settlement charge
|
|
1,665
|
|
|
—
|
|
|
Net FAS/CAS pension
adjustment - adjusted1,2
|
|
$
|
2,330
|
|
|
$
|
2,095
|
|
|
|
|
|
|
|
|
Service and
non-service cost reconciliation
|
|
|
|
|
|
FAS pension service
cost
|
|
$
|
(110)
|
|
|
$
|
(101)
|
|
|
Less: CAS pension
cost
|
|
2,065
|
|
|
1,977
|
|
|
FAS/CAS operating
adjustment
|
|
1,955
|
|
|
1,876
|
|
|
Non-service FAS
pension (expense) income
|
|
(1,290)
|
|
|
219
|
|
|
Net FAS/CAS pension
adjustment
|
|
665
|
|
|
2,095
|
|
|
Less: pension
settlement charge
|
|
1,665
|
|
|
—
|
|
|
Net FAS/CAS pension
adjustment - adjusted1,2
|
|
$
|
2,330
|
|
|
$
|
2,095
|
|
|
|
|
|
|
|
1
|
Net FAS/CAS pension
adjustment – adjusted is a non-GAAP measure. See the "Use of
Non-GAAP Financial Measures" section of this news release for more
information.
|
2
|
The company
recognized a noncash, non-operating settlement charge of $1,665
million in the third quarter of 2021 related to the accelerated
recognition of actuarial losses previously included in accumulated
other comprehensive loss for certain pension plans as a result of
the purchase of group annuity contracts from an insurance
company. The non-service cost components in the table above
relate only to the company's qualified defined benefit pension
plans. The company expects non-service FAS (expense) income for its
qualified defined benefit pension plans in the table above
(recorded as part of non-service FAS pension (expense) income in
the consolidated statement of earnings), along with non-service
income for its other postretirement benefit plans of $5 million
(recorded as part of other non-operating income (expense), net in
the consolidated statement of earnings), to total non-service
expense of $1,285 million for 2021 inclusive of the pension
settlement charge. The company recorded non-service expense for its
other postretirement benefit plans of $33 million in 2020, in
addition to its non-service income for its qualified defined
benefit pension plans in the table above, to total non-service
income of $186 million in 2020.
|
Lockheed Martin
Corporation
Other Supplemental Information
(unaudited; in millions, except for aircraft deliveries and
weeks)
|
|
|
|
|
Quarters
Ended
|
|
Nine Months
Ended
|
|
|
|
Sept.
26
2021
|
|
Sept.
27
2020
|
|
Sept.
26
2021
|
|
Sept.
27
2020
|
|
Amortization of
purchased intangibles
|
|
|
|
|
|
|
|
|
|
Aeronautics
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
Missiles and Fire
Control
|
|
1
|
|
|
1
|
|
|
2
|
|
|
2
|
|
|
Rotary and Mission
Systems
|
|
58
|
|
|
58
|
|
|
174
|
|
|
174
|
|
|
Space
|
|
2
|
|
|
7
|
|
|
46
|
|
|
21
|
|
|
Total amortization
of purchased intangibles
|
|
$
|
61
|
|
|
$
|
66
|
|
|
$
|
223
|
|
|
$
|
197
|
|
|
Backlog
|
|
Sept.
26
2021
|
|
Dec.
31
2020
|
|
Aeronautics
|
|
$
|
47,892
|
|
|
$
|
56,551
|
|
|
Missiles and Fire
Control
|
|
27,582
|
|
|
29,183
|
|
|
Rotary and Mission
Systems
|
|
34,100
|
|
|
36,249
|
|
|
Space
|
|
25,274
|
|
|
25,148
|
|
|
Total
backlog
|
|
$
|
134,848
|
|
|
$
|
147,131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarters
Ended
|
|
Nine Months
Ended
|
|
Aircraft
Deliveries
|
|
Sept.
26
2021
|
|
Sept.
27
2020
|
|
Sept.
26
2021
|
|
Sept.
27
2020
|
|
F-35
|
|
36
|
|
|
31
|
|
|
90
|
|
|
78
|
|
|
C-130J
|
|
7
|
|
|
3
|
|
|
15
|
|
|
11
|
|
|
Government helicopter
programs
|
|
18
|
|
|
19
|
|
|
53
|
|
|
48
|
|
|
Commercial helicopter
programs
|
|
1
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
International
military helicopter programs
|
|
1
|
|
|
3
|
|
|
9
|
|
|
7
|
|
|
Number of Weeks in
Reporting Period1
|
|
2021
|
|
2020
|
|
First
quarter
|
|
12
|
|
|
13
|
|
|
Second
quarter
|
|
13
|
|
|
13
|
|
|
Third
quarter
|
|
13
|
|
|
13
|
|
|
Fourth
quarter
|
|
14
|
|
|
13
|
|
|
|
|
|
|
|
1
|
Calendar quarters are
typically comprised of 13 weeks. However, the company closes
its books and records on the last Sunday of each month, except for
the month of Dec., as its fiscal year ends on Dec. 31. As a result,
the number of weeks in a reporting quarter may vary slightly during
the year and for comparable prior year periods.
|
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SOURCE Lockheed Martin