Lockheed Martin Reports First Quarter 2019 Results
BETHESDA, Md., April 23, 2019 /PRNewswire/ -- Lockheed Martin Corporation (NYSE: LMT) today reported first quarter 2019 net sales of $14.3 billion, compared to $11.6 billion in the first quarter of 2018. Net earnings in the first quarter of 2019 were $1.7 billion, or $5.99 per share, compared to $1.2 billion, or $4.02 per share, in the first quarter of 2018. Cash from operations in the first quarter of 2019 was $1.7 billion, compared to cash from operations of $632 million in the first quarter of 2018.
"The corporation had strong performance in the first quarter which has allowed us to increase our full year financial guidance for sales, profit, earnings per share and cash," said Lockheed Martin Chairman, President and CEO Marillyn Hewson. "Our differentiated portfolio and record backlog position us well for continued growth, and we remain focused on delivering innovative technologies and solutions for our customers, and long-term value creation for stockholders."
Summary Financial Results
The following table presents the corporation's summary financial results.
(in millions, except per share data)
Quarters Ended
March 31, March 25,
2019 2018
Net sales $
14,336 $
11,635
Business segment operating profit(1) $
1,715 $
1,310
Unallocated items
FAS/CAS operating adjustment 512 451
Other, net(2) 56 (36)
Total unallocated items 568 415
Consolidated operating profit $
2,283 $
1,725
Net earnings(3) $
1,704 $
1,157
Diluted earnings per share $
5.99 $
4.02
Cash generated from operations4 $
1,663 $
632
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 first quarter of 2019, the corporation recognized a previously deferred non-cash gain of $51 million ($38 million,
or $0.13 per share, after tax) related to properties sold in 2015 as a result of completing its remaining obligations.
3 Net earnings in the first quarter of 2019 include benefits of $75 million, or $0.26 per share, from additional tax
deductions, based on proposed tax regulations released on March 4, 2019, which clarified that foreign military sales
qualify as foreign derived intangible income. Approximately $65 million, or $0.23 per share, of the total benefit was
recorded discretely because it relates to the prior year.
4 Cash from operations in the first quarter of 2018 included cash contributions of $1.5 billion made to the corporation's
qualified defined benefit pension plans and net tax refunds of $850 million.
2019 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, ventures, changes in law, or new accounting standards until such items have been consummated, enacted or adopted. For additional factors that may impact the corporation's actual results, refer to the "Forward-Looking Statements" section in this news release.
(in millions, except per share
data) Current Update January 2019
Net sales
$56,750 - $58,250
$55,750 - $57,250
Business segment operating
profit
$6,100 - $6,250
$6,000 - $6,150
Net FAS/CAS pension
adjustment(1) ~$1,475
~$1,475
Diluted earnings per share(2)
$20.05 - $20.35
$19.15 - $19.45
Cash from operations >=$7,500
>=$7,400
1 The net FAS/CAS pension adjustment
above is presented as a single
amount and includes expected 2019
U.S. Government cost accounting
standards (CAS) pension cost of
approximately $2,565 million and
expected financial accounting
standards (FAS) pension expense of
approximately $1,090 million. CAS
pension cost and the service cost
component of FAS pension expense is
included in operating profit as part
of cost of sales. The non-service
cost component of FAS pension
expense is included in other non-
operating expense, net in the
corporation's consolidated
statements of earnings. 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 recently
proposed tax regulations confirming
that foreign military sales (FMS)
qualify for tax deductions for
foreign derived intangible income.
Even though the proposed regulations
are still subject to public comment,
the corporation believes
incorporating the effect of the
proposed regulations yields more
accurate disclosure of the company's
expectations because the proposed
regulations describe the tax
treatment of FMS sales in accordance
with the corporation's analysis of
the Internal Revenue Code.
---
Cash Activities
The corporation's cash activities in the first quarter of 2019 consisted of the following:
-- paying cash dividends of $638 million, compared to $586 million in the
first quarter of 2018;
-- repurchasing 1.0 million shares for $281 million, compared to 0.9
million shares for $300 million in the first quarter of 2018;
-- making capital expenditures of $284 million, compared to $216 million in
the first quarter of 2018; and
-- making net repayments of $200 million for commercial paper, compared to
no net repayments in the first quarter of 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
March 31, March 25,
2019 2018
Net sales
Aeronautics $
5,584 $
4,398
Missiles and Fire Control 2,350 1,677
Rotary and Mission Systems 3,762 3,223
Space 2,640 2,337
Total net sales $
14,336 $
11,635
Operating profit
Aeronautics $
585 $
474
Missiles and Fire Control 417 261
Rotary and Mission Systems 379 311
Space 334 264
Total business segment operating
profit 1,715 1,310
Unallocated items
FAS/CAS operating adjustment 512 451
Other, net 56 (36)
Total unallocated items 568 415
Total consolidated operating profit $
2,283 $
1,725
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, 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 segment's 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 pension 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 cost component is included in other non?operating expense, net 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 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 33 percent of total segment operating profit in the first quarter of 2019 as compared to 32 percent in the first quarter of 2018.
Aeronautics
(in millions) Quarters Ended
March 31, March 25,
2019 2018
Net sales $
5,584 $
4,398
Operating profit $
585 $
474
Operating margin 10.5
%
% 10.8
Aeronautics' net sales in the first quarter of 2019 increased $1.2 billion, or 27 percent, compared to the same period in 2018. The increase was primarily attributable to higher net sales of approximately $910 million for the F-35 program due to increased volume on production, sustainment and development programs; about $100 million for classified development activities due to higher volume; and about $70 million for the F-22 program due to higher volume on modernization and sustainment programs.
Aeronautics' operating profit in the first quarter of 2019 increased $111 million, or 23 percent, compared to the same period in 2018. Operating profit increased approximately $105 million for the F-35 program due to increased volume on production contracts and higher risk retirements on production and sustainment programs. Adjustments not related to volume, including net profit booking rate adjustments and other matters, were comparable in the first quarter of 2019 to the same period in 2018.
Missiles and Fire Control
(in millions) Quarters Ended
March 31, March 25,
2019 2018
Net sales $
2,350 $
1,677
Operating profit $
417 $
261
Operating margin 17.7
%
% 15.6
MFC's net sales in the first quarter of 2019 increased $673 million, or 40 percent, compared to the same period in 2018. The increase was primarily attributable to higher net sales of approximately $295 million for tactical and strike missiles programs due to increased volume (primarily precision fires, classified programs and new hypersonic missile programs); about $220 million for integrated air and missile defense programs due to contract mix and increased volume (primarily Terminal High Altitude Area Defense (THAAD) and Patriot Advanced Capability-3 (PAC-3)); and about $140 million for sensors and global sustainment programs due to increased volume (primarily Apache and Special Operations Forces Global Logistics Support Services).
MFC's operating profit in the first quarter of 2019 increased $156 million, or 60 percent, compared to the same period in 2018. Operating profit increased approximately $75 million for integrated air and missile defense programs due to contract mix, higher volume and higher risk retirements on international programs (primarily PAC-3 and THAAD); and about $55 million for tactical and strike missiles programs due to higher risk retirements and higher volume (primarily precision fires). Adjustments not related to volume, including net profit booking rate adjustments, were about $50 million higher in the first quarter of 2019 compared to the same period in 2018.
Rotary and Mission Systems
(in millions) Quarters Ended
March 31, March 25,
2019 2018
Net sales $
3,762 $
3,223
Operating profit $
379 $
311
Operating margin 10.1
%
% 9.6
RMS' net sales in the first quarter of 2019 increased $539 million, or 17 percent, compared to the same period in 2018. The increase was primarily attributable to higher net sales of approximately $295 million for integrated warfare systems and sensors (IWSS) programs due to higher volume (primarily Radar Surveillance Systems and Multi Mission Surface Combatant) and about $170 million for Sikorsky helicopter programs due to higher volume (primarily the combat rescue helicopter program, military aircraft services, and mission systems programs).
RMS' operating profit in the first quarter of 2019 increased $68 million, or 22 percent, compared to the same period in 2018. Operating profit increased approximately $30 million for IWSS programs due to higher risk retirements and higher volume (primarily Radar Surveillance Systems), partially offset by a $50 million charge for a ground-based radar program; about $15 million for Sikorsky helicopter programs primarily due to higher risk retirements and higher volume for mission systems programs, partially offset by lower margin contracts for helicopter development programs. The increase in operating profit also included an increase of about $15 million for C6ISR (command, control, communications, computers, cyber, combat systems, intelligence, surveillance, and reconnaissance) programs due to lower charges for various programs. Adjustments not related to volume, including net profit booking rate adjustments and other matters, were about $30 million higher in the first quarter of 2019 compared to the same period in 2018.
Space
(in millions) Quarters Ended
March 31, March 25,
2019 2018
Net sales $
2,640 $
2,337
Operating profit $
334 $
264
Operating margin 12.7
%
% 11.3
Space's net sales in the first quarter of 2019 increased $303 million, or 13 percent, compared to the same period in 2018. The increase was primarily attributable to higher net sales of $260 million for government satellite programs due to higher volume (primarily Next Generation Overhead Persistent Infrared (Next Gen OPIR); Global Positioning System (GPS) III; government satellite services; and Advanced Extremely High Frequency (AEHF)); and about $50 million for the Orion program due to higher volume.
Space's operating profit in the first quarter of 2019 increased $70 million, or 27 percent, compared to the same period in 2018. Operating profit increased approximately $65 million for government satellite programs due to higher risk retirements (primarily AEHF) and higher volume (primarily GPS III; government satellite services; and AEHF); and about $15 million for the Orion program due to higher risk retirements and higher volume. These increases were partially offset by a decrease of approximately $20 million due to lower equity earnings for ULA. Adjustments not related to volume, including net profit booking rate adjustments, were about $70 million higher in the first quarter of 2019, compared to the same period in 2018.
Total equity earnings recognized by Space (primarily ULA) represented approximately $65 million, or 19 percent, of Space's operating profit in the first quarter of 2019, compared to approximately $85 million, or 32 percent, in the first quarter of 2018.
Income Taxes
The corporation's effective income tax rate was 12.4 percent in the first quarter of 2019, compared to 14.9 percent in the first quarter of 2018. The rate for the first quarter of 2019 benefited from additional tax deductions based on proposed tax regulations released on March 4, 2019, which clarified that foreign military sales qualify for foreign derived intangible income treatment. Approximately $65 million, or $0.23 per share, of this benefit was recorded discretely because it relates to the prior year. The rates for both periods benefited from tax deductions for dividends paid to the corporation's defined contribution plans with an employee stock ownership plan feature, tax deductions for foreign derived intangible income related to direct commercial sales, tax deductions for employee equity awards, and the research and development tax credit.
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 Regulation G). While the corporation believes that these non-GAAP financial measures may be useful in evaluating the financial performance of Lockheed Martin, 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 the total earnings from the corporation's business segments before unallocated income and expense. This measure is used by the corporation's senior management in evaluating the performance of its business segments and is a performance goal in the corporation's annual incentive plan. Business segment operating margin is calculated by dividing business segment operating profit by sales. The table below reconciles the non-GAAP measure business segment operating profit with the most directly comparable GAAP financial measure, consolidated operating profit.
(in millions) 2019 Financial Outlook
Current Update January 2019
Business segment operating profit
(non-GAAP)
$6,100 - $6,250
$6,000 - $6,150
FAS/CAS operating adjustment(1) ~2,050
~2,050
Other, net ~(125)
~(165)
Consolidated operating profit (GAAP)
$8,025 - $8,175
$7,885 - $8,035
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 $575
million of expected non-service cost
that will be recorded in other non-
operating expense, net.
---
Conference Call Information
Lockheed Martin Corporation will webcast live its first quarter 2019 earnings results conference call (listen-only mode) on Tuesday, April 23, 2019, 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 105,000 people worldwide and is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services.
Forward-Looking Statements
This news release contains statements that, to the extent they are not recitations of historical fact, constitute forward-looking statements within the meaning of the federal securities laws, and are based on Lockheed Martin's current expectations and assumptions. The words "believe," "estimate," "anticipate," "project," "intend," "expect," "plan," "outlook," "scheduled," "forecast" and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks and uncertainties. Actual results may differ materially due to factors such as:
-- the corporation's reliance on contracts with the U.S. Government, which
are conditioned upon the availability of funding and can be terminated
by the U.S. Government for convenience, and the corporation's ability to
negotiate favorable contract terms;
-- budget uncertainty; affordability initiatives; the risk of future
sequestration under the Budget Control Act of 2011 or other budget cuts;
the impact of any future government shutdowns (including the potential
that the corporation works on unfunded contracts to preserve their cost
and/or schedule); continuing delay in obtaining export approvals from
the Department of State resulting from the prior shutdown and staffing
shortages; or the potential that DoD funds are repurposed;
-- risks related to the development, production, sustainment, performance,
schedule, cost and requirements of complex and technologically advanced
programs including the corporation's largest, the F-35 program;
-- economic, industry, business and political conditions including their
effects on governmental policy (including government actions to prevent
the sale or delivery of the corporation's products, such as delays in
obtaining Congressional approvals for exports requiring Congressional
notification to the Kingdom of Saudi Arabia, the United Arab Emirates
and Turkey and the Pentagon's decision to suspend the sales of F-35
aircraft to Turkey), or other trade policies or sanctions (including
potential sanctions on the Kingdom of Saudi Arabia);
-- the corporation's success expanding into and doing business in adjacent
markets and internationally; the differing risks posed by international
sales, including those involving commercial relationships with
unfamiliar customers and different cultures; its ability to recover
investments, which is frequently dependent upon the successful operation
of ventures that it does not control; and changes in foreign national
priorities, and foreign government budgets;
-- the competitive environment for the corporation's products and services,
including increased pricing pressures, aggressive pricing in the absence
of cost realism evaluation criteria, competition from outside the
aerospace and defense industry, and increased bid protests;
-- planned production rates for significant programs; compliance with
stringent performance and reliability standards; materials availability;
-- the performance and financial viability of key suppliers, teammates,
ventures, venture partners, subcontractors and customers;
-- the timing and customer acceptance of product deliveries;
-- the corporation's ability to continue to innovate and develop new
products and to attract and retain key personnel and transfer knowledge
to new personnel; the impact of work stoppages or other labor
disruptions;
-- the impact of cyber or other security threats or other disruptions to
the corporation's businesses;
-- the corporation's ability to implement and continue and the timing and
impact of capitalization changes such as share repurchases and dividend
payments;
-- timing and estimates regarding pension funding and the success of the
corporation's efforts to reduce volatility of its outstanding pension
obligations and to accelerate CAS cost recovery and recover certain
associated costs from the U.S. Government;
-- the corporation's ability to recover certain costs under U.S. Government
contracts and changes in contract mix;
-- the accuracy of the corporation's estimates and projections;
-- movements in interest rates and other changes that may affect pension
plan assumptions, equity, the level of the FAS/CAS adjustment and actual
returns on pension plan assets;
-- realizing the anticipated benefits of acquisitions or divestitures,
ventures, teaming arrangements or internal reorganizations, and the
corporation's efforts to increase the efficiency of its operations and
improve the affordability of its products and services;
-- risk of an impairment of goodwill and intangible assets, investments or
other long-term 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 its
equity investment in Advanced Military Maintenance, Repair and Overhaul
Center LLC (AMMROC);
-- the adequacy of the corporation's insurance and indemnities;
-- the effect of changes in (or in the interpretation of) procurement and
other regulations and policies affecting the corporation's industry,
including export of its products from the U.S. and other countries, cost
allowability or recovery, aggressive government positions with respect
to the use and ownership of intellectual property and potential changes
to the DoD's acquisition regulations relating to progress payments and
performance-based payments and a preference for fixed-price contracts;
-- the effect of changes in accounting, taxation, or export laws,
regulations, and policies; and
-- the outcome of legal proceedings, bid protests, environmental
remediation efforts, government investigations or government allegations
that the corporation has failed to comply with law, other contingencies
and U.S. Government identification of deficiencies in the corporation's
business systems.
These are only some of the factors that may affect the forward-looking statements contained in this news release. For a discussion identifying additional important factors that could cause actual results to vary materially from those anticipated in the forward-looking statements, see the corporation's filings with the U.S. Securities and Exchange Commission (SEC) including, but not limited to, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" in the corporation's Annual Report on Form 10-K for the year ended Dec. 31, 2018. 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(1)
(unaudited; in millions, except per share data)
Quarters Ended
March 31,
March 25,
2019 2018
Net sales $14,336 $11,635
Cost of sales (12,148) (9,977)
Gross profit 2,188 1,658
Other income, net(2) 95 67
Operating profit 2,283 1,725
Interest expense (171) (155)
Other non-operating expense, net (167) (210)
Earnings before income taxes 1,945 1,360
Income tax expense(3) (241) (203)
Net earnings $1,704 $1,157
Effective tax rate 12.4
% 14.9
%
Earnings per common share(3)
Basic $6.03 $4.05
Diluted $5.99 $4.02
Weighted average shares outstanding
Basic 282.5 285.5
Diluted 284.3 287.9
Common shares reported in stockholders' equity at end of period 281 284
1 The corporation closes its books and records on the last Sunday of the calendar quarter to align its financial
closing with its business processes, which was on March 31 for the first quarter of 2019 and March 25 for the
first quarter of 2018. The consolidated financial statements and tables of financial information included herein are
labeled based on that convention. This practice only affects interim periods, as the corporation's fiscal year ends on Dec. 31.
2 In the first quarter of 2019, the corporation recognized a previously deferred non-cash gain of $51 million ($38 million,
or $0.13 per share, after tax) related to properties sold in 2015 as a result of completing its remaining obligations.
3 Net earnings in the first quarter of 2019 include benefits of $75 million, or $0.26 per share, from additional tax deductions,
based on proposed tax regulations released on March 4, 2019, which clarified that foreign military sales qualify as foreign
derived intangible income. Approximately $65 million, or $0.23 per share, of the total benefit was recorded discretely because
it relates to prior year.
Lockheed Martin Corporation
Business Segment Summary
Operating Results
(unaudited; in millions)
Quarters Ended
March 31, March 25, % Change
2019 2018
Net sales
Aeronautics $5,584 $4,398 27
%
Missiles and Fire Control 2,350 1,677 40
%
Rotary and Mission Systems 3,762 3,223 17
%
Space 2,640 2,337 13
%
Total net sales $14,336 $11,635 23
%
Operating profit
Aeronautics $585 $474 23
%
Missiles and Fire Control 417 261 60
%
Rotary and Mission Systems 379 311 22
%
Space 334 264 27
%
Total business segment 1,715 1,310 31
operating profit
%
Unallocated items
FAS/CAS operating adjustment 512 451
Other, net(1) 56 (36)
Total unallocated items 568 415 37
%
Total consolidated operating $2,283 $1,725 32
profit
%
Operating margin
Aeronautics 10.5
%
% 10.8
Missiles and Fire Control 17.7
%
% 15.6
Rotary and Mission Systems 10.1
%
% 9.6
Space 12.7
%
% 11.3
Total business segment 12.0
operating margin %
% 11.3
Total consolidated operating 15.9
margin %
% 14.8
1 In the first quarter of 2019, the corporation recognized a previously deferred non-cash gain of
$51 million ($38 million, or $0.13 per share, after tax) related to properties sold in 2015 as a
result of completing its remaining obligations.
Lockheed Martin Corporation
Consolidated Balance Sheets
(in millions, except par value)
March 31,
Dec. 31,
2019 2018
(unaudited)
Assets
Current assets
Cash and cash equivalents $991 $772
Receivables, net 2,833 2,444
Contract assets 10,497 9,472
Inventories 3,285 2,997
Other current assets 425 418
Total current assets 18,031 16,103
Property, plant and equipment, net 6,140 6,124
Goodwill 10,769 10,769
Intangible assets, net 3,425 3,494
Deferred income taxes 3,169 3,208
Other noncurrent assets(1) 6,150 5,178
Total assets $47,684 $44,876
Liabilities and equity
Current liabilities
Accounts payable $3,097 $2,402
Contract liabilities 6,796 6,491
Salaries, benefits and payroll taxes 1,861 2,122
Current maturities of long-term debt and commercial paper 1,300 1,500
Other current liabilities(1) 2,349 1,883
Total current liabilities 15,403 14,398
Long-term debt, net 12,621 12,604
Accrued pension liabilities 11,418 11,410
Other postretirement benefit liabilities 698 704
Other noncurrent liabilities(1) 5,022 4,311
Total liabilities 45,162 43,427
Stockholders' equity
Common stock, $1 par value per share 281 281
Additional paid-in capital
Retained earnings 16,278 15,434
Accumulated other comprehensive loss (14,094) (14,321)
Total stockholders' equity 2,465 1,394
Noncontrolling interests in subsidiary 57 55
Total equity 2,522 1,449
Total liabilities and equity $47,684 $44,876
1 Effective Jan. 1, 2019, the corporation adopted Accounting Standards Update (ASU) 2016-02, Leases (Topic 842).
As of March 31, 2019, right-of-use operating lease assets were $969 million and operating lease liabilities were
$1.1 billion. Approximately $812 million of operating lease liabilities were classified as noncurrent. There was
no impact to the corporation's consolidated statements of earnings 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)
Quarters Ended
March 31, March 25,
2019 2018
Operating
activities
Net earnings $1,704 $1,157
Adjustments to
reconcile net
earnings to
net cash
provided by
operating
activities
Depreciation
and
amortization 277 279
Stock-based
compensation 37 38
Gain on
property sale (51)
Changes in
assets and
liabilities
Receivables,
net (389) (108)
Contract assets (1,025) (1,413)
Inventories (288) (318)
Accounts
payable 744 1,290
Contract
liabilities 305 (478)
Postretirement
benefit plans 278 (1,145)
Income taxes 243 1,064
Other, net (172) 266
Net cash
provided by
operating
activities 1,663 632
Investing
activities
Capital
expenditures (284) (216)
Other, net 27 130
Net cash used
for investing
activities (257) (86)
Financing
activities
Dividends paid (638) (586)
Repurchases of
common stock (281) (300)
Repayments of
commercial
paper, net (200)
Other, net (68) (128)
Net cash used
for financing
activities (1,187) (1,014)
Net change in
cash and cash
equivalents 219 (468)
Cash and cash
equivalents at
beginning of
period 772 2,861
Cash and cash
equivalents at
end of period $991 $2,393
Lockheed Martin Corporation
Consolidated Statement of Equity
(unaudited; in millions)
Accumulated
Additional
Other
Total
Noncontrolling
Common Paid-in
Retained
Comprehensive
Stockholders'
Interests
Total
Stock Capital
Earnings
Loss
Equity
in Subsidiary
Equity
---
Balance at Dec. 31, 2018 $281
$ - $15,434 $(14,321) $1,394 $55 $1,449
Net earnings - 1,704 1,704 1,704
Other comprehensive income, net of tax(1) - 227 227 227
Repurchases of common stock (1) (46) (237) (284) (284)
Dividends declared(2) - (623) (623) (623)
Stock-based awards, ESOP activity and 1 46 47 47
other
Net increase in noncontrolling interests in - 2 2
subsidiary
---
Balance at March 31, 2019 $281
$ - $16,278 $(14,094) $2,465 $57 $2,522
===
1 Primarily represents the reclassification adjustment for the recognition of prior period amounts related to pension and other postretirement plans.
2 Represents dividends of $2.20 per share declared for the first quarter of 2019.
Lockheed Martin Corporation
Other Financial and Operating Information
(unaudited; in millions, except for aircraft deliveries and weeks)
2019 2018
Outlook Actual
Total FAS expense and CAS costs
FAS pension expense $
(1,090) $
1,431)
Less: CAS pension cost 2,565 2,433
Net FAS/CAS pension adjustment $
1,475 $
1,002
Service and non-service cost reconciliation
FAS pension service cost $
(515) $
(630)
Less: CAS pension cost 2,565 2,433
FAS/CAS operating adjustment 2,050 1,803
Non-operating FAS pension cost(1) (575) (801)
Net FAS/CAS pension adjustment $
1,475 $
1,002
1 The corporation records the non-service cost components of net periodic benefit cost as part of other non-operating expense, net in the
consolidated statements 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 costs for its qualified defined benefit pension plans in
the table above, along with non-
service costs for its other postretirement benefit plans of $115 million, to total $690 million for 2019. The corporation recorded non-service costs for
its
other postretirement benefit plans of $67 million in 2018, in addition to its total non-service costs for its qualified defined benefit pension
plans in the table above, for a total of $868 million in
2018.
Backlog March 31, Dec. 31,
2019 2018
Aeronautics $
52,344 $
55,601
Missiles and Fire Control 23,214 21,363
Rotary and Mission Systems 31,327 31,320
Space 26,585 22,184
Total backlog $
133,470 $
130,468
Quarters Ended
Aircraft Deliveries March 31, March 25,
2019 2018
F-35 26 14
C-130J 5 3
C-5 1
Government helicopter programs 15 18
Commercial helicopter programs 1
International military helicopter programs 2 1
Number of Weeks in Reporting Period 2019 2018
First quarter 13 12
Second quarter 13 13
Third quarter 13 14
Fourth quarter 13 13
View original content:http://www.prnewswire.com/news-releases/lockheed-martin-reports-first-quarter-2019-results-300835871.html
SOURCE Lockheed Martin
