BETHESDA, Md. ,
Jan. 26, 2021 /PRNewswire/ --
Lockheed Martin Corporation [NYSE: LMT] today reported fourth
quarter 2020 net sales of $17.0
billion, compared to $15.9
billion in the fourth quarter of 2019. Net earnings from
continuing operations in the fourth quarter of 2020 were
$1.8 billion, or $6.38 per share, compared to $1.5 billion, or $5.29 per share, in the fourth quarter of
2019. Cash from operations in the fourth quarter of 2020 was
$1.8 billion, compared to
$1.5 billion in the fourth quarter of
2019. Cash from operations was after discretionary pension
contributions of $1.0 billion in each
of the fourth quarters of 2020 and 2019.
Net sales in 2020 were $65.4
billion, compared to $59.8
billion in 2019. Net earnings from continuing operations in
2020 were $6.9 billion, or
$24.50 per share, compared to
$6.2 billion, or $21.95 per share, in 2019. Cash from operations
in 2020 was $8.2 billion, compared to
$7.3 billion, in 2019. Cash from
operations was after discretionary pension contributions of
$1.0 billion in each of 2020 and
2019.
"Throughout 2020, the men and women of Lockheed Martin overcame
the public health, operational and supply chain challenges caused
by the COVID-19 pandemic, and continued to deliver the platforms,
systems, and services essential to the national defense of the U.S.
and its allies and to the continuation of scientific discovery. In
concert with our resilient operational performance, we delivered
strong financial results on behalf of our shareholders and
contributed to our communities through the production of PPE,
accelerated payments to small and medium businesses, and elevated
charitable contributions to support a range of important local and
national services," said Lockheed Martin president and CEO
James Taiclet. "We also initiated an
enhanced strategic vision for Lockheed Martin designed to
accelerate the adoption of leading edge networking and related
technologies into our national defense enterprise, while enhancing
the performance and value of our major platforms to our customers.
We intend to maintain our momentum as we enter 2021 in all of these
dimensions for the benefit of our customers, communities and
shareholders."
Strategic Action
As previously announced, on Dec. 20,
2020, the corporation entered into an agreement to acquire
Aerojet Rocketdyne Holdings, Inc. (Aerojet Rocketdyne) for
$56 per share in cash, which is
expected to be reduced to $51 per
share after Aerojet Rocketdyne pays a pre-closing special dividend
to its stockholders on March 24,
2021. This represents a post-dividend equity value of
approximately $4.6 billion, on a
fully diluted as-converted basis, and a transaction value of
approximately $4.4 billion after the
assumption of Aerojet Rocketdyne's projected net cash balance. The
corporation expects to finance the acquisition through a
combination of cash on hand and new debt issuances. The acquisition
provides the corporation the opportunity to integrate Aerojet
Rocketdyne's propulsion systems more effectively into its products,
generate cost and revenue synergies, and improve efficiencies in
Aerojet Rocketdyne's production operations. The transaction will
also allow customers incorporating Aerojet Rocketdyne products to
offer more timely, innovative and affordable solutions, and reduce
the prices paid by the U.S. Government for systems it buys. The
transaction is expected to close in the second half of 2021 and is
subject to the satisfaction of customary closing conditions,
including regulatory approvals and approval by Aerojet Rocketdyne's
stockholders.
Summary Financial Results
The following table presents the corporation's summary financial
results.
|
(in millions,
except per share data)
|
|
Quarters Ended
Dec. 31,
|
|
Years Ended Dec.
31,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Net
sales
|
|
$
|
17,032
|
|
|
$
|
15,878
|
|
|
$
|
65,398
|
|
|
$
|
59,812
|
|
|
|
|
|
|
|
|
|
|
|
|
Business segment
operating profit1
|
|
$
|
1,875
|
|
|
$
|
1,640
|
|
|
$
|
7,152
|
|
|
$
|
6,574
|
|
|
Unallocated
items
|
|
|
|
|
|
|
|
|
|
FAS/CAS operating
adjustment
|
|
469
|
|
|
512
|
|
|
1,876
|
|
|
2,049
|
|
|
Severance
charges2
|
|
(27)
|
|
|
—
|
|
|
(27)
|
|
|
—
|
|
|
Other,
net3,4,5
|
|
(28)
|
|
|
(3)
|
|
|
(357)
|
|
|
(78)
|
|
|
Total unallocated
items
|
|
414
|
|
|
509
|
|
|
1,492
|
|
|
1,971
|
|
|
Consolidated
operating profit
|
|
$
|
2,289
|
|
|
$
|
2,149
|
|
|
$
|
8,644
|
|
|
$
|
8,545
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
(loss) from
|
|
|
|
|
|
|
|
|
|
Continuing
operations3,4,6
|
|
$
|
1,792
|
|
|
$
|
1,498
|
|
|
$
|
6,888
|
|
|
$
|
6,230
|
|
|
Discontinued
operations7
|
|
—
|
|
|
—
|
|
|
(55)
|
|
|
—
|
|
|
Net
earnings6
|
|
$
|
1,792
|
|
|
$
|
1,498
|
|
|
$
|
6,833
|
|
|
$
|
6,230
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share from
|
|
|
|
|
|
|
|
|
|
Continuing
operations3,4,6
|
|
$
|
6.38
|
|
|
$
|
5.29
|
|
|
$
|
24.50
|
|
|
$
|
21.95
|
|
|
Discontinued
operations7
|
|
—
|
|
|
—
|
|
|
(0.20)
|
|
|
—
|
|
|
Diluted earnings
per share
|
|
$
|
6.38
|
|
|
$
|
5.29
|
|
|
$
|
24.30
|
|
|
$
|
21.95
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash from
operations8,9
|
|
$
|
1,807
|
|
|
$
|
1,490
|
|
|
$
|
8,183
|
|
|
$
|
7,311
|
|
|
|
|
|
|
|
|
|
|
|
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 quarter and
year ended Dec. 31, 2020, the corporation recognized severance
charges of $27 million ($21 million, or $0.08 per
share,
after-tax), primarily related to corporate functions.
|
3
|
In the year ended
Dec. 31, 2020, the corporation recognized a non-cash impairment
charge of $128 million ($96 million, or $0.34 per share,
after-tax) for its investment in the international equity method
investee, Advanced Military Maintenance, Repair and Overhaul Center
(AMMROC).
|
4
|
In the year ended
Dec. 31, 2019, the corporation recognized a previously deferred
non-cash gain of $51 million ($38 million, or $0.13 per
share,
after tax) related to properties sold in 2015 as a result of
completing its remaining obligations.
|
5
|
In the quarter and
year ended Dec. 31, 2019, the corporation recognized a gain of $34
million (approximately $0 after-tax) for the sale of its
Distributed
Energy Solutions business, a commercial energy service provider
that was part of its Missiles and Fire Control business
segment.
|
6
|
Net earnings for the
year ended Dec. 31, 2019, included benefits of $127 million ($0.45
per share), from the discrete recording of additional tax
deductions related to 2018, primarily attributable to foreign
derived intangible income treatment based on proposed tax
regulations released on
March 4, 2019, and a change in tax accounting method.
|
7
|
Discontinued
operations for the year ended Dec. 31, 2020, include a $55 million
($0.20 per share) non-cash charge resulting from the resolution
of certain tax matters related to the former Information Systems
& Global Solutions business divested in 2016.
|
8
|
Cash from operations
in the quarter ended Dec. 31, 2020, reflects the receipt of
approximately $105 million of net accelerated progress payments
due to the U.S. Government's increase in the progress payment rate
from 80 percent to 90 percent and the deferral of $145 million for
the employer
portion of payroll taxes to 2021 and 2022 pursuant to the
Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The
corporation used
the accelerated progress payments from the U.S. Government plus
cash on hand to accelerate payments to its suppliers resulting in a
$235 million
net impact to cash from operations in the fourth quarter of 2020.
Similarly, cash from operations in the year ended Dec. 31, 2020,
reflects the receipt
of approximately $1.2 billion of net accelerated progress payments
from the U.S. Government and the deferral of $460 million for the
employer portion
of payroll taxes to 2021 and 2022. The corporation used the
accelerated progress payments from the U.S. Government plus cash on
hand to accelerate
$2.1 billion of payments to its suppliers as of Dec. 31, 2020, that
are due by their terms in future periods.
|
9
|
Cash from operations
in the quarters and years ended Dec. 31, 2020 and 2019 are each net
of discretionary pension contributions of $1.0 billion.
|
2021 Financial Outlook
The following table and other sections of this news release
contain forward-looking statements, which are based on the
corporation's current expectations. Actual results may differ
materially from those projected. It is the corporation's practice
not to incorporate adjustments into its financial outlook for
proposed acquisitions, divestitures, ventures, changes in law, or
new accounting standards until such items have been consummated,
enacted or adopted. For additional factors that may impact the
corporation's actual results, refer to the "Forward-Looking
Statements" section in this news release.
|
(in millions,
except per share data)
|
|
2021
Current
Outlook1
|
|
|
|
|
|
|
|
Net sales
|
|
$67,100 -
$68,500
|
|
|
|
|
|
|
|
Business segment
operating profit
|
|
$7,355 -
$7,495
|
|
|
|
|
|
|
|
Net FAS/CAS pension
adjustment2,3
|
|
~$2,330
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
$26.00 -
$26.30
|
|
|
|
|
|
|
|
Cash from
operations4
|
|
≥$8,300
|
|
|
|
|
|
|
1
|
The corporation's
2021 financial outlook reflects the anticipated impacts from the
coronavirus disease 2019 (COVID-19) global pandemic based on the
corporation's
understanding at the time of this news release. However, the
ultimate impacts of COVID-19 on the corporation's financial outlook
for 2021 and beyond remains uncertain
and there can be no assurance that the corporation's underlying
assumptions are correct. For additional information regarding the
impacts of COVID-19, refer to the
"COVID-19" section of this new release. Additionally, the 2021
financial outlook reflects the UK Ministry of Defense's intent to
re-nationalize the Atomic Weapons
Establishment program (AWE program) on June 30, 2021, the impacts
of which were not reflected in the 2021 financial trending
information provided on October 20,
2020. Further, the 2021 financial outlook does not incorporate the
pending acquisition of Aerojet Rocketdyne Holdings, Inc. announced
on Dec. 20, 2020.
|
|
2
|
The net FAS/CAS
pension adjustment is presented as a single amount and includes
total expected U.S. Government cost accounting standards (CAS)
pension cost of
approximately $2,065 million and total expected financial
accounting standards (FAS) pension income of approximately $265
million. CAS pension cost and the service
cost component of FAS pension expense are included in operating
profit. The non-service cost components of FAS pension expense are
included in non-operating
income (expense). For additional detail 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
|
The net FAS/CAS
pension adjustment was calculated using a 2.5 percent discount
rate, an actual 16.5 percent return on plan assets in 2020, an
expected 7.0 percent
long-term rate of return on plan assets in future years, and
revised longevity assumptions released by the Society of Actuaries
in October 2020.
|
|
4
|
The corporation's
2021 financial outlook for cash from operations is net of $1.0
billion in expected discretionary contributions to its qualified
defined benefit pension plans.
|
|
COVID-19
The global outbreak of the coronavirus disease 2019 (COVID-19)
was declared a pandemic by the World Health Organization and a
national emergency by the U.S. Government in March 2020 and has negatively affected the U.S.
and global economies, disrupted global supply chains, resulted in
significant travel and transport restrictions, including mandated
closures and orders to "shelter-in-place" and quarantine
restrictions. Lockheed Martin has taken measures to protect the
health and safety of its employees, work with its customers and
suppliers to minimize disruptions and support its community in
addressing the challenges posed by this ongoing global pandemic.
The pandemic has presented unprecedented business challenges, and
the corporation has experienced impacts in each business area
related to COVID-19, primarily in increased coronavirus-related
costs, delays in supplier deliveries, impacts of travel
restrictions, site access and quarantine requirements, and the
impacts of remote work and adjusted work schedules. Despite these
challenges, the corporation and the U.S. Government's pro-active
efforts, especially with regard to the supply chain, helped to
partially mitigate the disruptions caused by COVID-19 on the
corporation's operations in 2020. In addition, favorable contract
award timing, strong operational performance and lower travel and
overhead expenditures due to COVID-19 restrictions partially offset
the impacts of COVID-19 on the corporation's financial results in
2020. However, the ultimate impact of COVID-19 in future periods
remains uncertain. The corporation's 2021 financial outlook
assumes, among other things, that its production facilities
continue to operate and it does not experience significant work
stoppages or closures, it is able to mitigate any supply chain
disruptions and these do not worsen, and government funding
priorities do not change. Working with its U.S. Government
customers, the corporation continues to monitor COVID-19 risks and
impacts as well as explore potential paths to recover any cost
impacts. While these are the corporation's current assumptions,
they could change and will depend on future pandemic related
developments, including the duration of the pandemic, any potential
subsequent waves of COVID-19 infection, the effectiveness,
distribution and acceptance of COVID-19 vaccines, and related
government actions.
Cash Activities
The corporation's cash activities in the quarter and year ended
Dec. 31, 2020, included the
following:
- making capital expenditures of $722
million and $1.8 billion
during the quarter and year ended Dec. 31,
2020, compared to $643 million
and $1.5 billion during the quarter
and year ended Dec. 31, 2019;
- making discretionary pension contributions of $1.0 billion during the quarter and year ended
Dec. 31, 2020, and $1.0 billion during the quarter and year ended
Dec. 31, 2019;
- repayment of $500 million and
$1.7 billion of long-term debt during
the quarter and year ended Dec. 31,
2020, compared to repayment of $900
million of long-term debt during the quarter and year ended
Dec. 31, 2019;
- receiving $1.1 billion of net
proceeds from the issuance of debt during the year ended
Dec. 31, 2020, compared to no net
proceeds during the year ended Dec. 31,
2019;
- paying cash dividends of $728
million and $2.8 billion
during the quarter and year ended Dec. 31,
2020, compared to $675 million
and $2.6 billion during the quarter
and year ended Dec. 31, 2019;
and
- no shares repurchased and repurchasing 3.0 million shares for
$1.1 billion during the quarter and
year ended Dec. 31, 2020, compared to
repurchasing 1.3 million shares for $490
million and 3.5 million shares for $1.2 billion during the quarter and year ended
Dec. 31, 2019.
Segment Results
The corporation operates in four business segments organized
based on the nature of products and services offered: Aeronautics,
Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS)
and Space. The following table presents summary operating results
of the corporation's business segments and reconciles these amounts
to the corporation's consolidated financial results.
|
(in millions)
|
|
Quarters Ended
Dec. 31,
|
|
Years Ended Dec.
31,
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
Net
sales
|
|
|
|
|
|
|
|
|
|
|
Aeronautics
|
|
$
|
6,714
|
|
|
$
|
6,381
|
|
|
$
|
26,266
|
|
|
$
|
23,693
|
|
|
|
Missiles and Fire
Control
|
|
2,866
|
|
|
2,769
|
|
|
11,257
|
|
|
10,131
|
|
|
|
Rotary and Mission
Systems
|
|
4,212
|
|
|
3,889
|
|
|
15,995
|
|
|
15,128
|
|
|
|
Space
|
|
3,240
|
|
|
2,839
|
|
|
11,880
|
|
|
10,860
|
|
|
|
Total net
sales
|
|
$
|
17,032
|
|
|
$
|
15,878
|
|
|
$
|
65,398
|
|
|
$
|
59,812
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
|
|
|
|
|
|
|
|
|
Aeronautics
|
|
$
|
727
|
|
|
$
|
679
|
|
|
$
|
2,843
|
|
|
$
|
2,521
|
|
|
|
Missiles and Fire
Control
|
|
374
|
|
|
348
|
|
|
1,545
|
|
|
1,441
|
|
|
|
Rotary and Mission
Systems
|
|
406
|
|
|
353
|
|
|
1,615
|
|
|
1,421
|
|
|
|
Space
|
|
368
|
|
|
260
|
|
|
1,149
|
|
|
1,191
|
|
|
|
Total business
segment operating profit
|
|
1,875
|
|
|
1,640
|
|
|
7,152
|
|
|
6,574
|
|
|
|
Unallocated
items
|
|
|
|
|
|
|
|
|
|
|
FAS/CAS operating
adjustment
|
|
469
|
|
|
512
|
|
|
1,876
|
|
|
2,049
|
|
|
|
Severance and
restructuring charges
|
|
(27)
|
|
|
—
|
|
|
(27)
|
|
|
—
|
|
|
|
Other, net
|
|
(28)
|
|
|
(3)
|
|
|
(357)
|
|
|
(78)
|
|
|
|
Total unallocated
items
|
|
414
|
|
|
509
|
|
|
1,492
|
|
|
1,971
|
|
|
|
Total consolidated
operating profit
|
|
$
|
2,289
|
|
|
$
|
2,149
|
|
|
$
|
8,644
|
|
|
$
|
8,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales and operating profit of the corporation's business
segments exclude intersegment sales, cost of sales, and profit as
these activities are eliminated in consolidation. Operating profit
of the corporation's business segments includes the corporation's
share of earnings or losses from equity method investees as the
operating activities of the investees are closely aligned with the
operations of its business segments.
Operating profit of the corporation's business segments also
excludes the FAS/CAS operating adjustment described below, a
portion of corporate costs not considered allowable or allocable to
contracts with the U.S. Government under the applicable U.S.
Government cost accounting standards (CAS) or federal acquisition
regulations (FAR), and other items not considered part of
management's evaluation of segment operating performance such as a
portion of management and administration costs, legal fees and
settlements, environmental costs, stock-based compensation expense,
retiree benefits, significant severance actions, significant asset
impairments, gains or losses from significant divestitures, and
other miscellaneous corporate activities.
The corporation recovers CAS pension cost through the pricing of
its products and services on U.S. Government contracts and,
therefore, recognizes CAS pension cost in each of its business
segments' net sales and cost of sales. The corporation's
consolidated financial statements must present pension and other
postretirement benefit plan expense calculated in accordance with
U.S. generally accepted accounting principles (referred to as FAS
expense). The operating portion of the net FAS/CAS pension
adjustment represents the difference between the service cost
component of FAS pension expense and total CAS pension cost. The
non-service FAS pension expense components are included in other
non-operating expense. The net FAS/CAS pension adjustment increases
or decreases CAS pension cost to equal total FAS pension expense
(both service and non-service).
Changes in net sales and operating profit generally are
expressed in terms of volume. Changes in volume refer to increases
or decreases in sales or operating profit resulting from varying
production activity levels, deliveries or service levels on
individual contracts. Volume changes in segment operating profit
are typically based on the current profit booking rate for a
particular contract. In addition, comparability of the
corporation's segment sales, operating profit and operating margin
may be impacted favorably or unfavorably by changes in profit
booking rates on the corporation's contracts for which it
recognizes revenue over time using the percentage-of-completion
cost-to-cost method to measure progress towards completion.
Increases in profit booking rates, typically referred to as risk
retirements, usually relate to revisions in the estimated total
costs to fulfill the performance obligations that reflect improved
conditions on a particular contract. Conversely, conditions on a
particular contract may deteriorate, resulting in an increase in
the estimated total costs to fulfill the performance obligations
and a reduction in the profit booking rate. Increases or decreases
in profit booking rates are recognized in the current period and
reflect the inception-to-date effect of such changes.
Segment operating profit and margin may also be impacted
favorably or unfavorably by other items, which may or may not
impact sales. Favorable items may include the positive resolution
of contractual matters, insurance recoveries and gains on sales of
assets. Unfavorable items may include the adverse resolution of
contractual matters; restructuring charges, except for significant
severance actions which are excluded from segment operating
results; reserves for disputes; certain asset impairments; and
losses on sales of certain assets.
The corporation's consolidated net adjustments not related to
volume, including net profit booking rate adjustments, represented
approximately 25 percent and 26 percent of total segment operating
profit in the quarter and year ended Dec.
31, 2020, as compared to 25 percent and 28 percent in the
quarter and year ended Dec. 31,
2019.
Aeronautics
|
(in millions)
|
|
Quarters Ended
Dec. 31,
|
|
Years Ended Dec.
31,
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
Net
sales
|
|
$
|
6,714
|
|
|
$
|
6,381
|
|
|
$
|
26,266
|
|
|
$
|
23,693
|
|
|
|
Operating
profit
|
|
$
|
727
|
|
|
$
|
679
|
|
|
$
|
2,843
|
|
|
$
|
2,521
|
|
|
|
Operating
margin
|
|
10.8
|
%
|
|
10.6
|
%
|
|
10.8
|
%
|
|
10.6
|
%
|
|
Aeronautics' net sales in the fourth quarter of 2020 increased
$333 million, or 5 percent, compared to the same period in
2019. The increase was primarily attributable to higher net sales
of approximately $145 million for the
F-16 program due to increased volume on international sustainment
contracts and production contracts; about $125 million for higher volume on classified
development contracts; and about $40 million for the F-35
program due to increased volume on sustainment and development
contracts, which was partially offset by lower volume on production
contracts.
Aeronautics' operating profit in the fourth quarter of 2020
increased $48 million, or 7 percent, compared to the same
period in 2019. Operating profit increased approximately
$40 million for the F-16 program due
to higher volume and risk retirements on international sustainment
contracts; about $20 million for the
C-130 program due to higher risk retirements on sustainment
contracts; and about $15 million for
classified development contracts due to higher risk retirements.
These increases were partially offset by a decrease of
approximately $35 million for the
F-35 program due to lower risk retirements and volume on production
contracts. Adjustments not related to volume, including net profit
booking rate adjustments, were $10
million higher in the fourth quarter of 2020 compared
to the same period in 2019.
Aeronautics' net sales in 2020 increased $2.6 billion,
or 11 percent, compared to 2019. The increase was primarily
attributable to higher net sales of approximately $1.8 billion for the F-35 program due to
increased volume on sustainment, production, and development
contracts; about $450 million for higher volume on classified
development contracts; and about $300
million for the F-16 program due to increased volume on
international production and sustainment contracts.
Aeronautics' operating profit in 2020 increased
$322 million, or 13 percent, compared to 2019. Operating
profit increased approximately $240 million for the F-35
program due to higher volume and risk retirements on development
and sustainment contracts and higher volume on production
contracts; about $70 million for the
C-130 program due to higher risk retirements on sustainment
contracts; and approximately $20
million for classified development contracts due to higher
risk retirements. Operating profit on the F-16 program was
comparable as higher volume was offset by lower risk retirements.
Adjustments not related to volume, including net profit booking
rate adjustments, were $90 million higher in 2020 compared to
2019.
Missiles and Fire Control
|
(in millions)
|
|
Quarters Ended
Dec. 31,
|
|
Years Ended Dec.
31,
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
Net
sales
|
|
$
|
2,866
|
|
|
$
|
2,769
|
|
|
$
|
11,257
|
|
|
$
|
10,131
|
|
|
|
Operating
profit
|
|
$
|
374
|
|
|
$
|
348
|
|
|
$
|
1,545
|
|
|
$
|
1,441
|
|
|
|
Operating
margin
|
|
13.0
|
%
|
|
12.6
|
%
|
|
13.7
|
%
|
|
14.2
|
%
|
|
MFC's net sales in the fourth quarter of 2020 increased
$97 million, or 4 percent, compared to the same period in
2019. The increase was primarily attributable to higher net sales
of approximately $105 million for
integrated air and missile defense programs due to increased volume
(Terminal High Altitude Area Defense (THAAD) and Patriot Advanced
Capability-3 (PAC-3)). This increase was partially offset by lower
net sales of about $20 million due to
the divestiture of the Distributed Energy Solutions business in
November 2019.
MFC's operating profit in the fourth quarter of 2020 increased
$26 million, or 7 percent, compared to the same period in
2019. Operating profit increased approximately $20 million for
tactical and strike missile programs due to higher risk retirements
(primarily Joint Air-to-Surface Standoff Missile
(JASSM)). Operating profit for integrated air and missile
defense programs was comparable as higher volume (THAAD and PAC-3)
was offset by lower risk retirements (THAAD and PAC-3). Adjustments
not related to volume, including net profit booking rate
adjustments, were $15 million higher
in the fourth quarter of 2020 compared to the same period
in 2019.
MFC's net sales in 2020 increased $1.1 billion, or 11 percent, compared to
2019. The increase was primarily attributable to higher net sales
of approximately $725 million for integrated air and missile
defense programs due to increased volume (THAAD and PAC-3); and
about $605 million for tactical and strike missile programs
due to increased volume (primarily Guided Multiple Launch Rocket
Systems (GMLRS), High Mobility Artillery Rocket System (HIMARS),
JASSM, and hypersonics). These increases were partially offset by a
decrease of approximately $80 million
for sensors and global sustainment programs due to lower volume on
the Apache sensors program; and about $120
million as a result of the divestiture of the Distributed
Energy Solutions business.
MFC's operating profit in 2020 increased $104 million, or 7
percent, compared to 2019. Operating profit increased approximately
$90 million for tactical and strike
missile programs due to higher volume (primarily JASSM,
hypersonics, GMLRS, and HIMARS); and approximately $30 million for integrated air and missile
defense programs due to increased volume (THAAD and PAC-3), which
was partially offset by lower risk retirements (THAAD and PAC-3).
These increases were partially offset by a decrease of
approximately $40 million for sensors
and global sustainment programs primarily due to lower risk
retirements and a reduction in the profit booking rate on the
Apache sensors program. Adjustments not related to volume,
including net profit booking rate adjustments, were
$40 million lower in 2020 compared to 2019.
Rotary and Mission Systems
|
(in millions)
|
|
Quarters Ended
Dec. 31,
|
|
Years Ended Dec.
31,
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
Net
sales
|
|
$
|
4,212
|
|
|
$
|
3,889
|
|
|
$
|
15,995
|
|
|
$
|
15,128
|
|
|
|
Operating
profit
|
|
$
|
406
|
|
|
$
|
353
|
|
|
$
|
1,615
|
|
|
$
|
1,421
|
|
|
|
Operating
margin
|
|
9.6
|
%
|
|
9.1
|
%
|
|
10.1
|
%
|
|
9.4
|
%
|
|
RMS' net sales in the fourth quarter of 2020 increased
$323 million, or 8 percent, compared to the same period in
2019. The increase was primarily attributable to higher net sales
of approximately $215 million for
Sikorsky helicopter programs due to higher volume on production
contracts (primarily Combat Rescue Helicopter (CRH), CH-53K and
Seahawk); about $130 million for
integrated warfare systems and sensors (IWSS) programs due to
higher volume (primarily Aegis Combat System (Aegis) and Advanced
Hawkeye); and about $45 million for
C6ISR (command, control, communications, computers, cyber, combat
systems, intelligence, surveillance, and reconnaissance) programs
due to higher volume (primarily on undersea combat systems
programs). These increases were partially offset by a $70 million decrease for various training and
logistics solutions (TLS) programs due to lower volume.
RMS' operating profit in the fourth quarter of 2020 increased
$53 million, or 15 percent, compared to the same period in
2019. Operating profit increased approximately $55 million for IWSS programs due to higher risk
retirements and volume (primarily Aegis, TPQ-53, and Advanced
Hawkeye); and about $20 million for
C6ISR programs due to improved performance and higher volume
(primarily undersea combat systems). These increases were partially
offset by a $25 million decrease for
Sikorsky helicopter programs primarily due to lower risk
retirements on international military aircraft programs. Operating
profit on TLS programs was comparable as higher margin volume was
offset by lower risk retirements. Adjustments not related to
volume, including net profit booking rate adjustments, were
$35 million higher in the fourth quarter of
2020 compared to the same period in 2019.
RMS' net sales in 2020 increased $867 million, or 6
percent, compared to 2019. The increase was primarily attributable
to higher net sales of approximately $570 million for Sikorsky
helicopter programs due to higher volume on production contracts
(primarily Seahawk, VH-92A, CRH, and CH-53K), which was partially
offset by lower volume on Black Hawk production programs; about
$175 million for IWSS programs due to
higher volume (primarily Aegis); and approximately $165 million for C6ISR programs due to higher
volume (primarily undersea combat systems). These increases were
partially offset by a $55 million
decrease for various TLS programs due to lower volume.
RMS' operating profit in 2020 increased $194 million, or 14
percent, compared to 2019. Operating profit increased approximately
$90 million for TLS programs due to
$80 million in charges for an army
sustainment program in 2019 not repeated in 2020; about
$70 million for Sikorsky helicopter
programs primarily due to higher volume on production contracts
(primarily VH-92A, Seahawk, CRH, and CH-53K); and about
$35 million for IWSS programs
primarily due to higher volume and higher risk retirements on
TPQ-53 and Advanced Hawkeye and lower charges on a ground-based
radar program. Operating profit on C6ISR programs was comparable as
higher volume was offset by lower risk retirements. Adjustments not
related to volume, including net profit booking rate adjustments,
were $15 million higher in
2020 compared to 2019.
Space
|
(in millions)
|
|
Quarters Ended
Dec. 31,
|
|
Years Ended Dec.
31,
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
Net
sales
|
|
$
|
3,240
|
|
|
$
|
2,839
|
|
|
$
|
11,880
|
|
|
$
|
10,860
|
|
|
|
Operating
profit
|
|
$
|
368
|
|
|
$
|
260
|
|
|
$
|
1,149
|
|
|
$
|
1,191
|
|
|
|
Operating
margin
|
|
11.4
|
%
|
|
9.2
|
%
|
|
9.7
|
%
|
|
11.0
|
%
|
|
Space's net sales in the fourth quarter of 2020 increased
$401 million, or 14 percent, compared to the same period in
2019. The increase was primarily attributable to higher net sales
of approximately $245 million for
government satellite programs due to higher volume (primarily Next
Generation Overhead Persistent Infrared (Next Gen OPIR) and
classified contracts); and about $105
million for strategic and missile defense programs due to
higher volume (primarily hypersonic development programs, inclusive
of impacts due to the acquisition of Integration Innovation Inc.'s
(i3) hypersonics portfolio in November
2020).
Space's operating profit in the fourth quarter of 2020 increased
$108 million, or 42 percent, compared to the same period in
2019. Operating profit increased approximately $85 million due to higher equity earnings from
the corporation's investment in United Launch Alliance (ULA)
primarily due to higher launch volume and launch vehicle mix.
Operating profit on government satellite programs was comparable as
higher volume was offset by lower risk retirements. Operating
profit for strategic and missile defense programs was also
comparable as higher risk retirements and volume on hypersonic
development programs were offset by lower risk retirements and
volume on fleet ballistic missile programs. Adjustments not related
to volume, including net profit booking rate adjustments, were
$10 million higher in the fourth
quarter of 2020, compared to the same period in 2019.
Space's net sales in 2020 increased $1.0 billion, or 9 percent, compared to
2019. The increase was primarily attributable to higher net sales
of approximately $525 million for
government satellite programs due to higher volume (primarily Next
Gen OPIR); and about $430 million for
strategic and missile defense programs due to higher volume
(primarily hypersonic development programs, inclusive of impacts
due to the acquisition of i3's hypersonics portfolio in
November 2020).
Space's operating profit in 2020 decreased $42 million, or
4 percent, compared to 2019. Operating profit decreased
approximately $90 million for
government satellite programs due to lower risk retirements on the
various programs (primarily AEHF) that were partially offset by
higher risk retirements and volume on the Next Gen OPIR program.
This decrease was partially offset by increases of $40 million for commercial satellite programs due
to charges recorded for performance matters in 2019 not repeated in
2020. Operating profit for strategic and missile defense programs
was comparable as higher risk retirements and volume on hypersonic
development programs were offset by lower risk retirements and
volume on fleet ballistic missile programs. Adjustments not related
to volume, including net profit booking rate adjustments, were
$100 million lower in 2020 compared
to 2019.
Total equity earnings recognized by Space (primarily ULA)
represented approximately $90 million, or 24 percent, and
approximately $135 million, or 12 percent, of Space's
operating profit during the quarter and year ended Dec. 31, 2020, compared to approximately
$5 million, or 2 percent and
approximately $145 million, or 12
percent in the quarter and year ended Dec.
31, 2019.
Income Taxes
The corporation's effective income tax rate was
18.1 percent and 16.4 percent in the quarter and year ended
Dec. 31, 2020, compared to
18.2 percent and 14.0 percent in the quarter and year ended
Dec. 31, 2019. The rates for all
periods benefited from tax deductions for foreign derived
intangible income, dividends paid to the corporation's defined
contribution plans with an employee stock ownership plan feature,
and employee equity awards. The rates for the year ended
Dec. 31, 2020, and the quarter and
year ended Dec. 31, 2019, also
benefited from the research and development tax credit. The rate
for the year ended Dec. 31, 2019,
further benefited from additional research and development credits
and tax deductions for 2018 attributable to foreign derived
intangible income treatment resulting from the proposed tax
regulations released on March 4,
2019.
Pension Transactions
In December 2020, certain of the
corporation's pension plans used pension trust assets to purchase
two group annuity contracts from insurance companies for
$2.2 billion. The first transaction
transferred $1.4 billion of the
corporation's outstanding defined benefit pension obligations
related to approximately 13,500 U.S. retirees and beneficiaries to
an insurance company. As a result of this transaction, the
insurance company assumed the outstanding pension obligations and
is now required to pay and administer the retirement benefits owed
to these retirees and beneficiaries. The second transaction
requires another insurance company to reimburse our pension trust
fund for all future benefit payments made to approximately 2,500
U.S. retirees and beneficiaries under a group annuity contract
purchased for $793 million. Under the
terms of this transaction, the plan retains the outstanding pension
obligations and will continue to pay and administer the retirement
benefits to these retirees and beneficiaries but will be reimbursed
for all future benefit payments covered by the contract with no net
ongoing cash funding obligation to the plan for the covered
participants as the cost of providing benefits is funded by the
contract. These transactions have no impact on the amount, timing,
or form of the monthly retirement benefit payments to the covered
retirees and beneficiaries. Additionally, these transactions did
not impact the corporation's earnings or cash flows in 2020.
Use of Non-GAAP Financial Measures
This news release contains the following non-generally accepted
accounting principles (non-GAAP) financial measures (as defined by
U.S. Securities and Exchange Commission (SEC) Regulation G). While
management believes that these non-GAAP financial measures may be
useful in evaluating the financial performance of the corporation,
this information should be considered supplemental and is not a
substitute for financial information prepared in accordance with
GAAP. In addition, the corporation's definitions for non-GAAP
financial measures may differ from similarly titled measures used
by other companies or analysts.
Business segment operating profit represents operating profit
from the corporation's business segments before unallocated income
and expense. This measure is used by the corporation's senior
management in evaluating the performance of its business segments
and is a performance goal in the corporation's annual incentive
plan. Business segment operating margin is calculated by dividing
business segment operating profit by sales. The table below
reconciles the non-GAAP measure business segment operating profit
with the most directly comparable GAAP financial measure,
consolidated operating profit.
|
(in
millions)
|
|
2021
Current
Outlook1
|
|
|
|
|
|
|
|
Business segment
operating profit (non-GAAP)
|
|
$7,355 -
$7,495
|
|
|
FAS/CAS operating
adjustment2
|
|
~1,955
|
|
|
Other, net
|
|
~(270)
|
|
|
Consolidated
operating profit (GAAP)
|
|
$9,040 -
$9,180
|
|
|
|
|
|
|
1
|
The corporation's
2021 financial outlook reflects the anticipated impacts from the
coronavirus disease 2019 (COVID-19) global pandemic based on the
corporation's
understanding at the time of this news release. However, the
ultimate impacts of COVID-19 on the corporation's financial outlook
for 2021 and beyond remains
uncertain and there can be no assurance that the corporation's
underlying assumptions are correct. For additional information
regarding the impacts of COVID-19,
refer to the "COVID-19" section of this new release. Additionally,
the 2021 financial outlook reflects the UK Ministry of Defense's
intent to re-nationalize the AWE
program on June 30, 2021, the impacts of which were not reflected
in the 2021 financial trending information provided on October 20,
2020. Further, the 2021 financial
outlook does not incorporate the pending acquisition of Aerojet
Rocketdyne Holdings, Inc. announced on Dec. 20, 2020.
|
|
2
|
Refer to the
supplemental table "Other Financial and Operating Information"
included in this news release for a detail of the FAS/CAS operating
adjustment, which
excludes $375 million of expected non-service FAS income that
will be recorded in non-operating income (expense).
|
|
Conference Call Information
Lockheed Martin Corporation will webcast live the earnings
results conference call (listen-only mode) on Tuesday, Jan. 26, 2021, at 11 a.m. EST. The live webcast and relevant
financial charts will be available for download on the Lockheed
Martin Investor Relations website at
www.lockheedmartin.com/investor.
For additional information, visit the corporation's website:
www.lockheedmartin.com.
About Lockheed Martin
Headquartered in Bethesda,
Maryland, Lockheed Martin Corporation is a global security
and aerospace company that employs approximately 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 pandemics or epidemics on our
business, including the potential for facility closures or work
stoppages, supply chain disruptions, program delays, our ability to
recover our costs under contracts, and changing government funding
and acquisition priorities and payment policies and
regulations;
- our reliance on contracts with the U.S. Government, which are
conditioned upon the availability of funding and can be terminated
by the U.S. Government for convenience, and our ability to
negotiate favorable contract terms;
- budget uncertainty, affordability initiatives or the risk of
future budget cuts;
- risks related to the development, production, sustainment,
performance, schedule, cost and requirements of complex and
technologically advanced programs including our largest, the
F-35 program;
- planned production rates for significant programs; compliance
with stringent performance and reliability standards; materials
availability;
- the performance and financial viability of key suppliers,
teammates, joint ventures, joint venture partners, subcontractors
and customers;
- economic, industry, business and political conditions including
their effects on governmental policy and government actions that
disrupt our supply chain or prevent the sale or delivery of our
products (such as delays in obtaining Congressional approvals for
exports requiring Congressional notification and export license
delays due to COVID-19);
- trade policies or sanctions (including potential Chinese
sanctions on us or our suppliers, teammates or partners; 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);
- our success expanding into and doing business in adjacent
markets and internationally and the differing risks posed by
international sales;
- changes in foreign national priorities and foreign government
budgets;
- the competitive environment for our products and services,
including increased pricing pressures, aggressive pricing in the
absence of cost realism evaluation criteria, competition from
outside the aerospace and defense industry, and bid protests;
- the timing and customer acceptance of product deliveries;
- our ability to continue to innovate and develop new products
and to attract and retain key personnel and transfer knowledge to
new personnel; the impact of work stoppages or other labor
disruptions;
- the impact of cyber or other security threats or other
disruptions to our businesses;
- our ability to implement and continue, and the timing and
impact of, capitalization changes such as share repurchases and
dividend payments;
- our ability to recover costs under U.S. Government contracts
and changes in contract mix;
- the accuracy of our estimates and projections and the potential
impact of changes in U.S. or foreign tax laws;
- timing and estimates regarding pension funding and movements in
interest rates and other changes that may affect pension plan
assumptions, stockholders' equity, the level of the FAS/CAS
adjustment and actual returns on pension plan assets;
- the successful operation of joint ventures that we do not
control and our ability to recover our investments;
- realizing the anticipated benefits of acquisitions or
divestitures, joint ventures, teaming arrangements or internal
reorganizations;
- risks related to our previously announced acquisition of
Aerojet Rocketdyne, including the failure to obtain, delays in
obtaining or adverse conditions contained in any required
regulatory or other approvals and our ability to successfully and
timely integrate the business and realize synergies and other
expected benefits of the transaction;
- our efforts to increase the efficiency of our operations and
improve the affordability of our products and services;
- the risk of an impairment of our assets, including the
potential impairment of goodwill recorded as a result of the
acquisition of the Sikorsky business;
- the availability and adequacy of our insurance and
indemnities;
- our ability to benefit fully from or adequately protect our
intellectual property rights;
- procurement and other regulations and policies affecting our
industry, export of our products, cost allowability or recovery,
preferred contract type, and performance and progress payments
policy, including a reversal or modification to the DoD's increase
to the progress payment rate in response to COVID-19;
- the effect of changes in accounting, taxation, or export laws,
regulations, and policies and their interpretation or application;
and
- the outcome of legal proceedings, bid protests, environmental
remediation efforts, audits, government investigations or
government allegations that we have failed to comply with law,
other contingencies and U.S. Government identification of
deficiencies in our business systems.
These are only some of the factors that may affect the
forward-looking statements contained in this news release. For a
discussion identifying additional important factors that could
cause actual results to differ materially from those anticipated in
the forward-looking statements, see the corporation's filings with
the U.S. Securities and Exchange Commission including, but not
limited to, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Risk Factors" in the
corporation's Annual Report on Form 10-K for the year ended
Dec. 31, 2019, and subsequent quarterly reports on Form
10-Q. The corporation's filings may be accessed through the
Investor Relations page of its website,
www.lockheedmartin.com/investor, or through the website maintained
by the SEC at www.sec.gov.
The corporation's actual financial results likely will be
different from those projected due to the inherent nature of
projections. Given these uncertainties, forward-looking statements
should not be relied on in making investment decisions. The
forward-looking statements contained in this news release speak
only as of the date of its filing. Except where required by
applicable law, the corporation expressly disclaims a duty to
provide updates to forward-looking statements after the date of
this news release to reflect subsequent events, changed
circumstances, changes in expectations, or the estimates and
assumptions associated with them. The forward-looking statements in
this news release are intended to be subject to the safe harbor
protection provided by the federal securities laws.
|
Lockheed Martin
Corporation Consolidated Statements of
Earnings1 (unaudited; in millions, except
per share data)
|
|
|
|
|
|
Quarters Ended
Dec. 31,
|
|
Years Ended Dec.
31,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Net
sales
|
|
$
|
17,032
|
|
|
$
|
15,878
|
|
|
$
|
65,398
|
|
|
$
|
59,812
|
|
|
Cost of
sales1
|
|
(14,818)
|
|
|
(13,755)
|
|
|
(56,744)
|
|
|
(51,445)
|
|
|
Gross
profit
|
|
2,214
|
|
|
2,123
|
|
|
8,654
|
|
|
8,367
|
|
|
Other (expense)
income, net2,3,4
|
|
75
|
|
|
26
|
|
|
(10)
|
|
|
178
|
|
|
Operating
profit
|
|
2,289
|
|
|
2,149
|
|
|
8,644
|
|
|
8,545
|
|
|
Interest
expense
|
|
(149)
|
|
|
(157)
|
|
|
(591)
|
|
|
(653)
|
|
|
Other non-operating
income (expense), net
|
|
47
|
|
|
(160)
|
|
|
182
|
|
|
(651)
|
|
|
Earnings from
continuing operations before income taxes
|
|
2,187
|
|
|
1,832
|
|
|
8,235
|
|
|
7,241
|
|
|
Income tax
expense5
|
|
(395)
|
|
|
(334)
|
|
|
(1,347)
|
|
|
(1,011)
|
|
|
Net earnings from
continuing operations
|
|
1,792
|
|
|
1,498
|
|
|
6,888
|
|
|
6,230
|
|
|
Net loss from
discontinued operations5
|
|
—
|
|
|
—
|
|
|
(55)
|
|
|
—
|
|
|
Net
earnings
|
|
$
|
1,792
|
|
|
$
|
1,498
|
|
|
$
|
6,833
|
|
|
$
|
6,230
|
|
|
Effective tax
rate
|
|
18.1
|
%
|
|
18.2
|
%
|
|
16.4
|
%
|
|
14.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
per common share
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
6.41
|
|
|
$
|
5.32
|
|
|
$
|
24.60
|
|
|
$
|
22.09
|
|
|
Discontinued
operations6
|
|
—
|
|
|
—
|
|
|
(0.20)
|
|
|
—
|
|
|
Basic earnings per
common share
|
|
$
|
6.41
|
|
|
$
|
5.32
|
|
|
$
|
24.40
|
|
|
$
|
22.09
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
6.38
|
|
|
$
|
5.29
|
|
|
$
|
24.50
|
|
|
$
|
21.95
|
|
|
Discontinued
operations6
|
|
—
|
|
|
—
|
|
|
(0.20)
|
|
|
—
|
|
|
Diluted earnings per
common share
|
|
$
|
6.38
|
|
|
$
|
5.29
|
|
|
$
|
24.30
|
|
|
$
|
21.95
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
|
|
|
|
|
|
|
|
Basic
|
|
279.7
|
|
|
281.4
|
|
|
280.0
|
|
|
282.0
|
|
|
Diluted
|
|
281.0
|
|
|
283.3
|
|
|
281.2
|
|
|
283.8
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares
reported in stockholders' equity at end of period
|
|
|
|
|
|
279
|
|
|
280
|
|
|
|
|
|
|
|
|
|
|
|
1
|
In the quarter and
year ended Dec. 31, 2020, the corporation recognized severance
charges of $27 million ($21 million, or $0.08 per share,
after-
tax) primarily related to corporate functions.
|
2
|
In the year ended
Dec. 31, 2020, the corporation recognized a non-cash impairment
charge of $128 million ($96 million, or $0.34 per share, after
tax) for its investment in the international equity method
investee, Advanced Military Maintenance, Repair and Overhaul Center
(AMMROC).
|
3
|
In the year ended
Dec. 31, 2019, the corporation recognized a previously deferred
non-cash gain of $51 million ($38 million, or $0.13 per
share,
after tax) related to properties sold in 2015 as a result of
completing its remaining obligations.
|
4
|
In the quarter and
year ended Dec. 31, 2019, the corporation recognized a gain of $34
million (approximately $0 after-tax) for the sale of its
Distributed Energy Solutions business, a commercial energy service
provider that was part of its Missiles and Fire Control business
segment.
|
5
|
Net earnings for the
year ended Dec. 31, 2019, included benefits of $127 million ($0.45
per share), from the discrete recording of additional
tax deductions related to 2018, primarily attributable to foreign
derived intangible income treatment based on proposed tax
regulations released
on March 4, 2019 and a change in tax accounting method.
|
6
|
Net loss from
discontinued operations for the year ended Dec. 31, 2020, includes
a $55 million ($0.20 per share) non-cash charge resulting
from the resolution of certain tax matters related to the former
IS&GS business divested in 2016.
|
|
Lockheed Martin
Corporation Business Segment Summary Operating
Results (unaudited; in millions)
|
|
|
|
|
|
Quarters
Ended
Dec.
31,
|
|
|
|
Years
Ended
Dec.
31,
|
|
|
|
|
|
2020
|
|
2019
|
|
%
Change
|
|
2020
|
|
2019
|
|
%
Change
|
|
Net
sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aeronautics
|
|
$
|
6,714
|
|
|
$
|
6,381
|
|
|
5%
|
|
$
|
26,266
|
|
|
$
|
23,693
|
|
|
11%
|
|
Missiles and Fire
Control
|
|
2,866
|
|
|
2,769
|
|
|
4%
|
|
11,257
|
|
|
10,131
|
|
|
11%
|
|
Rotary and Mission
Systems
|
|
4,212
|
|
|
3,889
|
|
|
8%
|
|
15,995
|
|
|
15,128
|
|
|
6%
|
|
Space
|
|
3,240
|
|
|
2,839
|
|
|
14%
|
|
11,880
|
|
|
10,860
|
|
|
9%
|
|
Total net
sales
|
|
$
|
17,032
|
|
|
$
|
15,878
|
|
|
7%
|
|
$
|
65,398
|
|
|
$
|
59,812
|
|
|
9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aeronautics
|
|
$
|
727
|
|
|
$
|
679
|
|
|
7%
|
|
$
|
2,843
|
|
|
$
|
2,521
|
|
|
13%
|
|
Missiles and Fire
Control
|
|
374
|
|
|
348
|
|
|
7%
|
|
1,545
|
|
|
1,441
|
|
|
7%
|
|
Rotary and Mission
Systems
|
|
406
|
|
|
353
|
|
|
15%
|
|
1,615
|
|
|
1,421
|
|
|
14%
|
|
Space
|
|
368
|
|
|
260
|
|
|
42%
|
|
1,149
|
|
|
1,191
|
|
|
(4%)
|
|
Total business
segment operating profit
|
|
1,875
|
|
|
1,640
|
|
|
14%
|
|
7,152
|
|
|
6,574
|
|
|
9%
|
|
Unallocated
items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FAS/CAS operating
adjustment
|
|
469
|
|
|
512
|
|
|
|
|
1,876
|
|
|
2,049
|
|
|
|
|
Severance
charges
|
|
(27)
|
|
|
—
|
|
|
|
|
(27)
|
|
|
—
|
|
|
|
|
Other,
net1,2,3
|
|
(28)
|
|
|
(3)
|
|
|
|
|
(357)
|
|
|
(78)
|
|
|
|
|
Total unallocated
items
|
|
414
|
|
|
509
|
|
|
(19%)
|
|
1,492
|
|
|
1,971
|
|
|
(24%)
|
|
Total consolidated
operating profit
|
|
$
|
2,289
|
|
|
$
|
2,149
|
|
|
7%
|
|
$
|
8,644
|
|
|
$
|
8,545
|
|
|
1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aeronautics
|
|
10.8%
|
|
10.6%
|
|
|
|
10.8%
|
|
10.6%
|
|
|
|
Missiles and Fire
Control
|
|
13.0%
|
|
12.6%
|
|
|
|
13.7%
|
|
14.2%
|
|
|
|
Rotary and Mission
Systems
|
|
9.6%
|
|
9.1%
|
|
|
|
10.1%
|
|
9.4%
|
|
|
|
Space
|
|
11.4%
|
|
9.2%
|
|
|
|
9.7%
|
|
11.0%
|
|
|
|
Total business
segment operating margin
|
|
11.0%
|
|
10.3%
|
|
|
|
10.9%
|
|
11.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consolidated
operating margin
|
|
13.4%
|
|
13.5%
|
|
|
|
13.2%
|
|
14.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
In the year ended
Dec. 31, 2019, the corporation recognized a previously deferred
non-cash gain of $51 million ($38 million, or $0.13 per share,
after
tax) related to properties sold in 2015 as a result of completing
its remaining obligations.
|
2
|
In the year ended
Dec. 31, 2020, the corporation recognized a non-cash impairment
charge of $128 million ($96 million, or $0.34 per share, after
tax)
for its investment in the international equity method investee,
AMMROC.
|
3
|
In the quarter and
year ended Dec. 31, 2019, the corporation recognized a gain of $34
million (approximately $0 after-tax) for the sale of its
Distributed
Energy Solutions business, a commercial energy service provider
that was part of its Missiles and Fire Control business
segment.
|
|
Lockheed Martin
Corporation Consolidated Balance
Sheets (in millions, except par
value)
|
|
|
|
|
|
Dec.
31,
2020
|
|
Dec.
31,
2019
|
|
|
|
(unaudited)
|
|
|
|
Assets
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
3,160
|
|
|
$
|
1,514
|
|
|
Receivables,
net
|
|
1,978
|
|
|
2,337
|
|
|
Contract
assets
|
|
9,545
|
|
|
9,094
|
|
|
Inventories
|
|
3,545
|
|
|
3,619
|
|
|
Other current
assets
|
|
1,150
|
|
|
531
|
|
|
Total current
assets
|
|
19,378
|
|
|
17,095
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
7,213
|
|
|
6,591
|
|
|
Goodwill
|
|
10,806
|
|
|
10,604
|
|
|
Intangible assets,
net
|
|
3,012
|
|
|
3,213
|
|
|
Deferred income
taxes
|
|
3,475
|
|
|
3,319
|
|
|
Other noncurrent
assets
|
|
6,826
|
|
|
6,706
|
|
|
Total
assets
|
|
$
|
50,710
|
|
|
$
|
47,528
|
|
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Accounts
payable
|
|
$
|
880
|
|
|
$
|
1,281
|
|
|
Contract
liabilities
|
|
7,545
|
|
|
7,054
|
|
|
Salaries, benefits and
payroll taxes
|
|
3,163
|
|
|
2,466
|
|
|
Current maturities of
long-term debt
|
|
500
|
|
|
1,250
|
|
|
Other current
liabilities
|
|
1,845
|
|
|
1,921
|
|
|
Total current
liabilities
|
|
13,933
|
|
|
13,972
|
|
|
|
|
|
|
|
|
Long-term debt,
net
|
|
11,669
|
|
|
11,404
|
|
|
Accrued pension
liabilities
|
|
12,874
|
|
|
13,234
|
|
|
Other noncurrent
liabilities
|
|
6,196
|
|
|
5,747
|
|
|
Total
liabilities
|
|
44,672
|
|
|
44,357
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
Common stock, $1 par
value per share
|
|
279
|
|
|
280
|
|
|
Additional paid-in
capital
|
|
221
|
|
|
—
|
|
|
Retained
earnings
|
|
21,636
|
|
|
18,401
|
|
|
Accumulated other
comprehensive loss
|
|
(16,121)
|
|
|
(15,554)
|
|
|
Total stockholders'
equity
|
|
6,015
|
|
|
3,127
|
|
|
Noncontrolling
interests in subsidiary
|
|
23
|
|
|
44
|
|
|
Total
equity
|
|
6,038
|
|
|
3,171
|
|
|
Total liabilities and
equity
|
|
$
|
50,710
|
|
|
$
|
47,528
|
|
|
|
|
|
|
|
Lockheed Martin
Corporation Consolidated Statements of Cash
Flows (unaudited; in millions)
|
|
|
|
Years Ended Dec.
31,
|
|
|
2020
|
|
2019
|
Operating
activities
|
|
|
|
|
Net
earnings
|
|
$
|
6,833
|
|
|
$
|
6,230
|
|
Adjustments to
reconcile net earnings to net cash provided by operating
activities
|
|
|
|
|
Depreciation and
amortization
|
|
1,290
|
|
|
1,189
|
|
Stock-based
compensation
|
|
221
|
|
|
189
|
|
Equity method
investment impairment
|
|
128
|
|
|
—
|
|
Tax resolution related
to former IS&GS business
|
|
55
|
|
|
—
|
|
Deferred income
taxes
|
|
5
|
|
|
222
|
|
Severance
charges
|
|
27
|
|
|
—
|
|
Gain on property
sale
|
|
—
|
|
|
(51)
|
|
Changes in assets and
liabilities
|
|
|
|
|
Receivables,
net
|
|
359
|
|
|
107
|
|
Contract
assets
|
|
(451)
|
|
|
378
|
|
Inventories
|
|
74
|
|
|
(622)
|
|
Accounts
payable
|
|
(372)
|
|
|
(1,098)
|
|
Contract
liabilities
|
|
491
|
|
|
563
|
|
Postretirement benefit
plans
|
|
(1,197)
|
|
|
81
|
|
Income
taxes
|
|
(19)
|
|
|
(151)
|
|
Other, net
|
|
739
|
|
|
274
|
|
Net cash provided
by operating activities
|
|
8,183
|
|
|
7,311
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
Capital
expenditures
|
|
(1,766)
|
|
|
(1,484)
|
|
Acquisitions of
businesses
|
|
(282)
|
|
|
—
|
|
Other, net
|
|
38
|
|
|
243
|
|
Net cash used for
investing activities
|
|
(2,010)
|
|
|
(1,241)
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
Repurchases of common
stock
|
|
(1,100)
|
|
|
(1,200)
|
|
Dividends
paid
|
|
(2,764)
|
|
|
(2,556)
|
|
Repayment of
commercial paper, net
|
|
—
|
|
|
(600)
|
|
Repayments of current
and long-term debt
|
|
(1,650)
|
|
|
(900)
|
|
Issuance of long-term
debt, net of related costs
|
|
1,131
|
|
|
—
|
|
Other, net
|
|
(144)
|
|
|
(72)
|
|
Net cash used for
financing activities
|
|
(4,527)
|
|
|
(5,328)
|
|
|
|
|
|
|
Net change in cash
and cash equivalents
|
|
1,646
|
|
|
742
|
|
Cash and cash
equivalents at beginning of year
|
|
1,514
|
|
|
772
|
|
Cash and cash
equivalents at end of year
|
|
$
|
3,160
|
|
|
$
|
1,514
|
|
|
|
|
|
|
|
Lockheed Martin
Corporation Consolidated Statement of
Equity (unaudited; in millions)
|
|
|
|
|
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total
Stockholders'
Equity
|
|
Noncontrolling
Interests
in
Subsidiary
|
|
Total
Equity
|
|
Balance at Dec.
31, 2019
|
|
$
|
280
|
|
|
$
|
—
|
|
|
$
|
18,401
|
|
|
$
|
(15,554)
|
|
|
$
|
3,127
|
|
|
$
|
44
|
|
|
$
|
3,171
|
|
|
Net
earnings
|
|
—
|
|
|
—
|
|
|
6,833
|
|
|
—
|
|
|
6,833
|
|
|
—
|
|
|
6,833
|
|
|
Other comprehensive
income, net of tax1
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(567)
|
|
|
(567)
|
|
|
—
|
|
|
(567)
|
|
|
Repurchases of common
stock
|
|
(3)
|
|
|
(256)
|
|
|
(841)
|
|
|
—
|
|
|
(1,100)
|
|
|
—
|
|
|
(1,100)
|
|
|
Dividends
declared2
|
|
—
|
|
|
—
|
|
|
(2,757)
|
|
|
—
|
|
|
(2,757)
|
|
|
—
|
|
|
(2,757)
|
|
|
Stock-based awards,
ESOP activity and other
|
|
2
|
|
|
477
|
|
|
—
|
|
|
—
|
|
|
479
|
|
|
—
|
|
|
479
|
|
|
Net decrease in
noncontrolling interests in subsidiary
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21)
|
|
|
(21)
|
|
|
Balance at Dec.
31, 2020
|
|
$
|
279
|
|
|
$
|
221
|
|
|
$
|
21,636
|
|
|
$
|
(16,121)
|
|
|
$
|
6,015
|
|
|
$
|
23
|
|
|
$
|
6,038
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Primarily represents
the reclassification adjustment for the recognition of prior period
amounts related to pension and other postretirement benefit
plans.
|
2
|
Represents dividends
of $2.40 per share declared for each of the first, second and third
quarters of 2020 and dividends of $2.60 per share declared for
the fourth quarter of 2020.
|
|
Lockheed Martin
Corporation Other Financial and Operating
Information (unaudited; in millions, except for
aircraft deliveries and weeks)
|
|
|
|
|
|
2021
Outlook
|
|
2020
Actual
|
|
Total FAS income
and CAS costs
|
|
|
|
|
|
FAS pension
income
|
|
$
|
265
|
|
|
$
|
118
|
|
|
Less: CAS pension
cost
|
|
2,065
|
|
|
1,977
|
|
|
Net FAS/CAS pension
adjustment
|
|
$
|
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-operating FAS
pension income1
|
|
375
|
|
|
219
|
|
|
Net FAS/CAS pension
adjustment
|
|
$
|
2,330
|
|
|
$
|
2,095
|
|
|
|
|
|
|
|
1
|
The corporation
records the non-service cost components of net periodic benefit
cost as part of other non-operating income in the consolidated
statement of earnings. The non-service cost components in the table
above relate only to the corporation's qualified defined benefit
pension plans.
The corporation expects total non-service income for its qualified
defined benefit pension plans in the table above, along with
non-service cost for
its other postretirement benefit plans of $35 million, to total
non-service credit of $340 million for 2021. The corporation
recorded non-service cost
for its other postretirement benefit plans of $33 million in 2020,
in addition to its total non-service credit for its qualified
defined benefit pension plans
in the table above, for a total non-service credit of $186 million
in 2020.
|
|
Lockheed Martin
Corporation Other Financial and Operating Information
(cont.) (unaudited; in millions, except aircraft
deliveries and weeks)
|
|
|
|
Backlog
|
|
Dec.
31
2020
|
|
Dec.
31
2019
|
|
Aeronautics
|
|
$
|
56,551
|
|
|
$
|
55,636
|
|
|
Missiles and Fire
Control
|
|
29,183
|
|
|
25,796
|
|
|
Rotary and Mission
Systems
|
|
36,249
|
|
|
34,296
|
|
|
Space1
|
|
25,148
|
|
|
28,253
|
|
|
Total
backlog
|
|
$
|
147,131
|
|
|
$
|
143,981
|
|
1
|
Space backlog at Dec.
31, 2020 was reduced by approximately $1.0 billion due to the U.K.
Ministry of Defense's intent to re-
nationalize the AWE program on June 30, 2021.
|
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended
Dec. 31,
|
|
Years Ended Dec.
31,
|
Aircraft
Deliveries
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
F-35
|
|
42
|
|
|
51
|
|
|
120
|
|
|
134
|
|
C-130J
|
|
10
|
|
|
9
|
|
|
22
|
|
|
28
|
|
Government helicopter
programs
|
|
32
|
|
|
24
|
|
|
80
|
|
|
85
|
|
International
military helicopter programs
|
|
8
|
|
|
8
|
|
|
15
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
Number of Weeks in
Reporting Period1
|
|
2021
|
|
2020
|
|
2019
|
|
First
quarter
|
|
12
|
|
|
13
|
|
|
13
|
|
|
Second
quarter
|
|
13
|
|
|
13
|
|
|
13
|
|
|
Third
quarter
|
|
13
|
|
|
13
|
|
|
13
|
|
|
Fourth
quarter
|
|
14
|
|
|
13
|
|
|
13
|
|
|
|
|
|
|
|
|
|
1
|
Quarters are
typically 13 weeks in length but, due to our fiscal year ending on
Dec. 31, the number of weeks in a reporting
period may vary slightly during the year and for comparable prior
year periods.
|
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SOURCE Lockheed Martin