Lockheed Martin Reports Fourth Quarter and Full Year 2018 Results
Net sales in 2018 was
"The corporation completed another year of outstanding operational accomplishments and strong financial performance," said
Adoption of New Accounting Standards
As previously reported, effective
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, |
||||||||||||||||
2018 |
2017 |
2018 |
2017 |
|||||||||||||||
Net sales |
$ |
14,411 |
$ |
13,844 |
$ |
53,762 |
$ |
49,960 |
||||||||||
Business segment operating profit1 |
$ |
1,515 |
$ |
1,367 |
$ |
5,877 |
$ |
5,092 |
||||||||||
Unallocated items |
||||||||||||||||||
FAS/CAS operating adjustment |
450 |
403 |
1,803 |
1,613 |
||||||||||||||
Severance and restructuring charges2 |
— |
— |
(96) |
— |
||||||||||||||
Other, net3,4 |
(114) |
179 |
(250) |
39 |
||||||||||||||
Total unallocated items |
336 |
582 |
1,457 |
1,652 |
||||||||||||||
Consolidated operating profit |
$ |
1,851 |
$ |
1,949 |
$ |
7,334 |
$ |
6,744 |
||||||||||
Net earnings (loss) from |
||||||||||||||||||
Continuing operations3,4,5 |
$ |
1,253 |
$ |
(817) |
$ |
5,046 |
$ |
1,890 |
||||||||||
Discontinued operations6 |
— |
73 |
— |
73 |
||||||||||||||
Net earnings (loss) |
$ |
1,253 |
$ |
(744) |
$ |
5,046 |
$ |
1,963 |
||||||||||
Diluted earnings (loss) per share from |
||||||||||||||||||
Continuing operations3,4,5,7 |
$ |
4.39 |
$ |
(2.85) |
$ |
17.59 |
$ |
6.50 |
||||||||||
Discontinued operations6,7 |
— |
0.25 |
— |
0.25 |
||||||||||||||
Diluted earnings (loss) per share7 |
$ |
4.39 |
$ |
(2.60) |
$ |
17.59 |
$ |
6.75 |
||||||||||
Cash from operations8 |
$ |
2,217 |
$ |
1,512 |
$ |
3,138 |
$ |
6,476 |
||||||||||
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 |
Unallocated items for the year ended Dec. 31, 2018 includes the previously announced severance and restructuring charges totaling $96 million ($76 million, or $0.26 per share, after tax) associated with planned workforce reductions and the consolidation of certain operations at the corporation's Rotary and Mission Systems business. |
|||||||||||||||||
3 |
In the fourth quarter of 2018, the corporation recognized a non-cash asset impairment charge of $110 million ($83 million, or $0.29 per share, after tax, for the fourth quarter and year ended Dec. 31, 2018) for its international equity method investee, Advanced Military Maintenance, Repair and Overhaul Center (AMMROC). Additionally, in the first quarter of 2017, the corporation recognized a non-cash asset impairment charge of $64 million ($40 million, or $0.14 per share, after tax, for the year ended Dec. 31, 2017), which represents its portion of a non-cash asset impairment charge recorded by AMMROC. |
|||||||||||||||||
4 |
In the fourth quarter of 2017, the corporation recognized a previously deferred non-cash gain of $198 million ($122 million, or $0.43 per share, after tax, in the fourth quarter and $0.42 per share, after tax, for the year ended Dec. 31, 2017), related to properties sold in 2015 as a result of completing its remaining obligations. |
|||||||||||||||||
5 |
In the fourth quarter of 2017, the corporation recorded a net one-time charge of $2.0 billion ($6.88 per share in the fourth quarter and $6.77 per share in 2017), substantially all of which was non-cash, primarily related to U.S tax reform. For additional information regarding the one-time charge, see the Income Taxes section and the Non-GAAP Measures of this news release. |
|||||||||||||||||
6 |
In the fourth quarter of 2017, the corporation recognized an additional gain of $73 million related to the Aug. 16, 2016 divestiture of its Information Systems & Global Solutions (IS&GS) business, which reflects certain post-closing adjustments, including the final determination of net working capital and certain tax adjustments. |
|||||||||||||||||
7 |
The corporation incurred a net loss in the fourth quarter of 2017 causing inclusion of any potentially dilutive securities to have an anti-dilutive effect, resulting in the weighted average shares outstanding for basic and dilutive earnings per share being equivalent during the quarter. As a result of the corporation's net loss in the fourth quarter of 2017, diluted earnings per share for the quarters of 2017 will not equal the earnings per share amount for the year ended Dec. 31, 2017. |
|||||||||||||||||
8 |
Cash from operations for the year ended Dec. 31, 2018 includes $5.0 billion of pension contributions. |
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 practice not to incorporate adjustments into its financial outlook for proposed acquisitions, divestitures, ventures, changes in law and 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) |
2019 Current Outlook |
|||||
Net sales |
$55,750 - $57,250 |
|||||
Business segment operating profit |
$6,000 - $6,150 |
|||||
Net FAS/CAS pension adjustment1 |
~$1,475 |
|||||
Diluted earnings per share2 |
$19.15 - $19.45 |
|||||
Cash from operations |
≥$7,400 |
|||||
1 |
Consistent with the corporation's historical presentation, the net FAS/CAS pension adjustment 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 non-operating expense on the corporation's consolidated statement 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 |
The foregoing outlook for 2019 does not reflect potential benefits, if any, from additional tax deductions for foreign derived intangible income under proposed US Treasury regulations that are expected to be released in the near future. Such proposed tax regulations, if favorable, may have a beneficial impact on our 2019 earnings, effective tax rate, and earnings per share. |
The corporation expects the 2019 net FAS/CAS pension benefit to be approximately
Cash Activities
The corporation's cash activities in the quarter and year ended Dec. 31, 2018 consisted of the following:
- repurchasing 2.2 million shares for
$666 million and 4.7 million shares for$1.5 billion during the quarter and year endedDec. 31, 2018 , compared to 1.6 million shares for$501 million and 7.1 million shares for$2.0 billion during the quarter and year endedDec. 31, 2017 ; - paying cash dividends of
$622 million and$2.3 billion during the quarter and year endedDec. 31, 2018 , compared to$572 million and$2.2 billion during the quarter and year endedDec. 31, 2017 ; - repayments of
$750 million of long-term debt upon scheduled maturity during the quarter and year endedDec. 31, 2018 , compared to no repayments of long-term debt during the quarter and year endedDec. 31, 2017 ; - making capital expenditures of
$459 million and$1.3 billion during the quarter and year endedDec. 31, 2018 , compared to$507 million and$1.2 billion during the quarter and year endedDec. 31, 2017 ; and - receiving net proceeds of
$110 million and$600 million from the issuance of commercial paper during the quarter and year endedDec. 31, 2018 , compared to no net proceeds during the quarter and year endedDec. 31, 2017 .
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, |
||||||||||||||||
2018 |
2017 |
2018 |
2017 |
|||||||||||||||
Net sales |
||||||||||||||||||
Aeronautics |
$ |
5,881 |
$ |
5,652 |
$ |
21,242 |
$ |
19,410 |
||||||||||
Missiles and Fire Control |
2,427 |
1,992 |
8,462 |
7,282 |
||||||||||||||
Rotary and Mission Systems |
3,613 |
3,759 |
14,250 |
13,663 |
||||||||||||||
Space |
2,490 |
2,441 |
9,808 |
9,605 |
||||||||||||||
Total net sales |
$ |
14,411 |
$ |
13,844 |
$ |
53,762 |
$ |
49,960 |
||||||||||
Operating profit |
||||||||||||||||||
Aeronautics |
$ |
626 |
$ |
657 |
$ |
2,272 |
$ |
2,176 |
||||||||||
Missiles and Fire Control |
376 |
249 |
1,248 |
1,034 |
||||||||||||||
Rotary and Mission Systems |
289 |
246 |
1,302 |
902 |
||||||||||||||
Space |
224 |
215 |
1,055 |
980 |
||||||||||||||
Total business segment operating profit |
1,515 |
1,367 |
5,877 |
5,092 |
||||||||||||||
Unallocated items |
||||||||||||||||||
FAS/CAS operating adjustment |
450 |
403 |
1,803 |
1,613 |
||||||||||||||
Severance and restructuring charges |
— |
— |
(96) |
— |
||||||||||||||
Other, net |
(114) |
179 |
(250) |
39 |
||||||||||||||
Total unallocated items |
336 |
582 |
1,457 |
1,652 |
||||||||||||||
Total consolidated operating profit |
$ |
1,851 |
$ |
1,949 |
$ |
7,334 |
$ |
6,744 |
||||||||||
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 our 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 its largest customer, the
The corporation recovers CAS pension cost through the pricing of its products and services on
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 the 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 profit adjustments not related to volume, including net profit booking rate adjustments and other items, represented approximately 29 percent and 32 percent of total segment operating profit for the quarter and year ended Dec. 31, 2018, compared to approximately 33 percent and 32 percent for the quarter and year ended Dec. 31, 2017.
Aeronautics
(in millions) |
Quarters Ended Dec. 31, |
Years Ended Dec. 31, |
||||||||||||||||
2018 |
2017 |
2018 |
2017 |
|||||||||||||||
Net sales |
$ |
5,881 |
$ |
5,652 |
$ |
21,242 |
$ |
19,410 |
||||||||||
Operating profit |
$ |
626 |
$ |
657 |
$ |
2,272 |
$ |
2,176 |
||||||||||
Operating margin |
10.6 |
% |
11.6 |
% |
10.7 |
% |
11.2 |
% |
Aeronautics' net sales in the fourth quarter of 2018 increased
Aeronautics' operating profit in the fourth quarter of 2018 decreased
Aeronautics' net sales in 2018 increased
Aeronautics' operating profit in 2018 increased
Missiles and Fire Control
(in millions) |
Quarters Ended Dec. 31, |
Years Ended Dec. 31, |
||||||||||||||||
2018 |
2017 |
2018 |
2017 |
|||||||||||||||
Net sales |
$ |
2,427 |
$ |
1,992 |
$ |
8,462 |
$ |
7,282 |
||||||||||
Operating profit |
$ |
376 |
$ |
249 |
$ |
1,248 |
$ |
1,034 |
||||||||||
Operating margin |
15.5 |
% |
12.5 |
% |
14.7 |
% |
14.2 |
% |
MFC's net sales in the fourth quarter of 2018 increased
MFC's operating profit in the fourth quarter of 2018 increased
MFC's net sales in 2018 increased
MFC's operating profit in 2018 increased
Rotary and Mission Systems
(in millions) |
Quarters Ended Dec. 31, |
Years Ended Dec. 31, |
||||||||||||||||
2018 |
2017 |
2018 |
2017 |
|||||||||||||||
Net sales |
$ |
3,613 |
$ |
3,759 |
$ |
14,250 |
$ |
13,663 |
||||||||||
Operating profit |
$ |
289 |
$ |
246 |
$ |
1,302 |
$ |
902 |
||||||||||
Operating margin |
8.0 |
% |
6.5 |
% |
9.1 |
% |
6.6 |
% |
RMS' net sales in the fourth quarter of 2018 decreased
RMS' operating profit in the fourth quarter of 2018 increased
RMS' net sales in 2018 increased
RMS' operating profit in 2018 increased $400 million, or 44 percent, compared to 2017. Operating profit increased approximately
Space
(in millions) |
Quarters Ended Dec. 31, |
Years Ended Dec. 31, |
||||||||||||||||
2018 |
2017 |
2018 |
2017 |
|||||||||||||||
Net sales |
$ |
2,490 |
$ |
2,441 |
$ |
9,808 |
$ |
9,605 |
||||||||||
Operating profit |
$ |
224 |
$ |
215 |
$ |
1,055 |
$ |
980 |
||||||||||
Operating margin |
9.0 |
% |
8.8 |
% |
10.8 |
% |
10.2 |
% |
Space's net sales in the fourth quarter of 2018 increased
Space's operating profit in the fourth quarter of 2018 increased
Space's net sales in 2018 increased
Space's operating profit in 2018 increased
Total equity earnings recognized by Space (primarily ULA) represented approximately
Income Taxes
The corporation's effective income tax rate from continuing operations was 15.5 percent and 13.6 percent in the quarter and year ended Dec. 31, 2018, compared to 152.0 percent and 64.0 percent in the quarter and year ended Dec. 31, 2017. The lower rate for the fourth quarter and year ended
The rate for the year ended
Pension Transactions
In
Use of Non-GAAP Financial Measures
This news release contains the following non-generally accepted accounting principles (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
Business segment operating profit represents the total earnings from the corporation's business segments before unallocated income and expense, interest expense, other non-operating income and expenses, and income tax 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 Current Outlook |
|||||
Business segment operating profit (non-GAAP) |
$6,000 - $6,150 |
|||||
Net FAS/CAS operating adjustment1 |
~2,050 |
|||||
Other, net |
~(165) |
|||||
Consolidated operating profit (GAAP) |
$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 in accordance with ASU 2017-07. |
Adjusted earnings from continuing operations and adjusted earnings per share from continuing operations represents net earnings (loss) from continuing operations plus the net one-time charge, primarily related to the estimated impacts of the Tax Act. Management believes that the exclusion of the net one-time charge provides a more useful comparison of the corporation's underlying business performance from period to period. However, this information is supplemental and should not be considered a substitute for financial measures prepared in accordance with GAAP.
(in millions, except per share data) |
Quarter Ended Dec. 31, 2017 |
Year Ended Dec. 31, 2017 |
|||||||
Adjusted earnings from continuing operations (non-GAAP) |
$ |
1,150 |
$ |
3,857 |
|||||
Net one-time charge for estimated impacts of the Tax Act |
1,967 |
1,967 |
|||||||
Net (loss) earnings from continuing operations (GAAP) |
$ |
(817) |
$ |
1,890 |
|||||
Adjusted earnings per share from continuing operations |
$ |
4.03 |
$ |
13.27 |
|||||
Net one-time charge for estimated impacts of the Tax Act |
6.88 |
6.77 |
|||||||
Diluted (loss) earnings per share from continuing operations |
$ |
(2.85) |
$ |
6.50 |
|||||
Conference Call Information
For additional information, visit our website: www.lockheedmartin.com.
About
Headquartered in
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
- the corporation's reliance on contracts with the
U.S. Government , which are conditioned upon the availability of funding and can be terminated by theU.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; and the impact of government shutdowns, including the possibility that DoD funds are diverted or the risk of nonpayment if we work on unfunded contracts to seek to maintain their projected cost and schedule profiles during any shutdown, and the existing delay in obtaining export licenses as a result of the recently-ended shutdown;
- 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 Congressional actions to prevent the sale or delivery of our products, such as F-35 aircraft to
Turkey ), or other trade policies or sanctions (including potential sanctions on theKingdom 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, dividend payments, and pension funding;
- 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 our 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
Department of Defense's acquisition regulations relating to progress payments and performance-based payments; - the effect of changes in accounting, taxation, or export regulations; 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
The corporation's actual financial results likely will be different from those projected due to the inherent nature of projections. Given these uncertainties, forward-looking statements should not be relied on in making investment decisions. The forward-looking statements contained in this news release speak only as of the date of its filing. Except where required by applicable law, the corporation expressly disclaims a duty to provide updates to forward-looking statements after the date of this news release to reflect subsequent events, changed circumstances, changes in expectations, or the estimates and assumptions associated with them. The forward-looking statements in this news release are intended to be subject to the safe harbor protection provided by the federal securities laws.
Lockheed Martin Corporation |
|||||||||
Consolidated Statements of Earnings |
|||||||||
(unaudited; in millions, except per share data) |
|||||||||
Quarters Ended Dec. 31, |
Years Ended Dec. 31, |
||||||||
2018 |
2017 |
2018 |
2017 |
||||||
Net sales |
$ 14,411 |
$ 13,844 |
$ 53,762 |
$ 49,960 |
|||||
Cost of sales1 |
(12,469) |
(12,135) |
(46,488) |
(43,589) |
|||||
Gross profit |
1,942 |
1,709 |
7,274 |
6,371 |
|||||
Other (expense) income, net2,3 |
(91) |
240 |
60 |
373 |
|||||
Operating profit |
1,851 |
1,949 |
7,334 |
6,744 |
|||||
Interest expense |
(171) |
(174) |
(668) |
(651) |
|||||
Other non-operating expense, net |
(197) |
(203) |
(828) |
(847) |
|||||
Earnings from continuing operations before income taxes |
1,483 |
1,572 |
5,838 |
5,246 |
|||||
Income tax expense4 |
(230) |
(2,389) |
(792) |
(3,356) |
|||||
Net earnings (loss) from continuing operations |
1,253 |
(817) |
5,046 |
1,890 |
|||||
Net earnings from discontinued operations |
- |
73 |
- |
73 |
|||||
Net earnings (loss) |
$ 1,253 |
$ (744) |
$ 5,046 |
$ 1,963 |
|||||
Effective tax rate4 |
15.5 |
% |
152.0 |
% |
13.6 |
% |
64.0 |
% |
|
Earnings (loss) per common share |
|||||||||
Basic |
|||||||||
Continuing operations1,2,3,4 |
$ 4.43 |
$ (2.85) |
$ 17.74 |
$ 6.56 |
|||||
Discontinued operations5 |
- |
0.25 |
- |
0.26 |
|||||
Basic earnings (loss) per common share4,5 |
$ 4.43 |
$ (2.60) |
$ 17.74 |
$ 6.82 |
|||||
Diluted |
|||||||||
Continuing operations1,2,3,4,6 |
$ 4.39 |
$ (2.85) |
$ 17.59 |
$ 6.50 |
|||||
Discontinued operations5,6 |
- |
0.25 |
- |
0.25 |
|||||
Diluted earnings (loss) per common share4,5,6 |
$ 4.39 |
$ (2.60) |
$ 17.59 |
$ 6.75 |
|||||
Weighted average shares outstanding |
|||||||||
Basic |
283.1 |
285.9 |
284.5 |
287.8 |
|||||
Diluted6 |
285.5 |
285.9 |
286.8 |
290.6 |
|||||
Common shares reported in stockholders' equity at end of period |
281 |
284 |
|||||||
1 Cost of sales in 2018 includes the previously announced severance and restructuring charges totaling $96 million ($76 million, or $0.26 per |
|||||||||
share, after tax) associated with planned workforce reductions and the consolidation of certain operations at the corporation's Rotary and |
|||||||||
Mission Systems (RMS) business. |
|||||||||
2 In the fourth quarter of 2018, the corporation recognized a non-cash asset impairment charge of $110 million ($83 million, or $0.29 per share, |
|||||||||
after tax, for the fourth quarter and year ended Dec. 31, 2018) for its international equity method investee the Advanced Military Maintenance, |
|||||||||
Repair and Overhaul Center (AMMROC). Additionally, in the first quarter of 2017, the corporation recognized a non-cash asset impairment |
|||||||||
charge of $64 million ($40 million, or $0.14 per share, after tax, for the year ended Dec. 31, 2017), which represents its portion of a |
|||||||||
non-cash asset impairment charge recorded by AMMROC. |
|||||||||
3 In the fourth quarter of 2017, the corporation recognized a previously deferred non-cash gain of $198 million ($122 million, or $0.43 per share, |
|||||||||
after tax, in the fourth quarter and $0.42 per share, after tax, for the year ended Dec. 31, 2017), related to properties sold in 2015 as a result |
|||||||||
of completing its remaining obligations. |
|||||||||
4 In the fourth quarter of 2017, the corporation recorded a net one-time charge of $2.0 billion ($6.88 per share in the fourth quarter and |
|||||||||
$6.77 per share in 2017), substantially all of which was non-cash, primarily related to the estimated impacts of the Tax Cuts and Jobs Act. |
|||||||||
5 In the fourth quarter of 2017, the corporation recognized an additional gain of $73 million related to the Aug. 16, 2016 divestiture of its |
|||||||||
Information Systems & Global Solutions (IS&GS) business, which reflects certain post-closing adjustments, including the final determination of |
|||||||||
net working capital and certain tax adjustments. |
|||||||||
6 The corporation incurred a net loss in the fourth quarter of 2017 causing inclusion of any potentially dilutive securities to have an anti-dilutive |
|||||||||
effect, resulting in the weighted average shares outstanding for basic and dilutive earnings per share being equivalent during the quarter. As a |
|||||||||
result of the corporation's net loss in the fourth quarter of 2017, diluted earnings per share for the quarters of 2017 will not equal the earnings per |
|||||||||
share amount for the year ended Dec. 31, 2017. |
Lockheed Martin Corporation |
|||||||||||||||
Business Segment Summary Operating Results |
|||||||||||||||
(unaudited; in millions) |
|||||||||||||||
Quarters Ended Dec. 31, |
Years Ended Dec. 31, |
||||||||||||||
2018 |
2017 |
% Change |
2018 |
2017 |
% Change |
||||||||||
Net sales |
|||||||||||||||
Aeronautics |
$ 5,881 |
$ 5,652 |
4 |
% |
$ 21,242 |
$ 19,410 |
9 |
% |
|||||||
Missiles and Fire Control |
2,427 |
1,992 |
22 |
% |
8,462 |
7,282 |
16 |
% |
|||||||
Rotary and Mission Systems |
3,613 |
3,759 |
(4) |
% |
14,250 |
13,663 |
4 |
% |
|||||||
Space |
2,490 |
2,441 |
2 |
% |
9,808 |
9,605 |
2 |
% |
|||||||
Total net sales |
$ 14,411 |
$ 13,844 |
4 |
% |
$ 53,762 |
$ 49,960 |
8 |
% |
|||||||
Operating profit |
|||||||||||||||
Aeronautics |
$ 626 |
$ 657 |
(5) |
% |
$ 2,272 |
$ 2,176 |
4 |
% |
|||||||
Missiles and Fire Control |
376 |
249 |
51 |
% |
1,248 |
1,034 |
21 |
% |
|||||||
Rotary and Mission Systems |
289 |
246 |
17 |
% |
1,302 |
902 |
44 |
% |
|||||||
Space |
224 |
215 |
4 |
% |
1,055 |
980 |
8 |
% |
|||||||
Total business segment operating profit |
1,515 |
1,367 |
11 |
% |
5,877 |
5,092 |
15 |
% |
|||||||
Unallocated items |
|||||||||||||||
FAS/CAS operating adjustment |
450 |
403 |
1,803 |
1,613 |
|||||||||||
Severance and restructuring charges1 |
- |
- |
(96) |
- |
|||||||||||
Other, net2,3 |
(114) |
179 |
(250) |
39 |
|||||||||||
Total unallocated items |
336 |
582 |
1,457 |
1,652 |
|||||||||||
Total consolidated operating profit |
$ 1,851 |
$ 1,949 |
(5) |
% |
$ 7,334 |
$ 6,744 |
9 |
% |
|||||||
Operating margin |
|||||||||||||||
Aeronautics |
10.6 |
% |
11.6 |
% |
10.7 |
% |
11.2 |
% |
|||||||
Missiles and Fire Control |
15.5 |
% |
12.5 |
% |
14.7 |
% |
14.2 |
% |
|||||||
Rotary and Mission Systems |
8.0 |
% |
6.5 |
% |
9.1 |
% |
6.6 |
% |
|||||||
Space |
9.0 |
% |
8.8 |
% |
10.8 |
% |
10.2 |
% |
|||||||
Total business segment operating margin |
10.5 |
% |
9.9 |
% |
10.9 |
% |
10.2 |
% |
|||||||
Total consolidated operating margin |
12.8 |
% |
14.1 |
% |
13.6 |
% |
13.5 |
% |
|||||||
1 Unallocated items in 2018 includes the previously announced severance and restructuring charges totaling $96 million ($76 million, or $0.26 per |
|||||||||||||||
share, after tax) associated with planned workforce reductions and the consolidation of certain operations at the corporation's RMS business. |
|||||||||||||||
2 In the fourth quarter of 2018, the corporation recognized a non-cash asset impairment charge of $110 million ($83 million, or $0.29 per share, |
|||||||||||||||
after tax, for the fourth quarter and year ended Dec. 31, 2018) for its international equity method investee the AMMROC. Additionally, in the first |
|||||||||||||||
quarter of 2017, the corporation recognized a non-cash asset impairment charge of $64 million ($40 million, or $0.14 per share, after tax, |
|||||||||||||||
for the year ended Dec. 31, 2017), which represents its portion of a non-cash asset impairment charge recorded by AMMROC. |
|||||||||||||||
3 In the fourth quarter of 2017, the corporation recognized a previously deferred non-cash gain of $198 million ($122 million, or $0.43 per share, |
|||||||||||||||
after tax, in the fourth quarter and $0.42 per share, after tax, for the year ended Dec. 31, 2017), related to properties sold in 2015 as a result |
|||||||||||||||
of completing its remaining obligations. |
Lockheed Martin Corporation |
|||
Consolidated Balance Sheets |
|||
(unaudited; in millions, except par value) |
|||
Dec. 31, |
Dec. 31, |
||
Assets |
|||
Current assets |
|||
Cash and cash equivalents |
$ 772 |
$ 2,861 |
|
Receivables, net |
2,444 |
2,265 |
|
Contract assets |
9,472 |
7,992 |
|
Inventories |
2,997 |
2,878 |
|
Other current assets |
418 |
1,509 |
|
Total current assets |
16,103 |
17,505 |
|
Property, plant and equipment, net |
6,124 |
5,775 |
|
Goodwill |
10,769 |
10,807 |
|
Intangible assets, net |
3,494 |
3,797 |
|
Deferred income taxes |
3,208 |
3,156 |
|
Other noncurrent assets |
5,178 |
5,580 |
|
Total assets |
$ 44,876 |
$ 46,620 |
|
Liabilities and equity |
|||
Current liabilities |
|||
Accounts payable |
$ 2,402 |
$ 1,467 |
|
Contract liabilities |
6,491 |
7,028 |
|
Salaries, benefits and payroll taxes |
2,122 |
1,785 |
|
Current maturities of long-term debt and commercial paper |
1,500 |
750 |
|
Other current liabilities |
1,883 |
1,883 |
|
Total current liabilities |
14,398 |
12,913 |
|
Long-term debt, net |
12,604 |
13,513 |
|
Accrued pension liabilities |
11,410 |
15,703 |
|
Other postretirement benefit liabilities |
704 |
719 |
|
Other noncurrent liabilities |
4,311 |
4,548 |
|
Total liabilities |
43,427 |
47,396 |
|
Stockholders' equity |
|||
Common stock, $1 par value per share |
281 |
284 |
|
Additional paid-in capital |
- |
- |
|
Retained earnings |
15,434 |
11,405 |
|
Accumulated other comprehensive loss |
(14,321) |
(12,539) |
|
Total stockholders' equity (deficit) |
1,394 |
(850) |
|
Noncontrolling interests in subsidiary |
55 |
74 |
|
Total equity (deficit) |
1,449 |
(776) |
|
Total liabilities and equity |
$ 44,876 |
$ 46,620 |
Lockheed Martin Corporation |
|||
Consolidated Statements of Cash Flows |
|||
(unaudited; in millions) |
|||
Years Ended Dec. 31, |
|||
2018 |
2017 |
||
Operating activities |
|||
Net earnings |
$ 5,046 |
$ 1,963 |
|
Adjustments to reconcile net earnings to net cash provided by operating activities |
|||
Depreciation and amortization |
1,161 |
1,195 |
|
Stock-based compensation |
173 |
158 |
|
Deferred income taxes |
(244) |
3,448 |
|
Severance and restructuring charges |
96 |
- |
|
Gain on property sale |
- |
(198) |
|
Gain on divestiture of IS&GS business |
- |
(73) |
|
Changes in assets and liabilities |
|||
Receivables, net |
(179) |
(902) |
|
Contract assets |
(1,480) |
390 |
|
Inventories |
(119) |
(79) |
|
Accounts payable |
914 |
(189) |
|
Contract liabilities |
(537) |
353 |
|
Postretirement benefit plans |
(3,574) |
1,316 |
|
Income taxes |
1,077 |
(1,210) |
|
Other, net |
804 |
304 |
|
Net cash provided by operating activities |
3,138 |
6,476 |
|
Investing activities |
|||
Capital expenditures |
(1,278) |
(1,177) |
|
Other, net |
203 |
30 |
|
Net cash used for investing activities |
(1,075) |
(1,147) |
|
Financing activities |
|||
Repurchases of common stock |
(1,492) |
(2,001) |
|
Dividends paid |
(2,347) |
(2,163) |
|
Proceeds from issuance of commercial paper, net |
600 |
- |
|
Repayments of long-term debt |
(750) |
- |
|
Other, net |
(163) |
(141) |
|
Net cash used for financing activities |
(4,152) |
(4,305) |
|
Net change in cash and cash equivalents |
(2,089) |
1,024 |
|
Cash and cash equivalents at beginning of period |
2,861 |
1,837 |
|
Cash and cash equivalents at end of period |
$ 772 |
$ 2,861 |
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, 2017 |
$ 284 |
$ - |
$ 11,405 |
$ (12,539) |
$ (850) |
$ 74 |
$ (776) |
||||||
Net earnings |
- |
- |
5,046 |
- |
5,046 |
- |
5,046 |
||||||
Other comprehensive income, net of tax1 |
- |
- |
- |
626 |
626 |
- |
626 |
||||||
Repurchases of common stock |
(5) |
(404) |
(1,083) |
- |
(1,492) |
- |
(1,492) |
||||||
Dividends declared2 |
- |
- |
(2,342) |
- |
(2,342) |
- |
(2,342) |
||||||
Stock-based awards, ESOP activity and |
2 |
404 |
- |
- |
406 |
- |
406 |
||||||
Reclassification of income tax effects from |
- |
- |
2,408 |
(2,408) |
- |
- |
- |
||||||
Net decrease in noncontrolling interests in |
- |
- |
- |
- |
- |
(19) |
(19) |
||||||
Balance at Dec. 31, 2018 |
$ 281 |
$ - |
$ 15,434 |
$ (14,321) |
$ 1,394 |
$ 55 |
$ 1,449 |
||||||
1 At Dec. 31, 2018 the corporation recognized a non-cash, after-tax reduction to stockholders' equity of $501 million as a result of the year-end re- |
||||||||||||||
measurement of its postretirement benefit plans. This reduction was offset by $1.2 billion recognition of previously deferred amounts. |
||||||||||||||
2 Represents dividends of $2.20 per share declared for the fourth quarter of 2018 and $2.00 per share declared for the first, second and third quarters of |
||||||||||||||
3 In the first quarter of 2018, the corporation adopted ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification |
||||||||||||||
of Certain Tax Effects from Accumulated Other Comprehensive Income. Accordingly, the corporation reclassified the stranded income tax effects in |
||||||||||||||
accumulated other comprehensive loss resulting from the Tax Cuts and Jobs Act to retained earnings. |
Lockheed Martin Corporation |
||||||||||
Other Financial and Operating Information |
||||||||||
(unaudited; in millions, except for aircraft deliveries) |
||||||||||
2019 |
2018 |
|||||||||
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 cost1 |
(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 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 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 |
Dec. 31, |
Dec. 31, |
||||||||
Aeronautics |
$ 55,601 |
$ 35,692 |
||||||||
Missiles and Fire Control |
21,363 |
17,729 |
||||||||
Rotary and Mission Systems |
31,320 |
30,030 |
||||||||
Space |
22,184 |
22,042 |
||||||||
Total backlog |
$ 130,468 |
$ 105,493 |
||||||||
Quarters Ended |
Years Ended |
|||||||||
Aircraft Deliveries |
Dec. 31, |
Dec. 31, |
Dec. 31, |
Dec. 31, |
||||||
F-35 |
32 |
22 |
91 |
66 |
||||||
F-16 |
- |
1 |
- |
8 |
||||||
C-130J |
7 |
10 |
25 |
26 |
||||||
C-5 |
- |
2 |
4 |
7 |
||||||
Other fixed-wing aircraft |
- |
2 |
- |
2 |
||||||
Government helicopter programs |
32 |
54 |
107 |
164 |
||||||
Commercial helicopter programs |
3 |
4 |
5 |
7 |
||||||
International military helicopter programs |
8 |
6 |
13 |
9 |
View original content:http://www.prnewswire.com/news-releases/lockheed-martin-reports-fourth-quarter-and-full-year-2018-results-300785544.html
SOURCE
Media Contact: Bill Phelps, 301-897-6308; william.phelps@lmco.com; Investor Relations Contacts: Greg Gardner, 301-897-6584; greg.m.gardner@lmco.com; Kelly Stevens, 301-897-6455; kelly.stevens@lmco.com