- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 13E-4
----------------
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
----------------
LOCKHEED MARTIN CORPORATION
(NAME OF ISSUER)
LOCKHEED MARTIN CORPORATION
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK
PAR VALUE $1.00 PER SHARE
(TITLE OF CLASS OF SECURITIES)
539830 10 9
(CUSIP NUMBER OF CLASS OF SECURITIES)
STEPHEN M. PIPER
LOCKHEED MARTIN CORPORATION
6801 ROCKLEDGE DRIVE
BETHESDA, MD 20817
(301) 897-6000
COPIES TO
WILLIAM J. PHILLIPS
JONATHAN L. FREEDMAN
DEWEY BALLANTINE
1301 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019-6092
(212) 259-8000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND
COMMUNICATIONS ON BEHALF OF PERSON(S) FILING STATEMENT)
SEPTEMBER 16, 1996
(DATE TENDER OFFER FIRST PUBLISHED, SENT OR GIVEN TO SECURITY HOLDERS)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CALCULATION OF FILING FEE
TRANSACTION VALUATION/1/ AMOUNT OF FILING FEE
$689,926,545 $137,986
[ x ] Check box if any part of the fee is offset as provided by Rule 0-
11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form of Schedule and the date of its filing.
AMOUNT PREVIOUSLY PAID: $1,025,516
FORM OR REGISTRATION NO.: REGISTRATION STATEMENT ON FORM S-4 (NO. 333-08895)
FILING PARTY: MARTIN MARIETTA MATERIALS, INC.
DATE FILED: JULY 26, 1996
- --------
/1/ Estimated solely for purposes of calculating the filing fee and computed
pursuant to Rule 0-11(a)(4) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). This amount assumes the acquisition by
Lockheed Martin Corporation of 7,913,136 shares of its common stock for
$87.1875 per share, the average of the high and low sales prices of a share
of such common stock as reported on the New York Stock Exchange Composite
Tape on September 13, 1996.
2
This Schedule 13E-4 relates to an offer by Lockheed Martin Corporation (the
"Company") to exchange (the "Exchange Offer") 37,350,000 shares of Common
Stock, par value $.01 per share, of Martin Marietta Materials, Inc. (the
"Materials Common Stock") which the Company owns for shares of the Company's
Common Stock, par value $1.00 per share, upon the terms and subject to the
conditions stated in the Offering Circular--Prospectus dated September 16,
1996 (the "Offering Circular--Prospectus") attached hereto as Exhibit A(2) and
the related Letter of Transmittal attached hereto as Exhibit A(4).
ITEM 1. SECURITY AND ISSUER.
(a) The name of the issuer is Lockheed Martin Corporation and the address of
its principal executive office is 6801 Rockledge Drive, Bethesda, Maryland
20817.
(b) The exact title and amount of the class of securities being sought are:
up to 7,913,136 shares of Common Stock, par value $1.00 per share, of the
Company (the "Shares"). As of August 31, 1996, 200,263,185 Shares were
outstanding. With respect to the consideration being offered for the Shares,
the cover page of the Offering Circular--Prospectus and the sections of the
Offering Circular--Prospectus entitled "Offering Circular--Prospectus
Summary," "The Transaction," "The Exchange Offer" and "Price Range of
Materials Common Stock and Dividends" are hereby incorporated herein by
reference. With respect to whether any Shares will be purchased from any
officer, director or affiliate of the Company, the second and third paragraphs
of the section of the Offering Circular--Prospectus entitled "Relationship
Between Materials and Lockheed Martin--Other" are hereby incorporated herein
by reference.
(c) Reference is made to the section of the Offering Circular--Prospectus
entitled "Price Range of Lockheed Martin Common Stock and Dividends" which is
hereby incorporated herein by reference.
(d) Not applicable.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The consideration being offered by the Company in exchange for the
Shares are shares of Materials Common Stock owned by the Company. Holders of
Shares who will be entitled to receive a fractional share of Materials Common
Stock will be paid cash in lieu of such fractional share. Reference is made to
the sections of the Offering Circular--Prospectus entitled "The Transaction"
and "The Exchange Offer--Terms of The Exchange Offer" which are hereby
incorporated herein by reference. The maximum number of shares of Materials
Common Stock that will be exchanged for the Shares shall be 37,350,000 shares,
or approximately 81%, of the 46,079,300 shares of Materials Common Stock
outstanding.
(b) Not applicable.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
With respect to the purpose of the Exchange Offer, disposition of securities
acquired and plans or proposals of the Company, the sections of the Offering
Circular--Prospectus entitled "Purpose and Effects of the Transaction" and
"The Transaction--Accounting Treatment of the Transaction" are hereby
incorporated herein by reference.
(a) With respect to the acquisition by any person of additional securities
of the Company, or the disposition of securities of the Company, the Cover
Page of the Offering Circular--Prospectus and the Sections of the Offering
Circular--Prospectus entitled "Offering Circular--Prospectus Summary--The
Transaction," "The Transaction" and "The Spin-Off" are hereby incorporated
herein by reference.
(b) - (j) Not applicable.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
(a) Except as set forth in the first paragraph of the section of the
Offering Circular--Prospectus entitled "Relationship Between Materials and
Lockheed Martin--Other" which is hereby incorporated herein by
3
reference, no transaction with respect to the Shares was effected during the
period of 40 business days prior to the date hereof by the Company, or to the
Company's knowledge, its directors or executive officers, or any of the
directors or executive officers of any of its subsidiaries, or any associate
or subsidiary of any such person (including any director or executive officer
of any such subsidiary).
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE ISSUER'S SECURITIES.
Neither the Company nor, to the best of the Company's knowledge, any of its
directors or executive officers, or any of the directors or executive officers
of any of its subsidiaries, is party to any contract, arrangement,
understanding or relationship relating, directly or indirectly, to the
Exchange Offer with respect to any securities of the Company required to be
disclosed herein.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Neither the Company nor any person on behalf of the Company will pay any
commission or other remuneration to any broker, dealer, salesman or other
person for soliciting exchanges of the Shares except as set forth in the
section of the Offering Circular--Prospectus entitled "The Exchange Offer--
Fees and Expenses" which is hereby incorporated herein by reference. Regular
employees of the Company may solicit exchanges from holders of the Shares but
they will not receive additional compensation therefor.
ITEM 7. FINANCIAL INFORMATION.
(a) (1)-(3) Reference is made to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1995 and the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1996, and the financial statements
included therein, said reports are incorporated by reference in the Offering
Circular--Prospectus, and the sections of the Offering Circular--Prospectus
entitled "Offering Circular--Prospectus Summary--Summary Consolidated
Financial Data of Lockheed Martin" and "Selected Consolidated Financial Data
of Lockheed Martin"; said sections and financial statements are hereby
incorporated herein by reference.
(a) (4) With respect to the book value per share, reference is made to the
sections in the Offering Circular--Prospectus entitled "Offering Circular--
Prospectus Summary--Summary Consolidated Financial Data of Lockheed Martin"
and "Selected Consolidated Financial Data of Lockheed Martin"; said sections
are hereby incorporated herein by reference.
(b) Reference is made to the sections of the Offering Circular--Prospectus
entitled "Unaudited Pro Forma Combined Condensed Earnings Data of Lockheed
Martin"; said section is hereby incorporated herein by reference.
ITEM 8. ADDITIONAL INFORMATION.
(a) None.
(b) The information set forth in the section of the Offering Circular--
Prospectus entitled "The Transaction--Regulatory Approvals" is hereby
incorporated herein by reference.
(c) Not applicable.
(d) None.
(e) Additional information with respect to the Exchange Offer and related
matters is included throughout the Offering Circular--Prospectus and the
Letter of Transmittal, which are attached hereto as Exhibits A(2) and A(4),
respectively and which are hereby incorporated herein by reference in its
entirety. The Company is not aware of any jurisdiction in which the making of
the Exchange Offer or the tender of the Shares would not be in compliance with
the laws of such jurisdiction. However, the Company reserves the right to
exclude holders in
4
any jurisdiction in which it is asserted that the Exchange Offer cannot
lawfully be made. So long as the Company makes a good faith effort to comply
with any state law deemed applicable to the Exchange Offer, if it cannot do
so, the Company believes that the exclusion of holders residing in such
state(s) is permitted under Rule 13e-4 (f) (9) promulgated under the Exchange
Act.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a) (1) Press Releases dated July 26, 1996 and September 16, 1996.
(a) (2) Offering Circular--Prospectus dated September 16, 1996.
(a) (3) Letter dated September 16, 1996, from the Chairman and Vice
Chairman and Chief Executive Officer, to the Company's
Stockholders.
(a) (4) Letter of Transmittal.
(a) (5) Letter from the Company to Securities Dealers, Commercial Banks,
Trust Companies and other Nominees.
(a) (6) Form of Letter to Clients.
(a) (7) Notice of Guaranteed Delivery.
(a) (8) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a) (9) Question and Answer Letter.
(a) (10) Letter to holders of unexchanged certificates.
(a) (11) Procedures for participants in Lockheed Martin employee benefit
plans.
(a) (12) Letter to participants in Lockheed Martin employee benefit plans
from trustees.
(a) (13) Instructions card for participants in Lockheed Martin employee
benefit plans.
(a) (14) Advertisement to be printed in the Wall Street Journal on September
16, 1996.
(b) Not applicable.
(c) Not applicable.
(d) Opinion of King & Spalding.
(e) See Exhibit (a) (2) above.
(f) Not applicable.
5
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Dated: September 16, 1996
Lockheed Martin Corporation
By /s/ Stephen M. Piper
----------------------------------
Name: Stephen M. Piper
Title: Assistant General Counsel
and Assistant Secretary
6
Exhibit 99.A1
[LOGO OF LOCKHEED MARTIN APPEARS HERE]
Information FOR IMMEDIATE RELEASE
---------------------
MARTIN MARIETTA MATERIALS
FILES REGISTRATION STATEMENT
FOR SPLIT-OFF FROM LOCKHEED MARTIN
BETHESDA, Maryland and RALEIGH, North Carolina, July 26 -- Lockheed Martin
Corporation (NYSE: LMT) and Martin Marietta Materials (NYSE: MLM) jointly
announced today that Martin Marietta Materials has filed a registration
statement with the Securities and Exchange Commission (SEC) outlining a
split-off plan for the 81 percent interest in Materials currently owned by
Lockheed Martin.
The proposed split-off would be achieved through an exchange offer whereby
Lockheed Martin stockholders would be given an opportunity to exchange some or
all of their Lockheed Martin common stock for Martin Marietta Materials common
stock currently held by Lockheed Martin. Following review by the SEC and
depending on market conditions, the split-off is expected to be completed in the
fourth quarter of this year. Specific terms of the transaction will be provided
to Lockheed Martin stockholders by means of an Offering Circular-Prospectus at
the commencement of the exchange offer.
Martin Marietta Materials, with sales of more than $660 million in 1995, is the
second-largest producer of construction aggregates in the United States and is a
leading producer of magnesia-based products. Headquartered in Raleigh, North
Carolina, Martin Marietta Materials has been a publicly-traded company since its
initial public offering in February 1994.
(more)
-2-
Norman R. Augustine, vice chairman and chief executive officer of Lockheed
Martin, commented, "The proposed split-off is intended to achieve key goals of
both corporations: it permits Lockheed Martin's management to better focus on
its core technology businesses, and it provides Martin Marietta Materials an
increased ability to pursue its growth strategy by facilitating the use of its
common stock to finance acquisitions."
Lockheed Martin, headquartered in Bethesda, Maryland, employs approximately
190,000 people worldwide, and is a highly diversified, advanced technology
Corporation with core businesses in aeronautics, electronics, energy and
environment, information and technology services, space and missiles, and
tactical systems.
# # #
0726/2696
CONTACT: Charles Manor, Lockheed Martin News & Information, 301/897-6258
Janice Henry, Martin Marietta Materials, 919/781-4550
[LOGO OF LOCKHEED MARTIN APPEARS HERE]
Information FOR IMMEDIATE RELEASE
---------------------
LOCKHEED MARTIN COMMENCES EXCHANGE OFFER
FOR MARTIN MARIETTA MATERIALS COMMON STOCK
BETHESDA, Maryland, September 16 - Lockheed Martin Corporation (NYSE:LMT) today
announced it is commencing an exchange offer to its shareholders to exchange
4.72 shares of Martin Marietta Materials,Inc., (NYSE:MLM) common stock owned by
Lockheed Martin for each share of Lockheed Martin common stock validly
tendered, up to a maximum of 7,913,136 shares of Lockheed Martin.
The exchange offer, which is being made by means of an offering circular-
prospectus, will expire at midnight EDT on Friday, October 18, unless extended.
The exchange agent for the offer is First Chicago Trust Company of New York and
the dealer manager in the U.S. is Morgan Stanley and Co., Incorporated. Copies
of the offering circular-prospectus can be obtained from the information agent,
Morrow, & Co., Inc.
The exchange offer is contingent upon, among other requirements, at least
5,275,424 shares of Lockheed Martin common stock being validly tendered and not
withdrawn on or prior to the extension date.
"This split-off is intended to achieve strategic goals of both Lockheed Martin
and Martin Marietta Materials," said Norman R. Augustine, vice chairman and
chief executive officer of Lockheed Martin, "enabling Lockheed Martin management
to sharpen its focus on core businesses and providing Martin Marietta Materials
the enhanced ability to pursue an aggressive growth strategy by facilitating the
use of its common stock to finance acquisitions."
(more)
-2-
Lockheed Martin is a diversified enterprise principally engaged in the research,
development, design, manufacture and integration of advanced-technology products
and services. The Corporation conducts its business through six major sectors:
Aeronautics, C/(3)/I & Systems Integration, Electronics, Energy & Environment,
Information & Services and Space & Strategic Missiles. The Corporation,
headquartered in Bethesda, employs approximately 190,000 people worldwide and
has annualized sales of nearly $30 billion.
Martin Marietta Materials, with sales of more than $660 million in 1995, is the
second-largest producer in the U.S. of aggregates used for the construction of
highways and other infrastructure projects, and for commercial and residential
construction. Through its Magnesia Specialties division, it also is one of the
nation's leading producers of magnesia-based products used in the steel industry
and other industrial, agricultural and environmental applications.
Headquartered in Raleigh, Martin Marietta Materials has been a publicly traded
company since its initial public offering in February 1994. Lockheed Martin
beneficially owns approximately 81% of the outstanding shares of Martin Marietta
Materials common stock and is making the exchange offer to facilitate the
separation of Martin Marietta Materials' aggregates and magnesia specialties
operations from Lockheed Martin's core aerospace and defense businesses in a
manner that is tax free to stockholders.
###
0916/1696
CONTACT: Charles Manor, Lockheed Martin News & Information, 301/897-6258
Janice Henry, Martin Marietta Materials, 919/781-4550
Morrow & Co., Inc. (Information Agent), 800/566-9058
Banks and Brokerage Firms call 800/662-5200
OFFERING CIRCULAR--PROSPECTUS
Lockheed Martin Corporation
Offer to Exchange
4.72 shares of Common Stock
of
Martin Marietta Materials, Inc.
for each share of Common Stock
of
Lockheed Martin Corporation
----------------
THE EXCHANGE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON OCTOBER 18, 1996, UNLESS THE EXCHANGE
OFFER IS EXTENDED.
----------------
Lockheed Martin Corporation, a Maryland corporation ("Lockheed Martin"), has
determined to distribute the shares it owns of Martin Marietta Materials,
Inc., a North Carolina corporation ("Materials" or the "Company"), to Lockheed
Martin stockholders by offering to exchange 4.72 shares of Common Stock of
Materials, par value $.01 per share ("Materials Common Stock"), for each share
tendered of Common Stock of Lockheed Martin, par value $1.00 per share
("Lockheed Martin Common Stock"), up to an aggregate of 7,913,136 shares of
Lockheed Martin Common Stock tendered and exchanged, upon the terms and
subject to the conditions set forth herein and in the related Letter of
Transmittal (which together constitute the "Exchange Offer"). A holder of
Lockheed Martin Common Stock has the right to tender all or a portion of such
holder's shares of Lockheed Martin Common Stock. As of September 16, 1996,
Lockheed Martin owned 37,350,000 shares of Materials Common Stock. If more
than 7,913,136 shares of Lockheed Martin Common Stock are validly tendered and
not withdrawn on or prior to the Expiration Date (as defined herein) of the
Exchange Offer, Lockheed Martin will accept such shares for exchange on a pro
rata basis as described herein. The Exchange Offer is subject to certain
conditions as set forth under "The Exchange Offer--Certain Conditions to the
Exchange Offer," including at least 5,275,424 shares of Lockheed Martin Common
Stock (approximately 2.6% of the outstanding Lockheed Martin Common Stock,
which is a sufficient number of shares to result in at least 66 2/3% of the
Materials Common Stock owned by Lockheed Martin being exchanged pursuant to
the Exchange Offer) being validly tendered and not withdrawn prior to the
Expiration Date of the Exchange Offer. If fewer than 7,913,136 shares of
Lockheed Martin Common Stock (but at least 5,275,424 shares) are tendered and
exchanged for Materials Common Stock pursuant to the Exchange Offer and
Lockheed Martin accordingly continues to own shares of Materials Common Stock
after consummation of the Exchange Offer, as soon as practicable thereafter
Lockheed Martin will effect a pro rata distribution of its remaining shares of
Materials Common Stock to holders of record of Lockheed Martin Common Stock
remaining after consummation of the Exchange Offer (the "Spin-Off"; together
with the Exchange Offer, the "Transaction").
(Continued on following page)
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
----------------
The Dealer Manager for the Exchange Offer is:
MORGAN STANLEY & CO.
Incorporated
The date of this Offering Circular-Prospectus is September 16, 1996.
(Cover continued from previous page)
Neither the Board of Directors of Lockheed Martin or Lockheed Martin nor the
Board of Directors of Materials or Materials makes any recommendation to any
stockholder as to whether to tender or refrain from tendering shares of
Lockheed Martin Common Stock pursuant to the Exchange Offer. Each stockholder
of Lockheed Martin must make his or her own decision as to whether to tender
pursuant to the Exchange Offer and, if so, how many shares to tender after
reading this Offering Circular-Prospectus and consulting with his or her
advisors based on his or her own financial position and requirements.
SEE "RISK FACTORS" COMMENCING ON PAGE 14 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH THE EXCHANGE OFFER.
The shares of Lockheed Martin Common Stock are listed and traded on the New
York Stock Exchange, Inc. (the "NYSE"). The shares of Materials Common Stock
are also listed and traded on the NYSE. On July 25, 1996, the last trading day
prior to the announcement of the Transaction, the closing sale prices as
reported in the consolidated transactions reporting system on the NYSE per
share of Lockheed Martin Common Stock and Materials Common Stock were $80 5/8
and $22 1/2, respectively. On September 13, 1996, the last trading day before
Lockheed Martin commenced the Exchange Offer, the closing sale prices as
reported in the consolidated transactions reporting system on the NYSE per
share of Lockheed Martin Common Stock and Materials Common Stock were $87 3/8
and $21 3/4, respectively. As of August 31, 1996, 200,263,185 shares of
Lockheed Martin Common Stock were outstanding, held of record by approximately
41,058 holders.
Any stockholder desiring to accept the Exchange Offer should either (1)
request his or her broker, dealer, commercial bank, trust company or nominee
to effect the transactions for him or her or (2) complete the Letter of
Transmittal or a facsimile thereof, sign it in the place required, have the
signature thereon guaranteed if required by the Letter of Transmittal and
forward it and any other required documents to First Chicago Trust Company of
New York (the "Exchange Agent"), and either deliver the certificates for such
shares of Lockheed Martin Common Stock to the Exchange Agent along with the
Letter of Transmittal or tender such shares of Lockheed Martin Common Stock
pursuant to the procedure for book-entry transfer set forth in "The Exchange
Offer--Procedures for Tendering Shares of Lockheed Martin Common Stock."
Stockholders having shares of Lockheed Martin Common Stock registered in the
name of a broker, dealer, commercial bank, trust company or nominee must
contact such person if they desire to tender their shares of Lockheed Martin
Common Stock. Lockheed Martin will not pay any fees or commissions to any
broker or dealer or any other person (other than the Dealer Manager and the
Soliciting Dealers (as defined herein)) for soliciting shares of Lockheed
Martin Common Stock pursuant to the Exchange Offer. See "The Exchange Offer--
Fees and Expenses." Stockholders who wish to tender shares of Lockheed Martin
Common Stock and whose certificates for such shares are not immediately
available should tender such shares by following the procedures for guaranteed
delivery set forth in "The Exchange Offer--Guaranteed Delivery Procedures."
LETTERS OF TRANSMITTAL AND CERTIFICATES FOR SHARES OF LOCKHEED MARTIN COMMON
STOCK SHOULD NOT BE SENT TO LOCKHEED MARTIN, MATERIALS, THE INFORMATION AGENT,
THE DEALER MANAGER OR ANY SOLICITING DEALERS.
Certain employees of Lockheed Martin and its subsidiaries participate in
employee benefit plans which permit the investment of all or a portion of
their account balances in shares of Lockheed Martin Common Stock. The plan
trustee is the stockholder of record for such plans. However, certain of these
plans provide that in the case of a transaction such as the Exchange Offer,
participants are entitled to direct the trustee as to whether or not to
exchange shares of Lockheed Martin Common Stock attributable to their accounts
for shares of Materials Common Stock ("Participant Directed Plans").
Participants in Participant Directed Plans will receive information from the
respective plan trustee as to the procedure for providing the trustee with
2
directions as to how to respond to the Exchange Offer with respect to shares
of Lockheed Martin Common Stock attributable to the participant's account.
With respect to the shares of Lockheed Martin Common Stock not allocated to
any participant's account in a Participant Directed Plan or shares held in an
employee benefit plan which is not a Participant Directed Plan, the trustee of
the applicable plan will determine whether or not to exchange shares of
Lockheed Martin Common Stock attributable to the participant's account for
shares of Materials Common Stock.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THIS
OFFERING CIRCULAR-PROSPECTUS AND THE LETTER OF TRANSMITTAL SHOULD BE DIRECTED
TO MORROW & CO., INC. (THE "INFORMATION AGENT") OR THE DEALER MANAGER, MORGAN
STANLEY & CO. INCORPORATED, AT THEIR RESPECTIVE ADDRESSES AND TELEPHONE
NUMBERS SET FORTH ON THE BACK COVER HEREOF.
No person has been authorized to give any information or to make any
representations other than those contained in this Offering Circular-
Prospectus, and, if given or made, such information or representations must
not be relied upon as having been authorized by Lockheed Martin or Materials
or any other person. This Offering Circular-Prospectus does not constitute an
offer to sell, or the solicitation of an offer to buy, any securities other
than the securities to which it relates or any offer to sell, or the
solicitation of an offer to buy, such securities in any circumstances in which
such offer or solicitation is unlawful. Neither the delivery of this Offering
Circular-Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of Lockheed Martin or Materials since the date hereof or that the
information contained herein is correct as of any time subsequent to its date.
All information contained herein regarding Lockheed Martin has been supplied
by authorized representatives of Lockheed Martin; all information contained
herein regarding Materials has been supplied by authorized representatives of
Materials.
In accordance with various state securities laws applicable to the Exchange
Offer which require the Exchange Offer to be made to the public by a licensed
broker or dealer, the Exchange Offer is hereby made to stockholders residing
in each such state by Morgan Stanley & Co. Incorporated, as Dealer Manager, on
behalf of Lockheed Martin.
AVAILABLE INFORMATION
Materials has filed a Registration Statement on Form S-4 under the
Securities Act of 1933, as amended (the "Securities Act"), with the Securities
and Exchange Commission (the "Commission") with respect to the securities
offered hereby (the "Registration Statement"). Lockheed Martin has filed a
Schedule 13E-4 Issuer Tender Offer Statement (the "Schedule 13E-4") under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), with the
Commission with respect to the Exchange Offer. This Offering Circular-
Prospectus does not contain all the information set forth in the Registration
Statement, the Schedule 13E-4 and the exhibits thereto, to which reference is
hereby made. Statements contained in this Offering Circular-Prospectus as to
the contents of any contract or other document referred to are not necessarily
complete and in each instance reference is made to the copy of such contract
or other document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference. The material
features of any such contract or other document are described herein.
Each of Lockheed Martin and Materials is subject to the informational
requirements of the Exchange Act and in accordance therewith files reports,
proxy and information statements and other information with the Commission.
The Registration Statement, the Schedule 13E-4, and such reports, proxy and
information statements and other information can be inspected and copied at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices
at
3
the Citicorp Center, 500 West Madison, Room 1400, Chicago, Illinois 60661 and
7 World Trade Center, 13th Floor, New York, New York 10048. Copies of such
material can also be obtained at prescribed rates by writing to the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549. The Commission also maintains a Web site at http:/www.sec.gov
which contains reports, proxy statements and other information regarding
registrants that file electronically with the Commission. In addition,
reports, proxy and information statements and other information concerning
Lockheed Martin and Materials can be inspected at the offices of the NYSE, 20
Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents have been filed by Lockheed Martin with the
Commission pursuant to the Exchange Act and are incorporated herein by
reference and made a part of this Offering Circular-Prospectus: (i) Lockheed
Martin's Annual Report on Form 10-K for the fiscal year ended December 31,
1995; (ii) Lockheed Martin's Quarterly Reports on Form 10-Q for the quarterly
periods ended March 31, 1996 and June 30, 1996; (iii) the description of
Lockheed Martin Common Stock contained in Lockheed Martin's registration
statement under the Exchange Act with respect to Lockheed Martin Common Stock
filed with the Commission, including any amendments or reports filed for the
purpose of updating that description; and (iv) Lockheed Martin's reports on
Form 8-K filed on the following dates: January 12, 1996, April 5, 1996, May 2,
1996 (amended May 8, 1996), May 20, 1996, May 28, 1996, June 18, 1996 and June
25, 1996. The following documents have been filed by Materials with the
Commission pursuant to the Exchange Act and are incorporated herein by
reference and made a part of this Offering Circular-Prospectus: (i) Materials'
Annual Report on Form 10-K for the fiscal year ended December 31, 1995;
(ii) Materials' Quarterly Reports on Form 10-Q for the quarterly periods ended
March 31, 1996 and June 30, 1996; (iii) the sections entitled "Beneficial
Ownership of Shares," "Executive Compensation" (except the "Report of the
Compensation and Equity-Related Awards Committees on Executive Compensation"
and the "Performance Graph"), and "Compensation Committee Interlocks and
Insider Participation in Compensation Decisions" of Materials' Proxy
Statement, filed with the Commission on March 27, 1996; and (iv) the
description of Materials Common Stock contained in Materials' registration
statement under the Exchange Act with respect to Materials Common Stock filed
with the Commission, including any amendments or reports filed for the purpose
of updating that description.
All documents and reports filed by Lockheed Martin or Materials with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Offering Circular-Prospectus and prior to the
termination of the offering of the shares of Materials Common Stock shall be
deemed to be incorporated herein by reference and made a part of this Offering
Circular-Prospectus from the date of filing of such documents or reports. Any
statement contained in a document or report incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Offering Circular-Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of this
Offering Circular-Prospectus.
This Offering Circular-Prospectus incorporates documents by reference that
are not presented herein or delivered herewith. Copies of documents
incorporated by reference (other than exhibits to such documents, unless such
exhibits are specifically incorporated by reference into such documents) are
available without charge to any person, including any beneficial owner, to
whom this Offering Circular-Prospectus is delivered upon written or oral
request to the Information Agent, Morrow & Co., Inc., telephone number (800)
566-9058. In order to ensure timely delivery of the documents, any request
should be made prior to October 11, 1996.
4
TABLE OF CONTENTS
AVAILABLE INFORMATION..................................................... 3
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE......................... 4
OFFERING CIRCULAR--PROSPECTUS SUMMARY..................................... 6
Lockheed Martin Corporation.............................................. 6
Martin Marietta Materials, Inc........................................... 6
Risk Factors............................................................. 7
The Transaction.......................................................... 7
Purpose and Effects of the Transaction................................... 7
Price Range and Dividends................................................ 8
The Exchange Offer....................................................... 9
Summary Consolidated Financial Data of Materials......................... 12
Summary Consolidated Financial Data of Lockheed Martin................... 13
RISK FACTORS.............................................................. 14
Tendering and Nontendering Stockholders Affected Differently by the
Transaction............................................................. 14
Tax Treatment of the Transaction......................................... 14
Market Uncertainties with Respect to Materials Common Stock and Lockheed
Martin Common Stock..................................................... 14
Cyclicality and Seasonality of Aggregates Business....................... 15
Geographic Concentration of Aggregates Business.......................... 15
Dependence of Magnesia-based Product Sales on Steel Industry;
Competition............................................................. 15
Environmental and Other Regulatory Matters; Litigation................... 15
Anti-Takeover Provisions................................................. 16
FORWARD LOOKING STATEMENTS--SAFE HARBOR PROVISIONS........................ 16
PURPOSE AND EFFECTS OF THE TRANSACTION.................................... 17
THE TRANSACTION........................................................... 18
General.................................................................. 18
Regulatory Approvals..................................................... 19
Appraisal Rights......................................................... 19
Accounting Treatment of the Transaction.................................. 19
THE EXCHANGE OFFER........................................................ 19
Terms of the Exchange Offer.............................................. 19
Tenders for Exchange by Holders of Fewer Than 100 Shares of Lockheed
Martin Common Stock..................................................... 21
Exchange of Shares of Lockheed Martin Common Stock....................... 22
Procedures for Tendering Shares of Lockheed Martin Common Stock.......... 23
Procedures for Tendering Dividend Reinvestment and Stock Purchase Plan
Shares of Lockheed Martin Common Stock.................................. 25
Guaranteed Delivery Procedures........................................... 25
Withdrawal Rights........................................................ 26
Extension of Tender Period; Termination; Amendment....................... 26
Certain Conditions of the Exchange Offer................................. 27
Fees and Expenses........................................................ 29
Miscellaneous............................................................ 30
THE SPIN-OFF.............................................................. 31
PRICE RANGE OF LOCKHEED MARTIN COMMON STOCK AND DIVIDENDS................. 32
PRICE RANGE OF MATERIALS COMMON STOCK AND DIVIDENDS....................... 33
UNAUDITED PRO FORMA COMBINED CONDENSED EARNINGS DATA OF LOCKHEED MARTIN... 34
SELECTED CONSOLIDATED FINANCIAL DATA OF LOCKHEED MARTIN................... 35
SELECTED CONSOLIDATED FINANCIAL DATA OF MATERIALS......................... 36
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF MATERIALS.................................................. 38
Overview................................................................. 38
Business Environment..................................................... 38
Business Combination With Dravo.......................................... 40
Results of Operations.................................................... 41
Liquidity and Capital Resources.......................................... 45
Other Matters............................................................ 46
MANAGEMENT OF MATERIALS................................................... 48
Directors and Executive Officers......................................... 48
Biographies.............................................................. 48
BUSINESS OF MATERIALS..................................................... 50
Strategy................................................................. 50
Overview of Aggregates Industry.......................................... 52
Aggregates Division...................................................... 54
Magnesia Specialties Division............................................ 57
Competition.............................................................. 58
Environmental Regulations................................................ 59
Employees................................................................ 59
PRINCIPAL STOCKHOLDER..................................................... 59
SHARES ELIGIBLE FOR FUTURE SALE........................................... 59
COMPARISON OF RIGHTS OF STOCKHOLDERS OF LOCKHEED MARTIN AND MATERIALS..... 60
Amendments to the Charter................................................ 60
Amendments to the Bylaws................................................. 60
Number of Directors...................................................... 61
Staggered Board of Directors............................................. 61
Removal of Directors..................................................... 62
Vacancies in the Board of Directors...................................... 62
Special Meetings of Stockholders......................................... 63
Notice of Stockholder Meetings........................................... 63
Cumulative Voting in Certain Circumstances............................... 63
Indemnification and Limitation of Liability.............................. 64
Vote Required for Certain Extraordinary Transactions..................... 65
Control Share Acquisitions............................................... 65
Business Combinations.................................................... 66
Dissenters' Rights....................................................... 67
Authorized Shares of Stock............................................... 68
Shareholder Rights Plan.................................................. 68
CERTAIN MATTERS RELATING TO LOCKHEED MARTIN SERIES A PREFERRED STOCK...... 68
RELATIONSHIP BETWEEN MATERIALS AND LOCKHEED MARTIN........................ 69
The Tax Sharing, Supplemental Tax Sharing and Tax Assurance Agreements... 70
Transfer Agreements...................................................... 70
Intercompany Loan Agreements............................................. 70
Transition Agreement..................................................... 71
Corporate Agreement...................................................... 72
Other.................................................................... 72
CERTAIN FEDERAL INCOME TAX CONSEQUENCES................................... 73
LEGAL MATTERS............................................................. 76
EXPERTS................................................................... 76
5
OFFERING CIRCULAR--PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information included or incorporated by reference in this Offering Circular-
Prospectus.
LOCKHEED MARTIN CORPORATION
Lockheed Martin is a diversified enterprise principally engaged in the
conception, research, development, design, manufacture and integration of
advanced technology products and services. Lockheed Martin conducts its
business through six major operating sectors: Space & Strategic Missiles;
Aeronautics; Information & Services; C/3/I & Systems Integration; Electronics;
and Energy & Environment. The business of Lockheed Martin consists of the
businesses previously conducted by Lockheed Corporation ("Lockheed") and Martin
Marietta Corporation ("Martin Marietta") and their respective subsidiaries and
the businesses of the former Loral Corporation recently acquired by Lockheed
Martin (the "Loral Transaction").
Lockheed Martin was incorporated in August 1994 as a Maryland corporation in
order to effect the combination (the "Combination") of the businesses of
Lockheed with the businesses of Martin Marietta. On March 15, 1995, the
Combination was consummated and Martin Marietta and Lockheed became wholly
owned subsidiaries of Lockheed Martin. Subsequently, Martin Marietta and
Lockheed were merged into Lockheed Martin.
Lockheed Martin's principal executive offices are located at 6801 Rockledge
Drive, Bethesda, Maryland 20817-1877, and its telephone number is (301) 897-
6000.
MARTIN MARIETTA MATERIALS, INC.
The Company is the United States' second largest producer of aggregates used
for the construction of highways and other infrastructure projects and for
commercial and residential construction, based on tons shipped. In 1995, the
Company's Aggregates division shipped approximately 94 million tons of
aggregates, primarily crushed stone, from more than 200 quarries and
distribution yards in 19 states in the Southeast, Midwest and Central states,
and in Canada and the Bahamas, generating net sales of $538.8 million. Since
the Materials IPO (as defined below), the Company has increased its annual
aggregates production capacity by almost 40%, from 84 million tons in 1993 to
117.3 million tons in 1995, primarily as a result of the acquisition of Dravo
Corporation's construction aggregates business ("Dravo Aggregates"), as well as
numerous smaller acquisitions and the opening of greensites. In addition to
expanding the Company's aggregates capacity and markets, the acquisition of
Dravo Aggregates complemented the Company's distribution channels with an
extensive river barge and ocean-going vessel distribution system and
significantly expanded its presence in the nonconstruction aggregates markets,
including markets for chemical and industrial applications.
The Company, through its Magnesia Specialties division, is also one of the
nation's leading producers of dolomitic lime; magnesia-based products,
including heat-resistant refractory products used in the steel industry; and
magnesia-based chemical products for industrial, agricultural and environmental
uses, including wastewater treatment and acid neutralization. In 1995, the
division's sales were $125.6 million.
Materials was formed in November 1993 as a North Carolina corporation to be
the successor to substantially all of the assets and liabilities of the
materials group of Martin Marietta and its subsidiaries. An initial public
offering of a portion of the Materials Common Stock was completed in February
1994 (the "Materials IPO") whereby 8,797,500 shares of Materials Common Stock
(representing approximately 19% of the shares outstanding) were sold. As of
September 16, 1996, Lockheed Martin beneficially owned approximately 81% of the
outstanding shares of Materials Common Stock.
6
Materials' principal executive offices are located at 2710 Wycliff Road,
Raleigh, North Carolina 27607-3033, and its telephone number is (919) 781-4550.
RISK FACTORS
Certain risk factors should be considered in evaluating an investment in the
Materials Common Stock offered hereby: tendering and nontendering stockholders
affected differently by the Transaction; tax treatment of the Transaction;
market uncertainties with respect to Materials Common Stock and Lockheed Martin
Common Stock; cyclicality and seasonality of aggregates business; geographic
concentration of aggregates business; dependence of magnesia-based product
sales on steel industry; competition; environmental and other regulatory
matters affecting Materials; and anti-takeover provisions. See "Risk Factors."
THE TRANSACTION
Pursuant to the Exchange Offer, Lockheed Martin is offering, upon the terms
and subject to the conditions thereof, to exchange 4.72 shares of Materials
Common Stock for each share of Lockheed Martin Common Stock tendered, up to an
aggregate of 7,913,136 shares of Lockheed Martin Common Stock. As of August 31,
1996, there were 200,263,185 shares of Lockheed Martin Common Stock
outstanding.
If fewer than 7,913,136 shares of Lockheed Martin Common Stock (but at least
5,275,424 shares) are tendered and exchanged for Materials Common Stock
pursuant to the Exchange Offer and Lockheed Martin accordingly continues to own
shares of Materials Common Stock after consummation of the Exchange Offer,
Lockheed Martin will, as soon as practicable thereafter, effect the Spin-Off of
the remaining shares of Materials Common Stock owned by Lockheed Martin as a
pro rata distribution to holders of Lockheed Martin Common Stock remaining
after consummation of the Exchange Offer. As of September 16, 1996, Lockheed
Martin owned 37,350,000 shares of Materials Common Stock.
PURPOSE AND EFFECTS OF THE TRANSACTION
Lockheed Martin and Materials believe that the Transaction will advance
important business purposes of both Lockheed Martin and Materials, which
include, among other things, the following: (i) facilitating the future
issuance by Materials of its stock to finance strategic acquisitions in pursuit
of its growth strategy; (ii) permitting Materials to implement more effective
management stock incentive programs and employee stock compensation programs;
(iii) allowing Materials to have direct control over its administrative costs
and allowing Materials' credit rating to be evaluated independently of Lockheed
Martin's; (iv) facilitating potential future equity offerings by Lockheed
Martin; and (v) allowing Lockheed Martin to focus on its core businesses. For
these and other reasons, Lockheed Martin believes that the Transaction will
also enhance shareholder value for both Lockheed Martin and Materials.
Following the Transaction and consistent with Lockheed Martin's plan to
generate cash to reduce debt, Lockheed Martin anticipates that, subject to
prevailing financial, market and economic conditions, it will divest other non-
core businesses and will consider making a public offering of shares of
Lockheed Martin Common Stock to further reduce outstanding debt. Any public
offering will be made only by means of a prospectus.
As a result of the Transaction, all of Lockheed Martin's approximately 81%
interest in the Materials Common Stock will be exchanged with Lockheed Martin
stockholders who participate in the Exchange Offer or, if applicable,
distributed to the Lockheed Martin stockholders in the Spin-Off.
7
PRICE RANGE AND DIVIDENDS
Lockheed Martin Common Stock and Materials Common Stock are each listed on
the NYSE. From the commencement of trading on March 16, 1995 to September 13,
1996, the high and low sale prices per share of Lockheed Martin Common Stock as
reported in the consolidated transactions reporting system on the NYSE were $88
1/2 and $50, respectively. Following the Combination, Lockheed Martin paid
quarterly dividends of $0.35 per share. Pursuant to a settlement of certain
stockholder litigation in connection with the Combination, Lockheed Martin
agreed to increase its regular quarterly dividend by $0.05 per share for each
of the first three quarters of 1996. On July 25, 1996, Lockheed Martin
announced that its Board of Directors had declared a quarterly cash dividend of
$0.40 per share payable on September 30, 1996 to holders of record on September
3, 1996. The declaration and payment of future dividends to holders of Lockheed
Martin Common Stock will be at the discretion of the Board of Directors of
Lockheed Martin and will depend upon many factors, including Lockheed Martin's
competitive position, financial condition, earnings and capital requirements.
From the commencement of trading on February 17, 1994 to September 13, 1996,
the high and low sale prices per share of Materials Common Stock as reported in
the consolidated transactions reporting system on the NYSE were $25 7/8 and $16
1/2, respectively. Materials has paid quarterly cash dividends of $0.11 per
share in each quarter since the third quarter of 1994. On July 26, 1996,
Materials announced that its Board of Directors had declared a quarterly cash
dividend of $0.12 per share payable on September 30, 1996 to holders of record
on August 30, 1996. The declaration and payment of future dividends to holders
of Materials Common Stock will be at the discretion of the Board of Directors
of Materials and will depend upon many factors, including Materials's
competitive position, financial condition, earnings and capital requirements.
8
THE EXCHANGE OFFER
Terms of the Exchange
Offer....................... Lockheed Martin is offering, upon the terms and
subject to the conditions of the Exchange Offer,
to exchange 4.72 shares of Materials Common
Stock for each share of Lockheed Martin Common
Stock tendered, up to an aggregate of 7,913,136
shares of Lockheed Martin Common Stock. A holder
of Lockheed Martin Common Stock has the right to
tender all or a portion of such holder's shares
of Lockheed Martin Common Stock. If fewer than
7,913,136 shares of Lockheed Martin Common Stock
(but at least 5,275,424 shares) are validly
tendered and not properly withdrawn pursuant to
the Exchange Offer and the Exchange Offer is
consummated, Lockheed Martin will distribute the
remaining shares of Materials Common Stock pro
rata to remaining holders of Lockheed Martin
Common Stock as soon as practicable after
consummation of the Exchange Offer. See "The
Spin-Off." If more than 7,913,136 shares of
Lockheed Martin Common Stock are validly
tendered and not properly withdrawn, then
Lockheed Martin will accept all of such shares
on a pro rata basis (except with respect to odd
lot tenders) as described herein in exchange for
the shares of Materials Common Stock. To be
eligible to receive Materials Common Stock
pursuant to the Exchange Offer, a holder of
Lockheed Martin Common Stock must validly tender
and not withdraw Lockheed Martin Common Stock on
or prior to the Expiration Date. See "The
Exchange Offer--Terms of the Exchange Offer."
Expiration Date............. 12:00 Midnight, New York City time, on October
18, 1996, unless extended, in which case the
term "Expiration Date" shall mean the last date
and time to which the Exchange Offer is
extended. See "The Exchange Offer--Extension of
Tender Period; Termination; Amendment."
Conditions of the Exchange
Offer....................... The Exchange Offer is subject to certain
conditions, including at least 5,275,424 shares
of Lockheed Martin Common Stock (approximately
2.6% of the outstanding Lockheed Martin Common
Stock, which is a sufficient number of shares of
Lockheed Martin Common Stock to result in at
least 66 2/3% of the Materials Common Stock
owned by Lockheed Martin being exchanged
pursuant to the Exchange Offer) being validly
tendered and not withdrawn prior to the
Expiration Date. All of the conditions to the
Exchange Offer may be waived in the sole
discretion of Lockheed Martin. See "The Exchange
Offer--Certain Conditions of the Exchange
Offer."
Procedures for Tendering.... To be tendered properly, certificates for shares
of Lockheed Martin Common Stock, together with a
properly completed and duly executed Letter of
Transmittal (or manually signed facsimile
thereof) or an Agent's Message (as defined
herein) in connection with a book-entry transfer
of shares and any other documents required by
the Letter of Transmittal must be received by
the Exchange Agent at one of the addresses set
forth on the back
9
cover of this Offering Circular-Prospectus prior
to 12:00 Midnight, New York City time, on the
Expiration Date, or stockholders must comply
with the specific procedures for guaranteed
delivery described herein. Certain financial
institutions may also effect tenders by book-
entry transfer through a Book-Entry Transfer
Facility (as defined herein). Holders of
Lockheed Martin Common Stock having shares
registered in the name of a broker, dealer,
commercial bank, trust company or nominee are
urged to contact such person promptly if they
wish to tender any shares of Lockheed Martin
Common Stock pursuant to the Exchange Offer. See
"The Exchange Offer--Procedures for Tendering
Shares of Lockheed Martin Common Stock."
Certain employees of Lockheed Martin and its
subsidiaries participate in employee benefit
plans which permit the investment of all or a
portion of their account balances in shares of
Lockheed Martin Common Stock. The plan trustee
is the stockholder of record for such plans.
However, participants in Participant Directed
Plans are entitled to direct the trustee as to
whether or not to exchange shares of Lockheed
Martin Common Stock attributable to their
accounts for shares of Materials Common Stock.
Such participants will receive information from
the respective plan trustee as to the procedure
for providing the trustee with directions on how
to respond to the Exchange Offer with respect to
shares of Lockheed Martin Common Stock
attributable to the participant's account. With
respect to the shares of Lockheed Martin Common
Stock not allocated to any participant's account
in a Participant Directed Plan or shares held in
an employee benefit plan which is not a
Participant Directed Plans, the trustee of the
applicable plan will determine whether or
not to exchange shares of Lockheed Martin Common
Stock attributable to the participant's account
for shares of Materials Common Stock.
Proration................... If more than 7,913,136 shares of Lockheed Martin
Common Stock have been validly tendered for
exchange and not withdrawn on or prior to the
Expiration Date, Lockheed Martin will accept
such shares on a pro rata basis, except that any
holder of shares of Lockheed Martin Common Stock
(other than participants in employee benefit
plans of Lockheed Martin or its subsidiaries)
who beneficially owns fewer than 100 shares of
Lockheed Martin Common Stock (an "Odd Lot") and
who validly tenders and does not withdraw all
such shares of Lockheed Martin Common Stock
prior to the Expiration Date will not be subject
to proration if such holder completes the box
captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of
Guaranteed Delivery. See "The Exchange Offer--
Tenders for Exchange by Holders of Fewer than
100 Shares of Lockheed Martin Common Stock."
10
Withdrawal Rights........... Subject to the conditions set forth herein,
tenders of Lockheed Martin Common Stock may be
withdrawn at any time on or prior to the
Expiration Date, and, unless theretofore
accepted for exchange, after November 12, 1996.
See "The Exchange Offer--Withdrawal Rights."
No Fractional Shares........ No fractional shares of Materials Common Stock
will be distributed. Holders of Lockheed Martin
Common Stock who would otherwise be entitled to
receive a fractional share of Materials Common
Stock will be paid cash in lieu of such
fractional share. See "The Exchange Offer."
Delivery of Materials
Common Stock................ Lockheed Martin will deliver shares of Materials
Common Stock and cash in lieu of fractional
shares as soon as practicable after acceptance
of Lockheed Martin Common Stock for exchange.
See "The Exchange Offer--Exchange of Shares of
Lockheed Martin Common Stock."
Exchange Agent.............. First Chicago Trust Company of New York is
serving as the Exchange Agent in connection with
the Exchange Offer.
Information Agent........... Morrow & Co., Inc. is serving as the Information
Agent in connection with the Exchange Offer. Its
telephone number is (800) 566-9058.
Certain Federal Income Tax
Consequences of the
Transaction................ Lockheed Martin has received a legal opinion (the
"Opinion") from King & Spalding, special tax
counsel to Lockheed Martin, stating its opinion
that, for federal income tax purposes, the
Transaction will qualify as a fully tax-free
distribution under Section 355 of the Internal
Revenue Code of 1986, as amended (the "Code").
For a more complete discussion of the United
States federal income tax consequences of the
Transaction to holders of Lockheed Martin Common
Stock, see "Certain Federal Income Tax
Consequences."
Regulatory Approvals........ Except with respect to possible filings under the
Hart-Scott-Rodino Antitrust Improvements Act of
1976 (the "HSR Act") under certain
circumstances, Lockheed Martin and Materials do
not believe that the receipt of any material
federal or state regulatory approvals will be
necessary in connection with the Transaction.
See "The Transaction--Regulatory Approvals."
Appraisal Rights............ No appraisal rights are available to stockholders
of Lockheed Martin or shareholders of Materials
in connection with the Transaction. See "The
Transaction--Appraisal Rights."
11
SUMMARY CONSOLIDATED FINANCIAL DATA OF MATERIALS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
SIX MONTHS
ENDED JUNE 30, FISCAL YEARS ENDED DECEMBER 31,
---------------- ---------------------------------------
1996 1995 1995(1) 1994 1993 1992 1991
------- ------- ------- ------ ------ ------ ------
STATEMENT OF EARNINGS
DATA:
Net sales............... $ 337.0 $ 305.9 $664.4 $501.7 $452.9 $408.3 $371.7
Gross profit............ 79.1 75.3 167.2 139.1 121.3 98.4 95.0
Earnings from opera-
tions.................. 48.5 45.6 107.6 91.9 76.4 55.1 55.4
Interest expense........ (5.7) (4.5) (9.7) (6.9) (3.2) (1.0) (0.8)
Other income and ex-
penses, net............ 4.3 2.6 6.0 5.4 0.9 2.5 (0.3)
Earnings before taxes on
income, net
extraordinary item and
net cumulative effect
of changes in
accounting............. 47.1 43.7 103.8 90.4 74.1 56.5 54.3
Earnings before net
extraordinary item and
net cumulative
effect of changes in
accounting............. 31.1 28.2 67.6 58.3 48.0 39.0 37.4
Net extraordinary
item(2)................ -- -- -- (4.6) -- -- --
Net cumulative effect of
changes in
accounting(3).......... -- -- -- -- (17.5) -- --
Net earnings............ 31.1 28.2 67.6 53.7 30.5 39.0 37.4
NET EARNINGS PER COMMON
SHARE:
Before extraordinary
item................... $ 0.68 $ 0.61 $ 1.47 $ 1.30
Extraordinary item...... -- -- -- (0.11)
------- ------- ------ ------
$ 0.68 $ 0.61 $ 1.47 $ 1.19
======= ======= ====== ======
SELECTED STATISTICAL AND
OPERATING DATA:
EBITDA(4)............... $ 82.8 $ 75.2 $169.2 $140.1 $114.3 $ 99.5 $ 94.4
Depreciation, depletion
and amortization....... $ 30.0 $ 27.0 $ 55.7 $ 42.8 $ 37.0 $ 42.0 $ 39.3
Capital expenditures
(including acquisi-
tions)................. $ 33.4 $ 176.9 $230.7 $ 59.5 $ 66.4 $ 57.9 $ 43.0
Tons of aggregates
shipped (in millions).. 46.0 42.2 94.0 71.2 64.9 56.5 50.3
Annual aggregates
production capacity
available at end of
period
(in millions of tons).. -- -- 117.3 85.7 84.0 80.1 74.9
AS OF JUNE 30, AS OF DECEMBER 31,
---------------- ---------------------------------------
1996 1995 1995 1994 1993 1992 1991
------- ------- ------- ------ ------ ------ ------
BALANCE SHEET DATA:
Total assets............ $ 746.4 $ 703.9 $789.4 $593.9 $497.0 $447.3 $422.5
Working capital......... 165.2 52.8 141.0 132.4 89.1 85.5 82.7
Long-term debt (includ-
ing current maturities
of long-term debt)..... 125.7 106.7 228.7 108.2 235.3 13.4 11.5
Stockholders' equi-
ty(5).................. 444.6 394.3 423.5 376.3 145.4 -- --
Business equity(5)...... -- -- -- -- -- 354.9 328.3
- --------
(1) The financial data for the year ended December 31, 1995, include the
operations of the former Dravo Basic Materials Company, Inc., from the date
of acquisition.
(2) Amount represents the net extraordinary loss on the early extinguishment of
debt associated with the February 1994 in-substance defeasance of $125
million of long-term indebtedness.
(3) Net cumulative effect of accounting changes reflects the 1993 adoption of
the change in methods of accounting for income taxes, postretirement
benefits other than pensions, and postemployment benefits.
(4) EBITDA represents earnings before taxes on income, net extraordinary item,
net cumulative effect of changes in accounting, interest expense, and
depreciation, depletion and amortization. EBITDA does not represent net
income or cash flows from operations as these terms are defined under
generally accepted accounting principles, and should not be considered as
an alternative to net income as an indicator of the Company's operating
performance or to cash flows as a measure of liquidity. The Company has
included information concerning EBITDA herein because it has been informed
that such information is useful to certain investors.
(5) The Company was incorporated in November 1993, at which time it authorized
and issued Materials Common Stock and assumed the obligations with respect
to certain indebtedness of its parent. Prior to its incorporation, the
Company was an operating division of Martin Marietta and its capitalization
did not include stockholders' equity in the form of capital stock or
significant interest-bearing indebtedness. Accordingly, the presentation of
its capitalization may not be comparable in all periods presented.
12
SUMMARY CONSOLIDATED FINANCIAL DATA OF LOCKHEED MARTIN
(IN MILLIONS, EXCEPT PER SHARE DATA)
SIX MONTHS ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
----------------- --------------------------
1996(1) 1995(2) 1995(2) 1994 1993
-------- -------- ----------------- --------
EARNINGS DATA:
Net sales
Space & Strategic Mis-
siles..................... $ 3,664 $ 3,747 $ 7,521 $ 6,719 $ 7,293
Aeronautics................ 2,500 3,242 6,617 7,091 6,601
Information & Technology
Services.................. 2,630 2,195 4,528 4,271 3,712
Electronics................ 2,965 1,650 3,294 4,055 4,092
Energy, Materials and Other
(3)....................... 426 417 893 770 699
-------- -------- -------- -------- --------
Total.................... $12,185 $11,251 $ 22,853 $ 22,906 $ 22,397
======== ======== ======== ======== ========
Operating profit
Space & Strategic Mis-
siles..................... $ 505 $ 84 $ 431 $ 476 $ 507
Aeronautics................ 230 136 394 511 479
Information & Technology
Services.................. 146 84 269 228 145
Electronics................ 249 80 261 456 331
Energy, Materials and Other
(3)....................... 66 (85) 22 308 122
-------- -------- -------- -------- --------
Total.................... $ 1,196 $ 299 $ 1,377 $ 1,979 $ 1,584
======== ======== ======== ======== ========
Net earnings................. $ 571 $ 84 $ 682 $ 1,018 $ 829
Earnings per common share:
Assuming no dilution....... $ 2.85 $ .28 $ 3.28 $ 5.12 $ 3.99
Assuming full dilution..... 2.55 -- (2) 3.05 4.66 3.75
CASH FLOW DATA:
Depreciation and amortiza-
tion........................ $ 533 $ 465 $ 921 $ 937 $ 936
Expenditures for property,
plant and equipment......... 347 269 531 509 536
Dividends on common and pre-
ferred stock................ 186 155 314 274 260
AS OF
AS OF DECEMBER 31,
JUNE 30, ---------------
1996(1) 1995 1994
-------- ------- -------
BALANCE SHEET DATA:
Cash and cash equivalents........................... $ 390 $ 653 $ 639
Total assets........................................ 30,328 17,648 18,049
Total debt.......................................... 12,759 3,732 3,879
Stockholders' equity................................ 6,912 6,433 6,086
Book value per common share, assuming full dilu-
tion............................................... 30.86 28.93 29.19
- --------
(1) On April 23, 1996, Lockheed Martin acquired Tactical Systems (the defense
electronics and systems integration businesses of the former Loral
Corporation). The operations of Tactical Systems have been included in the
results of operations of Lockheed Martin's Information & Technology
Services and Electronics segments from April 1, 1996. See "Unaudited Pro
Forma Combined Condensed Earnings Data of Lockheed Martin" for the effects
of the Loral Transaction.
(2) Operating profit includes the effect of the Lockheed Martin's $690 million
pretax charges for merger related and consolidation expenses recorded in
1995 related to the formation of Lockheed Martin. The after-tax effect of
these charges was $436 million, or $1.96 per common share assuming full
dilution. Earnings per common share assuming full dilution for the six
months ended June 30, 1995 is not presented as such amount is anti-
dilutive.
(3) Includes Energy and Environment Sector, Materials and businesses not
included in the other business segments.
13
RISK FACTORS
In considering whether or not to accept the Exchange Offer, holders of
Lockheed Martin Common Stock should carefully consider all information
contained in this Offering Circular-Prospectus, especially the matters
described or referred to in the following paragraphs.
TENDERING AND NONTENDERING STOCKHOLDERS AFFECTED DIFFERENTLY BY THE
TRANSACTION
Holders of shares of Lockheed Martin Common Stock will be affected by the
consummation of the Transaction regardless of whether such holders tender some
or all of their shares of Lockheed Martin Common Stock for exchange pursuant
to the Exchange Offer. Holders of shares of Lockheed Martin Common Stock who
tender all of their shares for exchange pursuant to the Exchange Offer will no
longer have an ownership interest in Lockheed Martin unless more than
7,913,136 shares of Lockheed Martin Common Stock are tendered for exchange and
such holder's tendered shares are accordingly prorated (other than
stockholders holding less than 100 shares who tender all such shares and
complete the box captioned "Odd Lots" on the Letter of Transmittal, and, if
applicable, on the Notice of Guaranteed Delivery). Holders of shares of
Lockheed Martin Common Stock who do not tender any of their shares for
exchange pursuant to the Exchange Offer will receive shares of Materials
Common Stock only as a result of the Spin-Off if fewer than 7,913,136 shares
of Lockheed Martin Common Stock are exchanged in the Exchange Offer, and will
in any event own fewer shares of Materials Common Stock than if they had
participated in the Exchange Offer. Such holders will continue to have an
ownership interest in Lockheed Martin, which percentage interest will have
been increased as a result of the consummation of the Exchange Offer.
TAX TREATMENT OF THE TRANSACTION
On July 24, 1996, Lockheed Martin received the Opinion from King & Spalding
stating its opinion that for United States federal income tax purposes the
Transaction will qualify under Section 355 of the Code as a distribution that
is fully tax-free to Lockheed Martin's stockholders (except with respect to
cash received in lieu of fractional shares) and, in general, is tax-free to
Lockheed Martin. The Opinion, which is not binding on the Internal Revenue
Service (the "IRS"), is subject to certain factual representations and
assumptions. If such factual representations and assumptions are incorrect in
any material respect, the ability of Lockheed Martin to rely on the Opinion
would be jeopardized. Neither Lockheed Martin nor Materials is aware of any
facts or circumstances that would cause any such representations or
assumptions to be incorrect or untrue in any material respect. Nevertheless,
if Lockheed Martin consummates the Transaction and the Transaction is
subsequently deemed taxable by the IRS, both Lockheed Martin and its
stockholders could be subject to tax on the Transaction, which tax could have
a material adverse effect on Lockheed Martin.
In connection with the Transaction, Materials has agreed to indemnify
Lockheed Martin for certain liabilities that would result from the failure of
the distribution of Materials Common Stock to qualify as a fully tax-free
distribution. In general, Materials will be responsible for only 19% of any
such liabilities, up to an aggregate limit of $25 million, and Lockheed Martin
will be responsible for the balance. However, if Materials knowingly or
willfully breaches certain covenants contained in the Tax Assurance Agreement
(as defined herein) and the failure of the Transaction to qualify as a fully
tax-free distribution would not have occurred but for such breach, Materials
will be solely responsible for the full amount of any resulting liability. In
addition, if Materials is subsequently acquired in a manner that causes the
failure of the Transaction to qualify as a fully tax-free distribution under
Section 355 of the Code (including the recognition of gain to Lockheed Martin
on the distribution of Materials Common Stock pursuant to Section 355(d) of
the Code) and the gain did not result from a breach by Lockheed Martin of the
Tax Assurance Agreement, the resulting liability shall be allocated solely to
Materials. Any such obligation of Materials to indemnify Lockheed Martin could
have a material adverse effect on Materials. See "Certain Federal Income Tax
Consequences."
MARKET UNCERTAINTIES WITH RESPECT TO MATERIALS COMMON STOCK AND LOCKHEED
MARTIN COMMON STOCK
The Transaction will increase the number of publicly held shares of
Materials Common Stock and the number of shareholders of Materials. If
significant numbers of holders of Lockheed Martin Common Stock who
14
receive shares of Materials Common Stock pursuant to the Transaction attempt
to sell such shares on the open market shortly after the Transaction, the
market price for Materials Common Stock could be adversely affected.
The reduction in the number of shares of Lockheed Martin Common Stock
outstanding will increase the proportionate ownership interest in Lockheed
Martin of stockholders of Lockheed Martin who do not tender Lockheed Martin
Common Stock pursuant to the Exchange Offer.
CYCLICALITY AND SEASONALITY OF AGGREGATES BUSINESS
Materials' Aggregates division markets its products primarily to the
construction industry, with approximately half of the Aggregates division's
shipments made to contractors in connection with highway and other public
infrastructure projects. Accordingly, the profitability of construction
aggregates producers is sensitive to national, as well as regional and local,
economic conditions, and particularly to cyclical swings in construction
spending, and to changes in the levels of infrastructure spending funded by
the public sector. Due to the high level of fixed costs associated with
aggregates production, operating leverage can be substantial.
In addition, Materials' aggregates business is highly seasonal, due
primarily to the effect of weather conditions on construction activity in
Materials' aggregates markets. Accordingly, Materials' second and third
quarters are generally the strongest and the first quarter the weakest. In
this regard, severe winter weather conditions within most of the markets
served by the Aggregates division during the first quarter of 1996 adversely
impacted the Company's earnings for the period. During the first week of
September 1996, several of Materials' eastern North Carolina quarries were
impacted to varying degrees by Hurricane Fran. The effect on Materials'
operations has not been assessed fully at this time. While the third quarter
earnings for 1996 may reflect the impact of increased costs and interrupted
product shipments, Materials' management believes that the impact from the
storm on Materials' financial position and on its results of operations for
the year ending December 31, 1996, will not be material.
GEOGRAPHIC CONCENTRATION OF AGGREGATES BUSINESS
Materials' aggregates business is concentrated principally in the Southeast,
Midwest and Central states and is, therefore, dependent upon the economies of
those regions. The acquisition of Dravo Aggregates together with the recently
acquired Nova Scotia quarry expanded the Company's distribution system by
providing an extensive river barge network and an ocean going capability.
While this expansion has enhanced the Company's ability to provide cost-
effective coverage of certain coastal markets from New York to Texas, as well
as allowed the Company to ship products to Canada, the Caribbean and parts of
South America, approximately 30% of the Aggregates division's net sales in
1995 were made in North Carolina, 12% in Georgia and 9% in Iowa. See "Business
of Materials--Aggregates Division."
DEPENDENCE OF MAGNESIA-BASED PRODUCT SALES ON STEEL INDUSTRY; COMPETITION
Materials' refractory and dolomitic lime products are sold primarily to the
steel industry, and such sales may be affected by economic conditions, the
levels of steel production and imports and price competition among suppliers
to the steel industry. The division competes principally on the basis of
quality, price and technical support for its products.
ENVIRONMENTAL AND OTHER REGULATORY MATTERS; LITIGATION
Materials' operations are subject to and affected by federal, state and
local laws and regulations relating to the environment, health and safety and
other regulatory matters. Certain of Materials' operations may from time to
time involve the use of substances that are classified as toxic or hazardous
substances within the meaning of these laws and regulations. Materials
believes that its operations and facilities, both owned and leased, are in
substantial compliance with applicable laws and regulations and that any
noncompliance is not likely to have a material adverse effect on the Company's
operations or its financial condition. Despite these compliance efforts, risk
of environmental liability is inherent in the operation of the Company's
businesses, as it is with other companies engaged in similar businesses, and
there can be no assurance that environmental liabilities will not have a
material adverse effect on the Company in the future. In addition, future
events, such as changes in or
15
modified interpretations of existing laws or regulations or enforcement
policies, or further investigation or evaluation of the potential health
hazards of certain products or business activities, may give rise to
additional compliance and other costs that could have a material adverse
effect on the Company.
Materials is involved from time to time in various legal proceedings and
claims that arise out of its operations, and is a defendant in several
lawsuits. In the opinion of management of Materials, it is unlikely that the
outcome of pending or threatened litigation will have a material adverse
effect on Materials' operations or its financial condition; however, there can
be no assurance that an adverse outcome in a pending or future legal
proceeding would not have such a material adverse effect.
ANTI-TAKEOVER PROVISIONS
Certain provisions of Materials' Articles of Incorporation (as amended, the
"Materials Articles of Incorporation") and Bylaws (as amended, the "Materials
Bylaws"), and certain proposed amendments thereto (as described herein) that
will become effective upon consummation of the Split-Off or the Transaction
(the "Proposed Amendments"), may be deemed to have anti-takeover effects and
may delay, defer or prevent a takeover attempt that a shareholder might
consider to be in its best interest. These include provisions in the Materials
Articles of Incorporation, the Materials Bylaws and the Proposed Amendments
that (i) permit the Board of Directors to issue up to 10 million shares of
preferred stock of Materials, without shareholder approval, (ii) classify the
Board of Directors of Materials into three classes, with staggered terms of
three years, (iii) limit the ability of shareholders to call a special meeting
of shareholders, (iv) provide for the removal of directors only "for cause",
and (v) require higher shareholder voting requirements for approving
transactions with "interested shareholders" of Materials. In addition, the
Board of Directors of Materials has adopted a shareholder rights plan that
will become effective upon consummation of the Split-Off or the Transaction.
See "Comparison of Rights of Stockholders of Lockheed Martin and Materials--
Shareholder Rights Plan." The existence of the foregoing provisions and
arrangements may, under certain circumstances, render more difficult attempts
to acquire the Company, discourage bids for Materials Common Stock at a
premium over the market price thereof and adversely affect the market price
of, and voting and other rights of the holders of, Materials Common Stock.
FORWARD LOOKING STATEMENTS--SAFE HARBOR PROVISIONS
This Offering Circular-Prospectus contains or incorporates by reference
statements which, to the extent that they are not recitations of historical
fact, may constitute "forward looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. All
forward looking statements contained or incorporated by reference in this
document are intended to be subject to the safe harbor protection provided by
such Sections 27A and 21E. For a discussion identifying some important factors
that could cause actual results to vary materially from those anticipated in
the forward looking statements made by Lockheed Martin, see Lockheed Martin's
Commission filings, including but not limited to the discussion on
"Competition and Risk" and the discussion of "Government Contracts and
Regulations on pages 10 through 12 and 13 through 14 of Lockheed Martin's 1995
Annual Report to Stockholders, which are incorporated by reference into
Lockheed Martin's Annual Report on Form 10-K for the year ended December 31,
1995 ("Lockheed Martin's 1995 Annual Report") and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" on pages 44 through
56 of Lockheed Martin's 1995 Annual Report and "Note 1--Summary of Significant
Accounting Policies" and "Note 14--Commitments and Contingencies" of the Notes
to Consolidated Financial Statements on pages 62 through 63 and 73 through 74,
respectively, of the Audited Financial Statements included in Lockheed
Martin's 1995 Annual Report, which are incorporated by reference herein. For a
discussion identifying some important factors that could cause actual results
to vary materially from those anticipated in the forward looking statements
made by Materials, see Materials' Commission filings, including but not
limited to, the discussion of "Competition" on page 6 of Materials Annual
Report on Form 10-K for the year ended December 31, 1995 ("Materials 1995 Form
10-K"), "Analysis of Financial Condition and Operating Results" on pages 28
through 36 of the Materials 1995 Annual Report to Shareholders ("Materials
1995 Annual Report") and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" on pages 9 through 20 of the Materials
Quarterly Report on Form 10-Q for the quarterly
16
period ended June 30, 1996 ("Materials Second Quarter 1996 Form 10-Q"), which
are incorporated by reference herein, and "Note A: Accounting Policies" and
"Note M: Contingencies" of the "Notes to Financial Statements" on pages 15
through 17 and 26 through 27, respectively, of the Audited Financial
Statements included in Materials 1995 Annual Report and "Note 5-Contingencies"
of the "Notes to Condensed Consolidated Financial Statements" on page 8 of the
unaudited financial statements included in the Materials Second Quarter 1996
Form 10-Q, which are incorporated herein by reference.
PURPOSE AND EFFECTS OF THE TRANSACTION
The Transaction will advance important business purposes of both Lockheed
Martin and Materials, as described in the following two paragraphs. For these
and other reasons, Lockheed Martin believes that the Transaction will enhance
shareholder value for both Lockheed Martin and Materials.
The success of Materials' growth strategy during recent years has produced
economies of scale in the operation of its business and has enhanced its
competitive position. Materials believes that future growth will further
improve these economies of scale in its businesses and is necessary to
maintain or improve its competitive position. In part due to Materials' recent
growth, the advantages that previously stemmed from its relationship with
Lockheed Martin as its dominant shareholder have been substantially reduced.
Instead, this relationship now presents a variety of systemic issues. For
example, because of Lockheed Martin's loss of a favorable tax status that
would occur if its ownership interest in Materials were to fall below 80%
(i.e., the relationship of the two corporations as members of the same
consolidated group), Materials is, as a practical matter, limited in its
ability to issue its equity to finance strategic acquisitions or implement
more effective management stock incentive and employee stock compensation
programs that it believes would be beneficial. In addition, Materials believes
that consummation of the Transaction will allow Materials to have direct
control over its administrative costs and will allow its credit rating to be
evaluated independently of Lockheed Martin's.
In addition, Lockheed Martin believes that the complete divestiture of
Materials, which is Lockheed Martin's largest non-core business asset
(determined by reference to estimated market value), will enhance the
perception of Lockheed Martin's focus on its core aerospace and defense
industries and thereby enhance stockholder value and facilitate potential
future equity offerings by Lockheed Martin. Following the Transaction and
consistent with its plan to generate cash to reduce debt, Lockheed Martin
anticipates that, subject to prevailing financial, market and economic
conditions, it will divest other non-core businesses and will consider making
a public offering of shares of Lockheed Martin Common Stock to further reduce
outstanding debt. Any public offering will be made only by means of a
prospectus.
Materials was formed in November 1993 to be the successor to substantially
all of the assets and liabilities of the materials group of Martin Marietta
and its subsidiaries. The Materials IPO was completed in February 1994 whereby
8,797,500 shares of Materials Common Stock (representing approximately 19% of
the shares outstanding) were sold. As of September 16, 1996, Lockheed Martin
owned approximately 81% of the outstanding shares of Materials Common Stock.
As a result of the Transaction, all of Lockheed Martin's approximately 81%
interest in the Materials Common Stock will be exchanged with Lockheed Martin
stockholders who participate in the Exchange Offer or, if applicable,
distributed to the Lockheed Martin stockholders in the Spin-Off.
The Transaction will reduce the number of outstanding shares of Lockheed
Martin Common Stock. This reduction will increase the proportionate ownership
in Lockheed Martin of stockholders of Lockheed Martin who do not tender
Lockheed Martin Common Stock pursuant to the Exchange Offer. The Exchange
Offer will also provide Lockheed Martin's stockholders with an opportunity to
adjust, in a tax-efficient manner, their investment between Lockheed Martin's
remaining businesses in advanced technology products and services and
Materials' aggregates and magnesia specialties businesses. To the extent that
a holder exchanges all of such holder's Lockheed Martin Common Stock pursuant
to the Exchange Offer, the holder will no longer participate in any increase
in the value of Lockheed Martin Common Stock. Furthermore, any Lockheed Martin
stockholder owning an aggregate of less than 100 shares of Lockheed Martin
Common Stock whose shares of Lockheed
17
Martin Common Stock are accepted for exchange pursuant to the Exchange Offer
will avoid the applicable odd lot discounts payable on sales of odd lots on
the NYSE.
Holders of shares of Lockheed Martin Common Stock will be affected by the
Transaction regardless of whether such holders tender their shares of Lockheed
Martin Common Stock for exchange pursuant to the Exchange Offer. Holders of
shares of Lockheed Martin Common Stock who tender all of their shares for
exchange pursuant to the Exchange Offer will no longer have an ownership
interest in Lockheed Martin unless more than 7,913,136 shares of Lockheed
Martin Common Stock are tendered for exchange and such holder's tendered
shares are accordingly prorated (other than stockholders holding less than 100
shares who tender all such shares and complete the box captioned "Odd Lots" on
the Letter of Transmittal, and, if applicable, on the Notice of Guaranteed
Delivery). Holders of shares of Lockheed Martin Common Stock who do not tender
any of their shares for exchange pursuant to the Exchange Offer will not
receive shares of Materials Common Stock as a result of the Exchange Offer,
although such stockholders will receive shares of Materials Common Stock
pursuant to the Spin-Off if fewer than 7,913,136 shares of Lockheed Martin
Common Stock are tendered pursuant to the Exchange Offer and the Exchange
Offer is consummated. Such holders will continue to have an ownership interest
in Lockheed Martin, which percentage interest will have been increased as a
result of the Exchange Offer.
Lockheed Martin Common Stock acquired by Lockheed Martin pursuant to the
Exchange Offer generally will be available for issuance by Lockheed Martin
without further stockholder action (except as required by applicable law or
the rules of the NYSE, on which Lockheed Martin Common Stock is listed) for
general or other corporate purposes, including stock splits or dividends,
acquisitions, the raising of additional capital for use in Lockheed Martin's
business and pursuant to employee benefit plans.
THE TRANSACTION
GENERAL
Pursuant to the Exchange Offer, Lockheed Martin is offering, upon the terms
and subject to the conditions thereof, to exchange 4.72 shares of Materials
Common Stock for each share of Lockheed Martin Common Stock tendered and
exchanged, up to an aggregate of 7,913,136 shares of Lockheed Martin Common
Stock.
If more than 7,913,136 shares of Lockheed Martin Common Stock have been
validly tendered for exchange and not withdrawn on or prior to the Expiration
Date, except as provided herein, Lockheed Martin will accept such shares for
exchange on a pro rata basis. If fewer than 7,913,136 shares of Lockheed
Martin Common Stock (but at least 5,275,424 shares) are tendered and exchanged
for Materials Common Stock pursuant to the Exchange Offer and Lockheed Martin
accordingly continues to own shares of Materials Common Stock after
consummation of the Exchange Offer, Lockheed Martin will effect the Spin-Off
of the remaining shares of Materials Common Stock owned by Lockheed Martin as
a pro rata distribution to holders of Lockheed Martin Common Stock remaining
after consummation of the Exchange Offer, based on their percentage ownership
of Lockheed Martin Common Stock after the Exchange Offer.
As of September 16, 1996, Lockheed Martin owned 37,350,000 shares of
Materials Common Stock.
NEITHER THE BOARD OF DIRECTORS OF LOCKHEED MARTIN OR LOCKHEED MARTIN NOR THE
BOARD OF DIRECTORS OF MATERIALS OR MATERIALS MAKES ANY RECOMMENDATION TO ANY
STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES OF
LOCKHEED MARTIN COMMON STOCK PURSUANT TO THE EXCHANGE OFFER. EACH STOCKHOLDER
OF LOCKHEED MARTIN MUST MAKE HIS OR HER OWN DECISION AS TO WHETHER TO TENDER
SHARES OF LOCKHEED MARTIN COMMON STOCK PURSUANT TO THE EXCHANGE OFFER AND, IF
SO, HOW MANY SHARES TO TENDER, AFTER READING THIS OFFERING CIRCULAR-PROSPECTUS
AND CONSULTING WITH HIS OR HER ADVISORS BASED ON HIS OR HER OWN FINANCIAL
POSITION AND REQUIREMENTS.
18
REGULATORY APPROVALS
No filings under the HSR Act are required in connection with the Exchange
Offer generally. To the extent certain stockholders of Lockheed Martin decide
to participate in the Exchange Offer and to acquire a number of shares of
Materials Common Stock that exceeds one of the thresholds stated in the
regulations under the HSR Act, and if an exemption under those regulations
does not apply, such stockholders and Lockheed Martin could be required to
make filings under the HSR Act, and the waiting period requirements under the
HSR Act may have to be satisfied before the exchanges by those particular
stockholders could be carried out. In order to enable the Exchange Offer to be
consummated in accordance with its terms, should the HSR Act filing
requirements be applicable to any stockholder participating in the Exchange
Offer, Lockheed Martin currently intends to hold such stockholder's shares of
Materials Common Stock to be received in the Exchange Offer following
consummation of the Exchange Offer. Upon expiration or earlier termination of
the HSR Act waiting period, the shares of Materials Common Stock will be
distributed to the stockholder. If a second request for information is made by
a governmental authority or if the stockholder elects to withdraw his or her
tender of shares, Lockheed Martin will return the tendered shares of Lockheed
Martin Common Stock to such stockholder and will distribute the shares of
Materials Common Stock which would otherwise have been received by such
stockholder to holders of record of shares of Lockheed Martin Common Stock on
a record date to be determined as soon as practicable following such
withdrawal or second request.
Except as stated above, Lockheed Martin and Materials do not believe that
any material federal or state regulatory approval will be necessary in
connection with the Transaction.
APPRAISAL RIGHTS
No appraisal rights are available to Lockheed Martin or Materials
stockholders in connection with the Transaction.
ACCOUNTING TREATMENT OF THE TRANSACTION
The shares of Lockheed Martin Common Stock received pursuant to the Exchange
Offer will be recorded as a decrease in stockholders equity, reflecting the
decrease in common stock outstanding at the market value of the shares of
Materials Common Stock distributed on the Expiration Date. The Exchange Offer
will result in a net gain to Lockheed Martin, after direct expenses of the
disposition, and will be reported as a gain on the disposal of the business.
The gain from the Exchange Offer will result from the difference between the
market value and the carrying value of the shares of Materials Common Stock
distributed.
Neither the exchange of shares of Lockheed Martin Common Stock for Materials
Common Stock pursuant to the Exchange Offer nor the distribution of shares of
Materials Common Stock in the Spin-Off will affect the financial position or
results of operations of Materials.
Any remaining shares of Materials Common Stock that are distributed through
the Spin-Off will be accounted for as a dividend through a direct charge to
retained earnings. The amount of the dividend will be equal to Lockheed
Martin's carrying value of the shares of Materials Common Stock distributed.
THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in the Exchange
Offer, Lockheed Martin hereby offers to exchange and will accept for exchange
4.72 shares of Materials Common Stock for each share of Lockheed Martin Common
Stock tendered, up to a maximum of 7,913,136 shares of Lockheed Martin Common
Stock, that is validly tendered by the Expiration Date and not withdrawn as
provided in "-- Withdrawal Rights." A holder of Lockheed Martin Common Stock
has the right to tender all or a portion of such holder's shares of Lockheed
Martin Common Stock. The term "Expiration Date" shall mean 12:00 Midnight, New
York City time, on October 18, 1996, unless Lockheed Martin in its sole
discretion shall have extended the period of time for
19
which the Exchange Offer is open, in which event the term "Expiration Date"
shall mean the latest time and date at which the Exchange Offer, as so
extended by Lockheed Martin, shall expire. The proration period will also
expire on the Expiration Date.
The exchange ratio of 4.72 shares of Materials Common Stock for each share
of Lockheed Martin Common Stock exchanged was established by Lockheed Martin.
The principal factors considered by Lockheed Martin in determining the
exchange ratio were (i) recent market prices for Lockheed Martin Common Stock
and Materials Common Stock and (ii) advice from the Dealer Manager with
respect to the determination of the appropriate exchange ratio in order to
attract a sufficient number of Lockheed Martin stockholders to participate in
the Exchange Offer.
It is a condition to the Exchange Offer that at least 5,275,424 shares of
Lockheed Martin Common Stock (approximately 2.6% of the outstanding Lockheed
Martin Common Stock as of August 31, 1996, which is a sufficient number of
shares of Lockheed Martin Common Stock to result in at least 66 2/3% of the
Materials Common Stock owned by Lockheed Martin being exchanged pursuant to
the Exchange Offer) be validly tendered and not withdrawn prior to the
Expiration Date (the "Minimum Condition"). If fewer than 7,913,136 shares of
Lockheed Martin Common Stock are validly tendered pursuant to the Exchange
Offer and not withdrawn and the Minimum Condition is satisfied, subject to the
other conditions of the Exchange Offer, Lockheed Martin will exchange all such
tendered shares of Lockheed Martin Common Stock for shares of Materials Common
Stock and distribute the remaining shares of Materials Common Stock intended
to be distributed by Lockheed Martin to the holders of Lockheed Martin Common
Stock remaining following consummation of the Exchange Offer pro rata based on
their respective holdings of Lockheed Martin Common Stock. See "The Spin-Off."
Upon the terms and subject to the conditions of the Exchange Offer, if more
than 7,913,136 shares of Lockheed Martin Common Stock have been validly
tendered for exchange and not withdrawn prior to the Expiration Date, Lockheed
Martin will exchange shares of Materials Common Stock for shares of Lockheed
Martin Common Stock in the following order of priority:
(a) all shares of Lockheed Martin Common Stock tendered for exchange and
not withdrawn prior to the Expiration Date by or on behalf of any
stockholder (other than participants in employee benefit plans of Lockheed
Martin or its subsidiaries) who beneficially owned an aggregate of fewer
than 100 shares of Lockheed Martin Common Stock as of the close of business
on September 13, 1996 and who validly tenders all of such shares of
Lockheed Martin Common Stock (partial tenders for exchange will not qualify
for this preference) and completes the box captioned "Odd Lots" on the
Letter of Transmittal and, if applicable, on the Notice of Guaranteed
Delivery; and
(b) after exchange of all of the foregoing shares of Lockheed Martin
Common Stock, all other shares of Lockheed Martin Common Stock validly
tendered and not withdrawn prior to the Expiration Date on a pro rata
basis.
As a result of such order of priority, shares of Lockheed Martin Common
Stock described in clause (a) will not be subject to proration. Shares of
Lockheed Martin Common Stock not exchanged for shares of Materials Common
Stock because of proration will be returned.
Lockheed Martin does not expect that it will be able to announce the final
proration factor or to commence delivery of any shares of Materials Common
Stock exchanged pursuant to the Exchange Offer until approximately seven NYSE
trading days after the Expiration Date if proration of tendered shares of
Lockheed Martin Common Stock is required. This delay results from the
difficulty in determining the number of shares of Lockheed Martin Common Stock
validly tendered for exchange (including shares of Lockheed Martin Common
Stock tendered for exchange pursuant to the guaranteed delivery procedures
described in "--Guaranteed Delivery Procedures") and not withdrawn prior to
the Expiration Date and as a result of the "odd lot" procedure described
herein. Preliminary results of proration will be announced by press release as
promptly as practicable after the Expiration Date. Holders of shares of
Lockheed Martin Common Stock may obtain such preliminary information from the
Information Agent or the Dealer Manager and may also be able to obtain such
information from their brokers.
20
No fractional shares of Materials Common Stock will be distributed. The
Exchange Agent, acting as agent for Lockheed Martin stockholders otherwise
entitled to receive fractional shares of Materials Common Stock, will aggregate
all fractional shares and sell them for the accounts of such stockholders.
Proceeds from sales of fractional shares will be paid by the Exchange Agent
based upon the average gross selling price per share of all such sales. Any
such cash payments will be made through the Exchange Agent if such shares of
Lockheed Martin Common Stock are tendered to the Exchange Agent, or if such
shares of Lockheed Martin Common Stock are tendered through a Book-Entry
Transfer Facility (as defined herein), through such Book-Entry Transfer
Facility. None of the Exchange Agent, Lockheed Martin, Materials, the Dealer
Manager or any Soliciting Dealer will guarantee any minimum sale price for the
shares of Materials Common Stock.
The Exchange Offer is subject to certain conditions set forth in "--Certain
Conditions of the Exchange Offer," including the Minimum Condition. If any
such conditions are not satisfied, Lockheed Martin may (i) terminate the
Exchange Offer and return all tendered shares of Lockheed Martin Common Stock
to tendering stockholders, (ii) extend the Exchange Offer and, subject to
withdrawal rights as set forth in "--Withdrawal Rights," retain all such
shares of Lockheed Martin Common Stock until the expiration of the Exchange
Offer as so extended, (iii) waive such condition and, subject to any
requirement to extend the period of time during which the Exchange Offer is
open, exchange all shares of Lockheed Martin Common Stock validly tendered for
exchange by the Expiration Date and not withdrawn for Materials Common Stock
or (iv) delay acceptance for exchange of or exchange for any shares of
Lockheed Martin Common Stock until satisfaction or waiver of such conditions
to the Exchange Offer even though the Exchange Offer has expired. Lockheed
Martin's right to delay acceptance for exchange of, or exchange for, shares of
Lockheed Martin Common Stock tendered for exchange pursuant to the Exchange
Offer is subject to the provisions of applicable law, including, to the extent
applicable, Rule 13e-4(f)(5) promulgated under the Exchange Act, which
requires that Lockheed Martin pay the consideration offered or return the
shares of Lockheed Martin Common Stock deposited by or on behalf of Lockheed
Martin's stockholders promptly after the termination or withdrawal of the
Exchange Offer. For a description of Lockheed Martin's right to extend the
period of time during which the Exchange Offer is open and to amend, delay or
terminate the Exchange Offer, see "--Extension of Tender Period; Termination;
Amendment."
This Offering Circular-Prospectus and related Letter of Transmittal will be
mailed to record holders of shares of Lockheed Martin Common Stock at the
close of business on September 13, 1996, and will be furnished to brokers,
banks and similar persons whose names, or the names of whose nominees, appear
on the Lockheed Martin stockholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing for subsequent
transmittal to beneficial owners of shares of Lockheed Martin Common Stock. As
of August 31, 1996, 200,263,185 shares of Lockheed Martin Common Stock were
outstanding, held of record by approximately 41,058 holders.
TENDERS FOR EXCHANGE BY HOLDERS OF FEWER THAN 100 SHARES OF LOCKHEED MARTIN
COMMON STOCK
All shares of Lockheed Martin Common Stock validly tendered for exchange and
not withdrawn by or on behalf of persons (other than participants in employee
benefit plans of Lockheed Martin, or its subsidiaries) who beneficially own an
aggregate of fewer than 100 shares of Lockheed Martin Common Stock as of the
close of business on September 13, 1996, and who validly tender for exchange
all such shares of Lockheed Martin Common Stock and do not withdraw any of
such shares of Lockheed Martin Common Stock by the Expiration Date, will be
accepted for exchange before proration, if any, of the exchange of other
shares of Lockheed Martin Common Stock tendered for exchange. See "--Terms of
the Exchange Offer" and "--Exchange of Shares of Lockheed Martin Common
Stock." Partial tenders will not qualify for this preference, and it is not
available to beneficial holders of 100 or more shares of Lockheed Martin
Common Stock, even if such holders have separate stock certificates or
accounts for fewer than 100 shares of Lockheed Martin Common Stock. Any
stockholder wishing to tender all of his or her shares of Lockheed Martin
Common Stock pursuant to this provision must complete the box captioned "Odd
Lots" on the Letter of Transmittal and, if applicable, on the Notice of
Guaranteed Delivery.
21
EXCHANGE OF SHARES OF LOCKHEED MARTIN COMMON STOCK
Upon the terms (including, without limitation, the proration provisions of
the Exchange Offer) and subject to the satisfaction or waiver of the
conditions of the Exchange Offer, Lockheed Martin will (subject to the
proration provisions of the Exchange Offer) accept for exchange, and transfer
shares of Materials Common Stock in exchange for, shares of Lockheed Martin
Common Stock that have been validly tendered and not withdrawn by the
Expiration Date, as promptly as practicable after the later of (i) the
Expiration Date and (ii) the satisfaction or waiver of the conditions set
forth in "--Certain Conditions of the Exchange Offer." In addition, Lockheed
Martin reserves the right, in its sole discretion (subject to Rule 13e-4(f)(5)
under the Exchange Act), to delay the acceptance for exchange or delay
exchange of any shares of Lockheed Martin Common Stock in order to comply in
whole or in part with any applicable law. For a description of Lockheed
Martin's right to terminate the Exchange Offer and not accept for exchange of
or exchange for any shares of Lockheed Martin Common Stock or to delay
acceptance for exchange of or exchange for any shares of Lockheed Martin
Common Stock, see "--Extension of Tender Period; Termination; Amendment."
For purposes of the Exchange Offer, Lockheed Martin shall be deemed, subject
to the proration provisions of the Exchange Offer, to have accepted for
exchange and exchanged shares of Lockheed Martin Common Stock validly tendered
for exchange when, as and if Lockheed Martin gives oral or written notice to
the Exchange Agent of its acceptance of the tenders of such shares of Lockheed
Martin Common Stock for exchange. Exchange of shares of Lockheed Martin Common
Stock accepted for exchange pursuant to the Exchange Offer will be made by
deposit of tendered shares of Lockheed Martin Common Stock with the Exchange
Agent, which will act as agent for the tendering stockholders for the purpose
of receiving shares of Materials Common Stock from Lockheed Martin and
transmitting such shares of Materials Common Stock to tendering stockholders.
In all cases, exchange for shares of Lockheed Martin Common Stock accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of (i) certificates for such shares of Lockheed Martin
Common Stock (or of a confirmation of a book-entry transfer of such shares of
Lockheed Martin Common Stock into the Exchange Agent's account at The
Depository Trust Company (the "DTC")) and (ii) a properly completed and duly
executed Letter of Transmittal (or manually signed facsimile thereof) or an
Agent's Message (as defined herein) in connection with a book-entry transfer
of shares, together with any other documents required by the Letter of
Transmittal. For a description of the procedures for tendering shares of
Lockheed Martin Common Stock pursuant to the Exchange Offer, see "--Procedures
for Tendering Shares of Lockheed Martin Common Stock." Accordingly, exchanges
of shares of Materials Common Stock for shares of Lockheed Martin Common Stock
may be made to tendering stockholders at different times if delivery of the
shares of Lockheed Martin Common Stock and other required documents occur at
different times. Under no circumstances will interest be paid by Lockheed
Martin pursuant to the Exchange Offer, regardless of any delay in making such
exchange.
The exchange of shares of Materials Common Stock for shares of Lockheed
Martin Common Stock may be delayed in the event of difficulty in determining
the number of shares of Lockheed Martin Common Stock validly tendered or if
proration is required. See "--Terms of the Exchange Offer." In addition, if
certain events occur, Lockheed Martin may not be obligated to exchange shares
of Materials Common Stock for shares of Lockheed Martin Common Stock pursuant
to the Exchange Offer. See "--Certain Conditions of the Exchange Offer." As
provided in Rules 13e-4(f)(4) and (8)(ii) under the Exchange Act, Lockheed
Martin will exchange the same number of shares of Materials Common Stock for
each share of Lockheed Martin Common Stock accepted for exchange pursuant to
the Exchange Offer. If a holder of Lockheed Martin Common Stock tenders a
sufficient number of shares of Lockheed Martin Common Stock such that upon
consummation of the Exchange Offer an HSR Act filing would be required, and a
second request for information is made by a governmental authority or such
stockholder elects to withdraw his or her tendered shares, Lockheed Martin
will distribute the shares of Materials Common Stock which would otherwise
have been received by such stockholder to holders of record of shares of
Lockheed Martin Common Stock remaining after consummation of the Exchange
Offer. See "The Transaction--Regulatory Approvals."
If any tendered shares of Lockheed Martin Common Stock are not exchanged
pursuant to the Exchange Offer for any reason, or if certificates are
submitted for more shares of Lockheed Martin Common Stock than
22
are (i) tendered for exchange or (ii) accepted for exchange due to the
proration provisions, certificates for such unexchanged or untendered shares
of Lockheed Martin Common Stock will be returned (or, in the case of shares of
Lockheed Martin Common Stock tendered by book-entry transfer, such shares of
Lockheed Martin Common Stock will be credited to an account maintained at the
DTC), without expense to the tendering stockholder, as promptly as practicable
following the expiration or termination of the Exchange Offer.
No domestic stock transfer taxes will be payable as a result of the
Transaction. Lockheed Martin will pay all foreign stock transfer taxes, if
any, but only to the extent such taxes are not solely the obligation of a
stockholder of Lockheed Martin payable on the transfer to Lockheed Martin of
shares of Lockheed Martin Common Stock and the transfer to tendering
stockholders of shares of Materials Common Stock, pursuant to the Exchange
Offer. If, however, the exchange of shares is to be made to, or (in the
circumstances permitted by the Exchange Offer) if shares of Lockheed Martin
Common Stock that are not tendered or are not accepted for exchange are to be
registered in the name of or delivered to any person other than the registered
owner, or if tendered certificates are registered in the name of any person
other than the person signing the Letter of Transmittal, the amount of all
foreign stock transfer taxes, if any (whether imposed on the registered owner
or such other person), payable on account of the transfer to such person must
be paid by the tendering stockholder unless evidence satisfactory to Lockheed
Martin of the payment of such taxes or exemption therefrom is submitted.
PROCEDURES FOR TENDERING SHARES OF LOCKHEED MARTIN COMMON STOCK
To tender shares of Lockheed Martin Common Stock pursuant to the Exchange
Offer, either (a) a properly completed and duly executed Letter of Transmittal
(or manually signed facsimile thereof) or an Agent's Message in the case of a
book-entry transfer of shares, and any other documents required by the Letter
of Transmittal must be received by the Exchange Agent at one of its addresses
set forth on the back cover of this Offering Circular-Prospectus prior to
12:00 Midnight, New York City time, on the Expiration Date, and either
(i) certificates for the shares of Lockheed Martin Common Stock to be tendered
must be received by the Exchange Agent at one of such addresses prior to such
time or (ii) such shares of Lockheed Martin Common Stock must be delivered
pursuant to the procedures for book-entry transfer described below (and a
confirmation of such delivery received by the Exchange Agent), in each case by
the Expiration Date, or (b) the guaranteed delivery procedures described below
must be complied with. LETTERS OF TRANSMITTAL AND CERTIFICATES FOR SHARES OF
LOCKHEED MARTIN COMMON STOCK SHOULD NOT BE SENT TO LOCKHEED MARTIN, MATERIALS,
THE INFORMATION AGENT, THE DEALER MANAGER OR ANY SOLICITING DEALER.
Any stockholder wishing to tender all of his or her shares of Lockheed
Martin Common Stock pursuant to the procedures described above under "--
Tenders for Exchange by Holders of Fewer Than 100 Shares of Lockheed Martin
Common Stock" must complete the box captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery.
It is a violation of Rule 14e-4 promulgated under the Exchange Act for a
person to tender shares of Lockheed Martin Common Stock for such person's own
account unless the person so tendering (a) owns such shares of Lockheed Martin
Common Stock or (b) owns other securities convertible into or exchangeable for
such shares of Lockheed Martin Common Stock or owns an option, warrant or
right to purchase such shares of Lockheed Martin Common Stock and intends to
acquire shares of Lockheed Martin Common Stock for tender by conversion or
exchange of such securities or by exercise of such option, warrant or right.
Rule 14e-4 provides a similar restriction applicable to the tender or
guarantee of a tender on behalf of another person.
A tender of shares of Lockheed Martin Common Stock made pursuant to any
method of delivery set forth herein will constitute a binding agreement
between the tendering stockholder and Lockheed Martin upon the terms and
subject to the conditions of the Exchange Offer, including the tendering
stockholder's representations that (i) such stockholder owns the shares of
Lockheed Martin Common Stock being tendered within the meaning of Rule 14e-4
promulgated under the Exchange Act and (ii) the tender of such shares of
Lockheed Martin Common Stock complies with Rule 14e-4.
23
In addition, all tendering stockholders will be required to provide certain
information on the Letter of Transmittal or other transmittal forms as to
their beneficial ownership (if any) of shares of Materials Common Stock and
information as to the beneficial ownership of shares of Materials Common Stock
by any persons with whom the tendering stockholders may be acting pursuant to
a plan or arrangement with respect to the acquisition of shares of Materials
Common Stock.
The Exchange Agent will establish accounts with respect to the shares of
Lockheed Martin Common Stock at DTC, for purposes of the Exchange Offer,
within two business days after the date of this Offering Circular-Prospectus,
and any financial institution that is a participant in the DTC system may make
delivery of shares of Lockheed Martin Common Stock by causing DTC to transfer
such shares of Lockheed Martin Common Stock into the Exchange Agent's account
in accordance with the procedures of DTC. Although delivery of shares of
Lockheed Martin Common Stock may be effected through book-entry transfer to
the Exchange Agent's account at DTC, a properly completed and duly executed
Letter of Transmittal (or manually signed facsimile thereof) and any other
required documents or an Agent's Message must, in any case, be transmitted to
and received or confirmed by the Exchange Agent at one of its addresses set
forth on the back cover of this Offering Circular-Prospectus by the Expiration
Date, or the guaranteed delivery procedures described below must be complied
with. "Agent's Message" means a message transmitted through electronic means
by DTC to and received by the Exchange Agent and forming a part of a book-
entry confirmation, which states that DTC has received an express
acknowledgement from the participant in DTC tendering the shares that such
participant has received and agrees to be bound by the Letter of Transmittal.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT AS REQUIRED HEREBY.
Signatures on a Letter of Transmittal must be guaranteed by an Eligible
Institution unless the shares of Lockheed Martin Common Stock tendered
pursuant to the Letter of Transmittal are tendered (i) by the registered
holder of the shares of Lockheed Martin Common Stock tendered therewith and
such holder has not completed the box entitled "Special Issuance Instructions"
or "Special Delivery Instructions" on the Letter of Transmittal or (ii) for
the account of an Eligible Institution. An "Eligible Institution" means a
participant in the Security Transfer Agents Medallion Program or the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program. A verification by a notary public alone is not acceptable.
If a certificate representing shares of Lockheed Martin Common Stock is
registered in the name of a person other than the signer of a Letter of
Transmittal, or if delivery of shares of Materials Common Stock is to be made,
or shares of Lockheed Martin Common Stock not exchanged or tendered are to be
issued, to a person other than the registered owner, the certificate must be
endorsed or accompanied by an appropriate stock power, in either case signed
exactly as the name of the registered owner appears on the certificate with
the signature on the certificate or stock power guaranteed by an Eligible
Institution.
If the Letter of Transmittal or Notice of Guaranteed Delivery or any
certificates or stock powers are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, such persons should
so indicate when signing and, unless waived by Lockheed Martin, proper
evidence satisfactory to Lockheed Martin of their authority to so act must be
submitted.
If any certificate representing shares of Lockheed Martin Common Stock has
been mutilated, lost, stolen or destroyed, the stockholder desiring to tender
shares represented by the certificate must (i) furnish to the Exchange Agent
evidence, satisfactory to it in its discretion, of the ownership of and the
mutilation, loss, theft or destruction of such certificate, (ii) furnish to
the Exchange Agent indemnity, satisfactory to it in its discretion, and (iii)
comply with such other reasonable regulations as the Exchange Agent may
prescribe.
Certain employees of Lockheed Martin and its subsidiaries participate in
employee benefit plans which permit the investment of all or a portion of
their account balances in shares of Lockheed Martin Common Stock. The plan
trustee is the stockholder of record for such plans. However, participants in
Participant Directed Plans are entitled to direct the trustee as to whether or
not to exchange shares of Lockheed Martin Common Stock attributable to their
accounts for shares of Materials Common Stock. Such participants will receive
information from the respective plan trustee as to the procedure for providing
the trustee with directions on how to respond
24
to the Exchange Offer with respect to shares of Lockheed Martin Common Stock
attributable to the participant's account. With respect to the shares of
Lockheed Martin Common Stock not allocated to any participant's account in a
Participant Directed Plan or shares held in an employee benefit plan which is
not a Participant Directed Plan, the trustee of the applicable plan will
determine whether or not to exchange shares of Lockheed Martin Common Stock
attributable to the participant's account for shares of Materials Common
Stock.
PROCEDURES FOR TENDERING DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN SHARES
OF LOCKHEED MARTIN COMMON STOCK
Lockheed Martin stockholders who are participants in Lockheed Martin's
Dividend Reinvestment and Stock Purchase Plan ("DRP") and who wish to tender
shares of Lockheed Martin Common Stock held in their account under the DRP
("DRP Shares") pursuant to the Exchange Offer, must so indicate by completing
Section I.B. of the Letter of Transmittal entitled "Dividend Reinvestment and
Stock Purchase Plan Shares" and returning to the Exchange Agent the properly
completed and duly executed Letter of Transmittal (or manually signed
facsimile thereof) with any required signature guarantees and any other
documents required by the Letter of Transmittal. If the participant authorizes
the tender of his or her DRP Shares, but does not indicate the number of
shares to be tendered, the participant will be deemed to have tendered all DRP
Shares owned by such participant pursuant to the DRP. A tender of all DRP
Shares will include fractional shares and any shares that may be credited to
the participant's account after the date of tender and prior to the Expiration
Date. If a participant authorizes the tender of the participant's DRP Shares
and such DRP Shares are exchanged under the terms and subject to the
conditions of the Exchange Offer, First Chicago Trust Company of New York, as
administrator of the DRP, will reduce the number of shares of Lockheed Martin
Common Stock in the participant's DRP account by the number of DRP Shares that
are accepted for exchange. Any DRP Shares tendered but not exchanged will be
returned to the participant's DRP account.
GUARANTEED DELIVERY PROCEDURES
If a stockholder desires to tender shares of Lockheed Martin Common Stock
pursuant to the Exchange Offer and cannot deliver such shares of Lockheed
Martin Common Stock and all other required documents to the Exchange Agent by
the Expiration Date, such shares of Lockheed Martin Common Stock may
nevertheless be tendered if all of the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form provided by Lockheed Martin setting forth the
name and address of the holder and the number of shares of Lockheed Martin
Common Stock tendered, stating that the tender is being made thereby and
guaranteeing that, within three NYSE trading days after the date of the
Notice of Guaranteed Delivery, the certificate(s) representing the shares
of Lockheed Martin Common Stock accompanied by all other documents required
by the Letter of Transmittal will be deposited by the Eligible Institution
with the Exchange Agent, is received by the Exchange Agent (as provided
below) by the Expiration Date; and
(iii) the certificate(s) for such shares of Lockheed Martin Common Stock
(or a confirmation of a book-entry transfer of such shares of Lockheed
Martin Common Stock into the Exchange Agent's account at DTC), together
with a properly completed and duly executed Letter of Transmittal (or
manually signed facsimile thereof) and any required signature guarantees,
or an Agent's Message in connection with a book-entry transfer, and any
other documents required by the Letter of Transmittal, are received by the
Exchange Agent within three NYSE trading days after the date of execution
of the Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, telegram,
facsimile transmission or mail to the Exchange Agent and must include a
guarantee by an Eligible Institution in the form set forth in such Notice.
THE METHOD OF DELIVERY OF SHARES OF LOCKHEED MARTIN COMMON STOCK AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING
STOCKHOLDER. IF CERTIFICATES FOR SHARES OF LOCKHEED MARTIN COMMON STOCK ARE
SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED,
IS RECOMMENDED, AND SUFFICIENT TIME TO ENSURE TIMELY RECEIPT SHOULD BE
ALLOWED.
All questions as to the form of documents (including notices of withdrawal)
and the validity, form, eligibility (including time of receipt) and acceptance
for exchange of any tender of shares of Lockheed Martin Common Stock will be
determined by Lockheed Martin in its sole discretion, which determination will
be final
25
and binding on all stockholders. Lockheed Martin reserves the absolute right
to reject any or all tenders of shares of Lockheed Martin Common Stock
determined by it not to be in proper form or the acceptance for exchange of
shares of Lockheed Martin Common Stock which may, in the opinion of Lockheed
Martin's counsel, be unlawful. Lockheed Martin also reserves the absolute
right to waive any defect or irregularity in any tender of shares of Lockheed
Martin Common Stock. None of Lockheed Martin, Materials, the Dealer Manager,
the Exchange Agent, the Information Agent or any other person will be under
any duty to give notification of any defect or irregularity in tenders or
incur any liability for failure to give any such notification.
WITHDRAWAL RIGHTS
Tenders of shares of Lockheed Martin Common Stock made pursuant to the
Exchange Offer may be withdrawn at any time prior to the Expiration Date.
Thereafter, such tenders are irrevocable, except that they may be withdrawn
after November 12, 1996, unless theretofore accepted for exchange as provided
in this Offering Circular-Prospectus. If Lockheed Martin extends the period of
time during which the Exchange Offer is open, tenders of shares of Lockheed
Martin Common Stock may be withdrawn at any time during the period of such
extension. If Lockheed Martin is delayed in its acceptance of shares of
Lockheed Martin Common Stock for exchange or is unable to accept shares of
Lockheed Martin Common Stock for exchange pursuant to the Exchange Offer for
any reason, then, without prejudice to Lockheed Martin's rights under the
Exchange Offer, the Exchange Agent may, on behalf of Lockheed Martin, retain
all shares of Lockheed Martin Common Stock tendered, and such shares of
Lockheed Martin Common Stock may not be withdrawn except as otherwise provided
herein, subject to Rule 13e-4(f)(5) under the Exchange Act, which provides
that the person making an issuer exchange offer shall either pay the
consideration offered or return tendered securities, promptly after the
termination or withdrawal of the offer. If a holder of Lockheed Martin Common
Stock tenders a sufficient number of shares of Lockheed Martin Common Stock
such that upon consummation of the Exchange Offer an HSR Act filing is
required because of the amount of Materials Common Stock received, such holder
has withdrawal rights with respect to his or her tendered shares of Lockheed
Martin Common Stock after the Expiration Date. See "The Transaction--
Regulatory Approvals."
To be effective, a written, telegraphic or facsimile transmission notice of
withdrawal must be timely received by the Exchange Agent at one of its
addresses set forth on the back cover of this Offering Circular-Prospectus and
must specify the name of the person who tendered the shares of Lockheed Martin
Common Stock to be withdrawn and the number of shares of Lockheed Martin
Common Stock to be withdrawn precisely as it appears on the Letter of
Transmittal. If the shares of Lockheed Martin Common Stock to be withdrawn
have been delivered to the Exchange Agent, a signed notice of withdrawal with
signatures guaranteed by an Eligible Institution must be submitted prior to
the release of such shares of Lockheed Martin Common Stock (except that such
signature guarantee requirement is not applicable in the case of shares of
Lockheed Martin Common Stock tendered by an Eligible Institution). In
addition, such notice must specify, in the case of shares of Lockheed Martin
Common Stock tendered by delivery of certificates, the name of the registered
holder (if different from that of the tendering stockholder) and the serial
numbers shown on the particular certificates evidencing the shares of Lockheed
Martin Common Stock to be withdrawn or, in the case of shares of Lockheed
Martin Common Stock tendered by book-entry transfer, the name and number of
the account at the Book-Entry Transfer Facility from which the shares were
transferred. Withdrawals may not be rescinded, and shares of Lockheed Martin
Common Stock withdrawn will thereafter be deemed not validly tendered for
purposes of the Exchange Offer. However, withdrawn shares of Lockheed Martin
Common Stock may be retendered by again following one of the procedures
described in "--Procedures for Tendering Shares of Lockheed Martin Common
Stock" at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by Lockheed Martin in its sole
discretion, which determination shall be final and binding on all holders of
Lockheed Martin Common Stock. None of Lockheed Martin, Materials, the Dealer
Manager, the Exchange Agent, the Information Agent or any other person will be
under any duty to give notification of any defect or irregularity in any
notice of withdrawal or incur any liability for failure to give any such
notification.
EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT
Lockheed Martin expressly reserves the right, at any time or from time to
time, in its sole discretion and regardless of whether or not any of the
conditions specified in "--Certain Conditions of the Exchange Offer" shall
have been satisfied, (i) to extend the period of time during which the
Exchange Offer is open by giving oral
26
or written notice of such extension to the Exchange Agent and by making a
public announcement of such extension or (ii) to amend the Exchange Offer in
any respect by making a public announcement of such amendment. There can be no
assurance that Lockheed Martin will exercise its right to extend or amend the
Exchange Offer.
If Lockheed Martin materially changes the terms of the Exchange Offer or the
information concerning the Exchange Offer, Lockheed Martin will extend the
Exchange Offer to the extent required by the Exchange Act. The minimum period
during which an offer must remain open following material changes in the terms
of the offer or information concerning the offer (other than a change in
price, change in the dealer's soliciting fee or a change in percentage of
securities sought) will depend on the facts and circumstances, including the
relative materiality of such terms or information. The Commission has stated
that, as a general rule, it is of the view that an offer should remain open
for a minimum of five business days from the date that notice of such a
material change is first published, sent or given, and that if material
changes are made with respect to information that approaches the significance
of price and share levels, a minimum of ten business days may be required to
allow adequate dissemination and investor response. If (i) Lockheed Martin
increases or decreases the number of shares of Materials Common Stock offered
in exchange for shares of Lockheed Martin Common Stock pursuant to the
Exchange Offer or the number of shares of Lockheed Martin Common Stock
eligible for exchange and (ii) the Exchange Offer is scheduled to expire at
any time earlier than the expiration of a period ending on the tenth business
day from and including the date that notice of such increase or decrease is
first published, sent or given, the Exchange Offer will be extended until the
expiration of such period of ten business days. The term "business day" shall
mean any day other than Saturday, Sunday or a federal holiday and shall
consist of the time period from 12:01 a.m. through 12:00 Midnight, New York
City time.
Lockheed Martin also reserves the right, in its sole discretion, in the
event any of the conditions specified in "--Certain Conditions of the Exchange
Offer" shall not have been satisfied and so long as shares of Lockheed Martin
Common Stock have not theretofore been accepted for exchange, to delay (except
as otherwise required by applicable law) acceptance for exchange of or
exchange for any shares of Lockheed Martin Common Stock or to terminate the
Exchange Offer and not accept for exchange of or exchange for any shares of
Lockheed Martin Common Stock.
If Lockheed Martin (i) extends the period of time during which the Exchange
Offer is open, (ii) is delayed in accepting for exchange of or exchange for
any shares of Lockheed Martin Common Stock or (iii) is unable to accept for
exchange of or exchange for any shares of Lockheed Martin Common Stock
pursuant to the Exchange Offer for any reason, then, without prejudice to
Lockheed Martin's rights under the Exchange Offer, the Exchange Agent may, on
behalf of Lockheed Martin, retain all shares of Lockheed Martin Common Stock
tendered, and such shares of Lockheed Martin Common Stock may not be withdrawn
except as otherwise provided in "--Withdrawal Rights" above. The reservation
by Lockheed Martin of the right to delay acceptance for exchange of or
exchange for any shares of Lockheed Martin Common Stock is subject to
applicable law, which requires that Lockheed Martin pay the consideration
offered or return the shares of Lockheed Martin Common Stock deposited by or
on behalf of stockholders promptly after the termination or withdrawal of the
Exchange Offer.
Any extension, termination or amendment of the Exchange Offer will be
followed as promptly as practicable by a public announcement thereof. Without
limiting the manner in which Lockheed Martin may choose to make any public
announcement, Lockheed Martin will have no obligation (except as otherwise
required by applicable law) to publish, advertise or otherwise communicate any
such public announcement other than by making a release to the Dow Jones News
Service. In the case of an extension of the Exchange Offer, Commission
regulations require a public announcement of such extension no later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date.
CERTAIN CONDITIONS OF THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer and without
prejudice to Lockheed Martin's other rights under the Exchange Offer, Lockheed
Martin shall not be required to accept for exchange of or, subject to any
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act relating to Lockheed Martin's obligation to exchange or
return tendered shares of Lockheed Martin Common Stock promptly after
termination or withdrawal of the Exchange Offer, exchange for any shares of
Lockheed Martin Common Stock, and may terminate the Exchange Offer as provided
in "--Extension of Tender Period;
27
Termination; Amendment," if prior to the acceptance for exchange of any shares
of Lockheed Martin Common Stock (i) at least 5,275,424 shares of Lockheed
Martin Common Stock (approximately 2.6% of the outstanding shares of Lockheed
Martin Common Stock as of August 31, 1996, which is a sufficient number of
shares of Lockheed Martin Common Stock to result in at least 66 2/3% of the
Materials Common Stock owned by Lockheed Martin being exchanged pursuant to
the Exchange Offer) shall not have been validly tendered and not withdrawn or
(ii) at any time on or after September 16, 1996, any of the following
conditions exists:
(a) there shall be threatened, instituted or pending any action or
proceeding by any government or governmental authority or agency, domestic
or foreign, or by any other person, domestic or foreign, before any court
or governmental authority or agency, domestic or foreign, (i) challenging
or seeking to make illegal, to delay or otherwise directly or indirectly to
restrain or prohibit the making of the Transaction or the acceptance for
exchange of or exchange of some or all of the shares of Lockheed Martin
Common Stock by Lockheed Martin or seeking to obtain material damages or
otherwise directly or indirectly relating to the Transaction, (ii) seeking
any relief that could result in a material diminution in the benefits
expected to be derived by Lockheed Martin or any of its subsidiaries or
affiliates (including Materials) as a result of the Transaction, or (iii)
that otherwise, in the sole judgment of Lockheed Martin, has or may have
material adverse significance with respect to the value of Lockheed Martin
or any of its subsidiaries or affiliates (including Materials); or
(b) there shall be any action taken, or any statute, rule, regulation,
injunction, order or decree proposed, enacted, enforced, promulgated,
issued or deemed applicable to the Transaction or any other element of the
Transaction by any court, government or governmental authority or agency,
domestic or foreign, that, in the sole judgment of Lockheed Martin, might,
directly or indirectly, result in any of the consequences referred to in
clauses (i) through (iii) of paragraph (a) above; or
(c) there shall have occurred (i) any general suspension of or limitation
on times for trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market, (ii) the
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) any material adverse change
(or development or threatened development involving a prospective material
adverse change) in United States or any other currency exchange rates or a
suspension of, or a limitation on, the markets therefor, (iv) the
commencement or material escalation of a war, armed hostilities or other
international or national calamity directly or indirectly involving the
United States, (v) any limitation (whether or not mandatory) by any
governmental authority or agency on, or any other event that, in the sole
judgment of Lockheed Martin, might adversely affect, the extension of
credit by banks or other financial institutions or (vi) in the case of any
of the foregoing existing at the time of the commencement of the Exchange
Offer, a material acceleration or worsening thereof; or
(d) there shall have occurred any material change (i) in the business,
financial condition, results of operations or prospects of Lockheed Martin
or Materials or (ii) in the market price of the shares of Lockheed Martin
Common Stock or Materials Common Stock; or
(e) a tender or exchange offer for some or all of the shares of Lockheed
Martin Common Stock or Materials Common Stock shall have been publicly
proposed to be made or shall have been made by another person or it shall
have been publicly disclosed or Lockheed Martin or Materials, as the case
may be, shall have otherwise learned that (i) any person or "group" (as
defined in Section 13(d)(3) of the Exchange Act) shall have acquired or
proposed to acquire beneficial ownership of more than 5% of any class or
series of capital stock of Lockheed Martin or Materials (including the
shares of Lockheed Martin Common Stock or Materials Common Stock), through
the acquisition of stock, the formation of a group or otherwise, or shall
have been granted any option, right or warrant, conditional or otherwise,
to acquire beneficial ownership of more than 5% of any class or series of
capital stock of Lockheed Martin or Materials (including the shares of
Lockheed Martin Common Stock or Materials Common Stock), (ii) any person or
group shall have made a proposal with respect to a tender or exchange offer
or a merger, consolidation or other business combination with or involving
Lockheed Martin or Materials or (iii) any person shall have filed a
Notification and Report Form under the HSR Act or made a public
announcement reflecting an intent to acquire Lockheed Martin or Materials
or any assets or securities of Lockheed Martin or Materials; or
(f) a holder of Lockheed Martin Common Stock shall have tendered a
sufficient number of shares of Lockheed Martin Common Stock such that upon
consummation of the Exchange Offer, such stockholder would receive a number
of shares of Materials Common Stock, which when added to the shares of
Materials
28
Common Stock beneficially owned by such holder and affiliates of such
holder, would constitute at least 15% of the outstanding shares of
Materials Common Stock (a "15% Acquiror"); or
(g) Lockheed Martin shall, in its sole discretion, determine that it is
unable to rely on the Opinion in connection with the consummation of the
Transaction, including a determination relating to continuity of
shareholder interest and compliance with Section 355(d) of the Code;
which, in the sole judgment of Lockheed Martin, in any such case, and
regardless of the circumstances (including any action or omission by Lockheed
Martin) giving rise to any such condition, makes it inadvisable to proceed
with (i) such acceptance for exchange of or exchange for any shares of
Lockheed Martin Common Stock or (ii) any other element of the Transaction.
The foregoing conditions are for the sole benefit of Lockheed Martin and may
be asserted by Lockheed Martin in its sole discretion, regardless of the
circumstances (including any action or omission by Lockheed Martin), giving
rise to any such conditions, or may be waived by Lockheed Martin, in its sole
discretion, in whole at any time or in part from time to time. The failure by
Lockheed Martin at any time to exercise its rights under any of the foregoing
conditions shall not be deemed a waiver of any such right; the waiver of any
such right with respect to particular facts and circumstances shall not be
deemed a waiver with respect to any other facts and circumstances; and each
such right shall be deemed an ongoing right which may be asserted at any time
or from time to time. Any determination by Lockheed Martin concerning the
events described above will be final and binding upon all parties.
In addition, Lockheed Martin will not accept for exchange any shares of
Lockheed Martin Common Stock tendered, and no shares of Materials Common Stock
will be exchanged for any shares of Lockheed Martin Common Stock, at any time
at which there shall be a stop order issued by the Commission which shall
remain in effect with respect to the Registration Statement.
FEES AND EXPENSES
Morgan Stanley & Co. Incorporated ("Morgan Stanley") is acting as Dealer
Manager in the United States only in connection with the Exchange Offer. The
Dealer Manager will, among other things, coordinate all aspects of marketing
of the Exchange Offer through the conduct of informational meetings and the
direct solicitation of certain identified stockholders. Lockheed Martin has
agreed to pay Morgan Stanley, as compensation for their services as Dealer
Manager, a fee of $1,500,000 plus reasonable out of pocket expenses. Morgan
Stanley from time to time has provided and continues to provide financial
advisory and financing services to Lockheed Martin and Materials and has
received customary fees for the rendering of these services. Lockheed Martin
has agreed to indemnify the Dealer Manager against certain liabilities,
including civil liabilities under the Securities Act, or contribute to certain
payments which the Dealer Manager may be required to make in respect thereof.
Lockheed Martin will pay to a Soliciting Dealer a solicitation fee of $1.00
per share, up to a maximum of 1,000 shares, for each share of Lockheed Martin
Common Stock tendered and accepted for exchange pursuant to the Exchange Offer
if such Soliciting Dealer has affirmatively solicited and obtained such
tender, except that no solicitation fee shall be payable (i) in connection
with a tender of Lockheed Martin Common Stock by a stockholder (x) tendering
more than 10,000 shares of Lockheed Martin Common Stock or (y) tendering from
a country outside of the United States; or (ii) to the Dealer Manager.
"Soliciting Dealer" includes (i) any broker or dealer in securities which is a
member of any national securities exchange or of the National Association of
Securities Dealers, Inc. or (ii) any bank or trust company. In order for a
Soliciting Dealer to receive a solicitation fee with respect to the tender of
shares of Lockheed Martin Common Stock, the Exchange Agent must have received
a Letter of Transmittal with Section VII thereof entitled "Notice of Solicited
Tenders" properly completed and duly executed.
No solicitation fee shall be payable to a Soliciting Dealer if such
Soliciting Dealer is required for any reason to transfer the amount of such
fee to a tendering holder (other than itself). Soliciting Dealers are not
entitled to a solicitation fee with respect to shares of Lockheed Martin
Common Stock beneficially owned by such Soliciting Dealer or with respect to
any shares that are registered in the name of a Soliciting Dealer unless the
shares are held by such Soliciting Dealer as nominee and are tendered for the
benefit of beneficial holders identified in the
29
Letter of Transmittal. No broker, dealer, bank, trust company or fiduciary
shall be deemed to be the agent of Lockheed Martin, Materials, the Exchange
Agent, the Dealer Manager or the Information Agent for purposes of the
Exchange Offer.
Lockheed Martin has retained Morrow & Co., Inc. to act as the Information
Agent and First Chicago Trust Company of New York to act as the Exchange Agent
in connection with the Exchange Offer. The Information Agent may contact
holders of shares of Lockheed Martin Common Stock by mail, telephone,
facsimile transmission and personal interviews and may request brokers,
dealers and other nominee stockholders to forward materials relating to the
Exchange Offer to beneficial owners. The Information Agent and the Exchange
Agent each will receive reasonable and customary compensation for their
respective services, will be reimbursed for certain reasonable out-of-pocket
expenses and will be indemnified against certain liabilities in connection
therewith, including certain liabilities under the federal securities laws.
Neither the Information Agent nor the Exchange Agent has been retained to make
solicitations or recommendations in their respective roles as Information
Agent and Exchange Agent and the fees to be paid to them will not be based on
the number of shares of Lockheed Martin Common Stock tendered pursuant to the
Exchange Offer.
Lockheed Martin will not pay any fees or commissions to any broker or dealer
or any other person (other than the Dealer Manager and the Soliciting Dealers)
for soliciting tenders of shares of Lockheed Martin Common Stock pursuant to
the Exchange Offer. Brokers, dealers, commercial banks and trust companies
will, upon request, be reimbursed by Lockheed Martin for reasonable and
necessary costs and expenses incurred by them in forwarding materials to their
customers. Certain employees of Lockheed Martin may solicit shares of Lockheed
Martin Common Stock from stockholders, but such employees will not receive any
commissions or compensation for such services other than their normal
employment compensation.
MISCELLANEOUS
The Exchange Offer is not being made to (nor will tenders be accepted from
or on behalf of) holders of Lockheed Martin Common Stock in any jurisdiction
in which the making of the Exchange Offer or the acceptance thereof would not
be in compliance with the laws of such jurisdiction. Lockheed Martin is not
aware of any jurisdiction where the making of the Exchange Offer or the
acceptance thereof would not be in compliance with applicable law. If Lockheed
Martin becomes aware of any jurisdiction where the making of the Exchange
Offer or acceptance thereof would not be in compliance with any valid
applicable law, Lockheed Martin will make a good faith effort to comply with
such law. If, after such good faith effort, Lockheed Martin cannot comply with
such law, the Exchange Offer will not be made to, nor will tenders be accepted
from or on behalf of, holders of shares of Lockheed Martin Common Stock in any
such jurisdiction.
No person has been authorized to give any information or make any
representation on behalf of Lockheed Martin not contained in this Offering
Circular-Prospectus or in the Letter of Transmittal and, if given or made,
such information or representation must not be relied upon as having been
authorized.
30
THE SPIN-OFF
If fewer than 7,913,136 shares of Lockheed Martin Common Stock are validly
tendered pursuant to the Exchange Offer and not withdrawn, and the Exchange
Offer is consummated, Lockheed Martin will distribute all remaining shares of
Materials Common Stock owned by Lockheed Martin pro rata to remaining holders
of record of shares of Lockheed Martin Common Stock at the close of business
on a record date as soon as practicable after consummation of the Exchange
Offer. Such record date and the date of such distribution (which will be as
soon as practicable after such record date) will be publicly announced by
Lockheed Martin when they have been determined. If the Minimum Condition is
not satisfied, Lockheed Martin may, in its sole discretion, (i) decide not to
consummate the Exchange Offer, (ii) waive the Minimum Condition and consummate
the Transaction, (iii) spin-off all shares of Materials Common Stock owned by
it or (iv) review and implement other alternatives. See "The Exchange Offer--
Certain Conditions of the Exchange Offer." If at least 7,913,136 shares of
Lockheed Martin Common Stock are exchanged pursuant to the Exchange Offer, the
Spin-Off will not be effected.
If a holder of Lockheed Martin Common Stock tenders a sufficient number of
shares of Lockheed Martin Common Stock such that upon consummation of the
Exchange Offer an HSR Act filing would be required, and an enforcement agency
makes a second request for information or such stockholder elects to withdraw
his or her tendered shares, Lockheed Martin will distribute the shares of
Materials Common Stock which would otherwise have been received by such
stockholder to holders of record of shares of Lockheed Martin Common Stock
remaining after consummation of the Exchange Offer. See "The Transaction--
Regulatory Approvals."
No fractional shares of Materials Common Stock will be distributed pursuant
to the Spin-Off. The Exchange Agent, acting as agent for Lockheed Martin
stockholders otherwise entitled to receive fractional shares, will aggregate
all fractional shares and sell them for the accounts of such stockholders.
Proceeds from sales of fractional shares will be paid by the Exchange Agent
based upon the average gross selling price per share of all such sales. None
of the Exchange Agent, Lockheed Martin, Materials, the Dealer Manager or any
Soliciting Dealer will guarantee any minimum sale price for the shares of
Materials Common Stock and no interest will be paid on the proceeds.
31
PRICE RANGE OF LOCKHEED MARTIN COMMON STOCK AND DIVIDENDS
Lockheed Martin Common Stock is listed and traded on the NYSE. The following
table sets forth for the periods indicated the high and low sale prices per
share of Lockheed Martin Common Stock as reported in the consolidated
transactions reporting system on the NYSE and the cash dividends paid per
share of Lockheed Martin Common Stock:
CASH
HIGH LOW DIVIDENDS
------- ------- ---------
1995
First Quarter*...................................... $54 3/8 $50 1/4 --
Second Quarter...................................... 64 7/8 50 $0.35
Third Quarter....................................... 68 1/8 59 3/8 0.35
Fourth Quarter...................................... 79 1/2 63 0.35
1996
First Quarter....................................... $80 7/8 $73 1/8 $0.40
Second Quarter...................................... 86 3/4 73 0.40
Third Quarter (through September 13, 1996).......... 88 1/2 76 1/4 0.40
- --------
* Partial period data. The Combination of Lockheed and Martin Marietta was
consummated on March 15, 1995. See "Offering Circular--Prospectus Summary--
Lockheed Martin Corporation."
On July 25, 1996, the last trading day prior to the announcement of the
Transaction, the closing sale price as reported in the consolidated
transactions reporting system on the NYSE per share of Lockheed Martin Common
Stock was $80 5/8. On September 13, 1996, the last trading day before Lockheed
Martin commenced the Exchange Offer, the closing sale price as reported in the
consolidated transactions reporting system on the NYSE per share of Lockheed
Martin Common Stock was $87 3/8. Stockholders are urged to obtain current
market quotations for the shares of Lockheed Martin Common Stock.
Following the Combination, Lockheed Martin paid quarterly dividends of $0.35
per share. Pursuant to a settlement of certain shareholder litigation in
connection with the Combination, Lockheed Martin agreed to increase its
regular quarterly dividend by $0.05 per share for each of the first three
quarters of 1996. On July 25, 1996, Lockheed Martin announced that its Board
of Directors had declared a quarterly cash dividend of $0.40 per share of
Lockheed Martin Common Stock payable on September 30, 1996 to holders of
record on September 3, 1996. Holders of record of Lockheed Martin Common Stock
on September 3, 1996 will receive the dividend regardless of whether such
holders tender their shares prior to September 30, 1996. The declaration and
payment of future dividends to holders of Lockheed Martin Common Stock will be
at the discretion of the Board of Directors of Lockheed Martin and will depend
upon many factors, including Lockheed Martin's competitive position, financial
condition, earnings and capital requirements.
32
PRICE RANGE OF MATERIALS COMMON STOCK AND DIVIDENDS
Materials Common Stock is listed and traded on the NYSE. The following table
sets forth for the periods indicated the high and low sale prices per share of
Materials Common Stock as reported in the consolidated transactions reporting
system on the NYSE and the cash dividends paid per share of Materials Common
Stock:
CASH
HIGH LOW DIVIDENDS
------- ------- ---------
1994
First Quarter*...................................... $25 7/8 $21 1/2 $ --
Second Quarter...................................... 24 18 --
Third Quarter....................................... 22 1/4 18 3/4 $0.11
Fourth Quarter...................................... 22 3/8 17 0.11
1995
First Quarter....................................... $19 1/2 $16 1/2 $0.11
Second Quarter...................................... 21 3/4 19 1/8 0.11
Third Quarter....................................... 20 1/2 18 1/2 0.11
Fourth Quarter...................................... 22 1/8 18 5/8 0.11
1996
First Quarter....................................... $23 1/4 $20 1/8 $0.11
Second Quarter...................................... 24 7/8 21 1/2 0.11
Third Quarter (through September 13, 1996).......... 24 3/4 21 1/2 0.12
- --------
* Partial period data. Materials Common Stock began trading on February 17,
1994 following the Materials IPO. See "Offering Circular--Prospectus
Summary--Martin Marietta Materials, Inc."
On July 25, 1996, the last trading day prior to the announcement of the
Transaction, the closing sale price as reported in the consolidated
transactions reporting system on the NYSE per share of Materials Common Stock
was $22 1/2. On September 13, 1996, the last trading day before Lockheed
Martin commenced the Exchange Offer, the closing sale price as reported in the
consolidated transactions reporting system on the NYSE per share of Materials
Common Stock was $21 3/4. Stockholders are urged to obtain current market
quotations for the shares of Materials Common Stock.
On July 26, 1996, Materials announced that its Board of Directors had
declared a quarterly cash dividend of $0.12 per share of Materials Common
Stock payable on September 30, 1996 to holders of record on August 30, 1996.
Holders of Lockheed Martin Common Stock who tender their shares in the
Exchange Offer will not be eligible to receive the dividend on Materials
Common Stock which is payable on September 30, 1996. The declaration and
payment of future dividends to holders of Materials Common Stock will be at
the discretion of the Board of Directors of Materials and will depend upon
many factors, including Materials' competitive position, financial condition,
earnings and capital requirements.
33
UNAUDITED PRO FORMA COMBINED CONDENSED
EARNINGS DATA OF LOCKHEED MARTIN
The following unaudited pro forma combined condensed earnings data of
Lockheed Martin, excerpted from Lockheed Martin's Quarterly Report on Form 10-
Q for the quarter ended June 30, 1996 filed with the Commission on August 13,
1996, has been prepared by Lockheed Martin's management from the historical
financial statements of Lockheed Martin and of Tactical Systems (the defense
electronics and systems integration businesses of the former Loral
Corporation). The unaudited pro forma combined condensed earnings data
reflects adjustments as if the Loral Transaction had been consummated at the
beginning of the periods presented. The unaudited pro forma adjustments are
based upon preliminary estimates and certain assumptions that management of
Lockheed Martin believes are reasonable in the circumstances.
The unaudited pro forma combined condensed earnings data is not necessarily
indicative of results of operations that would have resulted if the Loral
Transaction had occurred on the applicable dates indicated above. Moreover,
such information is not intended to be indicative of future results of
operations. The unaudited pro forma combined condensed earnings data should be
read in conjunction with the historical consolidated financial statements of
Lockheed Martin and related notes thereto, and the historical financial
statements of Tactical Systems and related notes thereto, both of which are
incorporated by reference in this Offering Circular-Prospectus.
LOCKHEED TACTICAL PRO FORMA
MARTIN SYSTEMS COMBINED
-------- -------- ---------
(IN MILLIONS, EXCEPT PER
SHARE DATA)
SIX MONTHS ENDED JUNE 30,
1996:
Net sales................. $12,185 $1,403(1) $13,545
Net earnings.............. 571 126(1) 577
Earnings per common share:
Assuming no dilution.... 2.85 N/A 2.88
Assuming full dilution.. 2.55 N/A 2.58
SIX MONTHS ENDED JUNE 30,
1995:
Net sales................. $11,251 $3,223 $14,387
Net earnings.............. 84(2) 172 16
Earnings (loss) per common
share:
Assuming no dilution.... .28 N/A (.07)
Assuming full dilution.. -- (3) N/A -- (3)
- --------
(1) Financial data presented represents the operating results of Tactical
Systems for the first quarter of 1996. The operating results of Tactical
Systems for the second quarter of 1996 have been included in the Lockheed
Martin financial data.
(2) Net earnings includes the effect of Lockheed Martin's merger related and
consolidation expenses recorded in 1995 related to the formation of
Lockheed Martin. The after-tax effect of these charges was $436 million,
or $1.96 per common share assuming full dilution.
(3) Amounts for earnings (loss) per common share assuming full dilution have
not been presented as such amounts are anti-dilutive. Calculated earnings
per common share were $.38 for Lockheed Martin and $.07 for Pro Forma
Combined, respectively.
34
SELECTED CONSOLIDATED FINANCIAL DATA OF LOCKHEED MARTIN
(IN MILLIONS, EXCEPT PER SHARE DATA)
The following selected consolidated financial data as of and for the years
ended December 31, 1995, 1994 and 1993 are derived from consolidated financial
statements of Lockheed Martin which have been audited by Ernst & Young, LLP,
independent auditors. The financial data as of and for the six months ended
June 30, 1996 and 1995, are derived from unaudited financial statements and,
in the opinion of Lockheed Martin's management, include all adjustments
(consisting of normal recurring accruals) necessary for a fair presentation of
financial position, results of operations and cash flows. Operating results
for the six months ended June 30, 1996, are not necessarily indicative of the
results that may be expected for the entire year ending December 31, 1996.
This information is qualified in its entirety by, and should be read in
conjunction with, the consolidated financial statements and related footnotes
thereto for Lockheed Martin incorporated by reference in this Offering
Circular-Prospectus as well as the Unaudited Pro Forma Combined Condensed
Financial Information of Lockheed Martin presented on the previous page of
this Offering Circular-Prospectus.
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
----------------- -----------------------
1996(1) 1995(2) 1995(2) 1994 1993
-------- -------- ------- ------- -------
EARNINGS DATA:
Net sales
Space & Strategic Missiles.... $ 3,664 $ 3,747 $ 7,521 $ 6,719 $ 7,293
Aeronautics................... 2,500 3,242 6,617 7,091 6,601
Information & Technology Serv-
ices......................... 2,630 2,195 4,528 4,271 3,712
Electronics................... 2,965 1,650 3,294 4,055 4,092
Energy, Materials and Other
(3).......................... 426 417 893 770 699
-------- -------- ------- ------- -------
Total....................... $12,185 $11,251 $22,853 $22,906 $22,397
======== ======== ======= ======= =======
Operating profit
Space & Strategic Missiles.... $ 505 $ 84 $ 431 $ 476 $ 507
Aeronautics................... 230 136 394 511 479
Information & Technology Serv-
ices......................... 146 84 269 228 145
Electronics................... 249 80 261 456 331
Energy, Materials and Other
(3).......................... 66 (85) 22 308 122
-------- -------- ------- ------- -------
Total....................... $ 1,196 $ 299 $ 1,377 $ 1,979 $ 1,584
======== ======== ======= ======= =======
Net earnings.................... $ 571 $ 84 $ 682 $ 1,018 $ 829
Earnings per common share:
Assuming no dilution.......... $ 2.85 $ .28 $ 3.28 $ 5.12 $ 3.99
Assuming full dilution........ 2.55 -- (2) 3.05 4.66 3.75
CASH FLOW DATA:
Depreciation and amortization... $ 533 $ 465 $ 921 $ 937 $ 936
Expenditures for property, plant
and equipment.................. 347 269 531 509 536
Dividends on common and pre-
ferred stock................... 186 155 314 274 260
AS OF
AS OF DECEMBER 31,
JUNE 30, ---------------
1996(1) 1995 1994
-------- ------- -------
BALANCE SHEET DATA:
Cash and cash equivalents........................... $ 390 $ 653 $ 639
Total assets........................................ 30,328 17,648 18,049
Total debt.......................................... 12,759 3,732 3,879
Stockholders' equity................................ 6,912 6,433 6,086
Book value per common share, assuming full dilu-
tion............................................... 30.86 28.93 29.19
- --------
(1) On April 23, 1996, Lockheed Martin acquired Tactical Systems (the defense
electronics and systems integration businesses of the former Loral
Corporation). The operations of Tactical Systems have been included in the
results of operations of Lockheed Martin's Information & Technology
Services and Electronics segments from April 1, 1996. See "Unaudited Pro
Forma Combined Condensed Earnings Data of Lockheed Martin" for the effects
of the Loral Transaction.
(2) Operating profit includes the effect of the Lockheed Martin's $690 million
pretax charges for merger related and consolidation expenses recorded in
1995 related to the formation of Lockheed Martin. The after-tax effect of
these charges was $436 million, or $1.96 per common share assuming full
dilution. Earnings per common share assuming full dilution for the six
months ended June 30, 1995 is not presented as such amount is anti-
dilutive.
(3) Includes Energy and Environment Sector, Materials and businesses not
included in the other business segments.
35
SELECTED CONSOLIDATED FINANCIAL DATA OF MATERIALS
The Statement of Earnings Data set forth below for each of the years in the
three-year period ended December 31, 1995, and the Balance Sheet Data set
forth below as of December 31, 1995 and 1994, are derived from the audited
consolidated financial statements of the Company and notes thereto
incorporated by reference in this Offering Circular--Prospectus. These
consolidated financial statements have been audited by Ernst & Young LLP,
independent auditors. The Statement of Earnings Data set forth below for each
of the years in the two-year period ended December 31, 1992, and the Balance
Sheet Data set forth below as of December 31, 1993, 1992 and 1991, are derived
from the audited consolidated financial statements of the Company, which also
have been audited by Ernst & Young LLP. The Statement of Earnings Data for the
six-month periods ended June 30, 1996 and 1995, and the Balance Sheet Data as
of June 30, 1996 and 1995, are derived from the Company's unaudited condensed
consolidated financial information and include, in the opinion of management,
all adjustments (consisting of normal recurring adjustments) necessary for a
fair presentation. The earnings results for the six-month period ended June
30, 1996, are not necessarily indicative of the results that may be expected
for the full year ending December 31, 1996.
The selected financial data presented below should be read in conjunction
with Management's Discussion and Analysis of Financial Condition and Results
of Operations, the unaudited condensed consolidated financial statements and
related notes thereto, and the audited consolidated financial statements and
related notes thereto which are incorporated by reference in this Offering
Circular-Prospectus.
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
SIX MONTHS
ENDED JUNE 30, FISCAL YEARS ENDED DECEMBER 31,
---------------- ----------------------------------------
1996 1995 1995(1) 1994 1993 1992 1991
------- ------- ------- ------- ------ ------ ------
STATEMENT OF EARNINGS
DATA:
Net sales............... $ 337.0 $ 305.9 $ 664.4 $ 501.7 $452.9 $408.3 $371.7
Gross profit............ 79.1 75.3 167.2 139.1 121.3 98.4 95.0
Earnings from opera-
tions.................. 48.5 45.6 107.6 91.9 76.4 55.1 55.4
Interest expense........ (5.7) (4.5) (9.7) (6.9) (3.2) (1.0) (0.8)
Other income and ex-
penses, net............ 4.3 2.6 6.0 5.4 0.9 2.5 (0.3)
Earnings before taxes on
income, net
extraordinary item and
net cumulative effect
of changes in
accounting............. 47.1 43.7 103.8 90.4 74.1 56.5 54.3
Earnings before net
extraordinary item and
net cumulative effect
of changes in
accounting............. 31.1 28.2 67.6 58.3 48.0 39.0 37.4
Net extraordinary
item(2)................ -- -- -- (4.6) -- -- --
Net cumulative effect of
changes in account-
ing(3)................. -- -- -- -- (17.5) -- --
Net earnings............ 31.1 28.2 67.6 53.7 30.5 39.0 37.4
NET EARNINGS PER COMMON
SHARE:
Before extraordinary
item................... $ 0.68 $ 0.61 $ 1.47 $ 1.30
Extraordinary item...... -- -- -- (0.11)
------- ------- ------- -------
$ 0.68 $ 0.61 $ 1.47 $ 1.19
======= ======= ======= =======
SELECTED STATISTICAL AND
OPERATING DATA:
EBITDA(4)............... $ 82.8 $ 75.2 $ 169.2 $ 140.1 $114.3 $ 99.5 $ 94.4
Depreciation, depletion
and amortization....... $ 30.0 $ 27.0 $ 55.7 $ 42.8 $ 37.0 $ 42.0 $ 39.3
Capital expenditures
(including acquisi-
tions)................. $ 33.4 $ 176.9 $ 230.7 $ 59.5 $ 66.4 $ 57.9 $ 43.0
Tons of aggregates
shipped (in millions).. 46.0 42.2 94.0 71.2 64.9 56.5 50.3
Annual aggregates
production capacity
available at end of
period (in millions of
tons).................. -- -- 117.3 85.7 84.0 80.1 74.9
AS OF JUNE 30, AS OF DECEMBER 31,
---------------- ----------------------------------------
1996 1995 1995 1994 1993 1992 1991
------- ------- ------- ------- ------ ------ ------
BALANCE SHEET DATA:
Total assets............ $ 746.4 $ 703.9 $ 789.4 $ 593.9 $497.0 $447.3 $422.5
Working capital......... 165.2 52.8 141.0 132.4 89.1 85.5 82.7
Long-term debt (includ-
ing current maturities
of long-term debt)..... 125.7 106.7 228.7 108.2 235.3 13.4 11.5
Stockholders' equi-
ty(5).................. 444.6 394.3 423.5 376.3 145.4 -- --
Business equity(5)...... -- -- -- -- -- 354.9 328.3
- --------
(1) The financial data for the year ended December 31, 1995, include the
operations of the former Dravo Basic Materials Company, Inc., from the
date of acquisition.
(2) Amount represents the net extraordinary loss on the early extinguishment
of debt associated with the February 1994 in-substance defeasance of $125
million of long-term indebtedness.
36
(3) Net cumulative effect of accounting changes reflects the 1993 adoption of
the change in methods of accounting for income taxes, postretirement
benefits other than pensions, and postemployment benefits.
(4) EBITDA represents earnings before taxes on income, net extraordinary item,
net cumulative effect of changes in accounting, interest expense, and
depreciation, depletion and amortization. EBITDA does not represent net
income or cash flows from operations as these terms are defined under
generally accepted accounting principles, and should not be considered as
an alternative to net income as an indicator of the Company's operating
performance or to cash flows as a measure of liquidity. The Company has
included information concerning EBITDA herein because it has been informed
that such information is useful to certain investors.
(5) The Company was incorporated in November 1993, at which time it authorized
and issued Materials Common Stock and assumed the obligations with respect
to certain indebtedness of its parent. Prior to its incorporation, the
Company was an operating division of Martin Marietta Corporation and its
capitalization did not include stockholders' equity in the form of capital
stock or significant interest-bearing indebtedness. Accordingly, the
presentation of its capitalization may not be comparable in all periods
presented.
37
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF MATERIALS
The following discussion and analysis presents management's assessment of
Materials' business environment, factors affecting the results of operations,
liquidity and capital resources as of and for the second quarter and six
months ended June 30, 1996, and the results of operations for the three years
in the period ended December 31, 1995. This information should be read in
conjunction with the Company's condensed consolidated financial statements and
related notes thereto contained in the Company's Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 1996, and the Company's audited
financial statements and related notes thereto contained in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1995, which
are incorporated by reference herein.
OVERVIEW
Materials achieved record quarterly sales and earnings, including earnings
from operations, for the quarter ended June 30, 1996, principally through
continued pricing and profitability improvements, coupled with the positive
impact of its previous acquisition activities. Financial results for the first
half of 1996 yielded earnings from operations of $48.5 million. These
operating earnings were up $2.8 million from the year-earlier period on net
sales of $337.0 million. Comparatively, earnings from operations for the first
six months of 1995 were $45.6 million on net sales of $305.9 million. The
Company's net earnings for the six-month period ended June 30, 1996, of $31.1
million, or $0.68 a share, represent an increase of 10% over net earnings for
the first six months of 1995 of $28.2 million, or $0.61 a share.
Materials continues to maintain a level of capital resources which
management believes is adequate to operate, compete and grow in an
increasingly challenging and competitive environment. At June 30, 1996, total
shareholders' equity reached $444.6 million, and the Company's ratio of debt
to total capitalization was 25%, compared with a debt-to-capitalization ratio
of 35% at year-end 1995. Total debt at year-end reflected a temporary increase
in long-term debt associated with the December 1995 sale of the Company's $125
million 7% Debentures. The proceeds from the sale of these Debentures were
used ultimately to repay the $100 million aggregate principal amount of the
Company's 8 1/2% Notes upon their maturity on March 1, 1996.
The management of Materials continues to remain committed to achieving its
current and long-term strategic and financial goals, which include a plan for
disciplined growth through acquisitions in the Company's core businesses and
an ongoing program for development of new aggregates quarry locations, known
as greensiting.
BUSINESS ENVIRONMENT
Materials conducts its operations through two divisions: Aggregates and
Magnesia Specialties. The Aggregates division is the second largest producer
of construction aggregates in the United States, based on tons shipped, and
its products are used primarily for construction of highways and other
infrastructure projects and in commercial and residential construction. The
Magnesia Specialties division sells a majority of its products to customers in
the steel industry, and also serves customers in other industrial,
agricultural and environmental markets.
The Company's aggregates business is characterized by a high level of
dependence upon private and public sector construction spending and a
sensitivity to national, as well as regional and local, economic cycles.
Historically, these characteristics have made the construction aggregates
industry highly cyclical. In addition, the aggregates business is seasonal,
due primarily to the effect of weather conditions on construction activity in
the markets served.
The public sector portion of construction spending levels, which accounts
for approximately one-half of the division's annual shipments, has been
historically more stable than the levels of construction spending for the
commercial and residential portions. Consequently, management believes that
the division's broad mix of public
38
sector construction activity and its emphasis on infrastructure-related
projects lessen somewhat the Company's exposure to fluctuations in commercial
and residential spending levels. Over time, these spending levels have been
sensitive primarily to the effects of changes in regional and local economies,
as well as to fluctuations in interest rates.
The current federal highway program expires September 30, 1997. However,
management expects a new federal program will be enacted without interruption,
with construction spending to continue at levels comparable to current
spending levels. In addition, it is expected that construction spending
associated with the state- and local-level highway programs in markets in
which the Company does business will continue at levels comparable to current
spending levels. If construction spending reductions occur in state- and
local-level highway programs, or if, as part of the federal budget
deliberations, construction spending reductions occur in the current or a
successor federal highway program, the division's operations could be
adversely affected, if such reductions occur within the division's respective
markets. However, it should be noted that the Highway Trust Fund and a
significant portion of the state and local highway programs within the
Company's markets are funded from sources such as dedicated portions of
gasoline tax revenues, which management believes should not be adversely
affected by federal and state-level budget reductions. In fact, current
federal legislation is pending that would transfer 4.3 cents per gallon of a
non-dedicated portion of the federal gasoline tax--funds that are now
channeled to the general treasury for use in reducing the federal budget
deficit--to the Highway Trust Fund. While this proposed legislation is
receiving bipartisan support currently, there is no assurance that passage of
the legislation will occur.
Against the backdrop of what is described by some economists as a soft
takeoff in economic and construction activity in the current year following
what was described as a soft landing back in 1995, a modest increase in the
total value of construction awards is expected for the full year 1996. While
the increase in 1996 construction awards is expected to be concentrated in
commercial income and residential construction properties, the level of public
works construction awards is expected to be flat through 1996.
Because of the concentration of the Aggregates division's operations in the
southeastern, midwestern and central regions of the country, the division's
and, consequently, the Company's operating performance is dependent on the
strength of these specific regional economies. Therefore, the division's
performance could be adversely affected by the future economic conditions in
these regions.
In connection with the Aggregates division's geographic expansion strategy,
the Company has made strategic acquisitions that not only widened its
geographic exposure but also added significant distribution flexibility. In
this regard, the division now has significant water transportation
distribution capabilities in addition to truck and rail. The acquisition of
Dravo Aggregates in 1995 complemented the division's operations by adding
operating facilities, including barges and distribution yards, along the Ohio
and Mississippi River systems, as well as on the Gulf of Mexico and the
Southeastern Atlantic coast. New quarry and mineral reserve locations
resulting from the acquisition of the former Dravo operations in the Bahamas
and from a separate acquisition in Nova Scotia have added important markets
outside the United States in Canada, the Caribbean islands and South America.
These quarries add significant long-term mineral reserve capacity that
position the Company to be able to compete for construction aggregate and
chemical stone business along the east coast and near major Eastern
metropolitan markets which are accessible by water transportation.
Finally, it should be noted that with respect to the seasonal nature of the
aggregates business, levels of construction activity in the division's markets
are affected significantly by regional weather conditions. Accordingly,
production and shipment levels coincide with general construction activity
levels, most of which occur in the division's markets typically during the
spring, summer and fall seasons.
The Aggregates division achieved record quarterly production and shipment
levels during the period ended June 30, 1996, reflecting the benefits of the
Company's growth strategy. Net shipments increased by 12%, with growth
experienced in each of the division's operating regions despite continued
adverse weather conditions in the northern sections of the country during most
of the quarter. Consistent with prior periods and the previous
39
year, construction for infrastructure programs have accounted for
approximately one-half of the division's sales thus far in 1996. Currently,
management believes that the Company will see improvement in the division's
annual production and shipment levels for the full year 1996, compared with
the prior year, without taking into account any acquisitions the Company may
consummate during the balance of the year. In the longer term, the Aggregates
division's business and financial results will continue to follow the
national, as well as regional and local, general economic trends. At this
time, some industry analysts are predicting an economic downturn beginning in
the 1998 or 1999 time period. If this downturn occurs, the pattern for total
construction activity over the economic cycle beginning in 1998 would
represent a sharp change from those cycles of previous periods in the early
1990s.
The Aggregates division's raw material reserves are sufficient to permit
production at present operating levels for the foreseeable future. Based upon
1995 annual shipment levels, the Company's raw material reserves exceed 50
years of production activity.
The Magnesia Specialties division's products, which include refractory and
dolomitic lime, are used principally within the steel industry. Sales to the
steel industry continue to account for approximately 74% of the Magnesia
Specialties division's current period sales. Accordingly, the division's
profitability is highly dependent on the manufacture of steel and its related
marketplace. Prices of its refractory products are directly affected by
current economic trends within the steel industry, which continues to
experience price weaknesses. To mitigate this exposure, the management of
Magnesia Specialties has taken steps to emphasize new product development and
concentrate on additional products for use in environmental, agricultural and
other industrial applications. As a result, the division's financial results
have benefited from increased sales of its higher-margin chemical and lime
products, coupled with successful cost reduction programs at its manufacturing
facilities.
The June 1995 strike at an operating facility in Manistee, Michigan, which
adversely affected the division's earnings for 1995, was settled successfully
and a new four-year agreement reached in early August 1995. During the current
period, another labor union contract at a separate operating location in
Woodville, Ohio, was renegotiated successfully without work interruption.
The Company is involved in various environmental and reclamation matters.
Among the variables that management must assess in evaluating costs associated
with these issues are evolving environmental regulatory standards. The nature
of these matters makes it difficult to estimate the timing and amount of any
costs that may be necessary for future remedial measures. The Company incurs
certain environmental-related costs in connection with its operations,
including land reclamation costs, pollution control facility operating and
maintenance costs, and environmental program compliance and monitoring costs.
For financial reporting purposes, the Company treats these costs as normal
ongoing operating expenses of its businesses and records them as costs of
sales in the period in which they are incurred.
The Company records appropriate financial statement accruals for
environmental matters in the period in which liability is established and the
appropriate amount can be estimated reasonably. The Company currently has no
material provisions for estimated costs in connection with environmental-
related expenditures, because it is impossible to quantify with certainty the
potential impact of all actions regarding environmental matters, particularly
the extent and cost of future remediation and other compliance efforts.
However, in the opinion of management, it is unlikely that any additional
liability the Company may incur for known environmental issues or that
compliance with present environmental protection laws would have a material
adverse effect on the Company's consolidated financial position or on its
results of operations.
BUSINESS COMBINATION WITH DRAVO
In January 1995, Materials purchased substantially all of the assets of the
construction aggregates business of Dravo for an acquisition price of
approximately $121 million in cash plus the assumption of certain liabilities.
In addition, the Company recorded a provision of approximately $7 million for
estimated costs to consummate the transaction and integrate the operations.
The acquisition was accounted for under the purchase method of
40
accounting, wherein approximately $7 million in goodwill was recognized by the
Company after recording approximately $8 million in other intangibles
(representing the estimated fair market value of certain assets) and other
purchase adjustments necessary to allocate the purchase price to the value of
assets acquired and liabilities assumed. As of June 30, 1996, approximately
$6.7 million (of the $7 million of costs originally estimated to consummate
the transaction and integrate the operations) has been expended and charged
against the liability. Management expects the balance of the estimated costs
will be incurred during the remainder of 1996. Goodwill and other intangibles
are being amortized over 20-year periods.
RESULTS OF OPERATIONS
June 1996 Compared to June 1995. Net sales for the quarter were $200.4
million, a 14% increase over 1995 second quarter sales of $175.9 million. Net
sales for the first six months of 1996 were $337.0 million, an increase of 10%
over net sales for the year-earlier period of $305.9 million. Earnings from
operations were up $8.8 million, or 28%, to $39.9 million for the second
quarter of 1996 over the same period in 1995, with earnings from operations up
$2.8 million, to $48.5 million for the first six months of 1996, compared with
the first six months of 1995. Consolidated net earnings for the quarter
increased 34% to $26.8 million, or $0.58 per share, from 1995 second quarter
net earnings of $20.0 million, or $0.43 per share. For the six-month period
ended June 30, 1996, consolidated net earnings were $31.1 million, or $0.68
per share. This represents an increase of 10% over net earnings for the first
six months of 1995 of $28.2 million, or $0.61 per share.
Sales for the Aggregates division increased 15% to $167.7 million for the
second quarter, compared with the year-earlier period. The division's sales
increased 11% to $271.3 million for the first six months of 1996, compared
with the first six months of 1995. This increase in sales reflects record
year-to-date aggregates shipments of 46 million tons and an increase in the
division's average net selling price, when compared to the same period in
1995. The division's second quarter operating profits were $37.6 million, an
increase of 23% over operating profits for the year-earlier period of $30.6
million. The division's operating profits for the first six months of 1996
increased slightly to $43.2 million from $42.4 million for the first six
months of 1995, reflecting the lingering effect of adverse weather conditions
within most of the markets served by the division during most of the first
quarter of 1996. The Company's aggregates business is highly seasonal, due
primarily to the effect of weather conditions on the level of construction
activity, the most of which occurs typically in the spring, summer, and early
fall. The severe winter weather conditions experienced during the first
quarter of 1996 contributed to overall higher production costs during the
first six months of the year. Management continues to believe that the
Company's annual production and shipments, excluding any acquisition
activities, will see some improvement for the full year ending December 31,
1996, compared with the prior year.
The Magnesia Specialties division had second quarter 1996 sales of $32.8
million, an increase of 10% over the second quarter of 1995, and had six month
1996 sales of $65.7 million, an increase of 6% in the first six months of 1996
over 1995. Even though shipments of refractory products for the first six
months of 1996 were relatively flat when compared with the year-earlier
period, overall prices were up somewhat. Because of a more favorable customer
and product sales mix during the first half of the year, the division realized
a softening of pricing pressures during the period. However, the division's
management continues to expect price weaknesses in this sector for the
foreseeable future due to the fixed market limitations inherent within the
steel industry. Chemical product sales for the first half of 1996 were above
those for the comparable period in 1995, principally due to strong industrial
products and magnesium hydroxide sales. Additionally, sales of the division's
lime products, used in the steel industry's basic oxygen furnaces, continued
to strengthen through the first half of the year.
Compared to the year-earlier period, the division's earnings from operations
for the first six months of 1996 increased to $5.3 million from $3.2 million
in 1995. While the division's lower operating earnings for the first half of
1995 principally reflected the effect of costs incurred during a 1995 labor
strike, the improvement in the operating margin for the first half of 1996 is
attributable to the benefits realized by the division's efforts to build a
more competitive operating cost structure, despite the somewhat negative
impact of an explosion and resulting fire in an electrical substation at the
division's Woodville, Ohio, lime plant.
41
The labor union contract covering the employees at the Magnesia Specialties
lime operation at Woodville, Ohio, expired in June 1996. A new labor union
agreement was renegotiated successfully without work interruption.
The following tables present net sales, gross profit, selling, general and
administrative expenses, and earnings from operations data for the Company and
each of its divisions for the three and six months ended June 30, 1996 and
1995. In each case the data is stated as a percentage of net sales of the
Company or the relevant division, as the case may be:
THREE MONTHS ENDED JUNE 30,
-------------------------------------
1996 1995
------------------ ------------------
% OF % OF
AMOUNT NET SALES AMOUNT NET SALES
-------- --------- -------- ---------
(Dollars in Thousands)
NET SALES:
Aggregates.............................. $167,660 100.0 $146,013 100.0
Magnesia Specialties.................... 32,778 100.0 29,901 100.0
-------- ----- -------- -----
Total................................. $200,438 100.0 $175,914 100.0
GROSS PROFIT:
Aggregates.............................. $ 48,359 28.8 $ 40,581 27.8
Magnesia Specialties.................... 6,971 21.3 5,669 19.0
-------- ----- -------- -----
Total................................. $ 55,330 27.6 $ 46,250 26.3
SELLING, GENERAL AND ADMINISTRATIVE EX-
PENSES:
Aggregates................................. $ 10,784 6.4 $ 9,945 6.8
Magnesia Specialties....................... 4,213 12.9 4,765 15.9
-------- ----- -------- -----
Total................................. $ 14,997 7.5 $ 14,710 8.4
EARNINGS FROM OPERATIONS:
Aggregates................................. $ 37,576 22.4 $ 30,637 21.0
Magnesia Specialties....................... 2,280 7.0 455 1.5
-------- ----- -------- -----
Total................................. $ 39,856 19.9 $ 31,092 17.7
SIX MONTHS ENDED JUNE 30,
-------------------------------------
1996 1995
------------------ ------------------
% OF % OF
AMOUNT NET SALES AMOUNT NET SALES
-------- --------- -------- ---------
(Dollars in Thousands)
NET SALES:
Aggregates.............................. $271,302 100.0 $243,862 100.0
Magnesia Specialties.................... 65,683 100.0 61,994 100.0
-------- ----- -------- -----
Total................................. $336,985 100.0 $305,856 100.0
GROSS PROFIT:
Aggregates.............................. 64,399 23.7 $ 61,632 25.3
Magnesia Specialties.................... 14,736 22.4 13,691 22.1
-------- ----- -------- -----
Total................................. $ 79,135 23.5 $ 75,323 24.6
SELLING, GENERAL AND ADMINISTRATIVE EX-
PENSES:
Aggregates.............................. 21,240 7.8 $ 19,259 7.9
Magnesia Specialties.................... 8,493 12.9 9,555 15.4
-------- ----- -------- -----
Total................................. $ 29,733 8.8 $ 28,814 9.4
EARNINGS FROM OPERATIONS:
Aggregates.............................. $ 43,160 15.9 $ 42,374 17.4
Magnesia Specialties.................... 5,290 8.1 3,242 5.2
-------- ----- -------- -----
Total................................. $ 48,450 14.4 $ 45,616 14.9
42
Other income and expenses, net, for the six months ended June 30, were $4.4
million in income in 1996 and $2.6 million in income in 1995. In addition to
several offsetting amounts, the 1996 amount included nonrecurring pretax gains
of approximately $1.8 million associated with the selling of certain assets
and a foreign investment along with approximately $1.1 million of interest
income from affiliates loans. The 1995 amount also included a nonrecurring
pretax gain of approximately $1.4 million related to certain asset
dispositions in connection with one of the Company's equity investments and
$0.6 million of interest income from loans to affiliates.
Interest expense was approximately $1.2 million, or 27%, higher in the first
six months of 1996 over 1995. The increase in 1996 resulted from the net
effect of the additional long-term borrowings by the Company in December 1995,
when the Company offered and sold to the public its $125 million 7%
Debentures, offset by the reduction of long-term debt during the period caused
by the repayment of the 8 1/2% Notes on March 1, 1996, and the reduced amounts
outstanding during the period that were due to Lockheed Martin under the
credit agreement.
The Company's estimated effective income tax rate for the first six months
was 33.9% in 1996 and 35.5% in 1995. The effective rate for the first half of
1996 was lower than the current federal corporate income tax rate of 35%, due
to the effect of several partially offsetting factors. The Company's year-to-
date 1996 effective tax rate reflects the effect of state income taxes which
has been more than offset by the favorable impact of differences in book and
tax accounting arising from the permanent benefits associated with the
depletion allowances for mineral reserves, foreign subsidiaries' operating
earnings, and equity earnings in nonconsolidated investments.
1995 Compared to 1994. The Company's net sales were approximately $664.4
million in 1995 and $501.7 million in 1994. Net sales increased $162.7
million, or 32%, in 1995 and $48.8 million, or 11%, in 1994. Consolidated
earnings from operations were approximately $107.6 million in 1995 and $91.9
million in 1994, reflecting an increase of $15.7 million, or 17%, in 1995 and
$15.5 million, or 20%, in 1994. Net sales and operating earnings for 1995
include the financial results of Dravo Aggregates which was combined with
Materials in January 1995.
For the year ended December 31, 1995, the Aggregates division had net sales
of $538.8 million, which were $155.7 million, or 41%, higher than the year-
earlier net sales. This improvement reflects a 22.8 million ton, or 32%,
increase in total tons shipped during 1995 of 94.0 million tons. Approximately
21.4 million tons of the increase in 1995 shipments are attributable to Dravo
Aggregates acquired in January. The increase in net sales also reflects an
increase of approximately 5% in the division's average net selling price, when
compared to the prior year's. These pricing improvements were experienced in
each of the division's five original operating elements. Earnings from
operations in the Aggregates division in the year were $98.1 million, an
increase of 20% over the prior year.
Magnesia Specialties division's net sales of $125.6 million were 6% above
the prior year's, but the Division's operating earnings decreased 7% to $9.5
million. This decrease in earnings was principally the result of the strike in
connection with an expired labor union agreement at a major operating location
in Michigan. While shipments of refractory products were up slightly from the
year-earlier period because of increased demand in the domestic and foreign
steel industry, competitive pressure has continued to negatively impact the
Division's pricing structure. Overall chemical product sales levels exceeded
the prior year's, principally from increased industrial and magnesium
hydroxide product sales. Additionally, the division's sales remained strong as
a result of continued demand throughout the year for lime that is used in the
steel industry's basic oxygen furnaces.
Other income and expenses, net, for the year ended December 31, 1995, was
$6.0 million in income, compared to $5.4 million in income for the prior year.
The increase in 1995 in other income, net, is attributable principally to
equity earnings representing the Company's share of increased income levels
from certain investments. In 1994, other income, net, included gains related
to asset sales and interest income related to an
43
affiliate's loan, both of which were offset by charges related to amounts
receivable from certain affiliates and to equity losses from an investment in
an Iowa-based aggregates operation. Interest expense on debt of $9.7 million
in 1995 was $2.9 million higher than in 1994. This increase is the result of
incremental borrowings during 1995 under the Company's credit agreement with
Lockheed Martin and the December 1995 sale of the $125 million 7% Debentures.
In 1994, the Company's interest expense was higher than the prior year's due
to indebtedness that was assumed by the Company upon its incorporation in
November 1993.
The Company's effective income tax rate for 1995 was 34.9%, compared with
35.5% in 1994 and 35.2% in 1993. The favorable variance in the effective
income tax rate for 1995, which is slightly lower than the federal corporate
tax rate of 35%, is due to the effect of several offsetting factors. In this
regard, the Company's effective tax rate reflects the effect of state income
taxes which has been more than offset by the favorable impact of differences
in book and tax accounting arising from the permanent benefits associated with
the depletion allowance for mineral reserves, foreign corporate operating
earnings and equity earnings in nonconsolidated investments. For 1994 and
1993, the Company's effective income tax rates were higher than the statutory
rates due principally to the effect of state income taxes offset by less
significant book and tax accounting differences arising primarily from the
benefit associated with the depletion allowances.
1994 Compared to 1993. The Aggregates division's net sales increased 14% to
$383.2 million, reflecting increased volume and improved prices in all five of
the division's operating elements. In 1994, the division's aggregates
shipments increased approximately 10% to 71.2 million tons, compared to 64.9
million tons in 1993, and the aggregates products' average net selling price
improved 3.5% over the prior year's. The division's 1994 earnings from
operations increased by approximately 14% to $81.7 million over the prior
year's earnings from operations reflecting the benefit from an improved
pricing structure. While the Magnesia Specialties division's net sales of
approximately $118.5 million increased a modest 3% over the prior year's, the
division's shipments of refractory products in 1994 actually were below those
of the prior year due to competitive pressures from within the industry. This
decline in refractory product shipments was offset by higher chemical product
sales for the year and as a result of a strong demand for lime products used
in the steel industry's basic oxygen furnaces. Operating income margin
improvements in 1994 continued to reflect the benefit of the division's
ongoing cost reduction program.
The following tables present net sales, gross profit, selling, general and
administrative expenses, and earnings from operations data for the Company and
each of its divisions for the three years ended December 31, 1995, 1994 and
1993:
YEAR ENDED DECEMBER 31,
--------------------------
1995 1994 1993
-------- -------- --------
(Dollars in Thousands)
NET SALES:
Aggregates........................................ $538,827 $383,155 $337,543
Magnesia Specialties.............................. 125,579 118,505 115,363
-------- -------- --------
Total........................................... $664,406 $501,660 $452,906
GROSS PROFIT:
Aggregates........................................ $137,704 $109,928 $ 98,353
Magnesia Specialties.............................. 29,460 29,215 22,962
-------- -------- --------
Total........................................... $167,164 $139,143 $121,315
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Aggregates........................................ $ 39,617 $ 28,254 $ 26,408
Magnesia Specialties.............................. 18,121 17,028 16,243
-------- -------- --------
Total........................................... $ 57,738 $ 45,282 $ 42,651
EARNINGS FROM OPERATIONS:
Aggregates........................................ $ 98,087 $ 81,674 $ 71,945
Magnesia Specialties.............................. 9,478 10,213 4,450
-------- -------- --------
Total........................................... $107,565 $ 91,887 $ 76,395
44
LIQUIDITY AND CAPITAL RESOURCES
The Company's net working capital at June 30, 1996, was $165.2 million,
which reflects an increase of $24.2 million over the year-end net working
capital. Shareholders' equity reached $444.6 million as of the end of the
second quarter of 1996, an increase of $21.0 million over total shareholders'
equity at year-end 1995. The ratio of long-term debt to total capitalization
was 25% at June 30, 1996, compared with 35% at year-end, which
reflected the impact of the December 1995 sale of $125 million of long-term
debentures. For purposes of computing the Company's debt-to-capitalization
ratio at June 30, 1996, the calculation included the $24.5 million of certain
intercompany amounts owed to Lockheed Martin as of that date. The primary use
of the proceeds from the sale of these debentures was ultimately for the
repayment of a portion of certain related party debt and the $100-million
aggregate principal amount of the Company's 8 1/2% Notes. These notes matured
on March 1, 1996, at which time they were paid in full upon redemption by
their holders. Accordingly, the Company's debt-to-capitalization ratio dropped
to 25% following repayment of the 8 1/2% Notes in March, an action which had a
significant and favorable impact on the Company's capital structure. In
addition to the above-stated debentures, as of June 30, 1996, $1.5 million was
outstanding under the terms of a cash management agreement and $23 million was
outstanding under the terms of a credit agreement, each with its majority
shareholder, Lockheed Martin. As of August 1, 1996, $12 million was
outstanding under the terms of these agreements.
Net cash flow provided by operating activities during the first six months
of 1996 was $26.8 million, compared with $37.6 million in the comparable
period of 1995. The cash flow from operating activities for both 1995 and 1996
was principally from earnings, before deducting depreciation, depletion and
amortization, offset by increased demand for working capital. Working capital
increases during the first half of 1996 were principally due to an increase in
accounts receivable balances due to timing and growth in aggregates demand, as
well as more moderate increases in amounts due from affiliates and in certain
inventory balances. The increased demand on working capital during the first
half of 1995 was primarily the result of increases in inventory and accounts
receivable balances, both of which were offset somewhat by increased trade
accounts payable and other liabilities balances. The seasonal nature of the
construction aggregates business impacts quarterly net cash provided by
operating activities when compared with the year. Accordingly, full year 1995
net cash provided by operating activities was $128.6 million, compared with
the $37.6 million provided by operations in the first half of 1995.
Capital expenditures, excluding acquisitions, for the first half of 1996
were $33.4 million, compared with $34.1 million for the same period in 1995.
Capital expenditures are expected to be approximately $82 million for 1996,
exclusive of acquisitions. Comparable capital expenditures, were $71.6 million
in 1995, $47.0 million in 1994 and $45.9 million in 1993. Capital expenditures
for 1995 and 1996 include increased spending requirements for capital
improvements and investments relating to the addition of the former Dravo
businesses.
The Company relies, for its liquidity requirements, upon internally
generated funds, access to capital markets, and funds obtained under its cash
management agreement and credit agreement, each with its majority shareholder,
Lockheed Martin. Prospectively, management may choose to borrow from third-
party lenders or through the Company's access to capital markets. The above-
referenced credit agreement with Lockheed Martin, which includes a revolving
credit provision that expires December 31, 1996, but which may be extended by
mutual consent of both parties, provides for borrowings of up to $55 million.
Loans outstanding under the credit agreement bear interest at a published
prime interest rate or at LIBOR plus a graduated rate.
During the latter half of 1996, management expects to establish a revolving
credit facility with a syndicate of banks to replace the current credit
agreements with Lockheed Martin. It should be noted, however, that the Company
has not determined the specific timing of, or the method by which it may
establish and access such a banking credit facility. Further, while any such
borrowings may be used initially to provide necessary working capital funds,
it is anticipated that the Company will repay the funds borrowed under its
credit agreement with Lockheed Martin with such bank borrowings. Additionally,
management may choose further access to the public debt markets through the
issuance of commercial paper or other debt securities. Again, it should be
noted that the Company has not determined the method or methods by which it
may further access the public markets.
45
With respect to the Company's ability to access the public market, it has an
effective shelf registration on file with the Securities and Exchange
Commission for the offering of up to $175 million of debt securities, which
may be issued from time to time. The Company's ability to issue such debt
securities at any time is dependent, among other things, upon market
conditions. Additionally, limitations under the amended and restated credit
agreement and certain other agreements in effect currently with Lockheed
Martin may restrict the Company's ability to borrow funds from the public
market and third-party lenders.
Based on prior performance and current expectations, the Company's
management believes that cash flows from internally generated funds and its
access to capital markets are expected to continue to be sufficient to provide
the capital resources necessary to fund the operating needs of its existing
businesses, cover debt service requirements, and allow for payment of
dividends in 1996. The Company may be required to obtain additional levels of
financing in order to fund certain strategic acquisitions if any such
opportunities arise. Currently, the Company's senior unsecured debt is rated
"A" by Standard & Poor's and "A3" by Moody's. While Standard & Poor's
continues to keep the Company's debt rating on CreditWatch--an action that was
taken in March 1996 as a result of Lockheed Martin's 81% ownership of the
Company--Standard & Poor's announced in July that, upon consummation of the
proposed Transaction by Lockheed Martin, the Company's "A" senior debt rating
will be affirmed and removed from CreditWatch. In a related July press release
following the announcement of the proposed split-off transaction, Moody's
confirmed the Company's "A3" senior debt rating and expects the Company's
financial position and debt protection measurements to remain consistent with
such rating. While management believes its credit ratings will remain at an
investment-grade level, no assurance can be given that these ratings will
remain at the above-mentioned levels.
As of August 1, 1996, the Board of Directors has approved regular quarterly
dividends on the Company's Common Stock totalling $0.34 a share through the
first three quarters of 1996. Dividends were authorized and paid at a rate of
$0.11 a share in each of the first two quarters of the year, and in July the
Board of Directors declared an increase in the Company's regular quarterly
dividend to $0.12 a share for the third quarter of 1996. This third quarter
dividend is payable September 30, 1996, to shareholders of record as of the
close of business on August 30, 1996. The Company's amended and restated
credit agreement with Lockheed Martin, in effect currently, contains certain
covenants that may, in certain circumstances, restrict the Company's ability
to pay dividends.
The Company may repurchase up to 2.5 million shares of its common stock
under authorizations from the Company's Board of Directors for use in the
Omnibus Securities Award Plan and for general corporate purposes. As of August
1, 1996, there have been 68,200 shares repurchased under these authorizations.
OTHER MATTERS
In connection with the Transaction, the Company's Board of Directors has
adopted a shareholder rights plan that will become effective, and certain
terms of which will be established, upon consummation of the Transaction, at
the discretion of the Executive Committee of the Board of Directors. The
shareholder rights plan provides, among other things, that if any person or
group of persons becomes the beneficial owner of 15% or more of the Company's
Common Stock, all holders of rights issued pursuant to the plan (other than
such person or group of persons and their affiliates, associates and
transferees) will have the right to acquire shares of the Company's Common
Stock at 50% of the then current market value.
Also in connection with the Transaction, the Board of Directors has adopted,
and has recommended that the shareholders of the Company approve at a special
meeting to be called for such purpose, certain amendments to the Company's
Articles of Incorporation. The proposed amendments are intended to reduce the
vulnerability of the Company to an unsolicited takeover proposal, particularly
one that is made at an inadequate price or does not contemplate the
acquisition of all of the Company's Common Stock. The special meeting of the
shareholders to approve such amendments will be held prior to the consummation
of the Transaction, and Lockheed Martin, which beneficially owns 81% of the
Company's Common Stock, has indicated that it intends to vote its shares in
favor of such amendments. Accordingly, if Lockheed Martin votes its shares as
it has indicated, the adoption of such amendment is assured.
46
The Company adopted Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of" ("FAS 121"), as of January 1, 1996. The pronouncement
requires that certain long-lived assets be reviewed for impairment when
circumstances indicate that the carrying amount of such assets may not be
recoverable. Additionally, FAS 121 requires that certain long-lived assets
held for disposition be reported at the lower of the carrying amount or fair
value less any selling costs. The impact of the adoption of this pronouncement
did not have a material effect on the Company's consolidated financial
position or on its results of operations.
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("FAS
123"), in 1995, which will be effective for financial statements in the
current year. FAS 123 introduces a fair-value based method of accounting for
stock-based compensation and encourages, but does not require, compensation
expense recognition for grants of stock, stock options and other equity
instruments to employees based on the new fair-value accounting rules.
Companies that choose not to adopt the new rules will continue to apply the
existing accounting rules contained in Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" ("APB 25"). However, it should
be noted that although expense recognition for employee stock-based
compensation is not mandatory, FAS 123 requires companies that choose not to
adopt the fair-value accounting rules to disclose pro forma net income and
earnings per share under the new method. Currently, management intends to
continue applying the accounting rules in APB 25 for purposes of recognizing
compensation expense for stock option grants to employees of the Company and
will adopt the disclosure provisions of FAS 123 as required in the fourth
quarter of 1996.
The impact of inflation on Materials' businesses has become less significant
with the benefit of lower inflation rates in recent years. When the Company
incurs higher costs to replace productive facilities and equipment, increased
depreciation generally is countered by increased capacity and productivity,
increased selling prices, and various other offsetting factors.
47
MANAGEMENT OF MATERIALS
DIRECTORS AND EXECUTIVE OFFICERS
The executive officers and directors of Materials and their ages and
positions as of August 31, 1996 are:
NAME POSITION AGE
---- -------- ---
Marcus C. Bennett Chairman of the Board 60
Stephen P.
Zelnak, Jr. President, Chief Executive Officer, Director 51
Richard G. Adam-
son Director 63
Bobby F. Leonard Director 63
Frank H. Menaker,
Jr. Director 56
James M. Reed Director 63
William B. Sansom Director 55
Philip J. Sipling Senior Vice President 49
Robert R. Win-
chester Senior Vice President 59
Bruce A. Deerson Vice President, Secretary and General Counsel 45
Janice K. Henry Vice President, Chief Financial Officer and Treasurer 45
Jonathan T. Stew-
art Vice President--Human Resources 47
Currently, the Materials Board of Directors consists of seven members. In
connection with adoption of the Proposed Amendments, the Materials Board of
Directors will be expanded to nine directors. The Materials Board of Directors
has not yet determined the identity of the two additional directors.
BIOGRAPHIES
Marcus C. Bennett, Chairman of the Board (since 1994) and Director (since
1993), Chairman of the Executive and Finance Committees, member of the
Compensation Committee, has served as Executive Vice President and Chief
Financial Officer of Lockheed Martin since July 1996. He has been a director
of Lockheed Martin since March 1995. From March 1995 until July 1996 he served
as Senior Vice President and Chief Financial Officer of Lockheed Martin and
from 1988 until 1995 as Vice President and Chief Financial Officer of Martin
Marietta Corporation. He also served as a director of Martin Marietta
Corporation from 1993 to 1995. Mr. Bennett joined Martin Marietta Corporation
in 1959. Mr. Bennett is also a Director of Carpenter Technologies, Inc.
Stephen P. Zelnak, Jr., Director (since 1993), member of the Executive and
Finance Committees, has served as President and Chief Executive Officer of
Materials since 1993, and previously served as the President of Martin
Marietta Corporation's materials group from 1992 until the formation of the
Company, and of Martin Marietta Corporation's aggregates division since 1982.
Mr. Zelnak also served as a Vice President of Martin Marietta Corporation from
1989 until 1994, when he resigned as an officer of Martin Marietta Corporation
effective upon the completion of the Materials IPO. Mr. Zelnak joined Martin
Marietta Corporation in 1981.
Richard G. Adamson, Director (since 1994), member of the Ethics and
Environmental Affairs and Audit Committees, served as Vice President,
Strategic Development for Martin Marietta Corporation from April 1993 until
his retirement in 1995. From 1984 until April 1993, he served as Vice
President, Business Development of Martin Marietta Corporation.
Bobby F. Leonard, Director (since 1994), Chairman of the Compensation
Committee, member of the Ethics and Environmental Affairs and Equity-Related
Awards Committees, served as Vice President, Human Resources, of Martin
Marietta Corporation from 1981 until his retirement in March 1995. He is
currently in private law practice in Maryland.
Frank H. Menaker, Jr., Director (since 1993), Chairman of the Ethics and
Environmental Affairs Committee, has served as Senior Vice President and
General Counsel of Lockheed Martin since July 1996. He served as Vice
President and General Counsel of Lockheed Martin from March 1995 to July 1996
and as Vice President of Martin Marietta Corporation from 1982 until 1995 and
as General Counsel of Martin Marietta Corporation from 1981 until 1995.
48
James M. Reed, Director (since 1994), Chairman of the Audit Committee,
member of the Equity-Related Awards, Executive and Finance Committees, has
served as Chief Financial Officer of Union Camp Corporation since 1977 and as
Vice Chairman of the Board of Union Camp Corporation since 1993. Mr. Reed is a
Director of Bush Boake Allen Inc., Savannah Foods & Industries, Inc. and The
Bulgarian-American Enterprise Fund.
William B. Sansom, Director (since 1994), Chairman of the Equity-Related
Awards Committee, member of the Audit and Compensation Committees, has served
as the Chairman and Chief Executive Officer of The H.T. Hackney Co. since May
1983. From 1979 to 1983, he served in Tennessee State Government, first as a
Commissioner of Transportation and then as Commissioner of Finance and
Administration. He has also previously served on the Board of Directors of the
National Crushed Stone Association. Mr. Sansom is a Director of First
Tennessee National Corporation and Astec Industries, Inc.
Philip J. Sipling, Senior Vice President (since 1993), also serves as
President of Martin Marietta Magnesia Specialties Inc., a wholly owned
subsidiary of the Company. Mr. Sipling is also responsible for the management
of the Central Region of the Aggregates division. Mr. Sipling joined Martin
Marietta Corporation in 1985, serving as Vice President of the aggregates
division from 1989 to 1993.
Robert R. Winchester, Senior Vice President (since 1993), also serves as
Executive Vice President of the Aggregates division responsible for the
general management of the Mideast Region and Eastern Carolina Region and has
served as Vice President Operations of the Aggregates division since 1982. Mr.
Winchester joined Martin Marietta Corporation in 1960 and has held various
positions in the aggregates division since that time.
Bruce A. Deerson, Vice President, Secretary and General Counsel (since
1993), served as General Counsel to Martin Marietta Corporation's materials
group from 1988 to 1993. Mr. Deerson joined Martin Marietta Corporation in
1979 and in 1981 became Assistant General Counsel of Martin Marietta
Corporation with responsibility for the aggregates division.
Janice K. Henry, Vice President, Chief Financial Officer (since 1994) and
Treasurer (since 1996), served as Vice President Business Management at Martin
Marietta Corporation's astronautics group from August 1992 to January 1994.
Prior to that, Ms. Henry served as Secretary of Martin Marietta Corporation
from 1985 to 1990 and as Director of Business Management of the Defense, Space
and Communications company of Martin Marietta Astronautics from 1990 to August
1992. Ms. Henry served as Controller of Martin Marietta Corporation's
materials group from 1981 to 1985. Ms. Henry joined Martin Marietta
Corporation in 1974.
Jonathan T. Stewart, Vice President, Human Resources (since 1993), served as
Human Resources Vice President of Martin Marietta Corporation's materials
group from 1992 to 1993, having served in similar capacities for divisions of
the group from 1984 to 1992. Mr. Stewart joined Martin Marietta Corporation in
1982.
49
BUSINESS OF MATERIALS
The Company is the United States' second largest producer of aggregates used
for the construction of highways and other infrastructure projects and for
commercial and residential construction, based on tons shipped. In 1995, the
Company's Aggregates division shipped approximately 94 million tons of
aggregates, primarily crushed stone, from more than 200 quarries and
distribution yards in 19 states in the Southeast, Midwest and Central states,
and in Canada and the Bahamas, generating net sales of $538.8 million. Since
the Materials IPO, the Company has increased its aggregates production
capacity by almost 40%, from 84 million tons in 1993 to 117 million tons in
1995, primarily as a result of the acquisition of Dravo Aggregates as well as
numerous smaller acquisitions and the opening of greensites. In addition to
expanding the Company's aggregates capacity and markets, the acquisition of
Dravo Aggregates complemented the Company's distribution channels with an
extensive river barge and ocean-going vessel distribution system and
significantly expanded its presence in the nonconstruction aggregates markets,
including markets for chemical and industrial applications.
The Company, through its Magnesia Specialties division, is also one of the
nation's leading producers of dolomitic lime (which is used by the Company as
a raw material in its internal process as well as a fluxing agent in steel
mills); magnesia-based products, including heat-resistant refractory products
used in the steel industry; and magnesia-based chemical products for
industrial, agricultural and environmental uses, including wastewater
treatment and acid neutralization. In 1995, the division's sales were $125.6
million.
STRATEGY
The Company's business strategy includes the following major elements:
PURSUE DISCIPLINED GROWTH. The Company's principal long-term strategy is to
identify high-return growth markets and to enter and grow in those markets
through a combination of acquisitions, greensiting (the opening of new
quarries), product development, superior service and capital investment in
capacity increases, with the objective of being a leading producer in the
markets it serves while minimizing increases in management, technical and
administrative costs. Since 1986, the Company has made 24 acquisitions
involving 68 quarries having a total capacity of over 48 million tons.
The 1995 acquisition of Dravo Aggregates provided the Company the
opportunity, in a single transaction, to grow its annual production capacity
by more than 24 million tons. In addition, this acquisition provided the
Company access to a significant barge and oceangoing vessel distribution
system, opening extensive markets for the aggregates business along the Ohio
and Mississippi River systems from Western Pennsylvania throughout the central
and southern United States and along the Gulf of Mexico and Atlantic coasts.
The Company leveraged this water-based distribution system with the
acquisition of a large granite quarry located in Nova Scotia, Canada. This
granite operation, when combined with the limestone quarries in Illinois,
Kentucky and the Bahamas which were acquired from Dravo Corporation allows the
Company to economically serve coastal and island customers with a full range
of products. These two acquisitions provide more than 12 million tons annually
of well-positioned, water-accessible capacity. In addition, during 1995 the
Company completed four smaller acquisitions enhancing the Company's position
in coastal and southern regions, specifically in the Atlanta metropolitan
region, Richmond, Virginia and South Carolina.
Many companies have chosen to exit the aggregates industry because of
increased operational complexity, regulatory issues and capital requirements.
The Company believes the aggregates industry will continue to consolidate and
that it has the financial and management capabilities to continue to grow
through acquisition.
The acquisition of Dravo Aggregates also significantly increased the
division's participation in non-construction applications for aggregates such
as high-grade chemical uses, desulfurization and cement production.
In late 1994, the Company purchased the MagneClear Division of Clearwater,
Inc. ("MagneClear"). MagneClear operates a plant in Pittsburgh, Pennsylvania,
which produces magnesium hydroxide slurry for
50
environmental applications, such as acid neutralization, heavy metal removal,
and acidic stack gas scrubbing. This purchase, in combination with production
from Martin Marietta Magnesia Specialties' Manistee, Michigan plant, brings
total production capacity for magnesium hydroxide slurry to over 100,000 tons
per year for this growing market.
Materials' growth strategy has produced economies of scale in the operation
of its business and has enhanced its competitive position. Materials believes
that the continued pursuit of its disciplined growth strategy will further
improve these economies of scale in its businesses and is necessary to
maintain or improve its competitive position. Materials has pursued, and
intends to continue pursuing, a very active growth strategy, and, as a part of
that strategy, it will seek to acquire companies in the aggregates business or
related businesses. With the exception of the acquisition of Dravo Aggregates
in January 1995, most of the Company's acquisitions have been of smaller
companies. While the Company will continue to seek to acquire smaller
companies that fit within its managed growth strategy, management believes
that the industry trend toward consolidation has and will continue to create
significant new opportunities for growth through larger acquisitions.
Materials has had preliminary discussions with several larger acquisition
candidates, but such discussions have not moved to a more serious level
because, as a practical matter, any such acquisition would require the use of
a substantial amount of Materials Common Stock as the acquisition
consideration and the Company believes that the use of Materials Common Stock
or the acquisition candidate's willingness to accept Materials Common Stock is
unlikely so long as Lockheed Martin remains as Materials' dominant
stockholder.
Both Lockheed Martin and Materials believe that the ability of Materials to
achieve its desired growth will be significantly enhanced in the event the
Transaction is consummated. If the Transaction is effected, Materials intends
to seek to enter into active negotiations with one or more of such larger
acquisition candidates and would seek to conclude a substantial acquisition
within the relatively near future. Materials does not currently have any
commitments or agreements with respect to any such acquisition, and no
assurance can be given that any such acquisition will be consummated on terms
acceptable to the Company or, if consummated, that any such acquired business
can be successfully integrated with the business operations of the Company. If
any such acquisition is consummated, the use of Materials' equity securities
as acquisition consideration may cause dilution to investors acquiring
Materials Common Stock pursuant to the Exchange Offer.
In addition to acquisitions, the Company maintains a consistent and
disciplined approach to greensiting. The greensiting approach includes:
. Locating sites with long-term and economically accessible mineral
reserves in strategic growth corridors;
. Focusing on good transportation access and proximity to markets to
minimize the transportation component of customers' costs;
. Minimizing initial capital expenditures through the use of third-party
crushing and other services, and making major investments only when
justified by market demand; and
. Opening greensites in areas contiguous to existing operations where the
Company can take advantage of operating and customer synergies.
Over the past 10 years, the Company has opened 22 new quarries in seven
states and has 14 additional sites ready to be opened as market conditions
dictate. As a foundation for its growth strategy, the Company adds locations
to its greensite inventory each year. The Company's planning team has
developed expertise in locating (through geological studies and market
analysis), acquiring, zoning, permitting, engineering and opening new quarry
facilities. As barriers to entry continue to increase the time and difficulty
of opening new sites, the Company believes the value of its greensites is
enhanced considerably.
The Company has an active product development program at its Magnesia
Specialties division with research and development efforts being directed to
applied technological development for use in its refractory and
51
chemical products, with focus given to higher margin products. During 1995,
four patents were awarded to the division for chemical applications and a new
product was introduced for flame retardant and smoke suppressant applications.
In addition, seven FloMag(R) magnesium-oxide products received certification
from NSF International (a global leader in the development of voluntary
consensus standards and product testing and certification in public health and
environmental specialties) for the product's use in the treatment of drinking
water. In 1996, the Company received NSF International certification of its
MagneClear(R) slurry products for use in potable water treatments.
The Magnesia Specialties division is committed to the export market. In
1995, the division's products were sold to customers in approximately 30
countries. Total international sales in this division increased 23% in 1995,
representing 13% of the total sales of the Company's Magnesia Specialties
division.
Also, the Company recently announced the expansion of its Woodville, Ohio
lime operation. The expansion at this facility, which is currently the largest
single location producer of dolomitic lime in North America, will raise annual
capacity to 850,000 tons of high quality dolomitic lime products. Phase one of
this two-phased expansion program was completed in the second quarter of 1996.
Depending on steel market conditions, phase two construction is planned for
1997. The Company believes that market conditions make this expansion timely.
The added low cost capacity permits the Company to increase its participation
in steel and related markets.
CONTINUE TO MINIMIZE COSTS. The Company has been able to limit increases in
its unit production costs and plans to continue to minimize costs through
emphasis on limiting increases in overhead costs as production volume expands,
modernizing and automating of production facilities and continuing attention
to savings in plant and equipment and maintenance. The Company believes its
size provides cost advantages by enabling it to distribute overhead costs over
greater production volume. Further, the Company's financial resources have
allowed it to make capital expenditures to modernize its facilities and
increase productivity. The Company intends to continue to increase
productivity through automation of production facilities, by the use of
specialized equipment, and by continued modernization of its mobile equipment.
In 1995, the Company made important progress in reducing costs in the
Magnesia Specialties division. The Magnesia Specialties division established a
gulf coast facility in Baton Rouge, Louisiana to produce refractory products
using competitively priced imported magnesite. The location of this operation
significantly reduces freight costs for the Company's refractory products in
the southern United States and provides the economic flexibility to switch
between domestic and imported magnesite. In addition, the Company negotiated a
new labor agreement in the third quarter, following a strike at its Manistee,
Michigan, production facility during the summer, which provides for increased
job flexibility, and when combined with other changes, the Company believes
will allow the Magnesia Specialties division to be more cost competitive.
MAINTAIN A STRONG BALANCE SHEET AND CASH FLOWS TO POSITION THE COMPANY TO
TAKE ADVANTAGE OF GROWTH OPPORTUNITIES. As of June 30, 1996, the Company had
long-term debt of $125.7 million and stockholders' equity of $444.6 million
for a debt-to-capitalization ratio of approximately 25%, which calculation
includes $24.5 million of certain intercompany amounts owed to Lockheed
Martin. The Company generated cash flow from operating activities of $128.6
million, $79.5 million and $90.9 million in 1995, 1994, and 1993,
respectively. The Company believes that its healthy financial condition, as
well as its historically strong cash flows, will provide the financial
flexibility to enable it to selectively pursue growth opportunities.
OVERVIEW OF AGGREGATES INDUSTRY
Demand Characteristics
Of the four principal markets in which the Company participates, three are
construction related--public sector, commercial and residential; the fourth
market is related to chemical/environmental uses. The aggregates industry is
highly dependent upon private and public sector construction spending and is
sensitive to national, as well as regional and local, economic factors.
Historically, these characteristics have made the construction
52
aggregates industry cyclical. In addition, the aggregates business is
seasonal, due primarily to the effect of weather conditions on construction
activity in the markets served.
Public sector spending accounted for approximately 26 percent of total
construction spending for the period from 1990 through 1995, of which
approximately 29 percent related to infrastructure expenditures for highways
and streets. The balance of public spending related to institutional
buildings, military facilities, conservation and sewer and water and sanitary
systems, environmental and other purposes. Total public spending has averaged
$123 billion per year through the 1990s and highway spending has averaged $36
billion per year.
Public sector demand is principally a function of the availability of
government funding and has been more stable than private sector demand. The
value of public construction put in place has climbed steadily since 1989. The
Intermodal Surface Transportation and Infrastructure Act of 1991 authorized a
$155 billion, six-year infrastructure funding program which expires in 1997.
New legislation is anticipated which will provide continued funding at or
above the current levels. Construction spending associated with state and
local highway programs also significantly influence the demand for aggregates.
The Highway Trust Fund and a significant portion of state and local highway
programs are funded from sources such as dedicated gasoline tax revenues and
related user fees.
U.S. Department of Transportation data indicate each $1 billion of highway
construction spending results in the use of approximately 20 million tons of
construction aggregates. Approximately half of the Company's products are used
for infrastructure projects, predominantly road construction and paving.
Over time, construction spending for commercial and residential projects has
been sensitive primarily to the effects of changes in regional and local
economies, as well as to fluctuations in interest rates and credit
availability. Private construction spending for the commercial and residential
sectors can vary in the same cyclical patterns, but more often residential
construction is more quickly impacted by economic changes while commercial
construction reacts more slowly based on size and lead time of projects. An
example is the 1994-96 period. The advent of higher interest rates and slower
economic growth in early 1995 caused residential construction activity to
weaken. However, excess inventories of commercial space had been absorbed and
developers responded by initiating new projects. The extended economic
expansion of the early 1990s generated record corporate profits, a significant
portion of which was reinvested in plant and equipment. The resulting
commercial and industrial construction expenditures offset the decline in the
residential sector.
Chemical and environmental market demand fluctuates based on the specific
use of product and changing government regulations.
Supply Characteristics
Aggregates can be found in abundant quantities throughout the United States,
and there are many producers nationwide. The ability to transport materials
via a water-based transportation system expands the market area for aggregates
quarries. Without water access, as a general rule, the size of the market area
of an aggregates quarry is limited, because of the cost of transporting
processed aggregates to customers is high in relation to the value of the
product itself. As a result, proximity of quarry facilities to customers is
the most important factor in competition for aggregates business, and helps
explain the highly fragmented nature of the aggregates industry.
While there remains a large number of producers, the industry has
experienced a significant consolidation of quarry operators. According to the
U.S. Geological Survey, from 1980 to 1995, the number of companies producing
crushed stone in the United States declined 14% from approximately 1,870 to
approximately 1,600, even though crushed stone consumption during the period
increased by 44%, and the number of sand and gravel producers declined from
4,512 to 4,250, even though sand and gravel consumption increased by 27%.
53
The Company believes that several factors explain the trend toward
consolidation. First, the aggregates industry has become more capital
intensive, relying on specialty heavy equipment such as mobile crushers and
large off-road vehicles. Second, the technical sophistication required in
aggregates production has placed a premium on producers' abilities to achieve
economies of scale. Efficient quarry operations require expertise in
geological engineering and planning, blasting technology, design of processing
facilities, computer automation technology, reclamation planning and various
other technical support functions. The ability to distribute the costs of
these functions over a greater number of quarry operations enhances the
competitive position of larger producers.
In addition, the difficulty and related expense of complying with
environmental and other regulations make it difficult for small producers to
compete effectively. In ongoing quarry operations, aggregates producers must
adhere to various mining regulations, such as those requiring reclamation of
depleted quarry sites, restrictions on dust and water emissions, rules on
sediment and erosion control, noise limitations, wetlands protection, and
safety regulations on blasting and other mining techniques. New quarry sites
require, among other things, zoning changes and permits and plans regarding
mining, reclamation and air and water emissions. New site approval procedures
may require the preparation of archaeological, endangered species and other
studies and environmental impact plans. Compliance with these regulatory
requirements can add to the length of time and cost to develop a new site.
In addition to governmental compliance issues, quarry operators may face
opposition from the communities in which new quarries are to be located.
Public concerns center on noise levels and blasting safety, the visual impact
of a quarry on the neighboring properties, and the volume of truck traffic. To
respond to these issues, producers must not only operate in a more
sophisticated manner (for example, developing blasting techniques to minimize
surface vibrations and noise), but also must develop an effective community
communications program. Producers are often required to acquire larger tracts
of property to allow for extended buffer zones between quarry operations and
surrounding properties and to expend significant amounts to improve road and
highway access.
Regulatory requirements and public concerns typically add from one to two
years to the time required by the Company to develop a new site, and in
extreme cases may require significantly longer time. Moreover, at some
locations regulatory obstacles may prevent the development of an attractive
site. The Company anticipates that environmental compliance, operational and
community relations issues will become more difficult in the future, enhancing
the competitive advantage of larger, strongly capitalized producers, further
encouraging consolidation in the industry, and making entry into the
aggregates business increasingly expensive.
AGGREGATES DIVISION
The Company's Aggregates division processes and sells granite, sandstone,
limestone, shell and other aggregates products primarily for use in the
construction industry, including infrastructure such as highways and bridges,
and commercial and residential buildings. The Company is the United States'
second largest producer of aggregates based on tons shipped. In 1995, the
Company shipped approximately 94 million tons of aggregates, an increase of
32% over the previous year, to customers in 25 Southeastern, Midwestern and
Central states and five foreign countries, generating net sales and earnings
from operations of $538.8 million and $98.1 million, respectively. In 1995,
approximately 87% of the aggregates shipped by the Company were crushed stone,
primarily granite and limestone, and approximately 13% were sand and gravel.
The Company has focused on the production of aggregates and has not integrated
vertically into other construction materials business.
The Company's aggregates business is concentrated principally in the
Southeast, Midwest and Central states. The acquisition of Dravo Aggregates
opened markets for the Company for the aggregates business along the Ohio and
Mississippi River systems from western Pennsylvania throughout the central and
southern United States. The newly-acquired distribution centers along the Gulf
of Mexico and Atlantic coasts, as well as operating facilities in the Bahamas,
together with the recently acquired Nova Scotia quarry, enhanced the Company's
ability to provide cost-effective coverage of certain coastal markets from New
York to Texas, as well as allowing
54
the Company to ship product to Canada, the Caribbean and parts of South
America. In 1995, the Company shipped construction aggregates from over 200
quarry and distribution locations in 19 states and Canada and the Bahamas. The
following map illustrates the locations in which the Company operates
aggregates quarries and the percentage of the aggregates production by the
Company in each of these locations in 1995.
PERCENTAGE OF COMPANY'S 1995 AGGREGATES PRODUCTION BY LOCATION
[MAP OF EASTERN HALF OF UNITED STATES APPEARS HERE]
NOTE: The Company's production facilities in Pennsylvania were sold during the
first quarter of 1996. Its quarry operations in Nova Scotia were acquired in
late 1995.
The Aggregates division also supplies its products to nonconstruction
markets, particularly for industrial and chemical uses. The division's
shipments for nonconstruction purposes increased significantly in 1995 with
the acquisition of several high-calcium limestone deposits from Dravo
Corporation. These deposits enable the division to serve a wide array of
industrial and utility needs. Aggregates from the Company are used by
utilities and industrial plants for flue gas desulphurization, by chemical
companies as a neutralization agent, and by other industries that utilize
acids as an integral component of processing. Significant quantities are also
shipped as aglime for soil remediation. The division has targeted the
nonconstruction market as an area providing opportunity for growth.
55
Capacity. The Company estimates that its recoverable reserves represent an
average quarry life exceeding 50 years of production assuming continuing
production levels at the 1995 production rate. Since implementing an expansion
strategy in 1986, the Company has almost doubled annual production capacity
from 59 million tons to 117 million tons in 1995. This capacity does not
include the addition of approximately 2.9 million tons of annual crushed stone
production capacity acquired in connection with the Company's purchase in 1992
of a nonconsolidated 50% interest in an Iowa-based aggregates corporation,
which operates 13 quarries in the Midwest. Since 1986, the Company has made 24
acquisitions which involve 68 quarries, having a total capacity of over 48
million tons. The acquisition of Dravo Aggregates in 1995 added more than 24
million tons of annual production capacity to the Company's operations. As a
result of the acquisition of Dravo Aggregates and the Nova Scotia quarry, the
Company has added more than 12 million tons of well-positioned, water-
accessible annual capacity. Since 1986, the Company also placed 22 greensite
quarries into operation, primarily in the Southeast, accounting for increased
annual capacity of approximately 13 millions tons.
The Company anticipates that further increases in capacity will come from
both additional acquisitions and greensiting of new facilities, and expansion
of existing quarries. The Company expects that growth in the Midwest will come
largely from acquisitions. In the Southeast and Central areas, a more even mix
of greensiting and acquisitions is anticipated. The Company believes that its
strong balance sheet and historically strong cash flows provide it with the
financial flexibility to pursue both external and internal growth
opportunities.
These increases in capacity, which are due in large part to the success of
Materials' growth strategy, have produced economies of scale in the operation
of Materials' aggregates businesses and have enhanced Materials' competitive
position. Accordingly, the Company intends to continue pursuing its
disciplined growth strategy as a means of further increasing its capacity.
Mining Operations. The Company attempts to minimize the cost of its mining
operations in various ways. Permanent production facilities are based on
modular designs, which permit the Company to respond promptly to market needs
with appropriately sized facilities that can later be expanded economically as
markets grow. Alternatively, portions of facilities may be detached from
existing facilities and moved for use at other sites. The Company frequently
uses transportable crushers at quarry sites in the markets that do not warrant
the construction of a permanent facility and in newer quarries, the Company
frequently uses on-site independent contractors for stone crushing until
growth in market demand justifies the construction of a crushing plant. The
Company operates a maintenance facility in Salisbury, North Carolina, which
services and rebuilds crushers and certain plant equipment. The Company relies
on its servicing and maintenance program to minimize the need for additional
capital expenditures for equipment replacement and to limit the need for an
inventory of spare production equipment. In addition, the Company has
increased automation at many of its existing production facilities with
computer-controlled equipment that has improved production efficiency.
Customers. The Company markets its aggregates products to customers in a
variety of industries, including producers of asphaltic concrete, ready-mix
concrete, concrete blocks, and concrete pipes; commercial, residential and
public infrastructure construction contractors; and railroads. Although a
substantial amount of the Company's aggregates is used in publicly funded
projects, the Company typically does not contract directly with government
agencies. The following chart shows the Company's estimates of aggregates use
by main category of customer. See "Overview of Aggregates Industry."
56
[PIE GRAPH OF 1995 AGGREGATES
DIVISION MARKETS APPEARS HERE]
The Company actively encourages certain of its customers, such as asphalt
plant operators and ready-mixed concrete plant operators, to locate their
production facilities on or near the Company's quarry sites. As of December
31, 1995, 57 customer facilities were located on the Company's quarry sites.
MAGNESIA SPECIALTIES DIVISION
The Company's Magnesia Specialties division is a market leader in the
integrated production of magnesia-based products for the steel industry and
other industrial and agricultural users. In 1995, approximately 74% of the
division's net sales were generated by products used in the steel industry as
refractory (heat-resistant) furnace lining materials, as a flux agent in the
steel production process or as a raw material for refractory bricks used in
steel furnaces and vessels. Magnesia-based chemical products sold for
wastewater treatment, acid neutralization and other industrial and
agricultural uses primarily accounted for the remaining 26% of 1995 sales. In
1995, the division's net sales were $125.6 million, or 19%, of the Company's
sales, and its earnings from operations were approximately $9.5 million, or 9%
of the Company's earnings from operations.
At the Company's Magnesia Specialties division research and development
efforts are being directed to applied technological development for use in its
refractory and chemical products, with focus given to higher margin products.
During 1995, four patents were awarded to the division for chemical
applications and a new product was introduced for flame retardant and smoke
suppressant applications. In addition, seven FloMag(R) magnesium-oxide
products received certification from NSF International for the product's use
in the treatment of drinking water. In 1996, the Company received NSF
International certification for its MagneClear(R) slurry products for use in
potable water treatment.
The Magnesia Specialties division is committed to the export market. In
1995, the division's products were sold to customers in approximately 30
countries. Total international sales increased 23% from $13 million in 1994 to
$16 million in 1995. Sales of international refractory products now account
for 12% of the sales of this product line, and export sales of chemical
products increased by 7% over the prior year.
In late 1994, the Company acquired MagneClear, enhancing the Company's
Magnesia Specialties division's production capabilities in the growing water
treatment market. This acquisition, coupled with the Company's existing
capacity at Manistee, Michigan, resulted in an 85% increase in shipments from
1994 to 1995 of its
57
products used in water treatment. Further, during 1995, the Magnesia
Specialties division began selling magnesium hydroxide powder, which is used
as a flame retardant.
The division operates major facilities in Woodville, Ohio, and Manistee,
Michigan, and smaller plants in River Rouge, Michigan, Bridgeport,
Connecticut, Pittsburgh, Pennsylvania and Baton Rouge, Louisiana. According to
the U.S. Geological Survey, based on production, the Woodville facility is the
largest dolomitic lime manufacturing facility in the United States. In
addition to dolomitic lime for sale to steel producers, this facility
manufactures a variety of high-purity magnesium oxide chemical products and
also sells crushed limestone as construction aggregates.
The Manistee plant receives lime from the Woodville facility and combines it
with magnesium-chloride-rich brine to produce a magnesium hydroxide slurry.
The slurry is further refined and marketed for acid neutralization and
wastewater treatment, or further processed to produce magnesium oxide
refractory products and periclase grain or other magnesium-oxide chemical
products. The River Rouge and Bridgeport facilities are small processing
plants, which blend magnesia and alumina-based refractory products for the
steel industry and fuel additives for sale to oil-burning electric utilities,
respectively. The operation in Pittsburgh produces the Company's MagneClear(R)
product line of stable magnesium hydroxide slurry for use in wastewater
treatment and industrial applications. A similar facility will be opened in
eastern Tennessee during the third quarter of 1996, further enhancing the cost
competitiveness of this product to the southeastern United States. The Baton
Rouge operation involves a third-party tolling arrangement to produce
refractory products using competitively priced, imported magnesite. This
operation significantly reduces freight costs for the Company's refractory
products sold in the Southern United States and provides the economic
flexibility to switch between domestic and imported magnesite. The first phase
of this facility became operational in early 1995; the facility was completed
in the first quarter of 1996.
COMPETITION
Because of the impact of transportation costs on the aggregates business,
competition in each of the Company's aggregates market tends to be limited to
producers in proximity to the Company's production facilities. However, the
Company believes that its ability to transport materials by ocean vessels and
river barges as a result of the acquisition of Dravo Aggregates and the Nova
Scotia acquisition has enhanced the Company's ability to compete in certain
extended market areas. Although the Company experiences competition in all of
its aggregates markets, it believes that it is generally a leading producer in
the market areas it serves. Competition is based primarily on quarry location
and price, but quality of aggregates and level of customer service are also
factors.
The Company is the second largest producer of aggregates in the United
States based on tons shipped. There are over 4,000 companies in the United
States that produce crushed stone, sand and gravel. The largest producer
accounts for less than 6% of the total market. Certain of the Company's
competitors in the aggregates industry have greater financial resources than
the Company.
The Magnesia Specialties division of the Company competes with various
companies in different geographic and product markets. The Company believes
that the Magnesia Specialties division is one of the largest suppliers of
monolithic (unshaped) refractory products and dolomitic lime to the steel
industry in the United States and one of the largest suppliers of magnesia-
based chemical products to various industries. The Magnesia Specialties
division has recently begun importing lower purity, natural magnesite for use
in its products. The division competes principally on the basis of quality,
price and technical support for its products. The Company's largest competitor
for monolithic refractory sales in the basic oxygen steel furnace market is
Minerals Technologies Inc. The Magnesia Specialties division also competes for
sales to customers located outside the United States with sales to such
customers accounting for approximately $16.0 million in sales in 1995
(representing approximately 13% of total sales of the Company's Magnesia
Specialties division). Certain of the Company's competitors in the magnesia
specialities industry have greater financial resources than the Company.
58
ENVIRONMENTAL REGULATIONS
Materials' operations are subject to and affected by federal, state and
local laws and regulations relating to the environment, health and safety and
other regulatory matters. Certain of the Company's operations may from time to
time involve the use of substances that are classified as toxic or hazardous
substances within the meaning of these laws and regulations. Environmental
operating permits are, or may be, required for certain of the Company's
operations and such permits are subject to modification, renewal and
revocation. The Company regularly monitors and reviews its operations,
procedures and policies for compliance with these laws and regulations.
Despite these compliance efforts, risk of environmental liability is inherent
in the operation of the Company's businesses, as it is with other companies
engaged in similar businesses, and there can be no assurance that
environmental liabilities will not have a material adverse effect on the
Company in the future. Costs incurred by the Company in connection with
environmental matters in the preceding two fiscal years were not material to
the Company's operations or financial condition.
The Company believes that its operations and facilities, both owned or
leased, are in substantial compliance with applicable laws and regulations and
that any noncompliance is not likely to have a material adverse effect on the
Company's operations or financial condition. However, future events, such as
changes in or modified interpretations of existing laws or regulations or
enforcement policies, or further investigation or evaluation of the potential
health hazards of certain products or business activities, may give rise to
additional compliance and other costs that could have a materially adverse
effect on the Company. For additional information with respect to
environmental matters, see the Materials 1995 Form 10-K and "Analysis of
Financial Condition and Results of Operation"and "Note M: Contingencies" of
the "Notes to Financial Statements" in the Materials 1995 Annual Report and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Note 5-Contingencies" of the "Notes to Condensed Consolidated
Financial Statements" in the Materials Second Quarter 1996 Form 10-Q, which
are incorporated by reference herein.
EMPLOYEES
As of March 19, 1996, the Company had approximately 4,000 employees.
Approximately 2,950 are hourly employees and approximately 1,050 are salaried
employees. Included among these employees are approximately 800 hourly
employees represented by labor unions. Approximately 17% of the Company's
Aggregates division's hourly employees are members of a labor union, while 95%
of the Magnesia Specialty division's hourly employees are represented by labor
unions. The Company's principal union contracts cover employees at the
Manistee, Michigan magnesia-based products plant and the Woodville, Ohio lime
plant. A work stoppage that lasted approximately 9 weeks commenced in June
1995 at the Manistee plant at the expiration of the labor union contract. The
strike was settled, a new four-year agreement was reached, and normal
operating production levels were achieved before the end of the third quarter
of 1995. Following the expiration of the Woodville labor union contract, in
June 1996 the Company entered into a new four-year labor contract with the
Woodville labor union. The Company considers its relations with its employees
to be good.
PRINCIPAL STOCKHOLDER
Prior to the Transaction, the only person who beneficially owned more than
5% of any class of Materials voting stock was Lockheed Martin. As of September
16, 1996, Lockheed Martin owned beneficially and of record 37,350,000 shares
of Materials Common Stock, representing approximately 81% of the outstanding
Materials Common Stock. Lockheed Martin has sole voting and sole investment
power with respect to these shares. Lockheed Martin is deemed to be a parent
of Materials as that term is defined for purposes of the Securities Act. After
the consummation of the Transaction, Lockheed Martin will no longer own any
interest in Materials.
SHARES ELIGIBLE FOR FUTURE SALE
Shares of Materials Common Stock distributed to Lockheed Martin stockholders
will be freely transferable, except for shares received by persons who may be
deemed to be "affiliates" of Materials under the Securities Act. Persons who
may be deemed to be affiliates of Materials after the expiration of the
Exchange Offer generally include individuals or entities that control, are
controlled by, or are under common control with, Materials, and will include
the directors and principal executive officers of Materials and also could
include certain significant stockholders of Materials. Persons who are
affiliates of Materials will be permitted to sell their shares of
59
Materials Common Stock only pursuant to an effective registration statement
under the Securities Act or an exemption from the registration requirements of
the Securities Act, such as the exemption afforded by Rule 144 under the
Securities Act.
COMPARISON OF RIGHTS OF
STOCKHOLDERS OF LOCKHEED MARTIN AND MATERIALS
Upon consummation of the Offer, stockholders of Lockheed Martin who exchange
their shares of Lockheed Martin Common Stock for Materials Common Stock will
become shareholders of Materials. The rights of a Materials shareholder will
be defined and governed by the corporate law of North Carolina, the State in
which Materials is incorporated, and by the Materials Articles of
Incorporation and the Materials Bylaws, rather than by the corporate law of
Maryland, the State in which Lockheed Martin is incorporated, the Charter of
Lockheed Martin (the "Lockheed Martin Charter") and the Bylaws of Lockheed
Martin (the "Lockheed Martin Bylaws").
Certain provisions of North Carolina law, the Materials Articles of
Incorporation and the Materials Bylaws alter the rights of shareholders of
Materials from those that Lockheed Martin stockholders presently have. The
following is a summary of the material differences. The summary does not
purport to be a complete statement of the rights of holders of shares of
Materials Common Stock under applicable North Carolina law, the Materials
Articles of Incorporation and the Materials Bylaws or a comprehensive
comparison with the rights of the holders of shares of Lockheed Martin Common
Stock under applicable Maryland law, the Lockheed Martin Charter and the
Lockheed Martin Bylaws, or a complete description of the specific provisions
referred to herein. The identification of specific differences is not meant to
indicate that other equally or more significant differences do not exist. This
summary is qualified in its entirety by reference to the North Carolina
Business Corporation Act ("NCBCA") and the governing corporate instruments of
Materials, and the Maryland General Corporation law ("MGCL") and the governing
corporate instruments of Lockheed Martin, to which holders of shares of
Lockheed Martin Common Stock are referred.
AMENDMENTS TO THE CHARTER
Lockheed Martin. Except for certain specified matters, the MGCL provides
that an amendment or change to a corporation's charter must be authorized by
the board of directors in a resolution setting forth the amendment, declaring
that it is advisable, and directing that it be submitted to the stockholders
for approval. The proposed amendment must then be approved by the stockholders
by an affirmative vote of two-thirds of all the votes entitled to be cast on
the matter, unless a corporation's charter calls for a greater or lesser
proportion of the votes (but in no event may this proportion of votes be less
than a majority of all the votes entitled to be cast). The Lockheed Martin
Charter reduces the vote required for amendments to the affirmative vote of a
majority of all votes entitled to be cast.
Materials. Except for certain specified matters, the NCBCA requires
shareholder approval in order to amend a corporation's articles of
incorporation. In order to be adopted in accordance with the NCBCA, proposed
amendments must be recommended by the board prior to their submission to the
shareholders (or, if the board cannot recommend the proposal as a result of a
conflict of interest or other special circumstances, the board must submit the
proposal with a statement of its reasons for the lack of a recommendation).
The proposed amendment must then be approved at a meeting at which a quorum is
present with more votes cast in favor of the amendment than are cast in
opposition to the amendment, or, to the extent the amendment would give rise
to dissenters' rights (as discussed below), of any voting group, by the
affirmative vote of the holders of a majority of the shares of such group
entitled to vote on the matter unless a greater number of shares are specified
in the articles of incorporation, the NCBCA or required by the board of
directors. Except for certain specified matters, the Materials Articles of
Incorporation do not so specify a greater number of shares.
AMENDMENTS TO THE BYLAWS
Lockheed Martin. The MGCL provides that after the organizational meeting of
directors, the power to adopt, alter and repeal the bylaws is vested in the
stockholders, except to the extent that the charter or bylaws vest this power
in the board of directors. The Lockheed Martin Bylaws provide the Board of
Directors shall have exclusive power, at any regular or special meeting
thereof, to make and adopt new bylaws, or to amend, alter, or
60
repeal any bylaws of Lockheed Martin, provided such revisions are not
inconsistent with the Lockheed Martin Charter or statute.
Materials. The NCBCA provides that bylaws may be adopted, amended or
repealed by either the board of directors or the shareholders of a
corporation. While the power of the board of directors to adopt, amend and
repeal the bylaws may be limited in the articles of incorporation or in a
bylaw adopted by the shareholders, neither the Materials Articles of
Incorporation nor the Materials Bylaws provide for any such limitation. The
board of directors may not readopt, amend or repeal any bylaw that has been
adopted, amended or repealed by the shareholders unless so authorized in the
articles of incorporation or a bylaw adopted by the shareholders. Special
requirements apply to bylaws increasing quorum or voting requirements for
directors.
NUMBER OF DIRECTORS
Lockheed Martin. Under the MGCL, unless a corporation has fewer than three
stockholders, at all times the board of directors shall consist of at least
three directors. Subject to the above provision, a Maryland corporation shall
have the number of directors provided in its charter until changed by the
bylaws. The Lockheed Martin Charter provides that the number of directors of
Lockheed Martin shall be 24, which number may increase or decrease from time
to time pursuant to the Lockheed Martin Charter or the Lockheed Martin Bylaws,
but which shall never be less than 12. The Lockheed Martin Bylaws provide that
the number of directors shall be not less than four and not more than 25. The
Lockheed Martin Board of Directors has the power to fix the number of
directors. There are currently 19 members of the Lockheed Martin Board of
Directors.
Materials. Under the NCBCA, a board of directors must consist of one or more
individuals, with the number specified in or fixed in accordance with the
articles of incorporation or bylaws. The number of directors may from time to
time increase or decrease by amendment of the articles of incorporation or, if
permitted by the articles of incorporation, the bylaws, but no such decrease
shall be made when the number of shares voting against the proposal for
decrease would be sufficient to elect a director by cumulative voting if such
shares are entitled to be voted cumulatively for the election of directors. If
a board of directors has power under the articles of incorporation or bylaws
to fix or change the number of directors and if the shareholders do not have
the right to cumulate their votes for directors, the board may increase or
decrease the number of directors, by not more than 30% during any 12 month
period. The articles of incorporation or bylaws may establish a variable range
for the size of the board of directors by fixing a minimum and maximum number
of directors. If a variable range is established, the number of directors may
be fixed or changed from time to time, within the minimum or maximum, by the
shareholders or the board of directors. After shares are issued, only the
shareholders may change the range of the size of the board or change from a
fixed to a variable-range size board and vice versa. The Board of Directors of
Materials has approved and recommended to shareholders amendments to the
Materials Articles of Incorporation (the "Proposed Amendments") which, among
other things, provide that the Board of Directors will consist of not less
than nine nor more than eleven directors, with the number of directors within
that range constituting the Board to be determined from time to time by the
Board of Directors or the shareholders. The Proposed Amendments will be
presented for approval at a special meeting of the shareholders of Materials
(the "Special Meeting"), to be held prior to consummation of the Exchange
Offer. Lockheed Martin, which will directly or indirectly hold approximately
81% of the Materials Common Stock as of the record date for the Special
Meeting, has advised Materials that it will vote in favor of approval of the
Proposed Amendments. Accordingly, if Lockheed Martin votes its shares as it
has indicated, approval of the Proposed Amendments is assured.
Currently, the Materials Board of Directors consists of seven members. In
connection with adoption of the Proposed Amendments, the Materials Board of
Directors will be expanded to nine directors. The Materials Board of Directors
has not yet determined the identity of the two additional directors.
STAGGERED BOARD OF DIRECTORS
Lockheed Martin. The MGCL provides that if the directors are divided into
classes, the term of office may be stated in the bylaws, provided the term of
office may not be longer than five years and the term of at least one class
must expire each year. Neither the Lockheed Martin Charter nor the Lockheed
Martin Bylaws divide the directors into classes with staggered terms of
office.
61
Materials. The NCBCA provides that if the number of directors is fixed at
nine or more, the Articles of Incorporation or Bylaws adopted by the
shareholders may provide for staggered terms by dividing the total number of
directors into two, three or four groups, with each group containing one-half,
one-third or one-quarter of the total, as near as may be. In that event, the
terms of directors in the first group expire at the first annual shareholders'
meeting after their election, the terms of the second group expire at the
second annual shareholders' meeting after their election, the terms of the
third group, if any, expire at the third annual shareholders' meeting after
their election, and the terms of the fourth group, if any, expire at the
fourth annual shareholder meeting after their election. At each annual
shareholders' meeting held thereafter, directors shall be chosen for a term of
two years, three years or four years, as the case may be, to succeed those
whose terms expire. The rules of the NYSE do not permit a listed company to
divide its board of directors into four such groups. The Proposed Amendments
provide for three classes of directors with staggered terms of three years.
REMOVAL OF DIRECTORS
Lockheed Martin. The MGCL provides that unless the charter of a corporation
provides otherwise, the stockholders of the corporation may remove any
director with or without cause, by the affirmative vote of a majority of all
the votes entitled to be cast for the election of directors. Unless the
charter provides otherwise, if the stockholders of any class or series are
entitled separately to elect one or more directors, a director elected by a
class or series may not be removed without cause, except by the affirmative
vote of a majority of all the votes of that class or series, and if a
corporation has cumulative voting and less than the entire board of directors
is to be removed, a director may not be removed without cause if the votes
cast against his removal would be sufficient to elect the director if then
cumulatively voted at an election of the entire board of directors or at an
election of the class of directors to which he or she is a member. The
Lockheed Martin Charter provides that any director or the entire Board of
Directors may be removed from office as a director or directors at any time,
but only for cause, by the affirmative vote at a duly called meeting of
stockholders of at least 80% of the votes that the holders of the then
outstanding shares of capital stock of Lockheed Martin are entitled to cast at
an annual election of directors, voting together as a single class.
Materials. The NCBCA provides that shareholders may remove one or more
directors with or without cause unless the articles of incorporation provide
that directors can be removed only for cause. The Proposed Amendments would
amend the Materials Articles of Incorporation to provide that any director may
be removed at any time, but only for cause, by a vote of the holders of a
majority of shares entitled to be voted. If a director is elected by a voting
group of shareholders, only the shareholders of that group may participate in
the vote to remove that director. A director may not be removed by the
shareholders at a meeting unless the notice of the meeting states that the
purpose, or one of the purposes, of the meeting is removal of the director. If
any directors are so removed, new directors may be elected at the same
meeting.
VACANCIES IN THE BOARD OF DIRECTORS
Lockheed Martin. The MGCL provides that unless a corporation's charter or
bylaws provide otherwise, newly created directorships resulting from an
increase in the number of directors may be filled by a majority of the entire
board of directors and vacancies on the board of directors that result from
any other cause may be filled by a majority of the remaining directors.
Vacancies on the board of directors resulting from the removal of a director
by the stockholders may also be filled by the stockholders unless the
stockholders of any class or series are entitled separately to elect one or
more directors, in which case such stockholders may elect a successor to fill
such a vacancy. The Lockheed Martin Charter provides that vacancies in the
board of directors, except for vacancies resulting from an increase in the
number of directors, shall be filled only by a majority vote of the remaining
directors then in office, even if less than a quorum, except that vacancies
resulting from removal from office by a vote of the stockholders, may be
filled by the stockholders at the same meeting in which such removal occurs.
The Lockheed Martin Charter further provides that vacancies resulting from an
increase in the number of directors shall be filled only by a majority vote of
the entire board of directors.
Materials. The NCBCA provides that, unless the articles of incorporation
provide otherwise, a vacancy on the board of directors, including a vacancy
resulting from an increase in the number of directors or from the failure of
the shareholders to elect the full authorized number of directors may be
filled by the shareholders or
62
the board of directors, even though the remaining directors constitute less
than a quorum. The Proposed Amendments provide that vacancies on the Board of
Directors, including any vacancies resulting from an increase in the number of
directors, shall be filled only by a majority vote of the remaining directors
then in office, though less than a quorum, except that vacancies resulting
from removal from office by a vote of the shareholders may be filled by the
shareholders at the same meeting at which such removal occurs. Any director
elected to fill a vacancy shall hold office only until the next shareholders'
meeting at which directors are elected. No decrease in the number of directors
constituting the Board of Directors shall affect the tenure of any incumbent
director.
SPECIAL MEETINGS OF STOCKHOLDERS
Lockheed Martin. The MGCL provides that special meetings of the stockholders
may be called by the president of the corporation, the board of directors, or
any other person specified in the charter or bylaws. Special meetings may also
be called by the secretary of the corporation upon the written request of the
holders of 25% of the votes entitled to be cast at the meeting specifying the
purpose for which the meeting is being called. Effective as of October 1,
1996, the MGCL has been amended to provide that a corporation may include in
its charter or bylaws a provision that requires the written request of
stockholders entitled to cast a percentage of votes greater or lesser than 25%
in order to call a special meeting, provided that the percentage may not be
greater than a majority of all the votes entitled to be cast at the meeting.
The Lockheed Martin Bylaws give the Chairman of the Board of Directors, the
President, the Board of Directors, and the Executive Committee of the Board of
Directors the power to call a special meeting of the stockholders.
Materials. The NCBCA provides that special meetings of the shareholders may
be called by the board of directors or the persons authorized to call such a
meeting in the articles of incorporation or bylaws. The Proposed Amendments
provide the Chairman of the Board of Directors, the President, the Board of
Directors, and the Executive Committee of the Board of Directors with the
power to call a special meeting of the shareholders by a vote at a meeting or
in writing with or without a meeting. Special meetings of the shareholders may
not be called by any other person or persons.
NOTICE OF STOCKHOLDER MEETINGS
Lockheed Martin. Under the MGCL, not less than ten days nor more than 90
days before the date of every stockholders' meeting, the secretary of the
corporation shall give each stockholder entitled to vote at the meeting and
each other stockholder entitled to notice of the meeting, written or printed
notice stating the time and place of the meeting and, in the case of a special
meeting, the purpose or purposes for which the meeting is being called. The
provision in the Lockheed Martin Bylaws regarding notice of stockholders'
meetings is identical to the MGCL, except that it provides that not less than
30 days nor more than 90 days before the date of every stockholders' meeting,
the secretary shall give notice of the meeting.
Materials. Under the NCBCA, not less than ten days nor more than 60 days
before the date of every shareholders' meeting, the corporation shall give
each shareholder entitled to vote at the meeting notice stating the time and
place of the meeting, and in the case of a special meeting, a description of
the purpose or purposes for which it was called. The Materials Bylaws provide
for substantially identical notice requirements.
CUMULATIVE VOTING IN CERTAIN CIRCUMSTANCES
Lockheed Martin. Under the MGCL, the charter of a corporation may include a
provision for minority representation through cumulative voting in the
election of directors. The Lockheed Martin Charter provides that in the event
that there shall exist a Substantial Stockholder (any person (other than
Lockheed Martin or any Subsidiary or any employee benefit plan) who or which
is a beneficial owner of voting stock representing 40% or more of the votes
entitled to be cast by the holders of all the outstanding shares of voting
stock) of Lockheed Martin and such existence shall be known or made known to
Lockheed Martin in advance of a meeting of stockholders at which directors
will be elected, each holder of voting stock shall be entitled, in connection
with any vote taken for such election of directors, to as many votes as shall
equal the number of votes which (except for this provision as to cumulative
voting) such stockholder would be entitled to cast for the election of
directors
63
with respect to such stockholder's shares multiplied by the number of
directors to be elected, and such stockholder may cast all of such votes for a
single director or may distribute them among the number of directors to be
voted for, or for any two or more of them as such stockholder may see fit. In
connection with any election of directors in which stockholders are entitled
to cumulative voting, the Lockheed Martin Charter provides that one or more
candidates may be nominated by a majority of the Disinterested Directors (any
member of the Board of Directors of Lockheed Martin who is unaffiliated with
an Interested Stockholder (i.e., a stockholder that beneficially owns,
directly or indirectly, 5% or more of the voting power of the outstanding
voting stock of or is or was an affiliate or associate of Lockheed Martin and
at any time during the two-year period prior to the date in question owned 5%
or more of the voting power of the outstanding voting stock of Lockheed Martin
or certain assignees of any such person) and was a member of the Board of
Directors prior to the time the Interested Stockholder became an Interested
Stockholder) or by any person who is the beneficial owner of shares of voting
stock having an aggregate market price of $250,000 or more. Lockheed Martin's
proxy statement and other communications with respect to such an election
shall contain on an equal basis and at the expense of Lockheed Martin,
descriptions and other statements of or with respect to all nominees for
election that qualify under the procedures set forth above.
Materials. Under the NCBCA, shareholders do not have the right to cumulate
their vote for directors unless the articles of incorporation so provide. The
Materials Articles of Incorporation do not contain any provision regarding
cumulative voting rights.
INDEMNIFICATION AND LIMITATION OF LIABILITY
Lockheed Martin. The MGCL contains provisions setting forth conditions under
which a corporation may indemnify its directors, officers, employees and
agents from any liability incurred in their activities on behalf of the
corporation. The MGCL permits indemnification unless it is established that
(1) the act or omission was material to the matter giving rise to the
proceeding and was either committed in bad faith or was the result of active
and deliberate dishonesty; (2) the party seeking indemnification actually
received an improper personal benefit in money, property or services; or (3)
in the case of criminal proceedings, the party seeking indemnification had
reasonable cause to believe that the act or omission was unlawful.
The Lockheed Martin Charter provides that the board of directors shall have
the power to adopt bylaws or resolutions for the indemnification of Lockheed
Martin's directors, officers, employees and agents, provided that any such
bylaws or resolutions shall be consistent with applicable law. The Lockheed
Martin Bylaws indemnify, to the fullest extent permitted by law, directors,
officers, and employees of Lockheed Martin, as well as any person serving at
the request of Lockheed Martin as a director, officer, or employee of another
corporation or entity (including services with employee benefit plans) who by
reason of this status or service in that capacity was, is or is threatened to
be made a party, or is otherwise involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative; provided that
Lockheed Martin shall not be required to indemnify a person in connection with
any action, suit or proceeding initiated by such person, unless the action,
suit or proceeding was authorized by the Board of Directors. Additionally, the
Lockheed Martin Bylaws provide for the reimbursement of reasonable expenses in
advance of a final disposition of the proceeding and without requiring a
preliminary determination of the ultimate entitlement to indemnification under
specified circumstances.
The MGCL provides that the charter of a corporation may include a provision
expanding or limiting the liability of directors or officers to the
corporation or its stockholders for money damages, but may not include any
provision that restricts or limits the liability of the directors or officers
to the corporation or its stockholders (i) to the extent that it is proved
that the person actually received an improper benefit or profit in money,
property, or services for the amount of the benefit or profit in money,
property, or services actually received, or (ii) to the extent that a judgment
or other final adjudication adverse to the person is entered in a proceeding
based on a finding in the proceeding that the person's action, or failure to
act, was the result of active or deliberate dishonesty, and was material to
the cause of action adjudicated in the proceeding. The Lockheed Martin Charter
provides that, to the maximum extent permitted by the MGCL, no director or
officer of Lockheed Martin shall be liable to the corporation or its
stockholders for money damages.
64
Materials. The NCBCA provides that a corporation must indemnify a director
or officer who has been wholly successful, on the merits or otherwise, in the
defense of any actual or threatened proceeding to which he was, or was
threatened to be made, a party because he is or was a director or officer; and
it also provides that a corporation may, but is not required to, indemnify a
director, officer, employee, or agent who has conducted himself in good faith
and reasonably believed that his conduct was in, or not opposed to, the
corporation's best interests, except that such indemnification may not be
granted to anybody who was held liable to the corporation in an action brought
by or on behalf of the corporation, nor for any personal benefit improperly
received by him. In addition to indemnification provisions described in the
preceding sentence, the NCBCA allows a corporation to include in its articles
of incorporation a provision limiting or eliminating the personal liability of
any director for monetary damages for breach of any duty as a director, except
for conduct that the director knew or believed was clearly in conflict with
the corporation's best interests, or for liability for unlawful distributions
under the NCBCA, or for any transaction from which the director derived an
improper personal benefit; and it also allows a corporation to indemnify or
agree by its articles of incorporation, bylaws, or separate agreement to
indemnify any director, officer, employee, or agent against any liability or
expenses, except for activities which were at the time taken known or believed
by him to be clearly in conflict with the corporation's best interests.
The Materials Articles of Incorporation provide that to the fullest extent
permitted by the NCBCA, as it exists or may hereafter be amended, no person
who is serving or has served as a director of Materials shall be personally
liable to Materials or any of its shareholders for the monetary damages for
breach of duty as a director. The Materials Bylaws indemnify directors,
officers and employees of Materials both in their capacities as such and when
serving at the request of Materials as directors, officers, partners,
trustees, employees or agents of another corporation, partnership, joint
venture, trust or other enterprise or as trustees, other fiduciaries or
administrators under an employee benefit plan. Additionally, the Proposed
Amendments provide for the reimbursement of expenses in advance of a final
disposition of the action, suit or proceeding and without requiring a
preliminary determination of the ultimate entitlement to indemnification. Such
rights shall inure to the benefit of the legal representatives of any such
person and shall not be exclusive of any other rights to which such person may
be entitled apart from the provision of such bylaw, including a right of
indemnification under any statute, agreement or insurance policy.
VOTE REQUIRED FOR CERTAIN EXTRAORDINARY TRANSACTIONS
Lockheed Martin. The MGCL provides that in order to effectuate a merger,
consolidation, share exchange or sale of all or substantially all of a
corporation's assets, the board of directors generally must adopt a resolution
declaring that the merger, consolidation, share exchange or sale of all or
substantially all of a corporation's assets is advisable and directing that
the proposed transaction be submitted to the stockholders for approval. With
certain exceptions, the affirmative vote of two-thirds of the stockholders
entitled to vote on such a transaction is necessary to effectuate the
transaction. The MGCL, however, permits a Maryland corporation's charter to
contain a provision specifying that a greater or lesser proportion of the
votes entitled to be cast on the matter may be required to approve such a
transaction (but in no event may this proportion of votes be less than a
majority of all the votes entitled to be cast). The Lockheed Martin Charter
contains a provision lowering the two-thirds requirement to the vote of a
majority of the votes entitled to be cast on the matter.
Materials. The NCBCA requires that in order to approve a plan of merger, the
board of directors must first adopt a plan of merger and must then recommend
the plan of merger to the shareholders. The shareholders must then approve the
plan by an affirmative vote of a majority of shares entitled to vote thereon
unless a higher threshold is specified in the Materials Articles of
Incorporation or Bylaws. Neither the Materials Articles of Incorporation nor
Bylaws provide for a higher threshold, other than with respect to certain
business combinations which are discussed below.
CONTROL SHARE ACQUISITIONS
Lockheed Martin. The MGCL provides that "control shares" of a Maryland
corporation acquired in a "control share acquisition" have no voting rights
except to the extent approved by a vote of two-thirds of the
65
votes entitled to be cast by stockholders in the election of directors,
excluding shares of stock as to which the acquiring person, officers of the
corporation and directors of the corporation who are employees of the
corporation are entitled to exercise or direct the exercise of the voting
power of the shares in the election of directors. "Control shares" are voting
shares of stock which, if aggregated with all other shares of stock previously
acquired by such person, would entitle the acquiror to exercise voting power
in electing directors within one of the following ranges of voting power: (i)
one-fifth or more but less than one-third, (ii) one-third or more but less
than a majority, or (iii) a majority of all voting power. Control shares do
not include shares that the acquiring person is entitled to vote as a result
of having previously obtained stockholder approval. A "control share
acquisition" means the acquisition, directly or indirectly, of control shares,
subject to certain exceptions.
A person who has made or proposes to make a control share acquisition, upon
satisfaction of certain conditions (including an undertaking to pay expenses),
may compel the board of directors to call a special meeting of stockholders to
be held within 50 days of demand to consider the voting rights of the shares.
If voting rights are not approved at the meeting or if the acquiror does not
deliver an acquiring person statement as required by the statute, then subject
to certain conditions and limitations, the corporation may redeem any or all
of the control shares, except those for which voting rights have previously
been approved, for fair value determined, without regard to voting rights, as
of the date of the last control share acquisition or of any meeting of
stockholders at which the voting rights of such shares are considered and not
approved. If voting rights for control shares are approved at a stockholders'
meeting and the acquiror becomes entitled to vote a majority of the shares
entitled to vote, all other stockholders may exercise appraisal rights. The
fair value of the shares as determined for purposes of such appraisal rights
may not be less than the highest price per share paid in the control share
acquisition, and certain limitations and restrictions generally applicable to
the exercise of appraisal rights do not apply in the context of a control
share acquisition.
The control share acquisition statute does not apply to shares acquired in a
merger, consolidation or share exchange if the corporation is a party to the
transaction or to acquisitions approved or excepted by the charter or the
bylaws of the corporation.
Materials. The NCBCA contains a Control Share Acquisition Act similar to
that contained in the MGCL, but Materials has exercised its right under the
Act to include in its Articles of Incorporation a provision opting out of the
Act so that the Act does not apply to Materials.
BUSINESS COMBINATIONS
Lockheed Martin. Under the MGCL, certain "business combinations" (including
a merger, consolidation, share exchange or, in certain circumstances, an asset
transfer or issuance or reclassification of equity securities) between a
Maryland corporation and (i) any person who beneficially owns 10% or more of
the voting power of the corporation's shares, (ii) an affiliate of such
corporation who, at any time within the two-year period prior to the date in
question, was the beneficial owner of 10% or more of the voting power of the
then-outstanding voting stock of the corporation (in either case, an
"interested stockholder"), or (iii) any affiliate of an interested
stockholder, are prohibited for five years after the most recent date on which
the interested stockholder became an interested stockholder, and thereafter
must be recommended by the board of directors of the Maryland corporation and
approved by the affirmative vote of at least (a) 80% of the votes entitled to
be cast by holders of its outstanding voting shares, and (b) two-thirds of the
votes entitled to be cast by holders of such outstanding voting shares, other
than shares held by the interested stockholder with whom the business
combination is to be effected; unless, among other things, the corporation's
stockholders receive a minimum price (as defined in MGCL) for their shares and
the consideration is received in cash or in the same form as previously paid
by the interested stockholder for its shares. These provisions of the MGCL do
not apply to business combinations that are approved or exempted by the board
of directors of the corporation prior to the time that the interested
stockholder becomes an interested stockholder. The Lockheed Martin Board of
Directors has exempted any business combination with General Electric Company
from its application.
66
In addition to the MGCL requirements, the Lockheed Martin Charter also
contains a provision requiring that any business combination between Lockheed
Martin and a Related Person (i.e., any individual, corporation, partnership,
or other person or entity which, as of the record date for the determination
of stockholders entitled to notice of and to vote on the business combination
or immediately prior to the consummation the business combination, together
with their affiliates and associates beneficially owns ten percent or more of
the outstanding shares on any class or series of voting stock of Lockheed
Martin and any affiliate or associate of such individual, corporation,
partnership, or other person or entity) must be approved by 80% of the
outstanding shares of Voting Stock and by two-thirds of the outstanding shares
of Voting Stock not owned by the Related Person. This provision does not apply
to a business combination approved by a two-thirds vote of the directors in
office prior to the time a Related Person becomes a Related Person (and
certain other directors designated from time to time as "Continuing
Directors") or if the consideration received by the stockholders other than
the Related Person is not less than the highest price per share paid by the
Related Person prior to the business combination and a proxy statement
complying with the regulations of the Exchange Act shall have been sent to all
stockholders. Under the Lockheed Martin Charter, this provision may be amended
only by the same two supermajority votes required for approval of a business
combination.
The business combination statute and the control share acquisition statute
could have the effect of discouraging unsolicited offers to acquire Lockheed
Martin and of increasing the difficulty of consummating any such offer.
Materials. The NCBCA contains a Shareholder Protection Act, which severely
limits mergers with, and asset sales or leases to, any person that
beneficially owns 20% of the corporation's voting shares without the
affirmative vote of the holders of 95% of the corporation's voting shares
entitled to vote on the matter, but Materials has exercised its right under
the Act to include in its Articles of Incorporation a provision opting out of
the Act so that the Act does not apply to Materials.
The Materials Articles of Incorporation, as modified by the Proposed
Amendments, provide that certain business combinations (including a merger or
consolidation or, in certain circumstances, a sale, lease, exchange or other
transfer of assets, the issuance, transfer or reclassification of equity
securities, or the adoption of a plan of liquidation or dissolution) between
Materials and any "interested shareholder" (defined generally as any person
who beneficially owns 5% or more of the voting stock of Materials), must be
approved by the holders of 80% of the outstanding voting stock of Materials
and 66 2/3% of such voting stock not held by any interested shareholder,
except in cases in which either (i) the interested transaction is approved by
a majority of the disinterested directors of Materials (as defined in the
Articles of Incorporation) or (ii) such interested shareholder has
beneficially owned his shares for more than two years.
The Materials Articles of Incorporation, as modified by the Proposed
Amendments, prevent Materials from repurchasing from an "interested
shareholder" shares of voting stock of Materials that have been beneficially
owned for a period of less than two years unless (i) the purchase price is not
greater than the fair market value of such stock on the earlier of the date of
repurchase or the date on which an agreement with respect to such transaction
was entered into, (ii) such transaction has been approved by the holders of a
majority of the voting stock not owned by the interested shareholder, or (iii)
such offer is made to the holders of all outstanding shares of the same class
of voting stock to be purchased. Fair market value of the shares to be
purchased is determined by reference to the last closing sale price
immediately preceding the time in question on the NYSE or other principal
market on which such shares are listed, or, if not listed, based on the last
closing bid quotation with respect to the stock on the National Association of
Securities Dealers, Inc. Automated Quotations System or, if not so quoted, as
determined by the Board of Directors in good faith.
DISSENTERS' RIGHTS
Under both the MGCL and NCBCA, holders of shares have the right, under
specified circumstances, to dissent from certain corporate transactions by
demanding payment in cash for their shares equal to the fair value (excluding
any appreciation or depreciation that directly or indirectly results from the
transaction) of such shares.
67
Lockheed Martin. Under the MGCL, the amount to be received by the dissenters
for their stock may be determined by agreement between the dissenters and the
corporation or, if the corporation and the dissenters are unable to agree, the
corporation or the dissenters may petition a court for an appraisal to
determine the fair value of the stock. The MGCL affords dissenters' rights
upon certain mergers, consolidations, share exchanges, sales of all or
substantially all of the assets and amendments of the charter that alter the
contract rights, as expressly set forth in the charter, of outstanding stock
and substantially affect stockholders' rights (unless the right to do so is
reserved by the charter of the corporation). Except in certain circumstances,
the MGCL does not grant dissenters' rights to holders of stock if (i) the
stock is listed on a national securities exchange or is designated as a
national market system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc.; or (ii) the stock is that of
the successor in a merger, unless the merger alters the contract rights of the
stock as expressly set forth in the charter, and the charter does not reserve
the right to do so, or the stock is to be changed or converted in whole or in
part in the merger into something other than stock in the successor, cash,
scrip or other rights or interests arising from fractional shares. The
Lockheed Martin Common Stock is listed on the New York Stock Exchange.
Materials. Under the NCBCA, the amount to be received by the dissenters for
their stock may be determined by agreement between the dissenters and the
corporation or, if the corporation and the dissenters are unable to agree, the
dissenters may petition a court for an appraisal of the fair value of the
stock. This last provision differs from the provision found in the MGCL in
that under the NCBCA only the dissenter has a right to petition the court for
appraisal rights. Under MGCL both the corporation and the dissenter have a
right to petition the court. The NCBCA affords dissenters rights upon certain
mergers, share exchanges, transfers of assets or amendments of the
corporation's articles of incorporation that substantially abridge certain
rights of the shareholders. Unlike the MGCL, the NCBCA does not limit
dissenters' rights if the corporation's stock is listed on a national exchange
or is designated as a national market system security.
AUTHORIZED SHARES OF STOCK
Lockheed Martin. The Lockheed Martin Charter provides that the total number
of shares of stock of all classes which Lockheed Martin has authority to issue
is 820 million shares, divided into 20 million shares of Series A Preferred
Stock, $1.00 par value per share, 50 million shares of Series Preferred Stock,
$1.00 par value per share, and 750 million shares of Common Stock, $1.00 par
value per share. The aggregate par value of all shares of all classes is $820
million.
Materials. The Materials Articles of Incorporation provide that the number
of shares Materials is authorized to issue is 110 million, divided into 100
million Common Shares and 10 million Preferred Shares, each with a par value
of $.01 per share.
SHAREHOLDER RIGHTS PLAN
Materials. The Board of Directors of Materials has adopted a shareholder
rights plan that will become effective, and certain terms of which will be
established, upon consummation of the Exchange Offer or the Transaction, at
the discretion of the Executive Committee of the Board of Directors. The
shareholder rights plan provides, among other things, that if any person or
group of persons becomes the beneficial owner of 15% or more of the Materials
Common Stock, all holders of rights issued pursuant to the plan (other than
such person or group of persons and their affiliates, associates and
transferees) will have the right to acquire shares of Materials Common Stock
at 50% of the then current market value.
CERTAIN MATTERS RELATING TO LOCKHEED MARTIN SERIES A PREFERRED STOCK
All of the 20 million authorized shares of Series A Preferred Stock of
Lockheed Martin currently are outstanding and held by General Electric
Company. The shares of Series A Preferred Stock rank senior to all classes of
capital stock of Lockheed Martin, except those classes of preferred stock
expressly designated as
68
ranking on a parity with the Series A Preferred Stock. The shares of Series A
Preferred Stock generally are entitled to cumulative cash dividends at the
rate of $.75 per quarter, are subject to redemption at the option of Lockheed
Martin on or after April 2, 1998 at specified prices, are entitled to only
limited voting rights, are convertible at the option of the holders into that
number of fully paid and non-assessable shares of Lockheed Martin Common Stock
as is determined by dividing $50 by the Conversion Price in effect at the time
of conversion, and are entitled to a liquidation preference relative to the
shares of Lockheed Martin Common Stock of $50 per share plus accrued and
unpaid dividends.
As of the date of this Offering Circular--Prospectus, the Conversion Price
of the shares of Series A Preferred Stock is $34.5525. In accordance with the
terms of the Lockheed Martin Charter, the Conversion Price is subject to
adjustment upon the occurrence of certain events, including but not limited to
repurchases by Lockheed Martin or any of its subsidiaries of any shares of
Lockheed Martin Common Stock at a weighted average purchase price in excess of
the "Average Closing Price" determined as of a specified date prior to such
repurchase and noncash distributions to holders of Lockheed Martin Common
Stock of assets of Lockheed Martin. Under the Lockheed Martin Charter, the
"Average Closing Price" is defined as the average of the closing prices for
Lockheed Martin Common Stock for the 20 consecutive trading days commencing 30
trading days before the day in question, with each day's closing sale price
being the reported last sale price regular way or, in case no such reported
sale takes place on such day, the average of the reported closing bid and
asking prices, in either case on the NYSE.
Depending on the relative prices of the shares of Lockheed Martin Common
Stock and Materials Common Stock and the number of shares of Lockheed Martin
Common Stock tendered in the Exchange Offer, the Transaction may have the
effect of causing the Conversion Price to be adjusted in accordance with the
anti-dilution adjustments described in the preceding paragraph. In the event
that greater than 5,275,424 shares of Lockheed Martin Common Stock are validly
tendered and not withdrawn on or prior to the Expiration Date, the
consummation of the Exchange Offer will result in an adjustment of the
Conversion Price if the Average Closing Price per share of Lockheed Martin
Common Stock determined as of the earlier of the commencement of the Exchange
Offer or the public announcement of the Exchange Offer is less than the value
of the shares of Materials Common Stock issued in the Exchange Offer. If more
than 7,913,136 shares of Lockheed Martin Common Stock but less than 5,275,424
shares of Lockheed Martin Common Stock are validly tendered and not withdrawn
on or prior to the Expiration Date and Lockheed Martin effects a pro rata
distribution of its remaining shares of Materials Common Stock to holders of
record of Lockheed Martin Common Stock remaining after consummation of the
Exchange Offer, the distribution of the remaining shares of Materials Common
Stock in the Spin-Off also will result in an adjustment of the Conversion
Price. Notwithstanding the foregoing, no adjustment to the Conversion Price is
required unless the adjustment would require an increase or decrease of at
least one percent in the Conversion Price; provided, however, that any
adjustments that are not required to be made by reason of this de minimis
adjustment provision shall be carried forward and taken into account in any
subsequent adjustment.
RELATIONSHIP BETWEEN MATERIALS AND LOCKHEED MARTIN
Materials' relationship with Lockheed Martin is governed by agreements
entered into by Materials and Martin Marietta Corporation and certain of its
affiliates in connection with the incorporation of Materials, and agreements
entered into in connection with the Materials IPO. In connection with a
reorganization of Lockheed Martin and its subsidiaries, Lockheed Martin
assumed the responsibilities of Martin Marietta Corporation and its
affiliates.
Set forth below are descriptions of certain agreements between Materials and
Lockheed Martin which are currently in place.
69
THE TAX SHARING, SUPPLEMENTAL TAX SHARING AND TAX ASSURANCE AGREEMENTS
The Company has been and will be included in Lockheed Martin's consolidated
tax group until and including the day the Transaction is consummated, and
therefore the taxable income (or loss) of the Company and its subsidiaries
(the "Materials Consolidated Group") has been and will be included in the
Lockheed Martin consolidated federal income tax return until such date. The
Company and Lockheed Martin, as successor to Martin Marietta, are parties to a
Tax Sharing Agreement, dated February 18, 1994, that allocates responsibility
between the Company and Lockheed Martin for their respective shares of the
consolidated federal income tax liability of Lockheed Martin and certain other
liabilities. Pursuant to the Tax Sharing Agreement, the Company and Lockheed
Martin make payments between them such that, with respect to any period, the
amount of taxes paid by the Company or any refund payable to the Company is
determined as though Materials filed separate federal, state and local income
tax returns (including any amounts determined to be due as a result of a
redetermination of the tax liability of Lockheed Martin arising from an audit
or otherwise) as the common parent of an affiliated group of corporations
filing a consolidated return rather than a consolidated subsidiary of Lockheed
Martin.
In anticipation of the Transaction, the Company and Lockheed Martin have
entered into a Supplemental Tax Sharing Agreement and a Tax Assurance
Agreement. The Supplemental Tax Sharing Agreement allocates responsibility
between the Company and Lockheed Martin for certain tax liabilities (including
any related liability of the Company or Lockheed Martin to stockholders of
Lockheed Martin) that may result from the failure of the Transaction to
qualify as a fully tax-free distribution. Pursuant to this agreement, any such
liability generally shall be allocated 81% to Lockheed Martin and 19% to the
Company, subject to a maximum allocation of $25 million to the Company.
However, if (i) either Lockheed Martin or the Company (but not both) knowingly
or willfully breaches a covenant contained in the Tax Assurance Agreement,
which contains covenants relating to the parties' post-Transaction conduct
which could jeopardize the qualification of the Transaction as fully tax-free
(if, among other things, there is a change of law or in the ruling policy of
the IRS), and the failure of the Transaction to qualify as a fully tax-free
distribution would not have occurred but for such breach, the resulting
liability shall be allocated solely to the breaching party. Materials would
not be solely liable for the resulting liability if it first obtained an
opinion of counsel (satisfactory to Lockheed Martin) to the effect that any
action underlying a breach would not cause the Transaction to fail to qualify
as a fully tax-free distribution. Furthermore, if either Lockheed Martin or
the Company is acquired in a manner that causes the failure of the Transaction
to qualify as a fully tax-free distribution under Section 355 of the Code
(including the recognition of gain to Lockheed Martin on the distribution of
Materials Common Stock pursuant to Section 355(d) of the Code) and the gain
did not result from a breach of the Tax Assurance Agreement, the resulting
liability shall be allocated solely to the corporation so acquired.
TRANSFER AGREEMENTS
In connection with its incorporation, Materials entered into several
agreements providing for the transfer to Materials of the business, assets and
liabilities associated with Martin Marietta's materials group. These
agreements provide that Materials, on the one hand, and Lockheed Martin, on
the other hand, are required to indemnify each other for, among other things,
claims or losses arising out of or relating to (i) the liabilities assumed by
Materials (in the case of indemnification by Materials) and (ii) certain
losses resulting from the failure of Materials to receive the same ownership
interests in the assets transferred to it as was held by the transferors (in
the case of indemnification by Lockheed Martin).
INTERCOMPANY LOAN AGREEMENTS
Revolving Credit Facility
Materials and Lockheed Martin are parties to an amended and restated credit
agreement (as amended, the "Revolving Credit Facility") pursuant to which
Lockheed Martin has agreed to provide, from time to time,
70
financing of up to $55 million for general corporate purposes, including but
not limited to financing the working capital needs of Materials. The Revolving
Credit Facility expires December 31, 1996, unless extended by mutual
agreement. There is no required prepayment or scheduled reduction of
availability of loans under the Revolving Credit Facility.
During 1996, Materials' management expects to establish a revolving credit
facility with a syndicate of banks. However, Materials has not determined the
timing when, or method by which, it may establish and access such a banking
credit facility. Further, while any such borrowings may be used initially to
provide necessary working capital funds, it is anticipated that Materials will
repay the funds borrowed under the Revolving Credit Facility with such bank
borrowings by December 31, 1996. Additionally, management may choose further
access to the public debt markets through the issuance of commercial paper or
otherwise. Materials has not determined the method or methods by which it may
further access the public market.
Loans outstanding under the Revolving Credit Facility bear interest, at
Materials' option, either at (i) a rate per annum equal to the higher of the
federal funds rate as announced from time to time plus 1/2 percent or the rate
announced from time to time by Morgan Guaranty Trust Company of New York as
its prime rate or (ii) LIBOR plus an interest rate margin based on the then
current ratings on the Company's senior unsecured long-term debt (currently
1/4 percent per annum). In addition, Materials is required to pay Lockheed
Martin a commitment fee equal to 1/8 percent per annum on the amount of the
available but unused commitment under the Revolving Credit Facility.
The Revolving Credit Facility sets forth certain negative and affirmative
covenants binding Materials. These covenants including, without limitation,
(i) a maximum ratio of funded debt to the sum of net worth plus funded debt of
55 percent; (ii) a minimum ratio of earnings (before deduction of interest
expense, income taxes, depreciation, depletion and amortization) to interest
expense and preferred dividends of 4-to-1; (iii) a prohibition (subject to
certain exceptions) on liens and sale-leaseback transactions; (iv) a
requirement of compliance with applicable laws, including ERISA and all
environmental laws; and (v) a limitation on Materials' ability to incur
liabilities under employee benefit plans. The foregoing restrictions may limit
Materials' ability to incur indebtedness, to pay dividends, or to otherwise
achieve corporate objectives.
Cash Advance Agreement
Materials and Lockheed Martin have entered into an amended agreement (as
amended, the "Cash Advance Agreement") pursuant to which excess cash balances
of the Company will be advanced to Lockheed Martin on an overnight basis, and
will bear interest at a rate per annum equal to the federal funds rate as in
effect from time to time. Cash shortfalls, up to $2 million, will be funded by
Lockheed Martin on an overnight basis, and will bear interest at a rate per
annum equal to the federal funds rate as in effect from time to time. The Cash
Advance Agreement expires on December 31, 1996, unless extended by mutual
agreement of both parties.
TRANSITION AGREEMENT
In connection with the Materials IPO, Materials and Martin Marietta entered
into an intercompany services agreement (the "Services Agreement") with
respect to the services to be provided to Materials by Martin Marietta. The
Services Agreement contemplated that Martin Marietta (and, subsequently,
Lockheed Martin as successor to Martin Marietta) would furnish to Materials a
package of services in exchange for a fee based upon a specified formula.
In connection with the Transaction, Materials and Lockheed Martin are
negotiating a Transition Agreement (the "Transition Agreement") to replace the
Services Agreement. It is expected that under the terms of the Transition
Agreement, Materials may obtain for a limited time period certain of the
services available
71
under the Services Agreement. The Transition Agreement is expected to provide
that Materials will pay Lockheed Martin a fee only for those services it
actually uses. The services available to Materials under the Transition
Agreement are expected to include: certain tax services; internal audit
services; insurance planning and advice; employee benefit plan administration
and services; treasury and cash management services; and certain other support
services.
In addition to specifying those services available to Materials subsequent
to consummation of the Transaction, the Transition Agreement is expected
generally to provide that Materials will obtain its own insurance commencing
as of the Expiration Date and that Lockheed Martin and Materials will
reimburse each other in respect of insurance claims, premiums, costs and
expenses relating to their respective businesses. The Transition Agreement
also is expected to provide for the continuation of certain insurance for the
benefit of Materials in respect of occurrences prior to the Expiration Date
and for the indemnification by Materials of Lockheed Martin in respect of
guarantees and other accommodation obligations of Lockheed Martin for the
direct or indirect benefit of Materials.
Under the terms of the Transition Agreement, Lockheed Martin and Materials
contemplate entering into certain agreements in respect of employee benefit
plans and arrangements, including the existing pension and retirement plans
available to employees of Materials and Lockheed Martin. Generally, it is
contemplated that under the terms of the Transition Agreement, the assets and
liabilities attributable to employees and former employees of Materials and
employees and former employees of Lockheed Martin will be allocated and, to
the extent required, transferred, to an appropriate Lockheed Martin or
Materials employee benefit plan. Materials will establish separate savings
plans to the extent necessary to accept a transfer of the assets and an
assumption of the liabilities relating to its employees and former employees
and has agreed to establish voluntary employee beneficiary associations to be
the successors to the voluntary employee beneficiary associations currently
maintained by Lockheed Martin that include former Materials employees.
There can be no assurance that Materials and Lockheed Martin will be able to
reach agreement on terms that are mutually satisfactory and, therefore, no
assurance can be given that Materials and Lockheed Martin will enter into an
agreement or that the terms of such agreement will be as described herein.
CORPORATE AGREEMENT
Materials and Lockheed Martin are parties to a corporate agreement (the
"Corporate Agreement") pursuant to which, among other things, (i) Materials
has granted to Lockheed Martin the right, exercisable immediately
prior to the issuance of any equity securities by Materials, to purchase
equity securities of Materials so that Lockheed Martin can maintain its
percentage ownership in Materials, (ii) under certain circumstances Materials
has a right of first refusal with respect to the disposition by Lockheed
Martin of shares of Materials Common Stock owned by it, (iii) Materials has
granted to Lockheed Martin registration rights with respect to the Materials
Common Stock held by it and (iv) the parties have provided for certain
corporate governance matters, including the inclusion on the Materials Board
of directors who are independent within the meaning of the NYSE rules.
Materials has agreed not to exercise its right of first refusal with respect
to the Transaction. Upon consummation of the Transaction, the Corporate
Agreement will terminate, except that the obligations of Materials and
Lockheed Martin to indemnify each other for certain liabilities in connection
with the Registration Statement will continue.
OTHER
Neither Lockheed Martin, nor any subsidiary of Lockheed Martin, nor, to
Lockheed Martin's knowledge, any of Lockheed Martin's executive officers or
directors or associates of any of the foregoing, has engaged in any
transaction involving shares of Lockheed Martin Common Stock during the period
of forty business days prior to the date hereof except for the following
transactions by certain executive officers of Lockheed Martin:
72
DATE OF NO. OF DESCRIPTION OF
NAME & TITLE OF OFFICER ACTIVITY SHARES TRANSACTION PRICE PER SHARE
----------------------- --------------- ------ ---------------------------- ----------------
Minoru S. Araki August 16, 1996 13,692 Open market sale of shares 12,000 @ $87.497
Vice President of Lockheed acquired via stock option 1,692 @ $88.869
Martin exercise of same date
Norman R. Augustine July 29, 1996 5,497 Shares surrendered in $61.875
Vice Chairman and Chief payment of tax obligation on
Executive Officer of restricted stock award
Lockheed Martin
Marcus C. Bennett July 26 , 1996 2,462 Shares surrendered in $81.750
Executive Vice President payment of tax obligation on
and Chief Financial restricted stock award
Officer of Lockheed Martin
James W. McAnally July 25, 1996 1,963 Shares surrendered in $80.625
Vice President of Lockheed payment of tax obligation on
Martin restricted stock award
Frank H. Menaker, Jr. July 31, 1996 1,712 Shares surrendered in $82.250
Senior Vice President and payment of tax obligation on
General Counsel of restricted stock award
Lockheed Martin
Robert E. Rulon August 12, 1996 18,908 Open market sale of shares $85.194
Vice President of Lockheed acquired via stock option
Martin exercise of same date
Peter B. Teets July 25, 1996 2,995 Shares surrendered in $80.625
Vice President of Lockheed payment of tax obligation on
Martin restricted stock award
August 14, 1996 2,383 Shares surrendered in $85.375
payment of tax obligation on
stock option exercise
(10,000 exercised)
August 15, 1996 7,617 Open market sale of shares $86.042
acquired via stock option
exercise of August 14, 1996
As of August 31, 1996, directors, executive officers and affiliates of
Lockheed Martin owned 477,625.828 shares of Lockheed Martin Common Stock
(0.239% of the outstanding shares of Lockheed Martin Common Stock) and have
indicated to Lockheed Martin that they do not intend to tender their
respective shares of Lockheed Martin Common Stock pursuant to the Exchange
Offer.
Certain Materials employees have stock options granted pursuant to the
Martin Marietta 1984 Stock Option Plan for Key Employees (with stock
appreciation rights) and Martin Marietta Corporation Amended Omnibus
Securities Award Plan. Following the consummation of the Transaction,
Materials will no longer qualify as an affiliate of Lockheed Martin and
Lockheed Martin stock options held by Materials employees will therefore
expire, in accordance with their terms, 90 days following the consummation of
the Transaction. However, Lockheed Martin's management intends to recommend to
the Lockheed Martin Board of Directors that the expiration period for Lockheed
Martin stock options for such employees be extended from 90 days to one year
following the consummation of the Transaction. Thus, if Lockheed Martin's
Board of Directors accepts this recommendation, Materials employees holding
vested Lockheed Martin stock options at the time of the Transaction will have
one year following the consummation of the Transaction to exercise stock
options granted under Lockheed Martin's plans.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material United States federal income tax
consequences relating to the Transaction. The discussion contained in this
Offering Circular-Prospectus is based upon the Code, the regulations
promulgated thereunder by the United States Treasury Department, and
interpretations of the Code and regulations by the courts and the IRS, all as
they exist and are in effect as of the date of this Offering Circular-
Prospectus and all of which are subject to change at any time. Any such
change, which may or may not be retroactive, could alter the tax consequences
to Lockheed Martin or its stockholders as described herein.
Section 355 of the Code permits the distribution of stock of a controlled
corporation on a tax-free basis with respect to both the distributing
corporation and its stockholders, provided that certain requirements are
satisfied. Among these are requirements that after the distribution both the
distributing corporation and the
73
controlled corporation must be engaged in the active conduct of a qualifying
trade or business, that the distribution must not be used principally as a
device for the distribution of earnings and profits of the distributing
corporation or the controlled corporation, and that persons who are
stockholders of the distributing corporation prior to the distribution, as a
group, must have a continuing ownership interest in both the distributing
corporation and the controlled corporation following the distribution. In
addition, regulations promulgated under Section 355 of the Code require that
the distribution be motivated in whole or in substantial part by a real and
substantial purpose (other than the reduction of federal income taxes) that is
germane to the business of the distributing corporation, the controlled
corporation or the affiliated group of corporations to which the distributing
corporation belongs.
Even if the foregoing requirements of Section 355 of the Code are satisfied,
a tax to the distributing corporation would result if any person, as defined
under broad attribution rules, or group of persons acting pursuant to a plan
or arrangement within the meaning of Section 355(d) of the Code, holds a 50%
or greater interest in either the distributing corporation's stock or the
controlled corporation's stock immediately after the distribution that is (i)
acquired by purchase within the five years immediately preceding the date of
the distribution or (ii) received in the distribution in respect of stock of
the distributing corporation acquired by purchase within the five years
immediately preceding the date of the distribution.
King & Spalding, special tax counsel to Lockheed Martin, has issued the
Opinion stating its opinion that the Transaction will qualify under Section
355 of the Code and that, accordingly, the following federal income tax
consequences will result from the Transaction:
1. No gain or loss will be recognized by, and no amount will be included
in the income of, the Lockheed Martin stockholders upon their receipt of
shares of Materials Common Stock (including any fractional shares of
Materials Common Stock distributed to the Exchange Agent) in the
Transaction.
2. For Lockheed Martin stockholders who surrender all of their Lockheed
Martin Common Stock in the Exchange Offer, each such stockholder's
aggregate tax basis in the Materials Common Stock (including any fractional
share) received will be the same as the aggregate tax basis of the shares
of Lockheed Martin Common Stock exchanged. For Lockheed Martin stockholders
who do not surrender all of their Lockheed Martin Common Stock in the
Exchange Offer, each such stockholder's aggregate tax basis in the Lockheed
Martin Common Stock held before consummation of the Transaction will be
allocated between the Lockheed Martin Common Stock and the Materials Common
Stock (including any fractional share) held by such stockholder after the
Transaction in proportion to their relative fair market values on the date
of the Transaction.
3. The holding period of the shares of Materials Common Stock (including
any fractional share) received by a Lockheed Martin stockholder in the
Transaction will include the holding period of the shares of Lockheed
Martin Common Stock with respect to which the shares of Materials Common
Stock were received, provided that the shares of Lockheed Martin Common
Stock are held as a capital asset on the date of the Transaction.
4. If cash is received by a Lockheed Martin stockholder as a result of
the sale of a fractional share of Materials Common Stock by the Exchange
Agent, such Lockheed Martin stockholder will be treated as having received
such fractional share of Materials Common Stock and thereafter having sold
such fractional share for the amount of cash received. Accordingly, a
Lockheed Martin stockholder who receives cash in lieu of a fractional share
will recognize gain or loss in an amount equal to the difference between
the amount of cash received for the fractional share and the tax basis
allocable to such fractional share. Such gain or loss will be a capital
gain or loss if such fractional share was held by such stockholder as a
capital asset on the date of the sale by the Exchange Agent.
5. Excluding gain taken into account under the consolidated return
regulations as a result of Materials' ceasing to be a member of the
Lockheed Martin consolidated group, no gain or loss will be recognized by
Lockheed Martin or Materials as a result of the Transaction.
74
The Opinion is based upon current law which is subject to change at any time
and represents the best judgment of counsel. The Opinion is not binding on the
IRS, and no ruling from the IRS has been or will be requested in connection
with the Transaction. The Opinion is subject to certain representations by
Lockheed Martin and Materials as to the existence of numerous material facts
and circumstances, as well as certain assumptions. If such representations or
assumptions are incorrect or untrue in any material respect, the ability to
rely on the Opinion would be jeopardized.
Treasury Regulations promulgated under Section 355 of the Code require that
each Lockheed Martin stockholder who receives Materials Common Stock pursuant
to the Transaction attach a statement to the federal income tax return filed
by such stockholder for the taxable year in which the Transaction is
consummated, which statement shows the applicability of Section 355 of the
Code to the Transaction. Lockheed Martin will provide each Lockheed Martin
stockholder with the information necessary to comply with this requirement.
On March 19, 1996, President Clinton submitted to Congress a proposed budget
for 1997 that included a proposal which would amend Section 355(d) of the
Code. Under the Administration's budget proposal, the distributing corporation
in a distribution qualifying under Section 355 of the Code would recognize
gain on the distribution of the stock of the controlled corporation if
stockholders of the distributing corporation, as a group, do not retain a
sufficient stock interest (generally 50%) in the distributing and controlled
corporations during the four-year period commencing two years prior to the
distribution. In determining whether stockholders retain a sufficient stock
interest in both corporations, any acquisition or disposition that is not
related to the distribution (which generally includes public trading) will be
disregarded. The Administration's proposal would be effective generally for
distributions occurring after the date of announcement of the proposal.
However, House Ways and Means Committee Chairman Archer and Senate Finance
Committee Chairman Roth have stated that the Administration's proposal would,
if enacted, have an effective date not earlier than the date of appropriate
committee action, which, as of the date of this Offering Circular-Prospectus,
has not occurred. If enacted as proposed, such legislation could adversely
affect the Transaction. Due to certain conditions of the Exchange Offer,
however, the likelihood that the Administration's proposal would apply to the
Transaction appears remote even if it were enacted with retroactive
application.
If the Transaction does not qualify under Section 355 of the Code, those
Lockheed Martin stockholders experiencing a reduction in their percentage
interest in Lockheed Martin as a result of the Exchange Offer would recognize
gain or loss with respect to their shares of Lockheed Martin Common Stock
surrendered in the Exchange Offer, while other Lockheed Martin stockholders
would recognize dividend income in an amount equal to the fair market value of
the Materials Common Stock received in the Exchange Offer. All Lockheed Martin
stockholders remaining after consummation of the Exchange Offer would
recognize dividend income with respect to Materials Common Stock received in
the Spin-Off. Furthermore, if the Transaction does not qualify under Section
355 of the Code, Lockheed Martin will recognize gain as if the Materials
Common Stock had been sold on the date of the Transaction for its then fair
market value.
THE SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES SET FORTH ABOVE IS FOR
GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE TO STOCKHOLDERS WHO
RECEIVED THEIR LOCKHEED MARTIN COMMON STOCK THROUGH THE EXERCISE OF EMPLOYEE
STOCK OPTIONS OR OTHERWISE AS COMPENSATION, WHO ARE NOT CITIZENS OR RESIDENTS
OF THE UNITED STATES, OR WHO ARE OTHERWISE SUBJECT TO SPECIAL TREATMENT UNDER
THE CODE. THIS SUMMARY DOES NOT ADDRESS ANY STATE, LOCAL, OR FOREIGN TAX
CONSEQUENCES. LOCKHEED MARTIN STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS REGARDING THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE TRANSACTION,
INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL, AND FOREIGN LAWS, THE
TAX BASIS AND HOLDING PERIOD CONSEQUENCES TO STOCKHOLDERS WHO OWN TWO OR MORE
BLOCKS OF LOCKHEED MARTIN COMMON STOCK THAT WERE ACQUIRED AT DIFFERENT TIMES
OR PRICES, AND ANY CHANGES IN FEDERAL TAX LAWS THAT OCCUR AFTER THE DATE OF
THIS OFFERING CIRCULAR-PROSPECTUS.
75
For a description of the agreement pursuant to which Lockheed Martin and
Materials have provided for various tax matters, see "Relationship Between
Materials and Lockheed Martin-The Tax Sharing, Supplemental Tax Sharing and
Tax Assurance Agreements."
LEGAL MATTERS
Certain legal matters will be passed upon for Lockheed Martin by Dewey
Ballantine, 1301 Avenue of the Americas, New York, New York 10019-6092.
Certain legal matters relating to Materials Common Stock being offered hereby
will be passed upon for Materials by Willkie Farr & Gallagher, One Citicorp
Center, 153 East 53rd Street, New York, New York 10022 and Robinson, Bradshaw
& Hinson, P.A., 101 North Tryon Street, Suite 1900, Charlotte, North Carolina
28246. Certain legal matters relating to tax implications of the Transaction
will be passed upon for Lockheed Martin by King & Spalding, Suite 1100, 1730
Pennsylvania Avenue N.W., Washington, DC 20006.
EXPERTS
The consolidated financial statements of Lockheed Martin incorporated by
reference in Lockheed Martin's Annual Report on Form 10-K for the year ended
December 31, 1995, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and
incorporated in this Offering Circular-Prospectus by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon the report of Ernst & Young LLP given upon the authority of such
firm as experts in accounting and auditing.
The consolidated financial statements of Materials incorporated by reference
in Material's Annual Report on Form 10-K for the year ended December 31, 1995,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon included therein and incorporated in this Offering
Circular-Prospectus by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon the report of Ernst & Young
LLP given upon the authority of such firm as experts in accounting and
auditing.
The financial statements of the Dravo Basic Materials Company, Inc. and
subsidiaries incorporated by reference in this Offering Circular-Prospectus
have been audited by KPMG Peat Marwick LLP, independent auditors, as indicated
in their reports, which are incorporated herein by reference, and have been so
incorporated herein in reliance upon the authority of said firm as experts in
auditing and accounting. The reports of KPMG Peat Marwick LLP refer to
prescribed changes in the methods of accounting for postretirement benefits
other than pensions and income taxes in 1993 and in the method of accounting
for postemployment benefits in 1994.
The consolidated balance sheets of Loral Corporation and Subsidiaries--
Retained Business as of March 31, 1996 and 1995 and the related consolidated
statements of operations, changes in net assets and cash flows for each of the
three years in the period ended March 31, 1996, included in Lockheed Martin's
Current Report on Form 8-K filed with the Commission on June 18, 1996, which
are incorporated by reference in this Registration Statement and Offering
Circular-Prospectus, have been incorporated herein by reference in reliance
upon the report of Coopers & Lybrand L.L.P., independent auditors, given upon
the authority of that firm as experts in accounting and auditing.
76
A Letter of Transmittal, certificates for shares of Lockheed Martin Common
Stock and any other required documents should be sent by each holder of
Lockheed Martin Common Stock or his or her broker, dealer, commercial bank,
trust company or other nominee to the Exchange Agent as follows:
The Exchange Agent is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Mail: By Facsimile By Hand or Overnight
Transmission: Courier:
P.O. BOX 2569 (201) 222-4720 14 WALL STREET, 8TH
TENDERS & EXCHANGES OR FLOOR
SUITE 4660 (201) 222-4721 SUITE 4680-LMC
JERSEY CITY, NEW JERSEY NEW YORK, NEW YORK 10005
07303-2569
Confirm Receipt of Notice of Guaranteed Delivery By Telephone:
(201) 222-4707
----------------
- --------------------------------------------------------------------------------
ANY QUESTIONS OR REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES OF THE OFFERING
CIRCULAR-PROSPECTUS AND THE LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE
INFORMATION AGENT OR THE DEALER MANAGER AT THEIR RESPECTIVE TELEPHONE NUMBERS
AND LOCATIONS LISTED BELOW. YOU MAY ALSO CONTACT YOUR BROKER, DEALER,
COMMERCIAL BANK OR TRUST COMPANY FOR ASSISTANCE CONCERNING THE EXCHANGE
OFFER.
- --------------------------------------------------------------------------------
The Information Agent for the Exchange Offer is:
MORROW & CO., INC.
909 THIRD AVENUE, 20TH FLOOR
NEW YORK, NEW YORK 10022
(212) 754-8000
TOLL FREE (800) 566-9058
BANKS AND BROKERAGE FIRMS, PLEASE CALL:
(800) 662-5200
The Dealer Manager for the Exchange Offer is:
MORGAN STANLEY & CO.
Incorporated
1585 BROADWAY
NEW YORK, NEW YORK 10036
(212) 761-7486
[LOCKHEED MARTIN LETTERHEAD]
September 16, 1996
Dear Stockholder:
I am pleased to inform you that Lockheed Martin Corporation ("Lockheed
Martin") is commencing an Exchange Offer through which it is offering its
stockholders an opportunity to exchange current holdings of Lockheed Martin
Common Stock for shares of Martin Marietta Materials, Inc. ("Materials") Common
Stock. As further described in the enclosed documents, an exchange ratio of
4.72 shares of Materials Common Stock for each share of Lockheed Martin Common
Stock tendered has been established for this Exchange Offer, up to an aggregate
of 7,913,316 shares of Lockheed Martin Common Stock. The Exchange Offer will
provide Lockheed Martin's stockholders with an opportunity to adjust, on a tax-
free basis, their investment between Lockheed Martin's advanced technology
business and Materials' aggregates and magnesia business.
The Exchange Offer will expire, unless extended by Lockheed Martin, at 12:00
Midnight, New York City time, on October 18, 1996. The terms and conditions of
the Exchange Offer are contained in the enclosed Offering--Circular Prospectus.
The documents also contain information relating to the business and management
of Materials, information regarding the adjustments to tax basis resulting from
exchanging shares of Lockheed Martin Common Stock for shares of Materials
Common Stock and other information that will assist you in considering the
Exchange Offer. You should read these documents carefully before deciding
whether to tender your shares of Lockheed Martin Common Stock in exchange for
shares of Materials Common Stock.
You also should read the enclosed Letter of Transmittal carefully, as it
explains in detail the proper procedure for tendering shares of Lockheed Martin
Common Stock. Neither Lockheed Martin or the Board of Directors of Lockheed
Martin nor Materials or the Board of Directors of Materials makes any
recommendation as to whether to participate in the Exchange Offer. Each
stockholder must make his or her own decision as to whether to tender such
shares and, if so, how many shares to tender.
If fewer than 7,913,136 shares of Lockheed Martin Common Stock are tendered
and the Exchange Offer is consummated, Lockheed Martin will distribute the
remaining shares of Materials Common Stock owned by Lockheed Martin on a pro
rata basis to all holders of record of Lockheed Martin Common Stock as of a
date following the expiration of the Exchange Offer. If more than 7,913,136
shares of Lockheed Martin Common Stock are tendered and the Exchange Offer is
consummated, proration will occur and tendering stockholders, except those who
qualify under the special provision for odd-lot holders, will have less than
all the shares they tender accepted for exchange in the Exchange Offer.
Lockheed Martin has retained the services of Morrow & Co., Inc. as
Information Agent to assist stockholders in connection with the Exchange Offer.
Requests for additional documents, questions regarding the terms and conditions
of the Exchange Offer, and information on tendering shares should be directed
to Morrow & Co., Inc. at the following toll free number: (800) 566-9058.
Sincerely,
Daniel M. Tellep Norman R. Augustine
Chairman Vice Chairman and Chief Executive
Officer
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, OCTOBER 18, 1996, UNLESS OTHERWISE EXTENDED
- --------------------------------------------------------------------------------
LOCKHEED MARTIN CORPORATION
LETTER OF TRANSMITTAL
FOR SHARES OF COMMON STOCK,
PAR VALUE $1.00 PER SHARE,
OF LOCKHEED MARTIN CORPORATION
TO: FIRST CHICAGO TRUST COMPANY OF NEW YORK, EXCHANGE AGENT
By Mail: By Facsimile Transmission: By Hand or Overnight
Courier:
P.O. Box 2569 (201) 222-4720 14 Wall Street, 8th Floor
Tenders & Exchanges or Suite 4680-LMC
Suite 4660 (201) 222-4721 New York, New York 10005
THE INFORMATION AGENT FOR THE EXCHANGE OFFER IS:
MORROW & CO., INC.
909 Third Avenue, 20th Floor
New York, New York 10022
(212) 754-8000
Toll Free (800) 566-9058
Banks and Brokerage Firms, please call:
(800) 662-5200
List below the certificate(s) representing shares of Lockheed Martin Common
Stock that you wish to tender. If the space provided below is inadequate, the
certificate and number of shares represented thereby should be listed on a
separate signed schedule affixed hereto. The following section should not be
completed by holders tendering by book-entry transfer.
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES OF LOCKHEED MARTIN COMMON STOCK TENDERED
- --------------------------------------------------------------------------------
NAME(S) AND
ADDRESS(ES) TOTAL NUMBER NUMBER OF
OF OF SHARES OF SHARES OF
REGISTERED LOCKHEED LOCKHEED
HOLDER(S)(1) MARTIN MARTIN
(PLEASE FILL COMMON STOCK COMMON
IN, IF CERTIFICATE REPRESENTED BY STOCK
BLANK) NUMBER(S) CERTIFICATE(S) TENDERED(2)
- ----------------------------------------------------------------
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
TOTAL
-----------------------------------------------
(1) If the name or address shown in this box is
incorrect, cross out the incorrect information
and insert the correct information in this box.
(2) Unless otherwise indicated in the last column,
and subject to the terms and conditions of the
Offering Circular--Prospectus, you will be deemed
to have tendered all the shares of Lockheed Martin
Common Stock represented by the certificate(s)
listed. See Instruction 2.
- ----------------------------------------------------------------
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE CHECKING ANY BOX BELOW
The undersigned acknowledges receipt of the Offering Circular--Prospectus
dated September 16, 1996 (the "Offering Circular--Prospectus") of Lockheed
Martin Corporation, a Maryland corporation ("Lockheed Martin"), and this
Letter of Transmittal, which together constitute Lockheed Martin's offer (the
"Exchange Offer") to exchange 4.72 shares of common stock, par value $.01 per
share, of Martin Marietta Materials, Inc. ("Materials Common Stock"), a North
Carolina corporation ("Materials"), for each share tendered of common stock,
par value $1.00 per share, of Lockheed Martin ("Lockheed Martin Common Stock")
up to an aggregate of 7,913,136 shares of Lockheed Martin Common Stock
tendered and exchanged.
Capitalized terms used but not defined herein have the meanings given to
them in the Offering Circular--Prospectus.
The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with
respect to the Exchange Offer.
TO BE COMPLETED BY ALL TENDERING HOLDERS OF CERTIFICATED SHARES OF
LOCKHEED MARTIN COMMON STOCK REGARDLESS OF WHETHER SUCH
SHARES ARE BEING PHYSICALLY DELIVERED HEREWITH
DELIVERY OF THIS LETTER OF TRANSMITTAL TO A PERSON OTHER THAN THE
EXCHANGE AGENT OR TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE VALID DELIVERY
- --------------------------------------------------------------------------------
DO NOT COMPLETE OR RETURN THIS LETTER OF TRANSMITTAL IF YOUR SHARES ARE
HELD IN AN ACCOUNT WITH A BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY,
EMPLOYEE BENEFIT PLAN SPONSORED BY LOCKHEED MARTIN (OR A SUBSIDIARY) OR
OTHER NOMINEE AND ARE NOT CERTIFICATED IN YOUR NAME. THIS LETTER OF
TRANSMITTAL IS BEING SUPPLIED FOR YOUR INFORMATION ONLY. THE INSTITUTION
HOLDING YOUR SHARES WILL SUPPLY YOU WITH SEPARATE INSTRUCTIONS REGARDING
THE TENDER OF YOUR SHARES.
- --------------------------------------------------------------------------------
This Letter of Transmittal is to be used if (i) certificate(s) representing
shares of Lockheed Martin Common Stock are to be forwarded herewith, (ii)
tenders are to be made by book-entry transfer to the account maintained by the
Exchange Agent at The Depository Trust Company ("DTC"), unless an Agent's
Message is utilized, or (iii) guaranteed delivery procedures are being used,
according to the procedures set forth in the Offering Circular--Prospectus
under "The Exchange Offer--Guaranteed Delivery Procedures." Delivery of
documents to DTC does not constitute delivery to the Exchange Agent.
Your broker can assist you in completing this form. The instructions
included with this Letter of Transmittal must be followed. Questions and
requests for assistance or for additional copies of the Offering Circular--
Prospectus, this Letter of Transmittal and the Notice of Guaranteed Delivery
may be directed to Morrow & Co., Inc. (the "Information Agent") at (800) 566-
9058. See Instruction 12.
I. TENDER OF CERTIFICATED SHARES ISSUED IN YOUR NAME.
Holders of shares of Lockheed Martin Common Stock ("Stockholders") tendering
shares of Lockheed Martin Common Stock pursuant to this Section I must also
complete Sections V and VI.A. herein.
A. CERTIFICATED SHARES--Complete this Section I.A. if you wish to tender
certificated shares issued in your name.
- --------------------------------------------------------------------------------
THE UNDERSIGNED, BY COMPLETING THIS SECTION I.A. AND SECTION VI.A., SIGNING
THIS LETTER OF TRANSMITTAL AND DELIVERING THIS LETTER OF TRANSMITTAL AND
THE CERTIFICATE(S) FOR LOCKHEED MARTIN COMMON STOCK TO THE EXCHANGE AGENT,
WILL BE DEEMED TO HAVE TENDERED THE SHARES OF LOCKHEED MARTIN COMMON STOCK
INDICATED BELOW.
- --------------------------------------------------------------------------------
2
Stockholders who wish to tender and whose shares of Lockheed Martin Common
Stock are not immediately available or who cannot deliver their shares of
Lockheed Martin Common Stock and all other documents required hereby to the
Exchange Agent on or before the Expiration Date must tender shares of Lockheed
Martin Common Stock according to the guaranteed delivery procedures set forth
in the Offering Circular--Prospectus under the caption "The Exchange Offer--
Guaranteed Delivery Procedures." See Instruction 1.
[_] CHECK HERE IF THE CERTIFICATE(S) REPRESENTING TENDERED SHARES OF LOCKHEED
MARTIN COMMON STOCK ARE ENCLOSED HEREWITH.
[_] CHECK HERE IF TENDERED SHARES OF LOCKHEED MARTIN COMMON STOCK ARE BEING
DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s):
-------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
------------------------
Name of Institution that guaranteed delivery:
------------------------------
- -------------------------------------------------------------------------------
B. DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN SHARES. Complete this
Section I.B. if you wish to tender shares held in the Dividend
Reinvestment and Stock Purchase Plan.
- --------------------------------------------------------------------------------
THE UNDERSIGNED, BY COMPLETING THIS SECTION I.B. AND SIGNING AND DELIVERING
THIS LETTER OF TRANSMITTAL TO THE EXCHANGE AGENT, WILL BE DEEMED TO HAVE
TENDERED THE SHARES OF LOCKHEED MARTIN COMMON STOCK INDICATED BELOW.
- --------------------------------------------------------------------------------
[_] CHECK HERE IF YOU ARE A PARTICIPANT IN LOCKHEED MARTIN'S DIVIDEND
REINVESTMENT AND STOCK PURCHASE PLAN (THE "DRP") AND WISH TO TENDER SHARES
OF LOCKHEED MARTIN COMMON STOCK HELD IN YOUR ACCOUNT UNDER THE DRP ("DRP
SHARES") AND COMPLETE THE FOLLOWING:
[_] Tender all DRP Shares; or
[_] Number of whole shares tendered from DRP (if less than all):
.
--------------------------------
A tender of all DRP Shares will include fractional shares and any shares
credited to the participant's account after the date hereof and prior to
the Expiration Date.
IF THE PARTICIPANT AUTHORIZES THE TENDER OF HIS OR HER DRP SHARES, BUT DOES
NOT INDICATE THE NUMBER OF SHARES TO BE TENDERED, THE PARTICIPANT WILL BE
DEEMED TO HAVE TENDERED ALL DRP SHARES OWNED BY SUCH PARTICIPANT, PURSUANT TO
THE DRP. SEE INSTRUCTION 5.
- -------------------------------------------------------------------------------
C. ODD LOT SHARES--Complete this Section I.C. if you hold fewer than 100
shares and wish to tender all such shares.
[_] CHECK HERE IF (i) YOU ARE THE OWNER BENEFICIALLY AND OF RECORD OF LESS THAN
100 SHARES OF LOCKHEED MARTIN COMMON STOCK IN THE AGGREGATE AND (ii) YOU
WISH TO TENDER ALL YOUR SHARES OF LOCKHEED MARTIN COMMON STOCK.
If you are the owner, beneficially and of record, of less than 100 shares
of Lockheed Martin Common Stock (an "Odd Lot") and you tender all your
shares, you will receive preferential treatment if the Exchange Offer is
oversubscribed. See Instruction 8.
3
II. TENDER OF SHARES HELD BY A BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY,
EMPLOYEE BENEFIT PLAN SPONSORED BY LOCKHEED MARTIN (OR A SUBSIDIARY) OR
OTHER NOMINEE.
If your shares of Lockheed Martin Common Stock are held in an account with a
broker, dealer, commercial bank, trust company, employee benefit plans
sponsored by Lockheed Martin (or a subsidiary) or other nominee and you wish
to tender all or part of those shares, do not return this Letter of
Transmittal to the Exchange Agent. This Letter of Transmittal is being
supplied for your information only. The institution holding your shares will
supply you with separate instructions regarding the tender of your shares. If
you have not received instructions regarding the tender of your shares, please
contact a representative of the institution holding your shares.
- --------------------------------------------------------------------------------
ONLY BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES, TRUSTEES OF
EMPLOYEE BENEFIT PLANS SPONSORED BY LOCKHEED MARTIN (OR A SUBSIDIARY) AND
OTHER NOMINEES SHOULD COMPLETE THIS SECTION II.
- --------------------------------------------------------------------------------
A. BOOK-ENTRY TRANSFER SHARES--Complete this Section II.A. if you wish to
tender shares held by DTC.
[_] CHECK HERE IF TENDERED SHARES OF LOCKHEED COMMON STOCK ARE BEING DELIVERED
BY BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT
WITH DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
-------------------------------------------
DTC Account Number:
------------------------------------------------------
Transaction Code Number:
-------------------------------------------------
[_] CHECK HERE IF TENDERED SHARES OF LOCKHEED MARTIN COMMON STOCK ARE BEING
DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE
FOLLOWING:
Date of Execution of Notice of Guaranteed Delivery:
----------------------
Name of Institution that guaranteed delivery:
----------------------------
- ------------------------------------------------------------------------------
B. ODD LOT SHARES--Complete this Section II.B. if you wish to tender on
behalf of an owner of an Odd Lot.
[_] CHECK HERE IF (i) YOU ARE TENDERING ON BEHALF OF THE OWNER BENEFICIALLY AND
OF RECORD OF AN ODD LOT, (ii) YOU BELIEVE, BASED UPON REPRESENTATIONS MADE
TO YOU BY SUCH OWNER, THAT SUCH OWNER OWNED BENEFICIALLY AND OF RECORD LESS
THAN 100 SHARES OF LOCKHEED MARTIN COMMON STOCK IN THE AGGREGATE AND (iii)
SUCH OWNER WISHES TO TENDER ALL HIS OR HER SHARES OF LOCKHEED MARTIN COMMON
STOCK.
Owners of Odd Lots who tender all such shares of Lockheed Martin Common
Stock will receive preferential treatment if the Exchange Offer is
oversubscribed. See Instruction 8.
4
III. SPECIAL ISSUANCE INSTRUCTIONS--To be completed only if shares of Materials
Common Stock, a Fractional Share Check and/or shares of Lockheed Martin
Common Stock tendered but not accepted for exchange are to be issued in
the name of someone other than the Stockholder tendering shares of
Lockheed Martin Common Stock.
Note: If this Section is completed, the signature in Section V must be
guaranteed by an Eligible Institution. See Instruction 3.
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if Materi-
als Common Stock Certificate(s),
a Fractional Share Check issued
in connection therewith, if any,
and shares of Lockheed Martin
Common Stock not accepted for ex-
change, if any, are to be ISSUED
in the name of someone other than
the undersigned.
Issue:
check appropriate box(es):
[_] all of the following to:
[_] Materials Certificate(s):
[_] Fractional Share Check:
[_ ] Lockheed Martin Common Stock
Certificate(s):
Name(s):
-------------------------
(PLEASE PRINT)
----------------------------------
(PLEASE PRINT)
Address:
-------------------------
----------------------------------
ZIP CODE
----------------------------------
EMPLOYER IDENTIFICATION OR SOCIAL
SECURITY NO.
5
IV. SPECIAL DELIVERY INSTRUCTIONS--To be completed only if shares of Materials
Common Stock, a Fractional Share Check and/or shares of Lockheed Martin
Common Stock are to be mailed to an address other than that shown in the
box entitled "Description of Shares of Lockheed Martin Common Stock
Tendered" or in Section III above.
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if Materi-
als Certificate(s), a Fractional
Share Check issued in connection
therewith, if any, and/or shares
of Lockheed Martin Common Stock
not tendered or any shares of
Lockheed Martin Common Stock ten-
dered but not accepted for ex-
change, if any, are to be MAILED
to someone other than the under-
signed, or to the undersigned at
an address other than that shown
in the box entitled "Description
of Shares of Lockheed Martin Com-
mon Stock Tendered" or in Section
III above, as applicable.
Mail:
check appropriate box(es):
[_] Materials Common Stock
Certificate(s) to:
[_] Fractional Share Check to:
Lockheed Martin Common Stock
Certificate(s):
[_] Not Tendered to:
[_] Not Accepted to:
Name(s):
-------------------------
(PLEASE PRINT)
----------------------------------
(PLEASE PRINT)
Address:
-------------------------
----------------------------------
ZIP CODE
6
V. SIGNATURE--To be completed by all Stockholders who are tendering shares of
Lockheed Martin Common Stock and who completed Sections I.A., I.B. or I.C.
Note: SIGNATURES MUST BE PROVIDED BELOW
IMPORTANT
ALL TENDERING STOCKHOLDERS PLEASE SIGN HERE
(PLEASE ALSO COMPLETE THE FOLLOWING SUBSTITUTE FORM W-9)
(SEE INSTRUCTIONS 1 AND 3)
X...........................................................................
X...........................................................................
SIGNATURE(S) OF OWNER(S)
Dated:.........................., 1996
(Must be signed by the registered holder(s) of shares of Lockheed Martin
Common Stock as their name(s) appear(s) on certificate(s) for shares of
Lockheed Martin Common Stock or on a security position listing or by
person(s) authorized to become registered holder(s) by endorsements and
documents transmitted with this Letter of Transmittal.)
If signature is by a trustee, executor, administrator, guardian, attorney-
in-fact, officer or other person acting in a fiduciary or representative
capacity, please set forth full title. (See Instruction 3.)
Name(s):....................................................................
....................................................................
(PLEASE PRINT)
Capacity:...................................................................
Address:....................................................................
....................................................................
(INCLUDE ZIP CODE)
Area Code and Telephone No.: ....................
Dated: ........................., 1996
SIGNATURE GUARANTEE
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 3)
FOR USE BY ELIGIBLE INSTITUTIONS ONLY.
PLACE MEDALLION GUARANTEE IN SPACE BELOW.
Signature(s) Guaranteed by an Eligible Institution:.........................
(AUTHORIZED SIGNATURE)
Name:.......................................................................
(PLEASE PRINT)
Title:......................................................................
Name of
Firm:.......................................................................
Address:....................................................................
(INCLUDE ZIP CODE)
Area Code and Telephone No.:.....................
Date: .........................., 1996
7
All tendering Stockholders must complete the Substitute Form W-9 below. If a
person other than the tendering Stockholder has been named in Section III,
such other person, rather than the person tendering the shares of Lockheed
Martin Common Stock, must complete the following Substitute Form W-9. See
Instruction 6 and the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.
PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
SUBSTITUTE PAYER'S REQUEST FOR TAXPAYER IDENTIFICATION NUMBER
FORM W-9 AND CERTIFICATION
PLEASE PROVIDE YOUR
TAXPAYER IDENTIFICATION ----------------------
NUMBER IN THE BOX AT RIGHT (SOCIAL SECURITY NO.
AND CERTIFY BY SIGNING AND EMPLOYER
DATING BELOW IDENTIFICATION NO.)
--------------------------------------------------------
DEPARTMENT OF THE PLEASE CHECK THE BOX AT RIGHT IF YOU HAVE APPLIED FOR
TREASURY INTERNAL AND ARE AWAITING RECEIPT OF YOUR TAXPAYER
REVENUE SERVICE IDENTIFICATION NUMBER [_]
--------------------------------------------------------
PAYER'S REQUEST FOR CERTIFICATION--Under penalties of perjury, I certify
TAXPAYER that:
IDENTIFICATION NUMBER (1) The number shown on this form is my correct
AND CERTIFICATION FOR Taxpayer Identification Number (or I am waiting
PAYEES EXEMPT FROM for a Taxpayer Identification number to be issued
BACKUP WITHHOLDING to me), and
(SEE GUIDELINES FOR (2) I am not subject to backup withholding either
CERTIFICATION OF because I have not been notified by the Internal
TAXPAYER Revenue Service ("IRS") that I am subject to
IDENTIFICATION NUMBER backup withholding as a result of a failure to
ON SUBSTITUTE FORM W- report all interest or dividends, or the IRS has
9) notified me that I am no longer subject to backup
withholding.
You must cross out item (2) above if you have been
notified by the IRS you are subject to backup
withholding because of underreporting interest or
dividends on your tax return. However, if after being
notified by the IRS that you were subject to backup
withholding you received another notification from
the IRS that you are no longer subject to backup
withholding, do not cross out item (2).
PRINT YOUR NAME:
-------------------------------------
ADDRESS:
---------------------------------------------
SIGNATURE: DATE:
-------------------------------- ----
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY
RESULT IN BACKUP WITHHOLDING OF 31% ON ANY DIVIDENDS
OR OTHER TAXABLE PAYMENTS MADE TO YOU PURSUANT TO THE
EXCHANGE OFFER. FOR ADDITIONAL DETAILS, PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9.
IF YOU CHECKED THE ABOVE BOX OF THIS SUBSTITUTE FORM
W-9 INDICATING THAT YOU ARE AWAITING RECEIPT OF YOUR
TAXPAYER IDENTIFICATION NUMBER, YOU MUST SIGN AND
DATE THE FOLLOWING CERTIFICATION.
CERTIFICATION OF PAYEE AWAITING TAXPAYER
IDENTIFICATION NUMBER
I certify under penalties of perjury, that a Taxpayer
Identification Number has not been issued to me, and
that I mailed or delivered an application to receive
a Taxpayer Identification Number to the appropriate
IRS Center or Social Security Administration Office
(or I intend to mail or deliver an application in the
near future). I understand that if I do not provide a
Taxpayer Identification Number within 60 days, 31% of
all reportable payments made to me thereafter will be
withheld until I provide a number.
SIGNATURE:
-------------------------------------------
DATE:
------------------------------------------------
8
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE HEREOF
(TOGETHER WITH SHARES OF LOCKHEED MARTIN COMMON STOCK AND ALL OTHER
REQUIRED DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED ON OR PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE
OFFERING CIRCULAR--PROSPECTUS).
VI. AGGREGATE OWNERSHIP INFORMATION--To be completed by all stockholders who
are tendering shares of Lockheed Martin Common Stock.
A. CERTIFICATED SHARES HELD IN YOUR NAME--Stockholders who are tendering
shares of Lockheed Martin Common Stock issued in their own name (other
than brokers, dealers, commercial banks, trust companies, trustees of
employee benefit plans sponsored by Lockheed Martin (or a subsidiary) or
other nominees) must complete this Section VI.A. Brokers, dealers,
commercial banks, trust companies, trustees of employee benefit plans
sponsored by Lockheed Martin (or a subsidiary) or other nominees must
complete Section VI. B. below.
- --------------------------------------------------------------------------------
STOCKHOLDERS MUST CHECK EITHER THE BOX MARKED "YES" OR "NO" BELOW.
SEE PAGE 13 HEREOF WHICH PROVIDES AN EXPRESS ASSUMPTION OF LIABILITY WITH
RESPECT TO THE INFORMATION CONTAINED IN THIS SECTION VI.
- --------------------------------------------------------------------------------
Instructions:
1. For purposes of this section, you should assume that there will be no
proration in the Exchange Offer and that each share of Lockheed Martin
Common Stock tendered will be exchanged for 4.72 shares of Materials
Common Stock.
2. In calculating your ownership of Materials Common Stock for purposes
of this section, you must include shares of Materials Common Stock
owned by any person with whom you are or were acting pursuant to a
plan or arrangement with respect to the acquisition of Materials
Common Stock, including shares now owned by such person, shares to be
acquired by such person in the Exchange Offer and shares to be
acquired by such person apart from the Exchange Offer.
YES [_] I/We intend to own, directly or indirectly, individually,
beneficially or otherwise, 2,000,000 or more shares of
Materials Common Stock upon consummation of the Exchange Offer.
NO [_] I/We do not intend to own, directly or indirectly,
individually, beneficially or otherwise, 2,000,000 or more
shares of Materials Common Stock upon consummation of the
Exchange Offer.
IF YOU CHECKED THE BOX MARKED "YES", YOU MUST PROVIDE THE FOLLOWING
INFORMATION:
How many shares of Materials Common Stock do you currently own,
directly or indirectly, individually, beneficially or
otherwise?
---------------------
How many additional shares of Materials Common Stock do you
intend to acquire by purchase or otherwise, to be owned directly
or indirectly, individually, beneficially or otherwise, upon or
before completion of the Transaction? (Do not include shares to
be received pursuant to the Exchange Offer.)
----------------------
How many shares of Materials Common Stock are owned, directly or
indirectly, individually, beneficially or otherwise, by any
person with whom you are or were acting pursuant to a plan or
arrangement with respect to the acquisition of Materials Common
Stock?
----------------------
How many shares of Materials Common Stock are intended to be
acquired by purchase or otherwise, to be owned directly or
indirectly, individually, beneficially or otherwise, by any
person with whom you are or were acting pursuant to a plan or
arrangement upon or before completion of the Transaction with
respect to the acquisition of Materials Common Stock? (Do not
include shares to be received pursuant to the Exchange
Offer.)
-----------------------
How many shares of Materials Common Stock will be received
pursuant to the Exchange Offer, to be owned directly or
indirectly, individually, beneficially or otherwise, by any
person with whom you are
9
or were acting pursuant to a plan or arrangement with respect to
the acquisition of Materials Common Stock? ________________
B. SHARES HELD BY A BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY, TRUSTEE
OF EMPLOYEE BENEFIT PLANS SPONSORED BY LOCKHEED MARTIN (OR A SUBSIDIARY)
OR OTHER NOMINEE--Brokers, dealers, commercial banks, trust companies,
trustee of employee benefit plans sponsored by Lockheed Martin (or a
subsidiary) or other nominees who have received instructions from the
beneficial owners of the shares of Lockheed Martin Common Stock to tender
their shares in the Exchange Offer must complete this Section VI.B.
- -------------------------------------------------------------------------------
ONLY BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES, TRUSTEE OF EMPLOYEE
BENEFIT PLANS SPONSORED BY LOCKHEED MARTIN (OR A SUBSIDIARY) OR OTHER NOMINEES
SHOULD COMPLETE THIS SECTION VI.B.
- -------------------------------------------------------------------------------
[_]CHECK HERE IF ANY OF THE BENEFICIAL OWNERS ON WHOSE BEHALF YOU ARE
TENDERING HAVE INDICATED THAT THEY INTEND TO OWN, DIRECTLY OR INDIRECTLY,
INDIVIDUALLY, BENEFICIALLY OR OTHERWISE, 2,000,000 OR MORE SHARES OF
MATERIALS COMMON STOCK UPON CONSUMMATION OF THE EXCHANGE OFFER AND STATE
THE DETAILS OF SUCH OWNERSHIP AS PROVIDED TO YOU BY SUCH BENEFICIAL OWNER
IN THEIR INSTRUCTION FORM.
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(ATTACH ADDITIONAL SHEETS, AS NECESSARY)
10
VII. NOTICE OF SOLICITING TENDERS--to be completed if a Soliciting Dealer fee
is to be paid in connection with this tender.
NOTICE OF SOLICITED TENDERS
Lockheed Martin will pay to a Soliciting Dealer, as defined in the
Offering Circular--Prospectus, a solicitation fee of $1.00 per share, up to
a maximum of 1,000 shares, for each share of Lockheed Martin Common Stock
tendered and exchanged pursuant to the Exchange Offer if such Soliciting
Dealer has affirmatively solicited and obtained such tender, except that no
solicitation fee shall be payable (i) in connection with a tender of
Lockheed Martin Common Stock by a Stockholder (x) owning more than 10,000
shares of Lockheed Martin Common Stock or (y) tendering from a country
outside the United States; or (ii) to the Dealer Manager. In addition, no
such fee shall be payable to a Soliciting Dealer if such Soliciting Dealer
is required for any reason to transfer the amount of such fee to a
tendering holder (other than itself). No broker, dealer, bank, trust
company or fiduciary shall be deemed to be the agent of Lockheed Martin,
Materials, the Exchange Agent, the Information Agent or the Dealer Manager
for purposes of the Exchange Offer. See Instruction 9.
The undersigned represents that the Soliciting Dealer which solicited and
obtained this tender is:
Name of Firm: ______________________________________________________________
(Please Print)
Name of Individual Broker or Financial Consultant: _________________________
Identification Number (if known): __________________________________________
Address: ___________________________________________________________________
(Include Zip Code)
The following is to be completed ONLY if customer's Lockheed Martin
Common Stock held in nominee name is tendered.
NUMBER OF SHARES OF LOCKHEED
MARTIN
BENEFICIAL OWNERS COMMON STOCK TENDERED
----------------------------------- -----------------------------------
(ATTACH ADDITIONAL LIST IF NECESSARY)
Beneficial Owner No. 1 . . . . . . . . . ___________________________________
Beneficial Owner No. 2 . . . . . . . . . ___________________________________
Beneficial Owner No. 3 . . . . . . . . . ___________________________________
The acceptance of compensation by such Soliciting Dealer will constitute
a representation by it that: (i) it has complied with the applicable
requirements of the Securities Exchange Act of 1934, as amended, and the
applicable rules and regulations thereunder, in connection with such
solicitation; (ii) it is entitled to such compensation for such
solicitation under the terms and conditions of the Offering Circular--
Prospectus; and (iii) in soliciting tenders of shares of Lockheed Martin
Common Stock, it has used no soliciting materials other than those
furnished by Lockheed Martin.
SOLICITING DEALERS ARE NOT ENTITLED TO A FEE WITH RESPECT TO SHARES OF
LOCKHEED MARTIN COMMON STOCK BENEFICIALLY OWNED BY SUCH SOLICITING DEALER
OR WITH RESPECT TO ANY SHARES THAT ARE REGISTERED IN THE NAME OF A
SOLICITING DEALER UNLESS SUCH SHARES ARE HELD BY SUCH SOLICITING DEALER AS
NOMINEE AND ARE TENDERED FOR THE BENEFIT OF BENEFICIAL HOLDERS IDENTIFIED
IN THE LETTER OF TRANSMITTAL.
11
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to Lockheed Martin the shares of Lockheed Martin
Common Stock represented by the certificate(s) described above. Subject to,
and effective upon, the acceptance for exchange of the shares of Lockheed
Martin Common Stock tendered herewith, the undersigned hereby conveys,
exchanges, assigns and transfers to, or upon the order of, Lockheed Martin,
all right, title and interest in and to the shares of Lockheed Martin Common
Stock tendered hereby (and any and all other shares of Lockheed Martin Common
Stock or other securities issued or issuable in respect thereof on or after
September 16, 1996) and accepted for exchange pursuant to the Exchange Offer.
The undersigned hereby irrevocably constitutes and appoints the Exchange Agent
as its true and lawful agent and attorney-in-fact (with full knowledge that
the Exchange Agent also acts as the agent of Lockheed Martin) with respect to
the shares of Lockheed Martin Common Stock tendered herewith, with full power
of substitution (such power of attorney being deemed to be an irrevocable
power coupled with an interest) (a) to deliver stock certificates representing
the shares of Lockheed Martin Common Stock tendered herewith or transfer
ownership of such shares of Lockheed Martin Common Stock on the account books
maintained by The Depository Trust Company ("DTC"), together with all
accompanying evidences of transfer and authenticity, to or upon the order of
Lockheed Martin upon receipt by the Exchange Agent, as the undersigned's
agent, of certificate(s) representing shares of Materials Common Stock
("Materials Certificate(s)") and shares of Lockheed Martin Common Stock not
exchanged to which the undersigned is entitled upon the acceptance for
exchange by Lockheed Martin of the shares of Lockheed Martin Common Stock
tendered herewith under the Exchange Offer; (b) to present certificate(s)
representing such shares of Lockheed Martin Common Stock for transfer on the
books of Lockheed Martin; and (c) to receive all benefits and otherwise
exercise all rights of beneficial ownership of such shares of Lockheed Martin
Common Stock, all in accordance with the terms and conditions of the Exchange
Offer. If the undersigned has not, prior to the Exchange Offer, submitted to
the Exchange Agent the undersigned's stock certificates representing Martin
Marietta Corporation common stock or Lockheed Corporation common stock, then
the undersigned hereby represents and warrants that all representations and
warranties set forth in this Letter of Transmittal with respect to Lockheed
Martin Common Stock shall be deemed to be made with respect to both the Martin
Marietta Corporation common stock or Lockheed Corporation common stock, as the
case may be, as well as the Lockheed Martin Common Stock that would have been
obtained upon such submission.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, convey, exchange, assign and transfer the
shares of Lockheed Martin Common Stock tendered hereby (and any and all other
shares of Lockheed Martin Common Stock or other securities issued or issuable
in respect thereof on or after September 16, 1996) and that when such shares
of Lockheed Martin Common Stock are accepted by Lockheed Martin for exchange
pursuant to the Exchange Offer, Lockheed Martin will acquire good, marketable
and unencumbered title thereto, free and clear of all liens, restrictions,
charges and encumbrances and that none of such shares of Lockheed Martin
Common Stock will be subject to any adverse claim or right when the same are
accepted for exchange by Lockheed Martin. The undersigned will, upon request,
execute and deliver any additional documents deemed by the Exchange Agent or
Lockheed Martin to be necessary or desirable to complete the conveyance,
exchange, assignment and transfer of the shares of Lockheed Martin Common
Stock tendered hereby (and all such other shares of Materials Common Stock or
securities). All authority conferred or agreed to be conferred in this Letter
of Transmittal and every obligation of the undersigned hereunder shall be
binding upon the successors, assigns, heirs, executors, administrators,
trustees in bankruptcy and legal representatives of the undersigned and shall
not be affected by, and shall survive, the death or incapacity of the
undersigned.
The undersigned understands that if more than 7,913,136 shares of Lockheed
Martin Common Stock are validly tendered and not properly withdrawn in the
Exchange Offer as provided in the Offering Circular--Prospectus, the shares of
Lockheed Martin Common Stock so tendered and not withdrawn shall be accepted
for exchange on a pro rata basis in accordance with the terms set forth in the
Offering Circular--Prospectus under "The Exchange Offer--Terms of the Exchange
Offer," except for odd lot tenders as described in the Offering Circular--
Prospectus under "The Exchange Offer--Tenders for Exchange by Holders of Fewer
than 100 Shares of Lockheed Martin Common Stock." The undersigned understands
that, upon acceptance by Lockheed Martin of the shares of Lockheed Martin
Common Stock tendered herewith, the undersigned will be deemed to have
accepted the shares of Materials Common Stock exchanged therefor and will be
deemed to have relinquished all rights with respect to the shares of Lockheed
Martin Common Stock so accepted.
12
The undersigned understands that Lockheed Martin may accept the
undersigned's tender at any time on or after the Expiration Date (as defined
in the Offering Circular--Prospectus) by delivering oral or written notice of
acceptance to the Exchange Agent. Tenders of shares of Lockheed Martin Common
Stock may be withdrawn at any time prior to the Expiration Date and, unless
theretofore accepted for exchange as provided in the Exchange Offer, at any
time after November 12, 1996. This tender may be withdrawn only in accordance
with the procedures set forth in the Offering Circular--Prospectus under "The
Exchange Offer--Withdrawal Rights" and the Instructions contained in this
Letter of Transmittal.
The undersigned recognizes that, under certain circumstances and subject to
certain conditions to the Exchange Offer (which Lockheed Martin, in its sole
discretion, may waive) set forth in the Offering Circular--Prospectus,
Lockheed Martin may not be required to accept for exchange any of the shares
of Lockheed Martin Common Stock tendered herewith or any shares of Lockheed
Martin Common Stock tendered after the Expiration Date. The shares of Lockheed
Martin Common Stock delivered to the Exchange Agent and not accepted for
exchange will be returned to the undersigned as promptly as practicable
following expiration or termination of the Exchange Offer at the address set
forth above under "Description of Shares of Lockheed Martin Common Stock
Tendered," unless otherwise indicated under "Special Delivery Instructions."
The undersigned understands and acknowledges that the Exchange Offer is
intended to qualify for treatment as a tax-free distribution of shares of
Materials Common Stock pursuant to Section 355 of the Internal Revenue Code,
and that to ensure such treatment all persons tendering shares of Lockheed
Martin Common Stock are required to provide the information called for under
"Aggregate Ownership Information." The undersigned hereby represents and
warrants to Lockheed Martin and to Materials and to the stockholders of
Lockheed Martin and Materials that the information provided by the undersigned
under "Aggregate Ownership Information" is complete and correct. If the
undersigned is a broker, dealer, nominee or other agent or representative
tendering on behalf of one or more beneficial owners of Lockheed Martin Common
Stock, the undersigned represents and warrants that to the best of its
knowledge no such beneficial owner, together with any other person or persons
with whom such beneficial owner may be acting pursuant to a plan or
arrangement with respect to the acquisition of Materials Common Stock, shall,
following, the Exchange Offer, hold more than 2,000,000 shares of Materials
Common Stock, except as disclosed in Section VI. "Aggregate Ownership
Information." TO THE EXTENT THE UNDERSIGNED TENDERS SHARES OF LOCKHEED MARTIN
COMMON STOCK IN VIOLATION OF THE UNDERSIGNED'S REPRESENTATION AND WARRANTY SET
FORTH IN THIS PARAGRAPH, THE UNDERSIGNED HEREBY EXPRESSLY AGREES THAT THE
UNDERSIGNED SHALL BE LIABLE FOR ALL DAMAGES CAUSED THEREBY TO ALL PARTIES
(INCLUDING LOCKHEED MARTIN, MATERIALS AND THEIR STOCKHOLDERS) BY REASON OF
SUCH BREACH AND ACKNOWLEDGES THAT SUCH DAMAGE MAY BE SUBSTANTIAL.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death or incapacity of the undersigned and every
obligation of the undersigned under this Letter of Transmittal shall be
binding upon his or her heirs, personal representatives, successors and
assigns. Tenders may be withdrawn only in accordance with the procedures set
forth in the Instructions contained in this Letter of Transmittal and the
Offering Circular--Prospectus.
Unless otherwise indicated under "Special Issuance Instructions," please
issue (i) the Materials Certificate(s) to which the undersigned is entitled;
(ii) if applicable, a check in lieu of a fractional share equal to such
fraction multiplied by the average gross selling price per share of Materials
Common Stock obtained by the Exchange Agent upon the sale of all fractional
shares on behalf of those tendering Lockheed Martin shareholders otherwise
entitled to receive fractional shares (a "Fractional Share Check"); and (iii)
if applicable, the certificate(s) representing any shares of Lockheed Martin
Common Stock tendered herewith that are not accepted for exchange, in each
case in the name(s) of the tendering holder(s) shown above under "Description
of Shares of Lockheed Martin Common Stock Tendered." Unless otherwise
indicated under "Special Delivery Instructions," please send (i) Materials
Certificate(s) to which the undersigned is entitled; (ii) if applicable, a
Fractional Share Check; (iii) if applicable, the certificate(s) representing
any shares of Lockheed Martin Common Stock not tendered; and/or (iv) if
applicable, the certificate(s) representing any shares of Lockheed Martin
Common Stock tendered herewith and not accepted for exchange, in each case
issued in the name(s) of the tendering holder(s) shown above under
"Description of Shares of Lockheed Martin Common Stock Tendered" together with
accompanying documents, as appropriate to the address(es) of the tendering
holder(s) shown above under "Description of Shares of Lockheed Martin Common
Stock Tendered." Any shares of Lockheed Martin Common Stock delivered by book-
entry transfer that are not tendered or any shares of Lockheed Martin Common
Stock tendered herewith delivered by book-entry transfer that are not accepted
for exchange will be credited to the account at the DTC designated under
Section II.A. The undersigned recognizes that Lockheed Martin has no
obligation pursuant to the "Special Issuance Instructions" to transfer
13
any shares of Lockheed Martin Common Stock from the name of the tendering
holder hereof if Lockheed Martin does not accept for exchange such shares. In
the event that the boxes entitled "Special Issuance Instructions" and "Special
Delivery Instructions" are both completed, please issue (i) the Materials
certificate(s) to which the undersigned is entitled; (ii) if applicable, a
Fractional Share Check; and (iii) if applicable, the certificates(s)
representing any shares of Lockheed Martin
Common Stock tendered herewith and not accepted for exchange in the name(s)
of, and mail such certificate(s) and check (and accompanying documents, as
appropriate) to, the person(s) so indicated. Certificate(s) representing any
shares of Lockheed Martin Common Stock not tendered by the undersigned will be
returned in the name(s) of the tendering holder(s) shown above to the
address(es) shown above under "Description of Shares of Lockheed Martin Common
Stock Tendered," unless otherwise instructed under "Special Delivery
Instructions."
The undersigned understands that the delivery and surrender of the shares of
Lockheed Martin Common Stock tendered herewith is not effective, and the risk
of loss of the shares of Lockheed Martin Common Stock (including shares of
Lockheed Martin Common Stock tendered herewith) does not pass to the Exchange
Agent, until receipt by the Exchange Agent of this Letter of Transmittal, or a
manually signed facsimile hereof, duly completed and signed, or an Agent's
Message (as defined in the Offering Circular--Prospectus under "The Exchange
Offer--Procedures for Tendering Shares of Lockheed Martin Common Stock) in
connection with a book-entry transfer of shares, together with all
accompanying evidences of authority in form satisfactory to Lockheed Martin
and any other required documents. ALL QUESTIONS AS TO VALIDITY, FORM AND
ELIGIBILITY AND ACCEPTANCE FOR EXCHANGE OF ANY SURRENDER OF SHARES OF LOCKHEED
MARTIN COMMON STOCK TENDERED HEREWITH WILL BE DETERMINED BY LOCKHEED MARTIN IN
ITS SOLE DISCRETION AND SUCH DETERMINATION SHALL BE FINAL AND BINDING UPON ALL
TENDERING SHAREHOLDERS.
The undersigned understands that a tender of shares of Lockheed Martin
Common Stock and the acceptance by Lockheed Martin for exchange of such shares
pursuant to the procedures described in the Offering Circular--Prospectus
under "The Exchange Offer--Procedures for Tendering Shares of Lockheed Martin
Common Stock" and in the Instructions hereto will constitute a binding
agreement between the undersigned and Lockheed Martin upon the terms and
subject to the conditions of the Exchange Offer, including the tendering
shareholder's representation and warranty that (i) such holder owns the shares
of Lockheed Martin Common Stock being tendered within the meaning of Rule 14e-
4 promulgated under the Securities Exchange Act of 1934, as amended, and (ii)
the tender of such shares of Lockheed Martin Common Stock complies with Rule
14e-4.
INSTRUCTIONS
FORMING PART OF THE TERMS OF AND CONDITIONS
TO THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES OR BOOK-ENTRY
CONFIRMATIONS. Certificate(s) for shares of Lockheed Martin Common Stock or
any book-entry transfer into the Exchange Agent's account at DTC of shares of
Lockheed Martin Common Stock tendered electronically, as well as a properly
completed and duly executed copy or manually signed facsimile of this Letter
of Transmittal, or an Agent's Message in the case of a book-entry transfer of
shares, and any other documents required by this Letter of Transmittal, must
be received by the Exchange Agent at its address set forth herein on or prior
to the Expiration Date (as defined in the Offering Circular--Prospectus). THE
METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, CERTIFICATE(S) FOR SHARES OF
LOCKHEED MARTIN COMMON STOCK, AND ANY OTHER REQUIRED DOCUMENTS IS AT THE
ELECTION AND RISK OF THE STOCKHOLDERS AND, EXCEPT AS OTHERWISE PROVIDED, THE
DELIVERY WILL BE DEEMED MADE WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, THE USE OF REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS SUGGESTED AND SUFFICIENT TIME TO
ENSURE TIMELY RECEIPT SHOULD BE ALLOWED.
Stockholders whose shares of Lockheed Martin Common Stock are not
immediately available or who cannot deliver their shares of Lockheed Martin
Common Stock and all other required documents to the Exchange Agent on or
prior to the Expiration Date, as may be extended, may tender their shares of
Lockheed Martin Common Stock pursuant to the guaranteed delivery procedures
set forth in the Offering Circular--Prospectus. Pursuant to such procedures
(i) tender must be made through a participant in the Security Transfer Agents
Medallion Program or the New York Stock Exchange Medallion
14
Signature Guarantee Program or the Stock Exchange Medallion Program (an
"Eligible Institution"); (ii) on or prior to the Expiration Date, the Exchange
Agent must have received from the Eligible Institution a properly completed
and duly executed Notice of Guaranteed Delivery (by facsimile transmission,
mail or hand delivery) (x) setting forth the name and address of the
Stockholder and the number of shares of Lockheed Martin Common Stock being
tendered, (y) stating that the tender is being made thereby and (z)
guaranteeing that, within three New York Stock Exchange trading days after the
date of execution of such Notice of Guaranteed Delivery, this Letter of
Transmittal together with the certificate(s) representing the shares of
Lockheed Martin Common Stock and any other documents required by this Letter
of Transmittal will be deposited by the Eligible Institution with the Exchange
Agent; and (iii) the certificate(s) for all tendered shares of Lockheed Martin
Common Stock, or a confirmation of a book-entry transfer of such shares of
Lockheed Martin Common Stock into the Exchange Agent's account at the DTC,
together with a properly completed and duly executed copy of this Letter of
Transmittal (or manually signed facsimile thereof) and any required signature
guarantees, or an Agent's Message, as well as all other documents required by
this Letter of Transmittal, must be received by the Exchange Agent within
three New York Stock Exchange trading days after the date of execution of such
Notice of Guaranteed Delivery, all as provided in the Offering Circular--
Prospectus under the caption "The Exchange Offer--Guaranteed Delivery
Procedures."
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered shares of Lockheed Martin
Common Stock will be determined by Lockheed Martin, in its sole discretion,
which determination shall be final and binding on all tendering Stockholders.
Lockheed Martin reserves the absolute right to reject any or all tenders of
shares of Lockheed Martin Common Stock determined by it not to be in proper
form or the acceptance of which may, in the opinion of Lockheed Martin's
counsel, be unlawful. Lockheed Martin also reserves the absolute right to
waive any defect or irregularity in any tender of shares of Lockheed Martin
Common Stock. All tendering Stockholders, by execution of this Letter of
Transmittal (or facsimile thereof), waive any right to receive notice of the
acceptance of their shares of Lockheed Martin Common Stock for exchange.
None of Lockheed Martin, the Exchange Agent, or any other person shall be
under any duty to give notification of any defect or irregularity in any
tender, or incur any liability for failure to give any such notification.
2. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER); WITHDRAWALS. If less than all the shares of Lockheed Martin Common
Stock evidenced by a submitted certificate are tendered, the tendering
Stockholder must fill in the number of shares tendered in the fourth column of
the box entitled "Description of Shares of Lockheed Martin Common Stock
Tendered." All the shares of Lockheed Martin Common Stock represented by
certificates delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated. Partial tenders are not applicable to
holders of shares of Lockheed Martin Common Stock who tender by book-entry
transfer. If all the shares of Lockheed Martin Common Stock are not tendered,
(i) a reissued certificate representing the number of shares of Lockheed
Martin Common Stock not tendered will be issued in the name of such tendering
Stockholders, and sent to, unless otherwise indicated under "Special Delivery
Instructions," such tendering Stockholders and (ii) certificate(s) for shares
of Materials Common Stock will be issued in the name of, and sent to, such
tendering Stockholders unless otherwise indicated above under "Special
Issuance Instructions" or "Special Delivery Instructions," promptly after the
shares of Lockheed Martin Common Stock are accepted for exchange.
A tender pursuant to the Exchange Offer may be withdrawn, subject to the
procedures described in this Letter of Transmittal and in the Offering
Circular--Prospectus, at any time prior to the Expiration Date and subsequent
to November 12, 1996, if not theretofore accepted for exchange. To be
effective with respect to the tender of shares of Lockheed Martin Common
Stock, a written facsimile transmission notice of withdrawal must (i) be
received by the Exchange Agent before the Expiration Date, (ii) specify the
name of the person who tendered the shares of Lockheed Martin Common Stock to
be withdrawn, (iii) contain the serial numbers shown on the particular
certificate(s) evidencing the shares of Lockheed Martin Common Stock to be
withdrawn and the name of the registered holder thereof (if certificates have
been delivered or otherwise identified to the Exchange Agent) or the name and
number of the account at DTC from which the shares were transferred and the
number of shares of Lockheed Martin Common Stock withdrawn and (iv) be signed
by the Stockholder in the same manner as the original signature on this Letter
of Transmittal (including the required signature guarantee(s)) or be
accompanied by evidence satisfactory to Lockheed Martin that the person
withdrawing the tender has succeeded to the beneficial ownership of the shares
of Lockheed Martin Common Stock. If the certificate(s) for shares of Lockheed
Martin Common Stock to be withdrawn have been delivered to the Exchange Agent,
a signed notice of withdrawal
15
with (except in the case of shares of Lockheed Martin Common Stock tendered by
an Eligible Institution) signatures guaranteed by an Eligible Institution must
be submitted prior to the release of such certificate(s) for shares of
Lockheed Martin Common Stock. Withdrawals may not be rescinded, and shares of
Lockheed Martin Common Stock withdrawn will thereafter be deemed not validly
tendered for purposes of the Exchange Offer. However, withdrawn shares of
Lockheed Martin Common Stock may be retendered by again following the
procedures described in this Letter of Transmittal and the Offering Circular--
Prospectus.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by Lockheed Martin, in its sole
discretion, which determination shall be final and binding. None of Lockheed
Martin, the Exchange Agent or any other person will be under any duty to give
notification of any defect or irregularity in any notice of withdrawal or
incur any liability for failure to give any such notification.
3. SIGNATURES ON THIS LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed by the
holder(s) of the shares of Lockheed Martin Common Stock tendered hereby, the
signature must correspond with the name(s) as written on the face of the
certificate(s) without alteration, enlargement or any change whatsoever.
If any of the shares of Lockheed Martin Common Stock tendered hereby are
owned by two or more joint owners, all such owners must sign this Letter of
Transmittal. If any tendered shares of Lockheed Martin Common Stock are held
in different names on several certificates, it will be necessary to complete,
sign and submit as many separate copies of this Letter of Transmittal as there
are names in which certificates are held.
If this Letter of Transmittal is signed by the tendering Stockholder(s) of
the shares of Lockheed Martin Common Stock listed and tendered hereby, no
signature guarantees are required, unless Materials Certificate(s) are to be
issued and, if applicable, certificate(s) for any shares of Lockheed Martin
Common Stock not accepted for exchange are to be reissued, in the name of a
person other than the tendering holder(s), in which case, the signature
guarantee in Section V of this Letter of transmittal must be completed. Such
signature guarantees must be provided by an Eligible Institution.
If this Letter of Transmittal or any certificates or stock powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing and, unless waived by Lockheed
Martin, proper evidence satisfactory to Lockheed Martin of their authority to
so act must be submitted.
All signatures on this Letter of Transmittal must be guaranteed by an
Eligible Institution unless the shares of Lockheed Martin Common Stock
tendered pursuant hereto are tendered: (i) by the registered holder of the
shares of Lockheed Martin Common Stock (which term, for purposes of this
Letter of Transmittal, shall include any participant in DTC whose name appears
on a security position listing as the owner of the shares of Lockheed Martin
Common Stock) who has not completed the box entitled "Special Issuance
Instructions" on this Letter of Transmittal, or (ii) for the account of an
Eligible Institution.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If special issuance and/or
special delivery instructions are requested, tendering Stockholders should
indicate, in the applicable box, the name and address to which Materials
Certificate(s), a Fractional Share Check, if any, and substitute
certificate(s) for shares of Lockheed Martin Common Stock tendered but not
accepted for exchange, if any, are to be issued or the name and address to
which the Materials Certificate(s), a Fractional Share Check, if any, and/or
substitute certificate(s) for shares of Lockheed Martin Common Stock not
tendered or shares of Lockheed Martin Common Stock tendered and not accepted
for exchange, if any, are to be sent if different from the name and address of
the person signing this Letter of Transmittal. In the case of issuance of
shares of Materials Common Stock or Lockheed Martin Common Stock in a
different name, the employer identification or the social security number of
the person named must be identified and a Substitute Form W-9 must be
completed for the new owner.
5. DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN SHARES. Stockholders who
are participants in Lockheed Martin's Dividend Reinvestment and Stock Purchase
Plan (the "DRP") and who wish to tender shares of Lockheed Martin Common Stock
held in their account under the DRP ("DRP Shares") pursuant to the Exchange
Offer must so indicate by completing Section I.B. and returning to the
Exchange Agent the properly completed and duly executed Letter of Transmittal
16
(or manually signed facsimile thereof) with any required signature guarantees
and any other documents required by this Letter of Transmittal. If the
participant authorizes the tender of his or her DRP Shares, but does not
indicate the number of shares to be tendered, the participant will be deemed
to have tendered all DRP Shares owned by such participant, including
fractional shares and any shares credited to the participant's account after
the date hereof and prior to the Expiration Date. If a participant authorizes
the tender of his or her DRP Shares and such DRP Shares are actually exchanged
under the terms and subject to the conditions of the Exchange Offer, First
Chicago Trust Company of New York, as administrator of the DRP, will reduce
the number of shares of Lockheed Martin Common Stock in the participant's DRP
account by the number of DRP Shares that are accepted for exchange. Any DRP
shares tendered but not exchanged will be returned to the participant's DRP
account.
6. TAXPAYER IDENTIFICATION NUMBER. Federal income tax law requires that a
Stockholder whose tendered shares of Lockheed Martin Common Stock are accepted
for exchange must provide his or her correct taxpayer identification number
("TIN") which, in the case of a Stockholder who is an individual, is his or
her social security number. If the Stockholder does not provide the correct
TIN, the Stockholder may be subject to a penalty imposed by the Internal
Revenue Service ("IRS") and dividends or other taxable payments paid to such
Stockholder may be subject to 31% backup withholding. If backup withholding
results in an overpayment of taxes, a refund may be obtained from the IRS.
Exempt Stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding requirements.
In order for a foreign individual to qualify as an exempt person, that
individual must submit a statement, signed under penalty of perjury, attesting
to that individual's exempt status. A Form W-8 for such a statement can be
obtained from the Exchange Agent.
To prevent backup withholding, each tendering Stockholder must provide his
or her correct TIN by completing "Substitute Form W-9" set forth above,
certifying that the TIN provided is correct (or that the Stockholder is
awaiting a TIN) and that (a) the Stockholder has not been notified by the IRS
that he or she is subject to backup withholding as a result of failure to
report all interest or dividends or (b) the IRS has notified the Stockholder
that he or she is no longer subject to backup withholding. To prevent possible
erroneous backup withholding, exempt Stockholders (other than certain foreign
individuals) should certify in accordance with the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 that
such Stockholder is exempt from backup withholding. If a Stockholder has been
notified by the IRS that he or she is subject to backup withholding because of
underreporting interest or dividends on his or her tax return, he or she
should nevertheless complete and sign Substitute Form W-9 but should (unless
after being so notified by the IRS he or she received a notification from the
IRS that he or she is no longer subject to backup withholding) cross out item
(2) of the certification on the form. In such case, backup withholding may
apply to dividends paid on the shares of Materials Common Stock issued to such
Stockholder. If the shares of Lockheed Martin Common Stock are in more than
one name or are not in the name of the actual owner, consult the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 for information on which TIN to report.
See enclosed "Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9" for additional instructions.
7. TRANSFER TAXES. No domestic stock transfer taxes will be payable as a
result of the Transaction. Lockheed Martin will pay all foreign stock transfer
taxes, if any, but only to the extent such taxes are not solely the obligation
of a stockholder of Lockheed Martin and are payable on the transfer of shares
pursuant to the Exchange Offer. If, however, the exchange of shares is to be
made to, or (in the circumstances permitted by the Exchange Offer) if shares
of Lockheed Martin Common Stock that are not tendered or are not accepted for
exchange are to be registered in the name of or delivered to, any person other
than the registered owner, or if tendered certificates are registered in the
name of any person other than the person signing the Letter of Transmittal,
the amount of all foreign stock transfer taxes, if any (whether imposed on the
registered owner or such other person), payable on account of the transfer to
such person must be paid by the tendering stockholder unless evidence
satisfactory to Lockheed Martin of the payment of such taxes or exemption
therefrom is submitted.
8. ODD LOTS. As described in the Offering Circular--Prospectus, if fewer
than all shares of Lockheed Martin Common Stock tendered on or prior to the
Expiration Date are to be purchased by Lockheed Martin, the shares of Lockheed
Martin Common Stock purchased first will consist of all shares of Lockheed
Martin Common Stock validly tendered by any
17
Stockholder who owned beneficially and of record as of September 13, 1996 an
aggregate of less than 100 shares of Lockheed Martin Common Stock and who
tendered all of such shares of Lockheed Martin Common Stock. This preference
will not be available unless Section I.C. or II.B. of this Letter of
Transmittal and the Notice of Guaranteed Delivery, if applicable, is
completed.
9. SOLICITED TENDERS. Lockheed Martin will pay a solicitation fee of $1.00
per share, up to a maximum of 1,000 shares, for each share of Lockheed Martin
Common Stock tendered and accepted for exchange pursuant to the Exchange
Offer, covered by the Letter of Transmittal which designates, in the box
captioned "Notice of Solicited Tenders," as having solicited and obtained the
tender, the name of (i) any broker or dealer in securities which is a member
of any national securities exchange or of the National Association of
Securities Dealers, Inc. or (ii) any bank or trust company (each, a
"Soliciting Dealer"), except that no solicitation fee shall be payable (i) in
connection with a tender of Lockheed Martin Common Stock by a Stockholder (x)
tendering more than 10,000 shares of Lockheed Martin Common Stock or (y)
tendering from a country outside of the United States or (ii) to the Dealer
Manager. In addition, Soliciting Dealers are not entitled to a fee with
respect to shares of Lockheed Martin Common Stock beneficially owned by such
Soliciting Dealer or with respect to any shares that are registered in the
name of a Soliciting Dealer unless such shares are held by such Soliciting
Dealer as nominee and are tendered for the benefit of beneficial holders
identified in this Letter of Transmittal. No such fee shall be payable to a
Soliciting Dealer if such Soliciting Dealer is required for any reason to
transfer the amount of such fee to a tendering holder (other than itself). No
broker, dealer, bank, trust company or fiduciary shall be deemed to be the
agent of Lockheed Martin, the Exchange Agent, the Information Agent or the
Dealer Manager for purposes of the Exchange Offer.
10. WAIVER OF CONDITIONS. Lockheed Martin reserves the absolute right to
amend or waive any of the specified conditions to the Exchange Offer in the
case of any shares of Lockheed Martin Common Stock tendered other than certain
conditions specified in the Offering Circular--Prospectus.
11. MUTILATED, LOST, STOLEN OR DESTROYED SHARES OF LOCKHEED MARTIN
STOCK. Any Stockholder whose shares of Lockheed Martin Common Stock have been
mutilated, lost, stolen or destroyed should contact the Exchange Agent by
telephone at (800) 519-3111 or at the address indicated above for further
instructions. If any certificate representing shares of Lockheed Martin Common
Stock has been mutilated, lost, stolen or destroyed, such stockholder must (i)
furnish to the Exchange Agent evidence, satisfactory to it in its discretion,
of the ownership of and the mutilation, loss, theft or destruction of such
certificate, (ii) furnish to the Exchange Agent indemnity, satisfactory to it
in its discretion, and (iii) comply with such other regulations as the
Exchange Agent may prescribe.
12. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the
procedure for tendering and requests for additional copies of the Offering
Circular--Prospectus and this Letter of Transmittal may be directed to the
Information Agent by telephone at (800) 566-9058.
THE INFORMATION AGENT FOR THE EXCHANGE OFFER IS:
MORROW & CO., INC.
909 THIRD AVENUE, 20TH FLOOR
NEW YORK, NEW YORK 10022
(212) 754-8000
TOLL FREE (800) 566-9058
BANKS AND BROKERAGE FIRMS, PLEASE CALL:
(800) 662-5200
18
LOCKHEED MARTIN CORPORATION
OFFER TO EXCHANGE 4.72 SHARES OF
COMMON STOCK OF MARTIN MARIETTA MATERIALS,
INC. FOR EACH SHARE OF COMMON STOCK OF
LOCKHEED MARTIN CORPORATION UP TO AN AGGREGATE OF
SHARES OF COMMON STOCK OF LOCKHEED MARTIN CORPORATION
To Brokers, Securities Dealers, Commercial Banks, Trust Companies and Other
Nominees:
Lockheed Martin Corporation ("Lockheed Martin") is offering, upon the terms
and subject to the conditions set forth in the enclosed Offering Circular--
Prospectus dated September 16, 1996 (the "Offering Circular--Prospectus") and
the enclosed Letter of Transmittal (the "Letter of Transmittal"; and together
with the Offering Circular--Prospectus, the "Exchange Offer"), to exchange
4.72 shares of common stock, par value $.01 per share ("Materials Common
Stock"), of Martin Marietta Materials, Inc. ("Materials") for each share
tendered of common stock, par value $1.00 per share, of Lockheed Martin
("Lockheed Martin Common Stock") up to an aggregate of 7,913,136 shares of
Lockheed Martin Common Stock tendered and exchanged.
We are asking you to contact your clients for whom you hold shares of
Lockheed Martin Common Stock registered in your name or in the name of your
nominee. You will be reimbursed for customary mailing and handling expenses
incurred by you in forwarding any of the enclosed materials to your clients.
No domestic stock transfer taxes will be payable as a result of the
transaction. Lockheed Martin will pay all foreign stock transfer taxes, except
as otherwise provided in Instruction 7 of the Letter of Transmittal.
Lockheed Martin will pay to a Soliciting Dealer (as defined herein), a
solicitation fee of $1.00 per share, up to a maximum of 1,000 shares, for each
share of Lockheed Martin Common Stock tendered and accepted for exchange
pursuant to the Exchange Offer if such Soliciting Dealer has solicited and
obtained such tender, except that no solicitation fee shall be payable in
connection with a tender of shares of Lockheed Martin Common Stock by a
shareholder owning more than 10,000 shares of Lockheed Common Stock or to the
Dealer Manager. "Soliciting Dealer" includes (i) any broker or dealer in
securities which is a member of any national securities exchange or of the
National Association of Securities Dealers, Inc. or (ii) any bank or trust
company. In order for a Soliciting Dealer to receive a solicitation fee with
respect to the tender of shares of Lockheed Martin Common Stock, the Exchange
Agent must have received a properly completed and executed form (from the
Letter of Transmittal) entitled "Notice of Solicited Tenders."
No fee shall be paid to a Soliciting Dealer with respect to shares of
Lockheed Martin Common Stock beneficially owned by such Soliciting Dealer or
with respect to any shares that are registered in the name of a Soliciting
Dealer unless such shares are held by such Soliciting Dealer as nominee and
are tendered for the benefit of beneficial holders identified in the Letter of
Transmittal. No such fee shall be payable to a Soliciting Dealer if such
Soliciting Dealer is required for any reason to transfer the amount of such
fee to a tendering holder (other than itself). No broker, dealer, bank, trust
company or fiduciary shall be deemed to be the agent of Lockheed Martin,
Materials, the Exchange Agent, the Dealer Manager or the Information Agent for
purposes of the Exchange Offer.
Enclosed is a copy of each of the following documents:
1. The Offering Circular--Prospectus.
2. The Question and Answer Letter.
3. The Letter of Transmittal for your use and for the information of your
clients.
4. The Notice of Guaranteed Delivery.
5. A form of letter which may be sent to your clients for whose account
you hold shares of Lockheed Martin Common Stock registered in your name
or the name of your nominee with space provided for obtaining the
clients' instructions with regard to the Exchange Offer.
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
7. A return envelope addressed to First Chicago Trust Company of New York,
the Exchange Agent.
Your prompt action is requested. The Exchange Offer will expire at Midnight,
New York City time, on October 18, 1996, or if extended by Lockheed Martin,
the latest date and time to which extended (the "Expiration Date"). Shares of
Lockheed Martin Common Stock tendered pursuant to the Exchange Offer may be
withdrawn, subject to the procedures described in the Offering Circular--
Prospectus, at any time prior to the Expiration Date and after November 12,
1996, if not theretofore accepted for exchange.
To participate in the Exchange Offer, certificates for shares of Lockheed
Martin Common Stock (or evidence of a book-entry delivery into the Exchange
Agent's account at The Depository Trust Company) and a duly executed and
properly completed Letter of Transmittal or a manually signed facsimile
thereof together with any other required documents must be delivered to the
Exchange Agent as indicated in the Exchange Offer. PLEASE NOTE THAT CERTAIN
AGGREGATE OWNERSHIP INFORMATION IS BEING REQUESTED OF YOUR CLIENTS WHICH YOU
ARE REQUIRED TO FORWARD TO THE EXCHANGE AGENT IN YOUR LETTER OF TRANSMITTAL.
If holders of shares of Lockheed Martin Common Stock wish to tender, but it
is impracticable for them to forward their shares of Lockheed Martin Common
Stock prior to the Expiration Date, a tender may be effected by following the
guaranteed delivery procedures described in the Offering Circular--Prospectus
under "The Exchange Offer--Guaranteed Delivery Procedures."
Additional information concerning the Exchange Offer and additional copies
of the enclosed material may be obtained from Morrow & Co., Inc., the
Information Agent at (800) 662-5200.
Very truly yours,
LOCKHEED MARTIN CORPORATION
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF LOCKHEED MARTIN, MATERIALS, THE EXCHANGE AGENT, THE
DEALER MANAGER OR THE INFORMATION AGENT, OR AUTHORIZE YOU OR ANY OTHER PERSON
TO MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM WITH RESPECT TO THE EXCHANGE
OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE OFFERING CIRCULAR--
PROSPECTUS OR THE LETTER OF TRANSMITTAL.
2
LOCKHEED MARTIN CORPORATION
OFFER TO EXCHANGE 4.72 SHARES OF
COMMON STOCK OF MARTIN MARIETTA MATERIALS, INC. FOR
EACH SHARE OF COMMON STOCK OF LOCKHEED MARTIN
CORPORATION UP TO AN AGGREGATE OF
SHARES OF COMMON STOCK OF LOCKHEED MARTIN CORPORATION
To Our Clients:
Enclosed for your consideration is an Offering Circular--Prospectus dated
September 16, 1996 (the "Offering Circular--Prospectus") and a form of Letter
of Transmittal (the "Letter of Transmittal"; and together with the Offering
Circular--Prospectus, the "Exchange Offer") relating to the offer by Lockheed
Martin Corporation ("Lockheed Martin") to exchange 4.72 shares of common
stock, par value $.01 per share, of Martin Marietta Materials, Inc.
("Materials Common Stock") for each share tendered of common stock, par value
$1.00 per share, of Lockheed Martin ("Lockheed Martin Common Stock") up to an
aggregate of 7,913,136 shares of Lockheed Martin Common Stock tendered and
exchanged.
The material is being forwarded to you as the beneficial owner of shares of
Lockheed Martin Common Stock carried by us in your account but not registered
in your name. A tender of such shares of Lockheed Martin Common Stock may only
be made by us as the registered holder and pursuant to your instructions.
Therefore, Lockheed Martin urges holders of shares of Lockheed Martin Common
Stock registered in the name of a broker, dealer, commercial bank, trust
company or other nominee to contact such registered holder promptly if they
wish to accept the Exchange Offer.
Accordingly, we request instructions as to whether you wish us to tender any
or all such shares of Lockheed Martin Common Stock held by us for your account
pursuant to the terms and conditions set forth in the enclosed Offering
Circular--Prospectus and the related Letter of Transmittal.
Your instructions to us should be forwarded as promptly as possible in order
to permit us to tender shares of Lockheed Martin Common Stock in accordance
with the provisions of the Exchange Offer. The Exchange Offer will expire at
Midnight, New York City time, on Friday, October 18, 1996, or if extended by
Lockheed Martin, the latest date and time to which extended (the "Expiration
Date"). Shares of Lockheed Martin Common Stock tendered pursuant to the
Exchange Offer may be withdrawn, subject to the procedures described in the
Offering Circular--Prospectus, at any time prior to the Expiration Date and
after November 12, 1996, if not theretofore accepted for exchange.
Your attention is directed to the following:
1. The Exchange Offer is for up to an aggregate of 7,913,136 shares of
Lockheed Martin Common Stock.
2. Lockheed Martin's obligation to accept shares of Lockheed Martin Common
Stock tendered in the Exchange Offer is subject to certain conditions
specified in the Offering Circular--Prospectus.
3. No domestic stock transfer taxes will be payable as a result of the
transaction. Lockheed Martin will pay all foreign stock transfer taxes,
except as otherwise provided in Instruction 7 of the Letter of
Transmittal.
If you wish to have us tender any or all of your shares of Lockheed Martin
Common Stock, please so instruct us by completing, executing and returning to
us the instruction form which appears on the reverse side of this letter. THE
LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATION ONLY AND MAY NOT BE
USED BY YOU TO TENDER SHARES OF LOCKHEED MARTIN COMMON STOCK.
INSTRUCTIONS
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer of Lockheed Martin
Corporation (the "Company") relating to the common stock, par value $1.00 per
share, of Lockheed Martin ("Lockheed Martin Common Stock").
This will instruct you to tender the shares of Lockheed Martin Common Stock
indicated below held by you for the account of the undersigned, pursuant to
the terms of and conditions set forth in the Offering Circular--Prospectus and
the Letter of Transmittal.
Box 1 [_]Please tender all of my shares of Lockheed Martin Common Stock
held by you for my account.
Box 2 [_]Please tender _____(number) of the shares of Lockheed Martin
Common Stock held by you for my account.
Box 3 [_]Please do not tender any of my shares of Lockheed Martin Common
Stock held by you for my account.
- -------------------------------------------------------------------------------
IMPORTANT--IF YOU HAVE CHECKED EITHER BOX 1 OR BOX 2 ABOVE THEN YOU MUST
PROVIDE THE AGGREGATE OWNERSHIP INFORMATION REQUESTED BELOW.
- -------------------------------------------------------------------------------
AGGREGATE OWNERSHIP INFORMATION
Instructions:
1. You must check either the box marked "Yes" or "No" below.
2. For purposes of this section, you should assume that there will be no
proration in the Exchange Offer and that each share of Lockheed Martin
Common Stock tendered will be exchanged for 4.72 shares of Materials
Common Stock.
3. In calculating your ownership of Materials Common Stock for purposes of
this section, you must include shares of Materials Common Stock owned
by any person with whom you are or were acting pursuant to a plan or
arrangement with respect to the acquisition of Materials Common Stock,
including shares now owned by such person, shares to be acquired by
such person in the Exchange Offer and shares to be acquired by such
person apart from the Exchange Offer.
YES[_] I/We intend to own, directly or indirectly, individually, beneficially
or otherwise, 2,000,000 or more shares of Materials Common Stock upon
consummation of the Exchange Offer.
NO [_] I/We do not intend to own, directly or indirectly, individually,
beneficially or otherwise, 2,000,000 or more shares of Materials Common
Stock upon consummation of the Exchange Offer.
IF YOU CHECKED THE BOX MARKET "YES" ABOVE, YOU MUST PROVIDE THE
FOLLOWING INFORMATION:
How many shares of Materials Common Stock do you currently own,
directly or indirectly, individually, beneficially or
otherwise?___________________________
How many additional shares of Materials Common Stock do you intend to
acquire by purchase or otherwise, to be owned directly or indirectly,
individually, beneficially or otherwise, upon or before completion of
the Transaction? (Do not include shares to be received pursuant to the
Exchange Offer.)_______________________
How many shares of Materials Common Stock are owned, directly or
indirectly, individually, beneficially or otherwise, by any person with
whom you are or were acting pursuant to a plan or arrangement with
respect to the acquisition of Materials Common Stock?__________________
Questions-continued on next page.
2
How many shares of Materials Common Stock are intended to be acquired
by purchase or otherwise, to be owned directly or indirectly,
individually, beneficially or otherwise, by any person with whom you
are or were acting pursuant to a plan or arrangement upon or before
completion of the Transaction with respect to the acquisition of
Materials Common Stock? (Do not include shares to be received pursuant
to the Exchange Offer.)_______________________________
How many shares of Materials Common Stock will be received pursuant to
the Exchange Offer, to be owned directly or indirectly, individually,
beneficially or otherwise, by any person with whom you are or were
acting pursuant to a plan or arrangement with respect to the
acquisition of Materials Common Stock?_____________________
- -------------------------------------------------------------------------------
ODD LOTS
[_] By checking this box, the undersigned represents that the undersigned owned
beneficially and of record as of September 13, 1996, an aggregate of less
than 100 shares of Lockheed Martin Common Stock and is tendering all such
shares.
- -------------------------------------------------------------------------------
NOTICE OF SOLICITED TENDERS
Lockheed Martin will pay to a Soliciting Dealer, as defined in the Offering
Circular--Prospectus, a solicitation fee of $1.00 per share, up to a maximum
of 1,000 shares, for each share of Lockheed Martin Common Stock tendered and
exchanged pursuant to the Exchange Offer in cases where such tenders are
affirmatively solicited by the Soliciting Dealer, except that no solicitation
fee shall be payable (i) in connection with a tender of Lockheed Martin Common
Stock by a stockholder (x) tendering more than 10,000 shares of Lockheed
Martin Common Stock or (y) tendering from a country outside of the United
States; or (ii) to the Dealer Manager. In addition, no such fee shall be
payable to a Soliciting Dealer if such Soliciting Dealer is required for any
reason to transfer the amount of such fee to a tendering holder (other than
itself). No broker, dealer, bank, trust company or fiduciary shall be deemed
to be the agent of Lockheed Martin, Materials, the Exchange Agent, the
Information Agent or the Dealer Manager for purposes of the Exchange Offer.
[_] By checking this box, the undersigned represents that his or her tender was
affirmatively solicited by the Soliciting Dealer listed below:
Name of Firm: _________________________________________________________________
(Please Print)
Name of Individual Broker or Financial Consultant: ____________________________
Identification Number (if known): _____________________________________________
Address: ______________________________________________________________________
(Include Zip Code)
3
SIGNATURE
Dated:_______________________________ _____________________________________
_____________________________________
SIGNATURE(S)
_____________________________________
_____________________________________
PLEASE PRINT NAME(S) HERE
UNLESS A SPECIFIC CONTRARY INSTRUCTION IS GIVEN IN THE SPACE PROVIDED, YOUR
SIGNATURE(S) HEREON SHALL CONSTITUTE AN INSTRUCTION TO US TO TENDER ALL OF YOUR
SHARES OF LOCKHEED MARTIN COMMON STOCK.
4
LOCKHEED MARTIN CORPORATION
NOTICE OF GUARANTEED DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
As set forth in the Offering Circular--Prospectus dated September 16, 1996
(the "Offering Circular--Prospectus") in the section entitled "The Exchange
Offer--Guaranteed Delivery Procedures" and in the accompanying Letter of
Transmittal (the "Letter of Transmittal"; and together with the Offering
Circular--Prospectus, the "Exchange Offer") and Instruction 1 thereto, this
form or one substantially equivalent hereto must be used to accept the
Exchange Offer if certificates for shares of common stock, par value $1.00 per
share, of Lockheed Martin Corporation ("Lockheed Martin Common Stock") are not
immediately available or time will not permit such holder's certificates or
other required documents to reach the Exchange Agent prior to the Expiration
Date (as defined in the Offering Circular--Prospectus) of the Exchange Offer.
This form may be delivered by hand or sent by facsimile transmission or mail
to the Exchange Agent.
To: First Chicago Trust Company of New York, Exchange Agent
By Mail: By Facsimile Transmission: By Hand or Overnight Courier:
P.O. Box 2569 (201) 222-4720 14 Wall Street, 8th Floor
Tenders & Exchanges or Suite 4680-LMC
Suite 4660 (201) 222-4721 New York, New York 10005
Jersey City,
New Jersey 07303-2569
To Confirm Receipt of Notice of Guaranteed Delivery By Telephone:
(201) 222-4707
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN
AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the Instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tenders to Lockheed Martin Corporation the shares of
Lockheed Martin Common Stock listed below, upon the terms of and subject to
the conditions set forth in the Offering Circular--Prospectus and the related
Letter of Transmittal and the instructions thereto, receipt of which is hereby
acknowledged, pursuant to the guaranteed delivery procedures set forth in the
Offering Circular--Prospectus, as follows:
Certificate No. Number of Shares
_____________________________________ _____________________________________
_____________________________________ _____________________________________
_____________________________________ _____________________________________
_____________________________________ _____________________________________
The Book-Entry Transfer Facility Ac- Sign Here
count Number (if the shares of Lock-
heed Martin Common Stock will be
tendered by book-entry transfer)
_____________________________________ _____________________________________
ACCOUNT NUMBER
_____________________________________ _____________________________________
NUMBER OF SHARES SIGNATURE(S)
Dated: ________________________, 1996 _____________________________________
NUMBER AND STREET OR P.O. BOX
_____________________________________
CITY, STATE, ZIP CODE
ODD LOTS
This section is to be completed ONLY if shares of Lockheed Martin Common
Stock are being tendered by or on behalf of a person owning beneficially and
of record an aggregate of less than 100 shares of Lockheed Martin Common Stock
as of September 13, 1996.
The undersigned either (check one):
[_]was the owner beneficially and of record of less than 100 shares of
Lockheed Martin Common Stock in the aggregate as of September 13, 1996,
all of which are being tendered, or
[_]is a broker, dealer, commercial bank, trust company or other nominee
which (i) is tendering, for the beneficial owners thereof, shares of
Lockheed Martin Common Stock with respect to which it is the record
owner, and (ii) believes, based upon representations made to it by each
such beneficial owner, that such owner owned beneficially and of record
less than 100 shares of Lockheed Martin Common Stock as of September 13,
1996, and is tendering all such shares.
2
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agents Medallion
Program or the New York Stock Exchange Medallion Signature Guarantee Program
or the Stock Exchange Medallion Program, (a) represents and guarantees that
the above-named person(s) "own(s)" the shares of Lockheed Martin Common Stock
tendered hereby within the meaning of Rule 14e-4 of the Securities Exchange
Act of 1934, as amended, and (b) guarantees delivery to the Exchange Agent of
certificates for the shares of Lockheed Martin Common Stock tendered hereby,
in proper form for transfer or delivery of such shares of Lockheed Martin
Common Stock pursuant to procedures for book-entry transfer, in either case
with delivery of a properly completed and duly executed Letter of Transmittal
(or manually signed facsimile thereof) and any other required documents,
unless an Agent's Message is utilized, all within three New York Stock
Exchange trading days after the date hereof.
_____________________________________
Firm Name (Print)
_____________________________________
Authorized Signature
_____________________________________
Address
_____________________________________
City, State, Zip Code
_____________________________________
Area Code and Telephone Number
Date __________________________, 1996
DO NOT SEND CERTIFICATE OR ANY OTHER REQUIRED DOCUMENTS
WITH THIS FORM. THEY SHOULD BE SENT WITH THE LETTER OF
TRANSMITTAL (UNLESS A BOOK-ENTRY TRANSFER FACILITY IS USED).
3
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.-- Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
- ----------------------------------- -----------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- --------------------------------------------
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, the first
individual on
the account(1)
3. Husband and wife (joint The actual owner
account) of the account
or, if joint
funds, either
person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is the
only
contributor, the
minor(1)
6. Account in the name of The ward, minor,
guardian or committee or incompetent
for a designated ward, person(3)
minor, or incompetent
person
7.a The usual revocable The grantor-
savings trust account trustee(1)
(grantor is also
trustee)
b So-called trust account The actual
that is not a legal or owner(1)
valid trust under State
law
8. Sole proprietorship The owner(4)
account
- --------------------------------------------
- ----------------------------------------------
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- ----------------------------------------------
9. A valid trust, estate, The legal entity
or pension trust (Do not furnish
the identifying
number of the
personal
representative
or trustee
unless the legal
entity itself is
not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, The organization
or educational
organization account
12. Partnership account The partnership
held in the name of the
business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or
nominee nominee
15. Account with the The public
Department of entity
Agriculture in the name
of a public entity
(such as a State or
local government,
school district, or
prison) that receives
agricultural program
payments
- ----------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local office
of the Social Security Administration or the Internal Revenue Service and
apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual
retirement plan.
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
. An entity registered at all times under the investment Company Act of
1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT
TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM.
Certain payments other than interest dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1984, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer.
Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you
fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
under-payment attributable to that failure unless there is clear and
convincing evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
QUESTIONS AND ANSWERS
LOCKHEED MARTIN CORPORATION EXCHANGE OFFER FOR COMMON STOCK OF MARTIN MARIETTA
MATERIALS, INC.
Q1. What is the split-off and what is the Exchange Offer?
A1. The split-off is a tax-free exchange which allows stockholders to
tender some, all or none of their shares of Lockheed Martin Common
Stock in return for shares of Materials Common Stock. The number of
shares of Materials Common Stock that Lockheed Martin will distribute
for each share of Lockheed Martin Common Stock accepted is specified
by the exchange ratio described in the Offering Circular-Prospectus.
This exchange ratio is 4.72 shares of Materials Common Stock for each
share of Lockheed Martin Common Stock tendered and accepted for
exchange.
The Exchange Offer is the formal offer to Lockheed Martin stockholders
to participate in the split-off.
Q2. How do I accept the Exchange Offer?
A2. Complete and sign the Letter of Transmittal designating the number of
shares of Lockheed Martin Common Stock you wish to tender. Send it,
together with your Lockheed Martin stock certificate(s) and any other
required documents (as described in the Letter of Transmittal) to the
Exchange Agent, First Chicago Trust Company of New York, at the
address listed on the back cover of the Offering Circular-Prospectus.
Do not send your certificates to Lockheed Martin, Materials, the
Dealer Manager (Morgan Stanley), or the Information Agent (Morrow &
Co., Inc.). If your shares are held in an account with your broker or
bank, you must ask that institution to tender your shares for you.
Q3. How many shares of Materials Common Stock will I receive if I
participate in the Exchange Offer?
A3. Generally, you will receive 4.72 shares of Materials Common Stock for
each share of Lockheed Martin Common Stock validly tendered and
accepted for exchange. The number of your shares that will be accepted
for exchange will depend on the total number of shares of Lockheed
Martin Common Stock tendered by all Lockheed Martin stockholders. If
7,913,136 or fewer shares of Lockheed Martin Common Stock are tendered
for exchange and the Exchange Offer is consummated, all of your
tendered shares of Lockheed Martin Common Stock will be accepted, and
you will receive 4.72 shares of Materials Common Stock for each share
of Lockheed Martin Common Stock tendered. If more than 7,913,136
shares of Lockheed Martin Common Stock are tendered for exchange,
proration will occur and less than all Lockheed Martin shares tendered
will be accepted for exchange unless you qualify under the special
provision for odd-lot holders.
Q4. What will happen if fewer than 5,275,424 shares of Lockheed Martin
Common Stock are tendered, i.e., the Exchange Offer is under-
subscribed?
A4. If at least 5,275,424 shares of Lockheed Martin Common Stock
(approximately 2.6 percent of the shares of Lockheed Martin Common
Stock outstanding) are tendered and the other conditions to the offer
are satisfied, the Exchange Offer will proceed. That will result in a
distribution of at least 66 2/3 percent of the shares of Materials
Common Stock owned by Lockheed Martin in exchange for shares of
Lockheed Martin Common Stock tendered. The remaining shares of
Materials Common Stock held by Lockheed Martin will be distributed to
Lockheed Martin stockholders of record as soon as practicable after
the Exchange Offer through a spin-off on a pro rata basis. If fewer
than 5,275,424 shares of Lockheed Martin Common Stock are tendered,
Lockheed Martin is not obligated to proceed with the Exchange Offer.
Q5. What if more than 7,913,136 shares of Lockheed Martin Common Stock are
tendered, i.e., the offer is oversubscribed?
A5. If more than 7,913,136 shares of Lockheed Martin Common Stock are
validly tendered and not withdrawn prior to the Expiration Date,
Lockheed Martin will accept those shares on a pro rata basis (except
for odd-lot tenders, which will not be subject to proration), based on
the number of shares of Lockheed Martin Common Stock each stockholder
has tendered in the offer (not based on the stockholder's aggregate
ownership of Lockheed Martin). Generally, the formula to determine the
proration factor is 7,913,136 divided by the total number of shares of
Lockheed Martin Common Stock tendered for exchange. This fraction,
multiplied by the number of shares you tendered, will determine the
number of your shares of Lockheed Martin Common Stock which will be
accepted for exchange. Any tendered shares of Lockheed Martin Common
Stock not accepted for exchange will be returned to tendering
stockholders.
Q6. When does the Exchange Offer expire?
A6. The Exchange Offer is scheduled to expire at 12:00, midnight, New York
City time, on October 18, 1996, unless extended.
To participate, registered stockholders (i.e., recordholders) must
deliver to the Exchange Agent (First Chicago Trust Company of New
York) a completed Letter of Transmittal and all other required
documents specified in the Letter of Transmittal--including the
stockholder's stock certificate(s) or a Notice of Guaranteed
Delivery--not later than midnight on October 18, 1996. The documents
must be received by First Chicago on that day--a postmark will not
constitute a valid tender.
If you provide a Notice of Guaranteed Delivery instead of the stock
certificate(s) at the time you submit your Letter of Transmittal, you
must then physically deliver the stock certificate(s) not later than
three New York Stock Exchange trading days after the expiration of the
offer period.
Your Lockheed Martin shares will not be accepted at Lockheed Martin or
Materials corporate headquarters. If your shares are held in an
account with a broker or bank, we strongly recommend that you submit
your instructions to the broker or bank well in advance of the
expiration date.
Q7. My shares of Lockheed Martin Common Stock are held by my broker. How
do I proceed if I want to participate in the Exchange Offer?
A7. If your shares are held by your broker and are not certificated in
your name (i.e., if your shares are in "street name"), you should
receive instructions from your broker on how to participate in the
Exchange Offer. In this situation, you do not need to complete the
Letter of Transmittal. If you have not yet received instructions from
your broker, please contact your broker directly.
Q8. If I cannot find my Lockheed Martin share certificates, what should I
do to participate in the exchange offer?
A8. You should contact the Exchange Agent (First Chicago Trust Company of
New York) by calling (800) 519-3111 and inform the Exchange Agent of
your situation. You will receive an affidavit to complete and you will
be informed of the amount needed to pay for a surety bond for your
lost shares (equal to 2 percent of the average market price on the
date of notification). Upon receipt of the completed affidavit, the
surety bond payment and the completed Letter of Transmittal, your
shares will be included in the Exchange Offer. You will need to act
quickly to ensure that the lost certificates can be replaced prior to
expiration of the Exchange Offer.
Q9. How do employees who own Lockheed Martin Common Stock through a plan
sponsored by Lockheed Martin (or a subsidiary) tender their shares?
2
A9. Special procedures apply to employee benefit plans sponsored by
Lockheed Martin (or a subsidiary). The plan trustee is the stockholder
of record for the plan and therefore the Exchange Offer is directed to
the trustee who will complete the Letter of Transmittal and other
transfer documents on behalf of the plan. Certain of those plans,
however, do permit participants to direct the trustee as to the manner
in which to respond to the Exchange Offer for shares attributable to
participants' accounts. Participants in those plans will be advised by
the trustee of the procedures to follow for providing instructions to
the trustee. You will need to act quickly to ensure that the trustee
receives your instructions in time to allow the trustee to tender on a
timely basis. For shares not allocated to participant accounts and for
all other plans, the trustee will determine the manner in which to
respond to the Exchange Offer on behalf of the plan.
Q10. Can I exchange the shares I have in Lockheed Martin's Dividend
Reinvestment and Stock Purchase Plan for Materials Common Stock?
A10. Yes. To tender Dividend Reinvestment and Stock Purchase Plan ("DRP")
shares, please check the first box found in Section I.B of the Letter
of Transmittal entitled "Dividend Investment and Stock Purchase Plan
Shares," then indicate whether you wish to tender all DRP shares or
only a certain number of whole shares in the applicable boxes. If you
do not otherwise indicate, you will be deemed to have tendered all
shares in your DRP account.
Q11. If I have not yet submitted my Martin Marietta Corporation or Lockheed
Corporation stock certificates for exchange into Lockheed Martin
Corporation stock certificates following the combination of Martin
Marietta Corporation and Lockheed Corporation in March, 1995, may I
still participate in the Exchange Offer?
A11. Yes. Simply follow all the instructions for tendering your shares in
the Exchange Offer but submit your Martin Marietta Corporation or
Lockheed Corporation stock certificates in place of the Lockheed
Martin stock certificates. Remember, however, that each share of
Lockheed Corporation common stock has been converted into the right to
receive 1.63 shares of Lockheed Martin Common Stock, while each share
of Martin Marietta Corporation common stock has been converted into
the right to receive one share of Lockheed Martin Common Stock. If you
cannot locate your stock certificates, contact the Exchange Agent
(First Chicago Trust Company of New York) by calling (800) 519-3111
and inform the Exchange Agent of your situation.
Q12. Is there special treatment for odd-lot holders?
A12. Yes. If you own fewer than 100 shares of Lockheed Martin Common Stock
and tender all such shares for exchange, you may request preferential
treatment by completing Section I. C. of the Letter of Transmittal
entitled "Odd Lot Shares." If the Exchange Offer is consummated, all
of your shares will be accepted for exchange, and you will not be
subject to proration. However, if you are an employee of Lockheed
Martin who owns shares of Lockheed Martin Common Stock through a plan
sponsored by Lockheed Martin (or a subsidiary), you are not eligible
for this preferential treatment.
Q13. When will tendering stockholders know the outcome of the Exchange
Offer?
A13. Preliminary results of the Exchange Offer, including any preliminary
proration factor, will be announced by press release as promptly as
practicable after the expiration of the Exchange Offer. Lockheed
Martin stockholders may also contact Morrow & Co., Morgan Stanley or
their broker to inquire about preliminary results approximately three
(3) business days after expiration of the Exchange Offer. Announcement
of any final proration factor should occur approximately seven
business days after the expiration of the Exchange Offer.
3
Q14. If I participate in the Exchange Offer, when will I receive my new
Materials certificates?
A14. The Exchange Agent (First Chicago Trust Company of New York) will
coordinate with the Materials' transfer agent (First Union National
Bank of North Carolina) who will mail your new Materials certificates
within approximately three weeks after the Expiration Date of the
Exchange Offer.
Q15. What will happen to third-quarter dividends that I should receive on
my shares of Lockheed Martin Common Stock?
A15. The Board of Directors of Lockheed Martin declared a third-quarter
dividend for 1996 of 40 cents a share on outstanding shares of
Lockheed Martin Common Stock. The dividend is payable on September 30,
1996, to stockholders of record at the close of business on September
3, 1996. You will receive third quarter dividends on September 30 as
long as you were a Lockheed Martin stockholder of record at the close
of business on September 3. It does not matter if you tender your
shares prior to September 30.
Q16. Will the exchange of shares of Lockheed Martin Common Stock for shares
of Materials Common Stock be taxable to Lockheed Martin stockholders?
Do stockholders have to pay taxes on shares of Materials Common Stock
received in the Exchange Offer?
A16. No. Although the IRS will not be asked to rule on the Transaction and
will not be bound by Lockheed Martin's treatment of the Transaction,
King & Spalding, special tax counsel to Lockheed Martin, has issued
its opinion to Lockheed Martin stating that the exchange of shares of
Lockheed Martin Common Stock for shares of Materials Common Stock will
not be taxable to Lockheed Martin stockholders for United States
federal income tax purposes. The receipt of cash for a fractional
share of Materials Common Stock will be taxable as a capital gain or
loss if your Lockheed Martin Common Stock was held as a capital asset.
Q17. What will be the tax basis of shares of Materials Common Stock I
receive in exchange for my shares of Lockheed Martin Common Stock?
A17. If you tender all of your shares of Lockheed Martin Common Stock (and
all are accepted for exchange by Lockheed Martin), the tax basis in
shares of Materials Common Stock you receive in the exchange will
equal your total tax basis in shares of Lockheed Martin Common Stock
before the exchange.
If you tender less than all of your shares of Lockheed Martin Common
Stock, or less than all of your shares of Lockheed Martin Common Stock
are accepted for exchange, the total tax basis in the shares of
Lockheed Martin Common Stock and Materials Common Stock received in
the exchange that you hold immediately after the exchange also should
equal your total tax basis in shares of Lockheed Martin Common Stock
before the exchange; however, the basis of the shares of Materials
Common Stock you receive will not necessarily equal the basis of the
shares of Lockheed Martin Common Stock that are accepted for exchange.
The portion of your total tax basis allocated to the shares of
Materials Common Stock you receive in the Exchange Offer will equal
your old tax basis in the shares of Lockheed Martin Common Stock
multiplied by a fraction. The fraction will be equal the aggregate
fair market value of the shares of Materials Common Stock you receive
in the Exchange Offer divided by the fair market value of the shares
of Materials Common Stock plus the fair market value of the shares of
Lockheed Martin Common Stock on the date of the exchange. Stated as a
formula, the basis in your shares of Materials Common Stock received
in the Exchange Offer may be determined as follows:
4
Basis in Basis in FMV of FMV of
Materials Lockheed Materials Materials
Common Martin Common Common
Stock = Common X Stock / Stock
received in Stock prior Received in Received in
the to the the the
Exchange Exchange Exchange Exchange
Offer Offer Offer Offer Plus
FMV of
Lockheed
Martin
Common
Stock held
immediately
after the
Exchange
Offer
If additional shares of Materials Common Stock are received in a spin-
off, the same determination must be repeated using the basis in the
shares of Lockheed Martin Common Stock as determined following the
Exchange Offer pursuant to the approach described in A18 or A19 below.
Q18. What will be the tax basis in shares of Lockheed Martin Common Stock
that are not exchanged pursuant to the Exchange Offer?
A18. If you tender less than all of your shares of Lockheed Martin Common
Stock, or less than all of your shares of Lockheed Martin Common Stock
are accepted for exchange, the tax total basis in your remaining
shares of Lockheed Martin Common Stock will not equal the total tax
basis in the shares of Lockheed Martin Common Stock before the
exchange. The total tax basis in your unexchanged shares of Lockheed
Martin Common Stock after the transaction will equal your total tax
basis in shares of Lockheed Martin Common Stock before the exchange,
less the basis allocated to shares of Materials Common Stock as
determined under the calculation described in A17 above.
Q19. What will be the tax basis in shares of Lockheed Martin Common Stock
which are not exchanged pursuant to the Exchange Offer if I have
blocks of shares of Lockheed Martin Common Stock which have different
per share tax bases?
A19. While the proper tax treatment is not clear, it may be reasonable to
take the position that the tax basis of each block of shares of
Lockheed Martin Common Stock may be reduced proportionately for the
basis allocated to your shares of Materials Common Stock. Please
consult with your tax advisor before applying this approach to your
specific situation.
Q20. What will be the tax basis in shares of Materials Common Stock
received with respect to blocks of shares of Lockheed Martin Common
Stock which have different per share tax basis?
A20. While the proper treatment is not clear, it is possible that the
relative basis disparities in the blocks of shares of Lockheed Martin
Common Stock may be preserved in different blocks of shares of
Materials Common Stock or it is possible that the tax basis in each of
the shares of Materials Common Stock may be uniform. Please consult
with your tax advisor.
Q21. Who should I contact for additional information about the Exchange
Offer?
A21. You can obtain additional information by calling the Information
Agent, Morrow & Co., Inc., at 1-800-566-9058, toll free.
THESE QUESTIONS AND ANSWERS CONTAIN SUMMARIES OF MORE DETAILED INFORMATION
FOUND IN THE OFFERING CIRCULAR-PROSPECTUS AND THE LETTER OF TRANSMITTAL, AND
ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE OFFERING CIRCULAR-
PROSPECTUS AND THE LETTER OF TRANSMITTAL.
5
[LETTERHEAD OF LOCKHEED MARTIN APPEARS HERE]
IMPORTANT NOTICE
TO HOLDERS OF COMMON STOCK OF
MARTIN MARIETTA CORPORATION
On March 16, 1995, you were advised that the combination of Lockheed
Corporation and Martin Marietta Corporation was approved by the stockholders of
each company at special stockholders meetings held on March 15, 1995. As a
result of the combination, holdings formerly representing Martin Marietta
Corporation common stock were converted into the right receive Lockheed Martin
Corporation common stock in the ratio of one share of Lockheed Martin
Corporation common stock for each share of Martin Marietta Corporation common
stock.
Our records indicate that you have not yet submitted your stock
certificates representing Martin Marietta Corporation shares for exchange.
Lockheed Martin Corporation is now commencing an exchange offer
through which it is offering its stockholders an opportunity to exchange 4.72
shares of common stock of Martin Marietta Materials, Inc. owned by Lockheed
Martin Corporation for each share of Lockheed Martin Corporation common stock.
The terms and conditions of the exchange offer are detailed in the enclosed
exchange offer materials.
You may participate in the exchange offer even if you have not yet
exchanged your Martin Marietta Corporation stock certificates for Lockheed
Martin Corporation stock certificates (or even if you cannot locate your
certificates). Simply follow all the instructions for tendering your shares in
the exchange offer contained in the enclosed Offering Circular-Prospectus and
Letter of Transmittal but submit your Martin Marietta stock certificates in
place of the Lockheed Martin stock certificates.
Questions relating to any lost, stolen or destroyed stock certificates
should be directed to First Chicago Trust Company of New York, the exchange
agent for the exchange offer at (800) 519-3111.
Questions relating to the procedures for tendering may be directed to
the Morrow & Co., Inc., the information agent for the exchange offer, at (800)
566-9058.
Sincerely,
Lillian M. Trippett
September 16, 1996
[LETTERHEAD OF LOCKHEED MARTIN APPEARS HERE]
IMPORTANT NOTICE
TO HOLDERS OF COMMON STOCK OF LOCKHEED CORPORATION
On March 16, 1995, you were advised that the combination of Lockheed
Corporation and Martin Marietta Corporation was approved by the stockholders of
each company at special stockholders meetings held on March 15, 1995. As a
result of the combination, holdings formerly representing Lockheed Corporation
common stock were converted into the right to receive Lockheed Martin
Corporation common stock in the ratio of 1.63 shares of Lockheed Martin
Corporation common stock for each share of Lockheed Corporation common stock.
Our records indicate that you have not yet submitted your stock
certificates representing Lockheed Corporation shares for exchange.
Lockheed Martin Corporation is now commencing an exchange offer through
which it is offering its stockholders an opportunity to exchange 4.72 shares of
common stock of Martin Marietta Materials, Inc. owned by Lockheed Martin
Corporation for each share of Lockheed Martin Corporation common stock. The
terms and conditions of the exchange offer are detailed in the enclosed exchange
offer materials.
You may participated in the exchange offer even if you have not yet
exchanged your Lockheed Corporation stock certificates for Lockheed Martin
Corporation stock certificates (or even if you cannot locate your
certificates). Simply follow all the instructions for tendering your shares in
the exchange offer contained in the enclosed Offering Circular-Prospectus and
Letter of Transmittal but submit your Lockheed stock certificates in place of
the Lockheed Martin stock certificates. Remember, however, that each share of
Lockheed Corporation common stock has been converted into the right to receive
1.63 shares of Lockheed Martin common stock.
Questions relating to any lost, stolen or destroyed stock certificates
should be directed to First Chicago Trust Company of New York, the exchange
agent for the exchange offer of (800) 519-3111.
Questions relating to the procedures for tendering may be directed to the
Morrow & Co., Inc., the information agent for the exchange offer, at (800)
566-9058.
Sincerely,
Lillian M. Trippett
September 16, 1996
EXPLANATION OF PROCEDURES CONCERNING
EXCHANGE OF LOCKHEED MARTIN CORPORATION COMMON STOCK
FOR MARTIN MARIETTA MATERIALS, INC. COMMON STOCK
September 16, 1996
Purpose of this Document
According to our records, you are a participant in one or more savings
plans or 401(k) plans (these plans are referred to in this explanation as
"Individual Account Plans") maintained by Lockheed Martin Corporation ("LMC") or
its subsidiaries which permit the investment of a portion of your plan account
in a fund invested in shares of LMC common stock (the "Company Stock Fund" or
"LMC Stock Fund"). This document, which has been prepared by LMC, is being sent
to you by State Street Bank and Trust Company (the "Plan Trustee"), along with
the other materials enclosed in this envelope, because LMC has commenced an
exchange offer (the "Exchange Offer") with its stockholders. Pursuant to the
Exchange Offer, each LMC stockholder is being offered the opportunity to receive
shares of Martin Marietta Materials, Inc. ("Materials"), an 81%-owned subsidiary
of LMC, in exchange for shares of LMC. For each share of LMC common stock
exchanged, a Lockheed Martin stockholder may become entitled to receive ____
shares of Materials common stock, subject to adjustment if the Exchange Offer is
oversubscribed.
Participants in the LMC Stock Fund will be allowed to direct the
Trustee as to whether to exchange LMC shares that are attributable to their
individual accounts. This document (the "Plan Exchange Procedures") is intended
to supplement the other materials enclosed in this package regarding the
Exchange Offer and to explain the procedures that govern your decision whether
to exchange some or all of the LMC stock
- --------------------------------------------------------------------------------
SPECIFICALLY DESIGNATED PORTIONS OF THIS DOCUMENT* CONSTITUTE PART OF A
PROSPECTUS COVERING SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933
- --------------------------------------------------------------------------------
*All of the document except as specifically noted on pages 7-8.
attributable to your account. You should carefully read the Plan Exchange
Procedures and the other materials sent to you, in particular, the Offering
Circular/Prospectus.
These Plan Exchange Procedures are for information purposes only.
Neither LMC, the LMC Board of Directors nor the Plan Trustee makes any
recommendation whether to exchange or to refrain from exchanging LMC shares in
the Exchange Offer. If you have any questions concerning the Exchange Offer,
you should contact the Information Agent for the Exchange Offer at 1-800-566-
9058.
Procedures for Instructing the Trustee With Regard to Your Decision Whether to
Exchange LMC Shares
Enclosed in this envelope is a Participant Instruction Card
("Instruction Card" or "Card") and a self-addressed return envelope. If you
wish to have some or all of the LMC shares attributable to your account
exchanged, you must return the Instruction Card. You should also return the
Instruction Card even if you do NOT want to exchange your LMC shares. The
Instruction Card must be mailed to the address listed on the envelope included
with these Plan Exchange Procedures.
When you examine your Card, you will see that it provides different
election amounts from 0% to 100% in 10% increments. Your selection of one of
these amounts will instruct the Plan Trustee as to what percent of your LMC
shares you want to exchange. The Card also shows the number of LMC shares that
plan records show as attributable to your account as of the close of business on
August 30, 1996, as calculated by the Trustee. The Trustee will calculate a new
number of shares as of the close of business on October 16th. All other
Individual Account Plan transactions received before 4:00 p.m. east coast time
on October 16, 1996 will be processed before the Trustee calculates the new LMC
share amount. It is the October 16th balance which will be used to determine
the number of shares that will be tendered according to your election and
subject to the terms of the Exchange Offer.
You should indicate the shares you wish to exchange, if any, by
checking a percentage, from 0% to 100%, in the appropriate box on your Card. If
you check a box of less than 100% and return the Instruction Card, your Card
will be treated as an instruction to exchange the percentage of LMC shares
listed and an instruction NOT to exchange all remaining LMC shares. For
example, an instruction to exchange 20% of your shares will be treated as an
instruction to exchange 20%
2
of your LMC shares and an instruction not to exchange the remaining 80%.
If you do not wish to exchange any shares, you must return the
----
Instruction Card with the box for 0% checked. If you fail to return a Card,
-----------------------------
send the Card to an improper address, or send an incomplete or incorrect Card,
- ------------------------------------------------------------------------------
an independent fiduciary will decide whether to tender the LMC shares in your
- -----------------------------------------------------------------------------
account, in accordance with plan provisions and applicable law. U.S. Trust
- -----------------------------------------------------------------
Company has been retained to serve as the independent fiduciary and to make the
exchange decision with regard to any LMC shares attributable to participant
accounts for which no properly completed instructions are received.
Your account balance will be updated for purchases or sales of LMC
shares attributable to your account through the close of business on Wednesday,
October 16, 1996, which will be the date used to calculate the actual number of
LMC shares to be exchanged. (This date is called the "Share Determination
Date.") For example, if your Instruction Card shows 100 LMC shares attributable
to your account and you elect to exchange 60% of your shares, but your account
balance as of the Share Determination Date has increased to 120 shares, the
Trustee will exchange 72 LMC shares (i.e., 60% of 120 shares). The LMC shares
exchanged will include fractional shares attributable to your account, to the
extent practicable. LMC shares credited to your account after the Share
Determination Date will not be exchanged.
THE DEADLINE FOR RECEIPT OF YOUR INSTRUCTION CARD IS OCTOBER 11, 1996.
An original signed Instruction Card must be received by mail on or before that
date at the address listed on the enclosed self-addressed envelope. Facsimiles
will NOT be accepted. Although the Exchange Offer closes on October 18, 1996
for individuals who own shares directly, instructions from participants in
Individual Account Plans must be received by October 11th in order to accurately
tabulate instructions and submit Exchange Offer instructions to the Exchange
Agent.
Any instruction regarding the exchange of LMC shares attributable to
your account may be modified so long as your Instruction Card is received by the
close of business on October 11th. If you want to modify your instructions, you
must obtain and mail in a new Instruction Card. A new Card may be obtained by
calling the Information Agent at 1-800-566-9058.
AS REQUIRED BY LAW, ALL EXCHANGE DECISIONS ARE STRICTLY CONFIDENTIAL.
Your exchange decision will be processed by the
3
Plan Trustee and the Exchange Agent. Your exchange decision will not be
disclosed to any member of Lockheed Martin Corporation management.
It is possible that the terms of the Exchange Offer may change. For
example, if too few shares are tendered, it is possible that the length of time
to respond to the Exchange Offer may be extended, the terms of the Exchange
Offer may be changed, or other steps may be taken. You will be notified of any
material changes.
It is possible that, if the number of tendered shares is less than is
required to distribute all of the Materials stock, the remaining Materials
shares will be distributed as a stock dividend to the remaining holders of LMC
shares. If this occurs, appropriate notifications will be sent to all
shareholders, including participants in the Individual Account Plans.
It is also possible that more LMC shares will be tendered than can be
exchanged for Materials stock. In this case, the amount of shares accepted for
exchange will be reduced proportionately. If the Exchange Offer is
oversubscribed by 50%, for example, only 2/3 of the shares you elected to tender
will be accepted for exchange.
Procedures for Handling Accounts After the Close of The Exchange Offer
The Exchange Offer will not affect your ability to buy or sell
additional units in the LMC Stock Fund through contributions or investment
switches through close of business on October 16, 1996. Your ability to sell LMC
shares will not be affected if you return an Instruction Card and elect not to
exchange any LMC shares. If you exchange a portion of your LMC shares, or if you
fail to return a properly completed Instruction Card by October 11, 1996 and the
independent fiduciary exchanges LMC shares on your behalf, the portion of your
account relating to the exchanged shares, as indicated by the elected percentage
on the Instruction Card, WILL NOT BE AVAILABLE for plan transactions until the
exchange is completed in November. This delay is necessary to accurately
process the exchange instructions received from participants.
For example, if you elect to exchange 50% of your LMC shares and 120
LMC shares are attributable to your account as of October 16th, you will only be
able to make plan transactions with regard to 60 of these shares (50% of 120
shares) from October 16th through the completion of the exchange. We anticipate
the exchange will be completed by
4
mid-November. Once the exchange is complete, your entire account will once again
be available for all plan transactions, subject to the various limitations
described below.
There are three ways in which you can learn the number of LMC shares
accepted for exchange. If your Plan has a voice response system, you should be
able to determine your new balances approximately seven days after LMC publicly
announces the result of the Exchange Offer. In addition, you receive quarterly
statements showing your account balance. The quarterly statement for the period
in which the exchange occurs will show a new balance in the Materials Stock Fund
if any shares attributable to your account are exchanged by you or by the
independent fiduciary. In addition, you will receive a transaction confirmation
statement describing the results of the exchange.
Description of Materials Stock Fund
In considering whether to exchange your LMC shares, in addition to
reviewing all of the enclosed communication material, it is very important that
you understand the treatment under your Plan of any Materials common stock that
you receive in exchange for your LMC shares. Materials common stock received by
participants in the Plan will be held in a separate fund, the "Materials Stock
Fund," established as part of completing the exchange. The Materials Stock Fund
will operate in a manner different from the other funds under the Plan. It
will, however, be a unitized fund, like the LMC Stock Fund.
You will not be able to add to your Materials Stock Fund balance. Cash
dividends on Materials common stock will be held in the Materials Stock Fund in
short term investments and will not be invested in shares of Materials common
stock. Distributions from the Materials Stock Fund will be made in cash and not
in shares of stock.
Other than for transfers in the Lockheed Martin Energy Systems, Inc.
Savings Program, transfers out of the Materials Stock Fund will be handled
differently from other investment directions for prior contributions. Normally,
regular investment directions are handled by voice response and result in a
reallocation of a participant's entire account balance derived from prior
contributions. In contrast, transfers out of the Materials Stock Fund must be
made through a customer service representative and not as a reallocation through
the voice response system. A direction to transfer out of the Materials Stock
Fund will involve only the assets transferred out of that Fund and will not
result in a reallocation of
5
other account balances. In addition, a reallocation of your entire prior
contribution account balance and a transfer out of the Materials Stock Fund
cannot be completed on the same day but instead must be requested and processed
separately. Finally, for all plans (including the Lockheed Martin Energy
Systems, Inc. Savings Program), assets transferred out of the Materials Stock
Fund cannot be transferred back into the Materials Stock Fund at a later date.
In any event, the Materials Stock Fund under your Plan will be
terminated as of October 30, 1998. The termination date may be extended in
which case you will be notified of the extension prior to August 1, 1998. If
you have not disposed of your Materials Stock Fund balance by the termination
date, the Plan will provide for the orderly liquidation of the remaining
balances in the Materials Stock Fund as of that date and the reinvestment of the
proceeds in the least volatile investment fund offered under the Plan, as
selected by the Benefit Plan Committee.
The LMC shares presently attributable to your account may come from
different contribution sources, such as employee pre-tax deferrals, employee
after-tax contributions, or company matching contributions. The types and
percentages of contribution sources of Materials shares credited to your account
after the Exchange Offer will be identical to the types and percentages of
contribution sources of the LMC shares in your account on October 16, 1996.
Your balance in the Materials Stock Fund will be available for loans and all
withdrawals (hardship or otherwise) to the extent permitted under the Plan for
those types of contributions.
Description of Tax Consequences
Exchanging LMC shares for Materials shares could change how you are
taxed on the amounts distributed to you from the plan. Depending on the type of
distribution, a participant who takes an in-kind distribution of shares of stock
may elect not to be taxed at the time of distribution on the "net unrealized
appreciation" attributable to certain types of contributions. The "net
unrealized appreciation" is the difference between the value of the units in the
stock fund at the time they were allocated to your account and at the time the
shares representing the value of those units are distributed to you. Net
unrealized appreciation will not be taxed until the stock is sold and the
appreciation is realized.
For tax purposes, the cost basis of the LMC shares currently allocated
to your account will be apportioned
6
between your remaining shares in the LMC Stock Fund and your shares in the
Materials Stock Fund. Distributions upon termination of employment or
withdrawals from the Materials Stock Fund will be made, however, only in cash.
As a result, distributions from the Materials Stock Fund will not be eligible
for "net unrealized appreciation" tax treatment.
For example, suppose that (1) prior to the Exchange Offer, you
intended to receive your entire distribution from the LMC Stock Fund in shares
and (2) after the Exchange Offer, you intend to receive your LMC Stock Fund
balance in shares and your Materials Stock Fund balance in cash. In this case
(and assuming that the value of your Materials stock is equal to the value of
the LMC stock that would have remained in your account if the Exchange Offer had
not occurred) you will pay a higher tax at the time of the distribution (and a
lesser tax upon sale of your LMC shares) than would be the case if you had not
exchanged your LMC shares. This is because the tax due on the appreciation of
the LMC shares would have been deferred until you sold the LMC shares, whereas
you are taxed on the full amount of your cash distribution from the Materials
Stock Fund (less the amount of your after-tax contributions invested in that
fund).
Treatment of Materials Employees
If you will be an employee of Materials after completion of the
Exchange Offer, your balance in the Lockheed Martin Savings and Investment Plan
for Hourly Employees or the Lockheed Martin Performance Sharing Plan will be
transferred to new plans to be established by Materials. Because LMC will no
longer be the parent company of your employer, the treatment of the Materials
Stock Fund may be different than the procedures described in the immediately
preceding section. In addition, the treatment of your investment in the LMC
Stock Fund may change. The terms of the new Materials plans, and not your
existing Lockheed Martin plans will govern how LMC and Materials common stock
attributable to your accounts will be treated.
Materials will provide you with information concerning your new plans
and you may want to consider that information in making your decision as to how
to respond to the Exchange Offer. Materials has provided Lockheed Martin with
the following information ( which does not constitute part of this Prospectus):
7
"Specifically, any remaining shares of LMC stock that were not tendered
for exchange will be held in a separate "LMC Stock Fund" and you will have
a new company stock investment option in your plans for Materials stock
called the "Materials Stock Fund." You will be able to dispose of and
transfer out any balance in the LMC Stock Fund in the same manner and at
the same time as you are able to dispose of and transfer out other assets
in your account. However, you will not be able to add to your LMC stock
balance and any cash dividends from LMC stock will be reinvested
automatically in a new stable value fund. You will not have proxy rights
associated with any LMC shares in your LMC Stock Fund. For income tax
purposes, the cost basis of the LMC Stock currently allocated to your
account as of October 16, 1996 will be apportioned between any remaining
LMC shares and any Materials shares in the Materials Stock Fund.
Additionally, any LMC shares remaining in your LMC Stock Fund will be
liquidated on or about October 31, 1998, and will be reinvested
automatically in a stable value fund option. You will be able to receive
the balance in your LMC Stock Fund in shares of LMC stock if, and only if,
you terminate employment and request a distribution before November 1,
1998."
8
EXCHANGE PROCEDURES
KEY DATES AND TERMS
KEY DATES (Based on schedule as of September 16, 1996; dates are approximate and
- ----------
may change if the Exchange Offer deadline is extended).
Date Event
- --------------------------------------------------------------------------------
September 16, 1996 Exchange Offer Commences - Begin mailing materials
to plan participants
October 11, 1996 Deadline for receipt by Exchange Agent of
Participant Instruction Cards
October Share Determination Date - Participant LMC account
16, 1996 balances updated to reflect transactions through
close of business on October 16, 1996. It is this
balance that will be used to determine the number
of shares exchanged.
October Commencement of restrictions on exchange of all
16, 1996 units in LMC Stock Fund for participants who
directed Trustee to exchange all or a percentage
of LMC account (or participants who provided no
properly completed directions in the event the
independent fiduciary directs an exchange of
shares for those accounts). Restrictions only
apply to tendered portion of account.
October 18, 1996 Exchange offer closes -Trustee submits exchange
instructions to LMC Exchange Agent.
Approximately Exchange Agent announces whether Exchange Offer
October 25, 1996 was oversubscribed and if so, the percentage of
shares tendered which will be exchanged.
Week of November 4, Trustee receives new Materials shares. Lifting of
1996 restrictions on exchange in LMC Stock Fund for
participants who directed Trustee to exchange all
or a percentage of Company Stock Account balance
(or participants who provided no properly
completed directions in the event the independent
fiduciary directs a exchange for those accounts.
KEY TERMS
- ---------
"Exchange Offer" - the opportunity being provided to shareholders of
Lockheed Martin Corporation to exchange shares of common stock of Lockheed
Martin Corporation for shares of common stock of Martin Marietta Materials, Inc.
"Independent Fiduciary" - U.S. Trust Company, the special fiduciary
appointed to respond to the Exchange Offer on behalf of participants for whom
properly completed instructions are not received by the deadline.
"Instruction Card" - (or "Card" or "Participant Instruction Card") - the
card/form on which a participant may give instructions to the Trustee as to
whether or not to temder in response to the Exchange Offer.
"Offering Circular/Prospectus" - a document provided to all shareholders of
Lockheed Martin Corporation which describes the Exchange Offer.
"Plan Exchange Procedures" - a document provided to employees who
participate in plans sponsored by Lockheed Martin Corporation or its
subsidiaries which permit investment of account balances in Lockheed Martin
Corporation common stock. The Plan Exchange Procedures set forth the procedures
whereby a participant in one of those plans may instruct the plan trustee as to
how to respond to the Exchange Offer.
"Share Determination Date: - the balance in a participant's account on this
date will be used to determine the number of shares that will be temdered as
part of the Exchange Offer, if the participant (or the independent fiduciary
tender in the case of a participant who does not turn in a properly completed
Instruction Card) directs the trustee to tender a percentage of his/her account.
9
This Plan Exchange Procedures explanation applies to participants in the
following plans:
Lockheed Martin Corporation Performance Sharing Plan
Lockheed Martin Corporation Savings and Investment Plan for Hourly
Employees
Lockheed Martin Energy Systems, Inc. Savings Program
Lockheed Martin Performance Sharing Plan for Puerto Rico Employees
10
EXPLANATION OF PROCEDURES CONCERNING
EXCHANGE OF LOCKHEED MARTIN CORPORATION COMMON STOCK
FOR MARTIN MARIETTA MATERIALS, INC. COMMON STOCK
September 16, 1996
Purpose of this Document
According to our records, you are a participant in the Sandia
Corporation Savings and Security Plan or the Sandia Corporation Savings and
Income Plan (these plans are referred to in this explanation as "Individual
Account Plans") maintained by Sandia Corporation, a subsidiary of Lockheed
Martin Corporation ("LMC") which permits the investment of a portion of your
plan account in the Company Common Stock Fund (LMC Shares). This document,
which has been prepared by LMC, is being sent to you by Fidelity Management
Trust Company (the "Plan Trustee" or "Fidelity"), along with the other materials
enclosed in this envelope, because LMC has commenced an exchange offer (the
"Exchange Offer") with its stockholders. Pursuant to the Exchange Offer, each
LMC stockholder is being offered the opportunity to receive shares of Martin
Marietta Materials, Inc. ("Materials"), an 81%-owned subsidiary of LMC, in
exchange for shares of LMC. For each share of LMC common stock exchanged, a
Lockheed Martin stockholder may become entitled to receive ____ shares of
Materials common stock, subject to adjustment if the Exchange Offer is
oversubscribed.
Participants invested in the Company Common Stock Fund (LMC Shares)
will be allowed to direct the Trustee as to whether to exchange LMC shares owned
by the Plan that are attributable to their individual accounts. This document
(the "Plan Exchange Procedures") is intended to supplement the other materials
enclosed in this package regarding the Exchange Offer and to explain the
procedures that govern your decision whether to exchange some or all of the LMC
stock attributable to your account. You should read carefully the Plan Exchange
Procedures and the other materials sent to you, in particular, the Offering
Circular/Prospectus, and make your own decision regarding the Exchange Offer.
These Plan Exchange Procedures are for information purposes only.
Neither LMC, Sandia Corporation, their Boards of Directors nor the Plan Trustee
makes any recommendation whether to exchange or to refrain from exchanging LMC
shares in the Exchange Offer.If you have any questions concerning the Exchange
Offer, you should contact the Information Agent for the Exchange Offer at
1-800-566-
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS
COVERING SECURITIES THAT HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933
9058. If you have any questions concerning the Plan Exchange Procedures,
you should contact Fidelity at 1-800-240-4015.
Procedures for Instructing the Trustee With Regard to Your Decision Whether to
Tender LMC Shares
Enclosed in this envelope is a Participant Instruction Card
("Instruction Card" or "Card") and a self-addressed return envelope. If you
wish to have some or all of the LMC shares attributable to your account
exchanged, you must return the Instruction Card. You should also return the
Instruction Card even if you do NOT want to exchange your LMC shares. The
Instruction Card must be mailed to the address listed on the Card and on the
envelope included with these Plan Exchange Procedures.
When you examine your Card, you will see that it provides different
election amounts from 0% to 100% in 10% increments. Your selection of one of
these amounts will instruct the Plan Trustee, what percent of your LMC shares
you want to exchange. The Card also shows the number of LMC shares that plan
records show as attributable to your account as of the close of business on
September 9th, as calculated by the Plan Trustee. The Trustee will calculate a
new number of shares attributable to your account as of the close of business on
October 11th. All transactions received by close of business on October 11th
will be processed before the Trustee calculates the new share amount. It is the
October 11th balance which will be used to determine the number of shares that
will be exchanged according to your election and subject to the terms of the
Exchange Offer.
You should indicate the shares you wish to exchange, if any, by
checking a percentage, from 0% to 100%, in the appropriate box on your Card. If
you check a box of less than 100% and return the Instruction Card, your Card
will be treated as an instruction to exchange the percentage of LMC shares
listed and an instruction NOT to exchange all remaining LMC shares. For
example, an instruction to exchange 20% of your shares will be treated as an
instruction to exchange 20% of your LMC shares and an instruction not to
exchange the remaining 80%.
If you do not wish to exchange any shares, you should return the
Instruction Card with the box for 0% shares checked. If you fail to return a
Card, send the Card to an improper address, or send an incomplete or incorrect
Card, you will be deemed to have instructed the Trustee not to exchange any
shares attributable to your account.
Your account balance will be updated for purchases or sales of LMC
shares attributable to your account through the close of business on Friday,
October 11, 1996, which will be the date used to calculate the actual number of
LMC shares to be exchanged.
2
(This date is called the "Share Determination Date.") For example, if your
Instruction Card shows 100 LMC shares attributable to your account and you elect
to exchange 60% of your shares, but your account balance as of the Share
Determination Date has increased to 120 shares, the Trustee will tender 72 LMC
shares (i.e., 60% of 120 shares). The LMC shares exchanged will include
fractional shares attributable to your account, to the extent practicable. LMC
shares credited to your account after the Share Determination Date will not be
exchanged.
THE DEADLINE FOR RECEIPT OF YOUR INSTRUCTION CARD IS MIDNIGHT OCTOBER
11, 1996. An original signed Instruction Card must be received on or before
that date by mail at the address printed on the enclosed self-addressed
envelope. Facsimiles will NOT be accepted. Although the Exchange Offer closes
on October 18, 1996 for individuals who own shares directly, instructions from
participants in Individual Account Plans must be received by October 11th in
order to allow the Plan Trustee to accurately tabulate instructions and submit
Exchange Offer instructions to the Exchange Agent.
Any instruction regarding the exchange of LMC shares attributable to
your account may be modified so long as your Instruction Card is received by
midnight on October 11th. If you want to modify your instructions, you must
obtain and mail in a new Instruction Card. A new Card may be obtained by
calling Fidelity at 1-800-240-4015.
AS REQUIRED BY LAW, ALL EXCHANGE DECISIONS ARE STRICTLY CONFIDENTIAL.
Your exchange decision will be processed by the Plan Trustee and its affiliates
and agents. Your exchange decision will not be disclosed to any member of
Lockheed Martin or Sandia Corporation management.
It is possible that the terms of the Exchange Offer may change. For
example, if too few shares are tendered, it is possible that the length of time
to respond to the Exchange Offer may be extended, the terms of the Exchange
Offer may be changed, or other steps may be taken. You will be notified of any
material changes.
It is possible that, if the number of tendered shares is less than is
required to distribute all of the Materials stock, the remaining Materials
shares will be distributed as a stock dividend to the remaining holders of LMC
shares. If this occurs, appropriate notifications will be sent to all
shareholders, including participants in the Individual Account Plans.
3
It is also possible that more LMC shares will be tendered than can be
exchanged for Materials stock. In this case, the amount of shares accepted for
exchange will be reduced proportionately. If the Exchange Offer is
oversubscribed by 50%, for example, only 2/3 of the shares you elected to tender
will be accepted for exchange.
Procedures for Handling Accounts After the Close of The Exchange Offer
This Exchange Offer will not affect your ability to buy additional
units in the Company Common Stock Fund (LMC Shares) through contributions or
exchanges. Nonetheless, as of 4:00 PM on Friday, October 11th, you will NOT be
able to take distributions or make exchanges from the Company Common Stock Fund
(LMC Shares) for a certain period of time:
. No participant will be able to take distributions or make exchanges from
the Company Common Stock Fund (LMC Shares) until the Plan Trustee completes
its tabulation and tender (the "Tender Completion Date"), which is expected
to occur by the close of business on October 17, 1996.
. Participants who instruct the Plan Trustee not to exchange any of the LMC
shares attributable to the Company Common Stock Fund (LMC Shares) will be
able to take distributions or make exchanges after the Tender Completion
Date. This is expected to occur by the close of business on October 17,
1996.
. Participants who instruct the Plan Trustee to exchange any allowable
percentage of the Company Common Stock Fund (LMC Shares) will NOT be able
to take distributions or make exchanges from that fund until the Exchange
Offer is complete and the Plan Trustee has received the Materials shares
and completed processing (the "Processing Completion Date"). This is
expected to occur around mid-November.
The Trustee will process exchanges in participant accounts as soon as
administratively feasible after the Exchange Offer is complete and the Materials
Stock has been received. It is anticipated that the Trustee will receive the
Materials common stock during the first week in November. If the Exchange Offer
results in activity in your Plan account, that activity will be reflected on the
quarterly statement for the period in which the processing occurs. In addition,
after the processing is complete, you can call the Fidelity at 1-800-240-4015 to
learn about your balances in the Company Common Stock Fund (LMC Shares) and the
Materials Stock Fund.
4
Description of Materials Stock Fund
In considering whether to exchange your LMC shares, in addition to
reviewing all of the enclosed communication material, it is very important that
you understand the treatment under your Plan of any Materials common stock that
you receive in exchange for your LMC shares. Materials common stock received by
participants in the Plan will be held in a separate fund, the "Materials Stock
Fund," established as part of completing the exchange. The Materials Stock Fund
will operate in a different manner than the Company Common Stock Fund (LMC
Shares). It will, however, be a unitized fund, like the Company Common Stock
Fund (LMC Shares).
Your balance in the Materials Stock Fund will be distributable in cash or
in kind. You will be able to transfer your balance in the Materials Stock Fund
in the same manner and at the same time as you are able to transfer other assets
in your account. You will not be able, however, to add to your Materials Stock
Fund balance. In addition, any dividends on Materials common stock will be
automatically invested in accordance with your then current contribution
investment directions. If you are not making current contributions, the
dividends will be invested in the Interest Income Fund.
In any event, the Materials Stock Fund under your Plan will be terminated
as of October 30, 1998. If you have not disposed of your Materials Stock Fund
balance by that date, the Plan will provide for the orderly liquidation of the
remaining balances in the Materials Stock Fund as of that date and the
reinvestment of the proceeds in the most conservative investment option, as
selected by the Plan's Investment Committee.
The LMC shares presently attributable to your account may come from
different contribution sources, such as employee pre-tax deferrals, employee
after-tax contributions, or company matching contributions. The types and
percentages of contribution sources of Materials shares credited to your account
after the Exchange Offer will be identical to the types and percentages of
contribution sources of the LMC shares in your account on October 11, 1996.
Your balance in the Materials Stock Fund will be available for loans and all
withdrawals (hardship or otherwise) to the extent permitted under the Plan for
those types of contributions.
Description of Tax Consequences
Exchanging LMC shares for Materials shares will not change how you are
taxed on the amounts distributed to you from the plan while the Materials Stock
Fund remains an investment option, but may affect your tax treatment after it
terminates as an investment
5
option. Depending on the type of distribution, the participant who takes an in-
kind distribution of shares of stock may elect not to be taxed at distribution
on the "net unrealized appreciation" attributable to certain types of
contributions. The "net unrealized appreciation" is the difference between the
value of the units in the stock fund at the time they were allocated to your
account and the time shares representing the value of those units are
distributed to you. Net unrealized appreciation will not be taxed unless and
until the appreciation is realized when the participant ultimately sells the
stock.
For tax purposes, the cost basis of the units of the Company Common Stock
Fund (LMC Shares) currently allocated to your account will be apportioned
between your remaining units in the Company Common Stock Fund (LMC Shares) and
your units in the Materials Stock Fund. The Internal Revenue Service will
consider in-kind distributions from the Materials Stock Fund to be eligible for
"net unrealized appreciation" treatment. Because you will be able to take a
distribution of Materials shares in kind, both the portion of your account
invested in the Company Common Stock Fund (LMC Shares) and the portion invested
in the Materials Stock Fund will be eligible for the "net unrealized
appreciation" tax treatment. Nonetheless, if your balance in the Materials
Stock Fund is exchanged for another investment option, then as with any exchange
out of an employer stock fund, distributions from that new investment will not
be eligible for "net unrealized appreciation" treatment.
6
EXCHANGE PROCEDURES
KEY DATES AND TERMS
KEY DATES (Based on schedule as of September 16, 1996; dates are approximate and
- ----------
may change if the Exchange Offer deadline is extended).
Date Event
- --------------------------------------------------------------------------------
September 16, 1996 Exchange Offer Commences.
September 17, 1996 Begin mailing materials to plan participants.
October 11, 1996 Deadline for receipt by Trustee of Participant
Instruction Cards.
October 11, 1996 Share Determination Date - Participant Company
Common Stock Fund (LMC Shares) balances updated to
reflect transactions through close of business on
October 11, 1996. It is this balance that will be
used to determine the number of shares tendered.
October 11, 1996 Commencement of restrictions on exchange out of
Company Common Stock Fund (LMC Shares) for all
participants, whether or not directing exchange of
LMC shares.
October 17, 1996 Estimated "Tender Completion Date" - Trustee
submits tender instructions to LMC Exchange Agent.
End of restrictions on exchange out of Company
Common Stock Fund (LMC Shares) for participants
for whom no exchange was directed. Restrictions
continue for those who did direct exchange.
October 18, 1996 Exchange Offer Closes - Deadline for Trustee to
submit exchange instructions to LMC Exchange Agent.
Approximately Exchange Agent announces whether Exchange Offer
October 25, 1996 was oversubscribed and if so, the percentage of
shares tendered which will be exchanged.
Week of November 4, 1996 Trustee receives new Materials shares.
Week of November 11, 1996 Trustee allocates units of Materials Stock Fund
to plan accounts of exchanging participants. End
of restrictions on exchange or withdrawals from
Company Common Stock Fund (LMC Shares) for
participants who directed exchange of LMC shares.
Materials Stock Fund available for exchanges out
and withdrawals.
KEY TERMS
- ---------
"Exchange Offer" - the opportunity being provided to shareholders of
Lockheed Martin Corporation to exchange shares of common stock of Lockheed
Martin Corporation for shares of common stock of Martin Marietta Materials, Inc.
"Instruction Card" - (or "Card" or "Participant Instruction Card") - the
card/form on which a participant may give instructions to the Trustee as to
whether or not to exchange in response to the Exchange Offer.
"Offering Circular/Prospectus" - a document provided to all shareholders of
Lockheed Martin Corporation which describes the Exchange Offer.
"Plan Exchange Procedures" - a document provided to employees who
participate in plans sponsored by Lockheed Martin Corporation or its
subsidiaries which permit investment of account balances in Lockheed Martin
Corporation common stock. The Plan Exchange Procedures set forth the procedures
whereby a participant in one of those plans may instruct the plan trustee as to
how to respond to the Exchange Offer.
"Share Determination Date: - October 11, 1996; the balance in a
participant's account on this date will be used to determine the number of
shares that will be exchanged as part of the Exchange Offer, if the participant
directs the trustee to exchange a percentage of his/her account.
7
EXPLANATION OF PROCEDURES CONCERNING
EXCHANGE OF LOCKHEED MARTIN CORPORATION COMMON STOCK
FOR MARTIN MARIETTA MATERIALS, INC. COMMON STOCK
September 16, 1996
Purpose of this Document
According to our records, you are a participant in one or more savings
plans (these plans are referred to in this explanation as "Individual Account
Plans") maintained by Lockheed Martin Corporation ("LMC") or its subsidiaries
which permit or provide for the investment of a portion of your plan account in
the LMC Common Stock Fund. This document, which has been prepared by LMC, is
being sent to you by Fidelity Management Trust Company (the "Plan Trustee" or
"Fidelity"), along with the other materials enclosed in this envelope, because
LMC has commenced an exchange offer (the "Exchange Offer") with its
stockholders. Pursuant to this Exchange Offer, each LMC stockholder is being
offered the opportunity to receive shares of Martin Marietta Materials, Inc.
("Materials"), an 81%-owned subsidiary of LMC, in exchange for shares of LMC.
For each share of LMC common stock exchanged, a Lockheed Martin stockholder may
become entitled to receive ____ shares of Materials common stock, subject to
adjustment if the Exchange Offer is oversubscribed.
Participants invested in the LMC Stock Fund will be allowed to direct
the Trustee whether to exchange LMC shares owned by the Plan that are
attributable to their individual accounts. This document (the "Plan Exchange
Procedures") is intended to supplement the other materials enclosed in this
package regarding the Exchange Offer and to explain the procedures that govern
your decision whether to exchange some or all of the LMC stock attributable to
your account. You should read carefully the Plan Exchange Procedures and the
other materials sent to you, in particular, the Offering Circular/Prospectus,
and make your own decision regarding the Exchange Offer.
These Plan Exchange Procedures are for information purposes only.
Neither LMC, the LMC Board of Directors nor the Plan Trustee makes any
recommendation whether to exchange or to refrain from exchanging LMC shares in
the Exchange Offer. If you have any questions concerning the Exchange Offer,
you should contact the Information Agent for the Exchange Offer at 1-800-566-
9058. If you have any questions concerning the Plan Exchange Procedures, you
should contact Fidelity at 1-800-354-7125.
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS
COVERING SECURITIES THAT HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933
Procedures for Instructing the Trustee With Regard to Your Decision Whether to
Tender LMC Shares
Enclosed in this envelope is a Participant Instruction Card
("Instruction Card" or "Card") and a self-addressed return envelope. If you
wish to have some or all of the LMC shares attributable to your account
exchanged, you must return the Instruction Card. You should also return the
Instruction Card even if you do NOT want to exchange your LMC shares. The
Instruction Card must be mailed to the address listed on the Card and on the
envelope included with these Plan Exchange Procedures.
When you examine your Instruction Card, you will see that it provides
different election amounts from 0% to 100% in 10% increments. Your selection of
one of these amounts will instruct the Plan Trustee what percent of your LMC
shares you want to exchange. The Card also shows the number of LMC shares that
plan records show as attributable to your account as of the close of business on
September 9th, as calculated by the Plan Trustee. The Trustee will calculate a
new number of shares attributable to your account as of the close of business on
October 11th. All transactions received by close of business on October 11,
1996 will be processed before the Trustee calculates the new share amount. It
is the October 11th balance which will be used to determine the number of shares
that will be exchanged according to your election and subject to the terms of
the Exchange Offer.
You should indicate the shares you wish to exchange, if any, by
checking a percentage, from 0% to 100%, in the appropriate box on your Card. If
you check a box of less than 100% and return the Instruction Card, your Card
will be treated as an instruction to exchange the percentage of LMC shares
listed and an instruction NOT to exchange all remaining LMC shares. For
example, an instruction to exchange 20% of your shares will be treated as an
instruction to exchange 20% of your LMC shares and an instruction not to
exchange the remaining 80%.
If you do not wish to exchange any shares, you must return the
----
Instruction Card with the box for 0% shares checked. If you fail to return a
-----------------------
Card, send the Card to an improper address, or send an incomplete or incorrect
- ------------------------------------------------------------------------------
Card, an independent fiduciary will decide whether to exchange the LMC shares in
- --------------------------------------------------------------------------------
your account, in accordance with plan provisions and applicable law. U.S. Trust
- --------------------------------------------------------------------
Company has been retained to serve as the independent fiduciary and to make the
exchange decision with regard to any LMC shares attributable to participant
accounts for which no properly completed Instruction Cards are received.
-2-
Your account balance will be updated for purchases or sales of LMC
shares attributable to your account through the close of business on Friday,
October 11, 1996, which will be the date used to calculate the actual number of
LMC shares to be exchanged. (This date is called the "Share Determination
Date.") For example, if your Instruction Card shows 100 LMC shares attributable
to your account and you elect to exchange 60% of your shares, but your account
balance as of the Share Determination Date has increased to 120 shares, the
Trustee will tender 72 LMC shares (i.e., 60% of 120 shares). The LMC shares
exchanged will include fractional shares attributable to your account, to the
extent practicable. LMC shares credited to your account after the Share
Determination Date will not be exchanged.
THE DEADLINE FOR RECEIPT OF THE INSTRUCTION CARD IS MIDNIGHT OCTOBER
11, 1996. An original signed Instruction Card must be received on or before
that date by mail at the address printed on the enclosed self-addressed
envelope. Facsimiles will NOT be accepted. Although the Exchange Offer closes
on October 18, 1996 for individuals who own shares directly, instructions from
participants in Individual Account Plans must be received by October 11th in
order to allow the Plan Trustee to accurately tabulate instructions and submit
Exchange Offer instructions to the Exchange Agent.
Any instruction regarding the exchange of LMC shares attributable to
your account may be modified so long as your Instruction Card is received by the
close of business on October 11th. If you want to modify your instructions, you
must obtain and mail in a new Instruction Card. A new Card may be obtained by
calling the Fidelity Service Center at 1-800-354-7125.
AS REQUIRED BY LAW, ALL EXCHANGE DECISIONS ARE STRICTLY CONFIDENTIAL.
Your exchange decision will be processed by the Plan Trustee and its affiliates
and agents. Your exchange decision will not be disclosed to any member of
Lockheed Martin Corporation management.
It is possible that the terms of the Exchange Offer may change. For
example, if too few shares are tendered, it is possible that the length of time
to respond to the Exchange Offer may be extended, the terms of the Exchange
Offer may be changed, or other steps may be taken. You will be notified of any
material changes.
It is possible that, if the number of tendered shares is less than is
required to distribute all of the Materials common stock, the remaining
Materials shares will be distributed as a stock
-3-
dividend to the remaining holders of LMC shares. If this occurs, appropriate
notifications will be sent to all shareholders, including participants in the
Individual Account Plans.
It is also possible that more LMC shares will be tendered than can be
exchanged for Materials stock. In this case, the amount of shares accepted for
exchange will be reduced proportionately. If the Exchange Offer is
oversubscribed by 50%, for example, only 2/3 of the shares you elected to tender
will be accepted for exchange.
Procedures for Handling Accounts After the Close of The Exchange Offer
This Exchange Offer will not affect your ability to buy additional
units in the LMC Stock Fund from contributions or exchanges. Nonetheless, as of
4:00 p.m. on Friday, October 11th, you will NOT be able to take distributions or
make exchanges from the LMC Stock Fund for a certain period of time:
. No participant will be able to take distributions or make exchanges from
the LMC Stock Fund until the Plan Trustee's tabulation and tender is
complete (the "Tender Completion Date"), which is expected to occur by the
close of business on October 17, 1996.
. Participants who instruct the Trustee not to exchange any of the LMC shares
attributable to their accounts will be able to take distributions or
exchanges after the Tender Completion Date. This is expected to occur by
close of business on October 17, 1996.
. Participants who instruct the Trustee to exchange any allowable percentage
of LMC shares will NOT be able to take distributions or make exchanges from
the LMC Stock Fund until the Exchange Offer is complete and the Plan
Trustee has received the Materials shares and completed processing (the
"Processing Completion Date"). This date is anticipated to occur in mid-
November.
. Participants who do not give properly completed instructions to the Trustee
will NOT be able to take distributions or make exchanges from the LMC Stock
Fund until the Processing Completion Date if the Independent Fiduciary
instructs the Plan Trustee to exchange any LMC shares.
The Plan Trustee will process exchanges in participant accounts as soon as
administratively feasible after the Exchange Offer is complete and the Materials
shares have been received. It
-4-
is anticipated that the Trustee will receive the Materials common stock during
the first week of November. If the Exchange Offer results in activity in your
Plan account, that activity will be reflected on the quarterly statement for the
period in which the processing occurs. In addition, after the processing is
complete, you can call the Fidelity Service Center at 1-800-354-7125 to learn
about your balances in the LMC Stock Fund and the Materials Stock Fund.
Description of Materials Stock Fund
In considering whether to exchange your LMC shares, in addition to
reviewing all of the enclosed communication material, it is very important that
you understand the treatment under your Plan of any Materials common stock that
you receive in exchange for your LMC shares. Materials common stock received by
participants in the Plan will be held in a separate fund, the "Materials Stock
Fund," established as part of completing the exchange. Like the LMC Stock Fund,
the Materials Stock Fund will be unitized. The Materials Stock Fund will
operate in a different manner than the LMC Stock Fund under the Plan.
You will be able to transfer your balance in the Materials Stock Fund in
the same manner and at the same time as you are able to transfer other assets in
your account. You will not, however, be able to add to your Materials Stock
Fund balance. Cash dividends on Materials common stock will be held in the
Materials Stock Fund in short term investments and will not be automatically
invested in shares of Materials stock. Your balance in the Materials Stock Fund
will only be distributable in cash, not in kind.
In any event, the Materials Stock Fund under your Plan will be terminated
as of October 30, 1998. The termination date may be extended in which case you
will be notified of the extension prior to August 1, 1998. If you have not
disposed of you Materials Stock Fund balance by the termination date, the Plan
will provide for the orderly liquidation of the remaining balances in the
Materials Stock Fund as of that date and the reinvestment of the proceeds in the
most conservative investment option, as selected by the Lockheed Martin Benefit
Plan Committee.
The LMC shares presently attributable to your account may come from
different contribution sources, such as employee pre-tax deferrals, employee
after-tax contributions, or company matching contributions. The types and
percentages of contribution sources of Materials shares credited to your account
after the Exchange Offer will be identical to the types and percentages of
-5-
contribution sources of the LMC shares in your account on October 11, 1996. Your
balance in the Materials Stock Fund will be available for loans and all
withdrawals (hardship or otherwise) to the extent permitted under the Plan for
those types of contributions.
Description of Tax Consequences
Exchanging LMC shares for Materials shares could change how you are taxed
on the amounts distributed to you from the plan. Depending on the type of
distribution, a participant who takes an in-kind distribution of shares of stock
may elect not to be taxed at the time of distribution on the "net unrealized
appreciation" attributable to certain types of contributions. The "net
unrealized appreciation" is the difference between the value of the units in the
stock fund at the time they were allocated to your account and at the time the
shares representing the value of those units are distributed to you. Net
unrealized appreciation will not be taxed until the stock is sold and the
appreciation is realized.
For tax purposes, the cost basis of the LMC shares currently allocated to
your account will be apportioned between your remaining units in the LMC Stock
Fund and your units in the Materials Stock Fund. Distributions upon termination
of employment or withdrawals from the Materials Stock Fund will be made,
however, only in cash. As a result, distributions from the Materials Stock Fund
will not be eligible for "net unrealized appreciation" tax treatment.
For example, suppose that (1) prior to the Exchange Offer, you intended to
receive your entire distribution from the LMC Stock Fund in shares and (2) after
the Exchange Offer, you intend to receive your LMC Stock Fund balance in shares
and your Materials Stock Fund balance in cash. In this case (and assuming that
the value of your Materials stock is equal to the value of the LMC stock that
would have remained in your account if the Exchange Offer had not occurred) you
will pay a higher tax at the time of the distribution (and a lesser tax upon
sale of your LMC shares) than would be the case if you had not exchanged your
LMC shares. This is because the tax due on the appreciation of the LMC shares
would have been deferred until you sold the LMC shares, whereas you are taxed on
the full amount of your cash distribution from the Materials Stock Fund (less
the amount of your after-tax contributions invested in that fund).
-6-
EXCHANGE PROCEDURES
KEY DATES AND TERMS
KEY DATES (Based on schedule as of September 16, 1996; dates are approximate
- ----------
and may change if the Exchange Offer deadline is extended).
Date Event
- --------------------------------------------------------------------------------
September 16, 1996 Exchange offer commences.
September 17, 1996 Begin mailing materials to plan participants.
October 11, 1996 Deadline for receipt by Trustee of Participant
Instruction Cards.
October 11, 1996 Share Determination Date - Participant LMC account
balances updated to reflect transactions through
close of business on October 11, 1996. It is this
balance that will be used to determine the number
of shares exchanged.
October 11, 1996 Commencement of restrictions on exchange out of
LMC Stock Fund for all participants, whether or
not directing exchange of LMC shares.
October 17, 1996 Estimated "Tender Completion Date" - Trustee
submits tender instructions to LMC Exchange Agent.
End of restrictions on exchange out of LMC Stock
Fund for participants for whom no exchange was
directed. Restrictions continue for those who did
direct exchange (or for whom independent fiduciary
directed exchange).
October 18, 1996 Exchange Offer closes.
Approximately October 25, Exchange Agent announces whether Exchange Offer
1996 was oversubscribed and if so, the percentage of
shares tendered which will be exchanged.
Week of November 4, 1996 Trustee receives new Materials shares.
Week of November 11, 1996 Trustee allocates units of Materials Stock Fund
to plan accounts of exchanging participants. End
of restrictions on exchanges or withdrawals from
LMC Stock Fund for participants who directed
exchange of LMC shares (or for whom independent
fiduciary directed exchange). Materials Stock
Fund available for exchanges out and withdrawals.
KEY TERMS
- ---------
"Exchange Offer" - the opportunity being provided to shareholders of
Lockheed Martin Corporation to exchange shares of common stock of Lockheed
Martin Corporation for shares of common stock of Martin Marietta Materials, Inc.
"Independent Fiduciary" - the special fiduciary appointed to respond to the
Exchange Offer on behalf of participants for whom properly completed
instructions are not received by the deadline.
"Instruction Card" - (or "Card" or "Participant Instruction Card") - the
card/form on which a participant may give instructions to the Trustee as to
whether or not to exchange in response to the Exchange Offer.
"Offer Circular/Prospectus" - a document provided to all shareholders of
Lockheed Martin Corporation which describes the Exchange Offer.
"Plan Exchange Procedures" - a document provided to employees who
participate in plans sponsored by Lockheed Martin Corporation or its
subsidiaries which permit investment of account balances in Lockheed Martin
Corporation common stock. The Plan Exchange Procedures set forth the procedures
whereby a participant in one of those plans may instruct the plan trustee as to
how to respond to the Exchange Offer.
"Share Determination Date: - the balance in a participant's account on this
date will be used to determine the number of shares that will be exchanged as
part of the Exchange Offer, if the participant (or the independent fiduciary
exchanges in the case of a participant who does not turn in a properly completed
Instruction Card) directs the trustee to exchange a percentage of his/her
account.
-7-
This Plan Procedures Explanation applies to participants in the following plans:
Lockheed Martin Aerospace Savings Plan
Lockheed Martin Tactical Defense Systems Savings Plan
Lockheed Martin Tactical Systems Master Savings Plan
Conic Corporation Deferred Income Retirement Plan
Narda Microwave Supplemental Retirement Savings Plan
Lockheed Martin Federal Systems Deferred Income Retirement Plan
Lockheed Martin Tactical Defense Systems Savings & Investment Plan
Frequency Sources, Inc. 401(k) Retirement Savings Plan
Lockheed Martin Tactical Systems Deferred Income Savings Plan
Narda-Western Operations 401(k) Deferred Income Retirement Plan
Lockheed Martin/ROLM Mil-Spec Corp. Retirement Income Savings Plan
Lockheed Martin Electro-Optical Systems, Inc. 401(k) Matching
Contribution Plan
Lockheed Martin Fairchild Corp. Savings Plan
Lockheed Martin IR Imaging Systems, Inc. Savings Plan
Lockheed Martin Vought Systems Corporation Capital Accumulation Plan
Lockheed Martin Librascope Retirement Savings Plan
-8-
EXPLANATION OF PROCEDURES CONCERNING
EXCHANGE OF LOCKHEED MARTIN CORPORATION COMMON STOCK
FOR MARTIN MARIETTA MATERIALS, INC. COMMON STOCK
September 16, 1996
Purpose of this Document
According to our records, you are a participant in the Lockheed Martin
Salaried Employees Savings Plan Plus, the Lockheed Martin Hourly Employees
Savings Plan Plus, or the Lockheed Martin Space Operations Hourly Employee
Investment Plan Plus (these plans are referred to in this explanation as
"Individual Account Plans") maintained by Lockheed Martin Corporation ("LMC") or
its subsidiaries which permit the investment of a portion of your plan account
in LMC common stock ("LMC Stock Fund" or "ESOP Fund"). This document, which has
been prepared by LMC, is being sent to you, along with the other materials
enclosed in this envelope, because LMC has commenced an exchange offer (the
"Exchange Offer") with its stockholders. Pursuant to the Exchange Offer, each
LMC stockholder is being offered the opportunity to receive shares of Martin
Marietta Materials, Inc. ("Materials"), an 81%-owned subsidiary of LMC, in
exchange for shares of LMC. For each share of LMC common stock exchanged, a
Lockheed Martin stockholder may become entitled to receive ____ shares of
Materials common stock, subject to adjustment if the Exchange Offer is
oversubscribed.
Participants in the Individual Account Plans who have invested in the
LMC Stock Fund will be allowed to direct the Trustee as to whether to exchange
shares that are allocated to their individual accounts. This document (the
"Plan Exchange Procedures") is intended to supplement the other materials
enclosed in this package regarding the Exchange Offer and to explain the
procedures that govern your decision whether to exchange some or all of the LMC
stock allocated to your account. You should read carefully the Plan Exchange
Procedures and the other materials sent to you, in particular, the Offering
Circular/Prospectus and make your own decision about the Exchange Offer.
- --------------------------------------------------------------------------------
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING
SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933
- --------------------------------------------------------------------------------
-1-
These Plan Exchange Procedures are for information purposes only.
Neither LMC, the LMC Board of Directors nor the Plan Trustee makes any
recommendation whether to exchange or to refrain from exchanging LMC shares in
the Exchange Offer. If you have any questions concerning the Exchange Offer, you
should contact the Information Agent for the Exchange Offer at 1-800-566-9058.
If you have any questions concerning the Plan Exchange Procedures, you should
contact the Plan Trustee, U.S. Trust Company, at the following telephone
numbers, Monday through Friday:
1-800-362-7514 between 9:00 AM and 5:30 PM Eastern Time
1-800-535-3093 between 8:30 AM and 5:00 PM Pacific Time
Procedures for Instructing the Trustee With Regard to Your Decision Whether to
Tender LMC Shares
Enclosed in this envelope is a Participant Instruction Card
("Instruction Card" or "Card") and a self-addressed return envelope. If you wish
to have some or all of the LMC shares allocated to your account exchanged, you
must return the Instruction Card. You should also return the Instruction Card
even if you do NOT want to exchange your LMC shares. The Instruction Card must
---
be mailed to the address listed on the envelope included with these Plan
Exchange Procedures.
When you examine your Instruction Card, you will see that it provides
different election amounts from 0% to 100% in 10% increments. Your selection of
one of these amounts will instruct the Plan Trustee as to what percent of your
LMC shares you want to exchange. The Card also shows the number of LMC shares
allocated to your account as of the close of business on July 31st, as
calculated by the Plan recordkeeper.
You should indicate the shares you wish to exchange, if any, by
checking a percentage, from 0% to 100%, in the appropriate box on your Card. If
you check a box of less than 100% and return the Instruction Card, your Card
will be treated as an instruction to tender the percentage of LMC shares listed
and an instruction NOT to tender the remaining LMC shares. For example, an
instruction to tender 20% of your shares will be treated as an instruction to
tender 20% of your LMC shares and an instruction not to tender the remaining
80%.
If you do not wish to exchange any shares, you must return the
----
Instruction Card with the box for 0% shares checked. If you fail to return a
-----------------------
Card, send the Card to an improper address, or send an incomplete or incorrect
- ------------------------------------------------------------------------------
Card, an independent fiduciary will decide whether to exchange the LMC shares in
- --------------------------------------------------------------------------------
your account, in accordance
- ---------------------------
-2-
with plan provisions and applicable law. U.S. Trust Company has been retained to
- ----------------------------------------
serve as the independent fiduciary and to make the exchange decision with regard
to any LMC shares allocated to participant accounts for which no properly
completed instructions are received. In addition, U.S. Trust Company will make
the exchange decision with regard to the LMC shares held by the Lockheed Martin
Salaried Savings Plan Plus that have not been allocated to participants as of
August 31, 1996.
Your account balance will be updated for purchases or sales of LMC
shares in your account through August 31st, which will be the date used to
calculate the actual number of LMC shares to be exchanged. (This later date is
called the "Share Determination Date.") For example, if your Instruction Card
shows 100 LMC shares allocated to your account and you elect to exchange 60% of
your shares, but your account balance as of the Share Determination Date has
increased to 120 shares, the Trustee will tender 72 LMC shares (i.e., 60% of 120
shares). The LMC shares exchanged will include fractional shares to the extent
practicable. LMC shares credited to your account after the Share Determination
Date will not be exchanged.
THE DEADLINE FOR RECEIPT OF YOUR INSTRUCTION CARD IS OCTOBER 11, 1996.
An original signed Instruction Card must be received by mail on or before that
date at the address listed on the enclosed self-addressed envelope. Facsimiles
will NOT be accepted. Although the Exchange Offer closes on October 18, 1996 for
individuals who own shares directly, instructions from participants in
Individual Account Plans must be received by October 11th in order to allow the
Plan Trustee to accurately tabulate instructions and submit exchange offer
instructions to the Exchange Agent.
Any instruction regarding the exchange of LMC shares allocated to your
account may be modified so long as your Instruction Card is received by October
11th. If you want to modify your instructions, you must obtain and mail in a
new Instruction Card. A new Card may be obtained by calling U.S. Trust Company
Monday through Friday at 1-800-362-7514 between 9:00 AM and 5:30 PM, Eastern
Time, or 1-800-535-3093 between 8:30 AM and 5:00 PM Pacific Time.
AS REQUIRED BY LAW, ALL EXCHANGE DECISIONS ARE STRICTLY CONFIDENTIAL.
Your exchange decision will be processed by the Plan Trustee, the Plan
recordkeeper and the Exchange Agent. Your exchange decision will not be
disclosed to any member of Lockheed Martin Corporation management.
It is possible that the terms of the Exchange Offer may change. For
example, if too few shares are tendered, it is possible that the length of time
to respond to the Exchange Offer
-3-
may be extended, the terms of the Exchange Offer may be changed, or other steps
may be taken. You will be notified of any material changes.
It is possible that, if the number of tendered shares is less than is
required to distribute all of the Materials stock, the remaining Materials
shares will be distributed as a stock dividend to the remaining holders of LMC
shares. If this occurs, appropriate notifications will be sent to all
shareholders, including participants in the Individual Account Plans.
It is also possible that more LMC shares will be tendered than can be
exchanged for Materials stock. In this case, the amount of shares accepted for
exchange will be reduced proportionately. If the Exchange Offer is
oversubscribed by 50%, for example, only 2/3 of the shares you elected to tender
will be accepted for exchange.
Procedures for Handling Accounts After the Close of The Exchange Offer
Any transaction involving LMC shares in your account -- including
purchases, sales, distributions or loans -- that otherwise would be processed as
of September 30 will be delayed for approximately one week. This delay will
apply to all participants regardless of whether the participant elects to tender
all or a portion of the LMC shares in his or her account. Also, if you exchange
a portion of your LMC shares, or if you fail to return a properly completed
Instruction Card by October 11 and the independent fiduciary tenders LMC shares
on your behalf, the Plan Trustee will not process September instructions to
purchase or sell LMC shares in your account, which would otherwise be effective
as of October 31, until the exchange is complete. We anticipate the exchange
will be completed by mid-November. These delays are necessary to accurately
process the exchange instructions received from participants. The exchange will
be processed as a September transaction. Once the exchange is complete, your
entire account will once again be available for all plan transactions, subject
to the various limitations described below.
There are three ways in which you can learn the number of LMC shares
accepted for exchange. If your Plan has a voice response system, you should be
able to determine your new balances on or around November 15, 1996. In
addition, you receive quarterly statements showing your account balance. The
next quarterly statement will show the number of LMC shares exchanged. In
addition, you will receive a transaction confirmation statement describing the
results of the exchange.
-4-
Description of Materials Stock Fund
In considering whether to exchange your LMC shares, in addition to
reviewing all of the enclosed communication material, it is very important that
you understand the treatment under your Plan of any Materials common stock that
you receive in exchange for your LMC shares. Materials common stock received by
participants in the Plan will be held in a separate fund, the "Materials Stock
Fund," established as part of completing the exchange. The Materials Stock Fund
will be a unitized fund and will operate in a manner different from the other
funds under the Plan.
You will not be able to add to your Materials Stock Fund balance. Cash
dividends on Materials stock will be held in the Materials Stock Fund in short
term investments and will not be automatically invested in shares of Materials
stock. Distributions from the Materials Stock Fund will be made in cash and not
in shares of stock.
In any event, the Materials Stock Fund under your Plan will be
terminated as of October 30, 1998. The termination date may be extended in which
case you will be notified of the extension prior to August 1, 1998. If you have
not disposed of your Materials Stock Fund balance by the termination date, the
Plan will provide for the orderly liquidation of the remaining balances in the
Materials Stock Fund as of that date and the reinvestment of the proceeds in the
most conservative investment option offered under the Plan, as selected by the
Benefit Plan Committee.
The LMC shares presently in your account may come from different
contribution sources, such as employee pre-tax deferrals, employee after-tax
contributions, or company matching contributions. The types and percentages of
contribution sources of Materials shares credited to your account after the
Exchange Offer will be identical to the types and percentages of contribution
sources of the LMC shares in your account as of August 31, 1996. Your balance in
the Materials Stock Fund will be available for loans and all withdrawals
(hardship or otherwise) to the extent permitted under the Plan for those types
of contributions.
Description of Tax Consequences
Exchanging LMC shares for Materials shares could change how you are
taxed on the amounts distributed to you from the plan. Depending on the type of
distribution, a participant who takes an in-kind distribution of shares of stock
may elect not to be taxed at the time of distribution on the "net unrealized
appreciation" attributable to certain types of contributions. The "net
-5-
unrealized appreciation" is the difference between the value of the shares in
the stock fund at the time they were allocated to your account and at the time
the shares are distributed to you. Net unrealized appreciation will not be
taxed until the stock is sold and the appreciation is realized.
For tax purposes, the cost basis of the LMC shares currently allocated
to your account will be apportioned between your remaining shares in the LMC
Stock Fund and your units in the Materials Stock Fund. Distributions upon
termination of employment or withdrawals from the Materials Stock Fund will be
made, however, only in cash. As a result, distributions from the Materials Stock
Fund will not be eligible for "net unrealized appreciation" tax treatment.
For example, suppose that (1) prior to the Exchange Offer, you
intended to receive your entire distribution from the ESOP Fund in shares and
(2) after the Exchange Offer, you intend to receive your ESOP Fund balance in
shares and your Materials Stock Fund balance in cash. In this case (and assuming
that the value of your Materials stock is equal to the value of the LMC stock
that would have remained in your account if the Exchange Offer had not occurred)
you will pay a higher tax at the time of the distribution (and a lesser tax upon
sale of your LMC shares) than would be the case if you had not exchanged your
LMC shares. This is because the tax due on the appreciation of the LMC shares
would have been deferred until you sold the LMC shares, whereas you are taxed on
the full amount of your cash distribution from the Materials Stock Fund (less
the amount of your after-tax contributions invested in that fund).
-6-
EXCHANGE PROCEDURES
KEY DATES AND TERMS
KEY DATES (Based on schedule as of September 16, 1996; dates are approximate and
- ----------
may change if the Exchange Offer deadline is extended).
Date Event
- --------------------------------------------------------------------------------
August 30, 1996 Share Determination Date - Participant LMC account
balances updated to reflect July transactions
processed in August. It is this balance that will
be used to determine the number of shares
exchanged.
September 16, 1996 Exchange Offer Commences - Begin mailing materials
to plan participants.
September 30, 1996 Transactions normally processed as of September 30
delayed for one week for all participants.
October 11, 1996 Deadline for receipt by Trustee of Participant
Instruction Cards.
October 18, 1996 Exchange Offer Closes - Trustee submits exchange
instructions to LMC Exchange Agent.
Approximately Exchange Agent announces whether Exchange Offer
October 25, 1996 was oversubscribed and if so, the percentage of
shares tendered which will be exchanged.
October 30, 1996 September transactions normally processed at end
of October delayed for all participants who
directed Trustee to exchange all or a percentage
of LMC account (or participants who provided no
properly completed directions in the event the
independent fiduciary directs an exchange of all or
a percentage of those shares)
Week of November 4, Trustee receives new Materials shares.
1996
Week of November 11, Trustee allocates shares of Materials to plan
1996 accounts of tendering participants.
Week of November 11 Processing of September transactions completed
1996 for all participants who directed Trustee to
exchange all or a percentage of LMC Account (or
participants who provided no properly completed
directions in the event the independent fiduciary
directs an exchange of all or a percentage of
those shares).
KEY TERMS
- ---------
"Exchange Offer" - the opportunity being provided to shareholders of
Lockheed Martin Corporation to exchange shares of common stock of Lockheed
Martin Corporation for shares of common stock of Martin Marietta Materials, Inc.
"Independent Fiduciary" - U. S. Trust Company, the special fiduciary
appointed to respond to the Exchange Offer on behalf of participants for whom
properly completed instructions are not received by the deadline.
"Instruction Card" - (or "Card" or "Participant Instruction Card") -
the card/form on which a participant may give instructions to the Trustee as to
whether or not to exchange in response to the Exchange Offer.
"Offering Circular/Prospectus" - a document provided to all
shareholders of Lockheed Martin Corporation which describes the Exchange Offer.
"Plan Exchange Procedures" - a document provided to employees who
participate in plans sponsored by Lockheed Martin Corporation or its
subsidiaries which permit investment of account balances in Lockheed Martin
Corporation common stock. The Plan Exchange Procedures set forth the procedures
whereby a participant in one of those plans may instruct the plan trustee as to
how to respond to the Exchange Offer.
"Share Determination Date: - August 31, 1996, the balance in a
participant's account on this date will be used to determine the number of
shares that will be tendered as part of the Exchange Offer, if the participant
(or the independent fiduciary tenders in the case of a participant who does not
turn in a properly completed Instruction Card) directs the trustee to tender a
percentage of his/her account.
-7-
EXPLANATION OF PROCEDURES CONCERNING
EXCHANGE OF LOCKHEED MARTIN CORPORATION COMMON STOCK
FOR MARTIN MARIETTA MATERIALS, INC. COMMON STOCK
September 16, 1996
Purpose of this Document
According to our records, you are a participant in the Lockheed Martin
Energy Systems, Inc. Savings Plan for Salaried and Hourly Employees or the
Lockheed Martin Energy Systems, Inc. Savings Plan for Hourly Employees (these
plans are referred to in this explanation as "Individual Account Plans")
maintained by Lockheed Martin Energy Systems, Inc., a subsidiary of Lockheed
Martin Corporation ("LMC"). These Plans permit you to invest a portion of your
plan account in a fund invested in LMC common stock ("Company Stock Fund" or
"LMC Stock Fund"). This document, which has been prepared by LMC, is being sent
to you by State Street Bank and Trust Company (the "Plan Trustee"), along with
the other materials enclosed in this envelope, because LMC has commenced an
exchange offer (the "Exchange Offer") with its shareholders. Pursuant to the
Exchange Offer, each LMC stockholder is being offered the opportunity to receive
shares of Martin Marietta Materials, Inc. ("Materials"), an 81%-owned subsidiary
of LMC, in exchange for shares of LMC. For each share of LMC common stock
exchanged, a Lockheed Martin stockholder may become entitled to receive ____
shares of Materials common stock, subject to adjustment if the Exchange Offer is
oversubscribed.
Plan participants who have invested in the LMC Stock Fund will be
allowed to direct the Trustee as to whether to exchange LMC shares allocated to
their individual accounts. This document (the "Plan Exchange Procedures") is
intended to supplement the other materials enclosed in this package regarding
the Exchange Offer and to explain the procedures that govern your decision
whether to exchange some or all of the LMC stock attributable to your account.
You should read carefully the Plan Exchange Procedures and the other materials
sent to you, in particular, the Offering Circular/Prospectus.
These Plan Exchange Procedures are for information purposes only.
Neither LMC, Lockheed Martin Energy Systems, Inc. their Boards of Directors nor
the Plan Trustee makes any recommendation whether to exchange or to refrain from
exchanging LMC shares in the Exchange Offer. If you have any questions
concerning the ExchangeOffer, you should contact the Information Agent for the
Exchange Offer at 1-800-566-9058.
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS
COVERING SECURITIES THAT HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933
Procedures for Instructing the Trustee With Regard to Your Decision Whether to
Tender LMC Shares
Enclosed in this envelope is a Participant Instruction Card
("Instruction Card" or "Card") and a self-addressed return envelope. If you
wish to have some or all of the LMC shares attributable to your account
exchanged, you must return the Instruction Card. You should also return the
Instruction Card even if you do NOT want to exchange your LMC shares. The
---
Instruction Card must be mailed to the address listed on the Card and on the
envelope included with these Plan Exchange Procedures.
When you examine your Instruction Card, you will see that it provides
different election amounts from 0% to 100% in 10% increments. Your selection of
one of these amounts will instruct the Plan Trustee as to what percent of the
LMC shares attributable to your account to exchange. The Card also shows the
number of LMC shares allocated to your account as of the close of business on
July 31st, as calculated by the Plan recordkeeper.
You should indicate the shares you wish to exchange, if any, by
checking a percentage, from 0% to 100%, in the appropriate box on your Card. If
you check a box of less than 100% and return the Instruction Card, your Card
will be treated as an instruction to exchange the percentage of LMC shares
listed and an instruction NOT to exchange the remaining LMC shares. For example,
an instruction to exchange 20% of your shares will be treated as an instruction
to exchange 20% of your LMC shares and an instruction not to exchange the
remaining 80%.
If you do not wish to exchange any shares, you must return the
----
Instruction Card with the box for 0% checked. If you fail to return a Card,
-----------------------------
send the Card to an improper address, or send an incomplete or incorrect Card,
- ------------------------------------------------------------------------------
an independent fiduciary will decide whether to exchange the LMC shares in your
- -------------------------------------------------------------------------------
account, in accordance with plan provisions and applicable law. U.S. Trust
- ---------------------------------------------------------------
Company has been retained to serve as the independent fiduciary and to make the
exchange decision with regard to any LMC shares allocated to participant
accounts for which no properly completed Instruction Card is received.
Your account balance will be updated for purchases or sales of LMC
shares attributable to your account through August 31st, which will be the date
used to calculate the actual number of LMC shares to be exchanged. (This later
date is called the "Share Determination Date.") For example, if your
Instruction Card shows 100 LMC shares allocated to your account and you elect to
exchange 60% of your shares, but your account balance as of the Share
-2-
Determination Date has increased to 120 shares, the Trustee will exchange 72 LMC
shares (i.e., 60% of 120 shares). The LMC shares exchanged will include
fractional shares attributable to your account to the extent practicable. LMC
shares credited to your account after the Share Determination Date will not be
exchanged.
THE DEADLINE FOR RECEIPT OF YOUR INSTRUCTION CARD IS OCTOBER 11, 1996.
An original signed Instruction Card must be received by mail on or before that
date at the address listed on the enclosed self-addressed envelope. Facsimiles
will NOT be accepted. Although the Exchange Offer closes on October 18, 1996 for
individuals who own shares directly, instructions from participants in
Individual Account Plans must be received by October 11th in order to allow the
Plan Trustee to accurately tabulate instructions and submit Exchange Offer
instructions to the Exchange Agent.
Any instruction regarding the exchange of LMC shares allocated to your
account may be modified so long as your Instruction Card is received by close of
business on October 11th. If you want to modify your instructions, you must
obtain and mail in a new Instruction Card. A new Card may be obtained by
calling the Information Agent at 1-800-566-9058.
AS REQUIRED BY LAW, ALL EXCHANGE DECISIONS ARE STRICTLY CONFIDENTIAL.
Your exchange decision will be processed by the Plan Trustee and the Exchange
Agent. Your exchange decision will not be disclosed to any member of Lockheed
Martin Corporation management.
It is possible that the terms of the Exchange Offer may change. For
example, if too few shares are tendered, it is possible that the length of time
to respond to the Exchange Offer may be extended, the terms of the Exchange
Offer may be changed, or other steps may be taken. You will be notified of any
material changes.
It is possible that, if the number of tendered shares is less than is
required to distribute all of the Materials common stock, the remaining
Materials shares will be distributed as a stock dividend to the remaining
holders of LMC shares. If this occurs, appropriate notifications will be sent
to all shareholders, including participants in the Individual Account Plans.
-3-
It is also possible that more LMC shares will be tendered than can be
exchanged for Materials stock. In this case, the amount of shares accepted for
exchange will be reduced proportionately. If the Exchange Offer is
oversubscribed by 50%, for example, only 2/3 of the shares you elected to tender
will be accepted for exchange.
Procedures for Handling Accounts After the Close of The Exchange Offer
Upon notification to the Plan's recordkeeper by the Transfer Agent of
the number of shares to be exchanged, the percentage of your August 31, 1996
account balance that you instructed be exchanged will be segregated from the
remainder of your LMC account. The shares in this segregated account will be
those exchanged for Materials common stock. LMC stock held in the segregated
account will not be available for distribution or sale until the exchange
process is completed. If you do not return a properly completed Instruction
Card, the independent fiduciary may decide to exchange shares allocated to your
LMC stock account. The LMC shares exchanged by the independent fiduciary will
also be segregated from your account. If you return the Instruction Card with
a less than 100% election, any transaction involving the non-segregated shares
of LMC stock, including purchases, sales and distributions will be processed as
normal.
There are two ways in which you can learn the number of LMC shares
accepted for exchange. You receive semiannual statements showing your account
balance. The next statement will show the number of LMC shares exchanged. In
addition, you will receive a transaction confirmation statement describing the
results of the exchange.
Description of Materials Stock Fund
In considering whether to exchange your LMC shares, in addition to
reviewing all of the enclosed communication material, it is very important that
you understand the treatment under your Plan of any Materials common stock that
you receive in exchange for your LMC shares. Materials common stock received by
participants in the Plan will be held in a separate fund, the "Materials Stock
Fund," established as part of completing the exchange. The Materials Stock Fund
will be a unitized fund and will operate in a manner different from the other
funds under the Plan.
You will be able to dispose of your balance in the Materials Stock
Fund in the same manner and at the same time as you are able to dispose of other
assets in your account. You will not be able, however, to add to your Materials
Stock Fund balance. In addition,
-4-
cash dividends on Materials common stock will be held in the Materials Stock
Fund in short term investments and will not be automatically invested in shares
of Materials common stock. Distributions from the Materials Stock Fund will be
made in cash and not in shares of stock.
In any event, the Materials Stock Fund under your Plan will be
terminated as of October 30, 1998. The termination may be extended in which
case you will be notified of the extension prior to August 1, 1998. If you
have not disposed of your Materials Stock Fund balance by the termination date,
the Plan will provide for the orderly liquidation of the remaining balances in
the Materials Stock Fund as of that date and the reinvestment of the proceeds in
the most conservative investment option offered under the Plan, as selected by
the Benefit Plan Committee.
The value of the LMC shares presently in your account may come from
different contribution sources, such as Basic, Supplemental, employee pre-tax
deferrals, employee after-tax contributions, or company matching contributions.
The types and percentages of contribution sources of Materials shares credited
to your account after the Exchange Offer will be identical to the types and
percentages of contribution sources of the LMC shares in your account as of
August 31, 1996. Your balance in the Materials Stock Fund will be available for
all withdrawals (hardship or otherwise) to the extent permitted under the Plan
for the types of contributions.
Description of Tax Consequences
Exchanging LMC shares for Materials shares could change how you are
taxed on the amounts distributed to you from the plan. Depending on the type of
distribution, a participant who takes an in-kind distribution of shares of stock
may elect not to be taxed at the time of distribution on the "net unrealized
appreciation" attributable to certain types of contributions. The "net
unrealized appreciation" is the difference between the value of the units in the
stock fund at the time they were allocated to your account and at the time the
shares representing the value of those units are distributed to you. Net
unrealized appreciation will not be taxed until the stock is sold and the
appreciation is realized.
For tax purposes, the cost basis of the LMC shares currently allocated
to your account will be apportioned between your remaining units in the LMC
Stock Fund and your units in the Materials Stock Fund. Distributions upon
termination of employment or withdrawals from the Materials Stock Fund will be
made, however, only in cash. As a result, distributions from the Materials
Stock
-5-
Fund will not be eligible for "net unrealized appreciation" tax treatment.
For example, suppose that (1) prior to the Exchange Offer, you
intended to receive your entire distribution from the LMC Stock Fund in shares
and (2) after the Exchange Offer, you intend to receive your LMC Stock Fund
balance in shares and your Materials Stock Fund balance in cash. In this case
(and assuming that the value of your Materials stock is equal to the value of
the LMC stock that would have remained in your account if the Exchange Offer had
not occurred) you will pay a higher tax at the time of the distribution (and a
lesser tax upon sale of your LMC shares) than would be the case if you had not
exchanged your LMC shares. This is because the tax due on the appreciation of
the LMC shares would have been deferred until you sold the LMC shares, whereas
you are taxed on the full amount of your cash distribution from the Materials
Stock Fund (less the amount of your after-tax contributions invested in that
fund).
-6-
EXCHANGE PROCEDURES
KEY DATES AND TERMS
KEY DATES (Based on schedule as of September 16, 1996; dates are approximate and
- ----------
may change if the Exchange Offer deadline is extended).
Date Event
- --------------------------------------------------------------------------------
August 30, 1996 Share Determination Date - Participant LMC Fund
Account Balances Updated to reflect July
transactions processed in August. It is this
balance that will be used to determine the number
of shares exchanged.
September 16, 1996 Exchange Offer Commences - Begin mailing materials
to plan participants.
October 11, 1996 Deadline for receipt by Trustee of Participant
Instruction Cards.
October 18, 1996 Exchange Offer Closes - Trustee submits tender
instructions to LMC Exchange Agent.
Approximately Exchange Agent announces whether Exchange Offer
October 25, 1996 was oversubscribed and if so, the percentage of
shares tendered which will be exchanged.
Week of November 5, Trustee receives new Materials shares.
1996
Week of November 11, Trustee allocates shares of Materials to plan
accounts of exchanging participants.
KEY TERMS
- ---------
"Exchange Offer" - the opportunity being provided to shareholders of
Lockheed Martin Corporation to exchange shares of common stock of Lockheed
Martin Corporation for shares of common stock of Martin Marietta Materials, Inc.
"Independent Fiduciary" - U.S. Trust Company, the special fiduciary
appointed to respond to the Exchange Offer on behalf of participants for whom
properly completed instructions are not received by the deadline.
"Instruction Card" - (or "Card" or "Participant Instruction Card") -
the card/form on which a participant may give instructions to the Trustee as to
whether or not to exchange in response to the Exchange Offer.
"Offering Circular/Prospectus" - a document provided to all
shareholders of Lockheed Martin Corporation which describes the Exchange Offer.
"Plan Exchange Procedures" - a document provided to employees who
participate in plans sponsored by Lockheed Martin Corporation or its
subsidiaries which permit investment of account balances in Lockheed Martin
Corporation common stock. The Exchange Procedures set forth the procedures
whereby a participant in one of those plans may instruct the plan trustee as to
how to respond to the Exchange Offer.
"Share Determination Date: - August 30, 1996; the balance in a
participant's account on this date will be used to determine the number of
shares that will be exchanged as part of the Exchange Offer, if the participant
(or the independent fiduciary exchanges in the case of a participant who does
not turn in a properly completed Instruction Card) directs the trustee to
exchange a percentage of his/her account.
-7-
EXPLANATION OF PROCEDURES CONCERNING
EXCHANGE OF LOCKHEED MARTIN CORPORATION COMMON STOCK
FOR MARTIN MARIETTA MATERIALS, INC. COMMON STOCK
September 16, 1996
Purpose of this Document
According to our records, you are a participant in the Idaho National
Engineering Laboratory Employee Investment Plan (the "Plan") maintained by a
subsidiary of Lockheed Martin Corporation ("LMC"). The Plan permits you to
invest a portion of your individual plan account in a fund invested in LMC
common stock. This document, which has been prepared by LMC, is being sent to
you by U.S. Bank of Idaho (the "Plan Trustee"), along with the other materials
enclosed in this envelope, because LMC has commenced an exchange offer (the
"Exchange Offer") with its stockholders. Pursuant to the Exchange Offer, each
LMC stockholder is being offered the opportunity to receive shares of Martin
Marietta Materials, Inc. ("Materials"), an 81%-owned subsidiary of LMC, in
exchange for shares of LMC. For each share of LMC common stock exchanged, a
Lockheed Martin stockholder may become entitled to receive ____ shares of
Materials common stock, subject to adjustment if the Exchange Offer is
oversubscribed.
Plan participants who have invested in the LMC Stock Fund will be
allowed to direct the Trustee as to whether to exchange LMC shares that are
attributable to their individual accounts. This document (the "Plan Exchange
Procedures") is intended to supplement the other materials enclosed in this
package regarding the Exchange Offer and to explain the procedures that govern
your decision whether to exchange some or all of the LMC stock attributable to
your account. You should read carefully the Plan Exchange Procedures and the
other materials sent to you, in particular, the Offering Circular/Prospectus and
make your own decision about the Exchange Offer.
These Plan Exchange Procedures are for information purposes only.
Neither LMC, its subsidiaries, their Boards of Directors nor the Plan Trustee
makes any recommendation whether to exchange or to refrain from exchanging LMC
shares in the Exchange Offer. If you have any questions concerning the Exchange
Offer, you should contact the Information Agent for the Exchange Offer at 1-800-
566-9058.
Procedures for Instructing the Trustee With Regard to Your Decision Whether to
Exchange LMC Shares
Enclosed in this envelope is a Participant Instruction Card
("Instruction Card" or "Card") and a self-addressed return envelope. If you
wish to have some or all of the LMC shares attributable to your account
exchanged, you must return the Instruction Card. You should also return the
Instruction Card even if you do NOT want to exchange your LMC shares. The
---
Instruction Card must be mailed to the address listed on the Card and using the
envelope included with these Plan Exchange Procedures.
When you examine your Instruction Card, you will see that it provides
different election amounts from 0% to 100% in 10% increments. Your selection of
one of these amounts will instruct the Plan Trustee as to what percent of your
LMC shares you want to exchange. The Card also shows the number of LMC shares
attributable to your account as of the close of business on July 31, 1996.
You should indicate the shares you wish to exchange, if any, by
checking a percentage, from 0% to 100%, in the appropriate box on your Card. If
you check a box of less than 100% and return the Instruction Card, your Card
will be treated as an instruction to exchange the percentage of LMC shares
listed and an instruction NOT to exchange the remaining LMC shares. For
example, an instruction to exchange 20% of your shares will be treated as an
instruction to exchange 20% of your LMC shares and an instruction not to
exchange the remaining 80%.
If you do not wish to exchange any shares, you must return the
----
Instruction Card with the box for 0% shares checked. If you fail to return a
-----------------------
Card, send the Card to an improper address, or send an incomplete or incorrect
- ------------------------------------------------------------------------------
Card, an independent fiduciary will decide whether to exchange the LMC shares in
- --------------------------------------------------------------------------------
your account, in accordance with plan provisions and applicable law. U.S. Trust
- --------------------------------------------------------------------
Company has been retained to serve as the independent fiduciary and to make the
exchange decision with regard to any LMC shares attributable to participant
accounts for which no properly completed instructions are received.
Your account balance will be updated for purchases or sales of LMC
shares in your account through September 30, 1996, which will be the date used
to calculate the actual number of LMC shares to be exchanged. (This later date
is called the "Share Determination Date.") For example, if your Instruction
Card shows 100 LMC shares attributable to your account and you elect to exchange
60% of your
-2-
shares, but your account balance as of the Share Determination Date has
increased to 120 shares, the Trustee will exchange 72 LMC shares (i.e., 60% of
120 shares). The LMC shares exchanged will include fractional shares. LMC shares
credited to your account after the Share Determination Date will not be
exchanged.
THE DEADLINE FOR RECEIPT OF YOUR INSTRUCTION CARD IS OCTOBER 11, 1996.
An original signed Instruction Card must be received by mail on or before that
date at the address listed on the enclosed self-addressed envelope. Facsimiles
will NOT be accepted. Although the Exchange Offer closes on October 18, 1996
for individuals who own shares directly, instructions from Plan participants
must be received by October 11th in order to allow the Plan Trustee to
accurately tabulate instructions and submit exchange offer instructions to the
Exchange Agent.
Any instruction regarding the exchange of LMC shares attributable to
your account may be modified so long as your Instruction Card is received by the
close of business on October 11th. If you want to modify your instructions, you
must obtain and mail in a new Instruction Card. A new Card may be obtained by
calling the Information Agent at 1-800-566-9058.
AS REQUIRED BY LAW, ALL EXCHANGE DECISIONS ARE STRICTLY CONFIDENTIAL.
Your exchange decision will be processed by the Plan Trustee and the Exchange
Agent. Your exchange decision will not be disclosed to any member of Lockheed
Martin Corporation management.
It is possible that the terms of the Exchange Offer may change. For
example, if too few shares are tendered, it is possible that the length of time
to respond to the Exchange Offer may be extended, the terms of the Exchange
Offer may be changed, or other steps may be taken. You will be notified of any
material changes.
It is possible that, if the number of tendered shares is less than is
required to distribute all of the Materials stock, the remaining Materials
shares will be distributed as a stock dividend to the remaining holders of LMC
shares. If this occurs, appropriate notifications will be sent to all
shareholders, including participants in the Plan.
-3-
It is also possible that more LMC shares will be tendered than can be
exchanged for Materials stock. In this case, the amount of shares accepted for
exchange will be reduced proportionately. If the Exchange Offer is
oversubscribed by 50%, for example, only 2/3 of the shares you elected to tender
will be accepted for exchange.
Procedures for Handling Accounts After the Close of The Exchange Offer
Your ability to buy and sell LMC shares WILL NOT be affected if you
return a properly completed Instruction Card and elect not to exchange any LMC
shares. If you exchange a portion of your shares, of if you fail to return a
properly completed Instruction Card by October 11, 1996 and the independent
fiduciary exchanges LMC shares on your behalf, the Plan Trustee will not process
September instructions to purchase or sell LMC shares in your account until the
exchange is complete. In addition, all distributions scheduled for October 15
will be delayed, regardless of whether an exchange was elected. These delays
are necessary to accurately process the exchange instructions received from
participants. We anticipate the exchange will be completed by mid-November.
Once the exchange is complete, your entire account will once again be available
for all plan transactions.
There are three ways in which you can learn the number of LMC shares
accepted for exchange. You should be able to determine your new balances from
your electronic time sheet approximately 10 to 15 days after the end of the
month following the month in which the exchange is completed. In addition, you
receive quarterly statements showing your account balance. The quarterly
statement for the period ending December 31 will show the results of the
exchange for participants who tendered shares. In addition, you will receive a
transaction confirmation statement describing the results of the exchange.
Description of Materials Stock Fund
In considering whether to exchange your LMC shares, in addition to
reviewing all of the enclosed communication material, it is very important that
you understand the treatment under your Plan of any Materials common stock that
you receive in exchange for your LMC shares. Materials common stock received by
participants in the Plan will be held in a separate fund, the "Materials Stock
Fund," established as part of completing the exchange. The Materials Stock Fund
will operate in a manner different from the other funds under the Plan.
-4-
You will be able to dispose of your balance in the Materials Stock
Fund in the same manner and at the same time as you are able to dispose of other
assets in your account. You will not be able, however, to add to your Materials
Stock Fund balance. Any dividends on Materials stock will be part of the
Materials Stock Fund.
The Materials Stock Fund under your Plan will be terminated as of
October 30, 1998. The termination date may be extended in which case you will
be notified of the extension prior to August 1, 1998. If you have not disposed
of your Materials Stock Fund balance by the termination date, the Plan will
provide for the orderly liquidation of the remaining balances in the Materials
Stock Fund as of that date and the reinvestment of the proceeds according to
your contribution investment elections in effect at that time.
The LMC shares presently in your account may come from different
contribution sources, such as employee pre-tax deferrals, employee after-tax
contributions, or company matching contributions. The types and percentages of
contribution sources of Materials shares credited to your account after the
Exchange Offer will be identical to the types and percentages of contribution
sources of the LMC shares in your account on September 30, 1996. Your balance
in the Materials Stock Fund will be available for loans and all withdrawals
(hardship or otherwise) to the extent permitted under the Plan for those types
of contributions.
-5-
EXCHANGE PROCEDURES
KEY DATES AND TERMS
KEY DATES (Based on schedule as of September 16, 1996; dates are approximate and
- ----------
may change if the Exchange Offer deadline is extended).
Date Event
- --------------------------------------------------------------------------------
September 16, 1996 Exchange Offer Commences - Begin mailing materials
to plan participants
September 30, 1996 Share Determination Date - Participant LMC Stock
Fund account balances updated to reflect August
transactions processed in September. It is this
balance that will be used to determine the number
of shares exchanged.
October 11, 1996 Deadline for receipt by Trustee of Participant
Instruction Cards.
October 18, 1996 Exchange Offer Closes - Trustee submits tender
instructions to LMC Exchange Agent.
Approximately October 25, Exchange Agent announces whether Exchange Offer
1996 was oversubscribed and if so, the percentage of
shares exchanged which will be exchanged.
October 30, 1996 September transactions normally processed at the
end of October delayed for participants who
directed Trustee to exchange all or a percentage
of LMC account (or participants who provided no
properly completed Instruction Card in the event
the Independent fiduciary directs a exchange of
all or a percentage of those shares).
Week of November 4, 1996 Trustee receives new Materials shares.
Week of November 11, 1996 Trustee allocates shares of Materials to plan
accounts of exchanging participants.
Week of November 11, 1996 Processing of September transactions normally
processed at the end of October for all
participants who directed Trustee to exchange all
or a percentage of LMC Stock Fund account (or
participants who provided no properly completed
Instruction Card in the event the Independent
fiduciary directs a exchange of all or a
percentage of those shares).
KEY TERMS
- ---------
"Exchange Offer" - the opportunity being provided to shareholders of
Lockheed Martin Corporation to exchange shares of common stock of Lockheed
Martin Corporation for shares of common stock of Martin Marietta Materials, Inc.
"Independent Fiduciary" - U.S. Trust Company, the special fiduciary
appointed to respond to the Exchange Offer on behalf of participants for whom
properly completed instructions are not received by the deadline.
"Instruction Card" - (or "Card" or "Participant Instruction Card") -
the card/form on which a participant may give instructions to the Trustee as to
whether or not to exchange in response to the Exchange Offer.
"Offering Circular/Prospectus" - a document provided to all
shareholders of Lockheed Martin Corporation which describes the Exchange Offer.
"Plan Exchange Procedures" - a document provided to employees who
participate in plans sponsored by Lockheed Martin Corporation or its
subsidiaries which permit investment of account balances in Lockheed Martin
Corporation common stock. The Plan Exchange Procedures set forth the procedures
whereby a participant in one of those plans may instruct the plan trustee as to
how to respond to the Exchange Offer.
"Share Determination Date: - the balance in a participant's account on
this date will be used to determine the number of shares that will be exchanged
as part of the Exchange Offer, if the participant (or the independent fiduciary
exchanges in the case of a participant who does not turn in a properly completed
Instruction Card) directs the trustee to exchange a percentage of his/her
account.
-6-
EXPLANATION OF PROCEDURES CONCERNING
EXCHANGE OF LOCKHEED MARTIN CORPORATION COMMON STOCK
FOR MARTIN MARIETTA MATERIALS, INC. COMMON STOCK
September 16, 1996
Purpose of this Document
According to our records, you are a participant in the Lockheed Martin
Capital Accumulation Plan or the Lockheed Martin Hourly Employees Savings and
Investment Plan - Fort Worth and Abilene Divisions (these plans are referred to
in this explanation as "Individual Account Plans") maintained by Lockheed Martin
Corporation ("LMC") or its subsidiaries. These Plans permit you to invest a
portion of your plan account in LMC common stock. This document, which has been
prepared by LMC, is being sent to you by Bankers Trust Company (the "Plan
Trustee"), along with the other materials enclosed in this envelope, because LMC
has commenced an exchange offer (the "Exchange Offer") with its stockholders.
Pursuant to the Exchange Offer, each LMC stockholder is being offered the
opportunity to receive shares of Martin Marietta Materials, Inc. ("Materials"),
an 81%-owned subsidiary of LMC, in exchange for shares of LMC. For each share
of LMC common stock exchanged, a Lockheed Martin stockholder may become entitled
to receive ____ shares of Materials common stock, subject to adjustment if the
Exchange Offer is oversubscribed.
Plan participants who have invested in the LMC Stock Fund will be
allowed to direct the trustee as to whether to exchange LMC shares allocated to
their individual accounts. This document (the "Plan Exchange Procedures") is
intended to supplement the other materials enclosed in this package regarding
the Exchange Offer and to explain the procedures that govern your decision
whether to exchange some or all of the LMC stock allocated to your account. You
should read carefully the Plan Exchange Procedures and the other materials sent
to you, in particular, the Offering Circular/Prospectus and make your own
decision regarding the Exchange Offer.
These Plan Exchange Procedures are for information purposes only.
Neither LMC, the LMC Board of Directors nor the Plan Trustee makes any
recommendation whether to exchange or to refrain from exchanging LMC shares in
the Exchange Offer.
If you have any questions concerning the Exchange Offer, you should
contact the Information Agent for the Exchange Offer at 1-800-566-9058. If you
have any questions concerning the Plan
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS
COVERING SECURITIES THAT HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933
Exchange Procedures, you should contact the Plan Trustee, Bankers Trust Company,
at 1-800-949-8496.
Procedures for Instructing the Trustee With Regard to Your Decision Whether to
Tender LMC Shares
Enclosed in this envelope is a Participant Instruction Card
("Instruction Card" or "Card") and a self-addressed return envelope. If you
wish to have some or all of the LMC shares allocated to your account exchanged,
you must return the Instruction Card. You should also return the Instruction
Card even if you do NOT want to exchange your LMC shares. The Instruction Card
---
must be mailed to the address listed the envelope included with these Plan
Exchange Procedures.
When you examine your Instruction Card, you will see that it provides
different election amounts from 0% to 100% in 10% increments. Your selection of
one of these amounts will instruct the Plan Trustee as to what percent of your
LMC shares you want to exchange. The Card also shows the number of LMC shares
allocated to your account as of the close of business on July 31st, as
calculated by the Plan recordkeeper.
You should indicate the shares you wish to exchange, if any, by
checking a percentage, from 0% to 100%, in the appropriate box on your Card. If
you check a box of less than 100% and return the Instruction Card, your Card
will be treated as an instruction to tender the percentage of LMC shares listed
and an instruction NOT to tender the remaining LMC shares. For example, an
instruction to tender 20% of your shares will be treated as an instruction to
tender 20% of your LMC shares and an instruction not to tender the remaining
80%.
If you do not wish to exchange any shares, you must return the
----
Instruction Card with the box for 0% shares checked. If you fail to return a
-----------------------
Card, send the Card to an improper address, or send an incomplete or incorrect
- ------------------------------------------------------------------------------
Card, an independent fiduciary will decide whether to exchange the LMC shares in
- --------------------------------------------------------------------------------
your account, in accordance with plan provisions and applicable law. U.S. Trust
- --------------------------------------------------------------------
Company has been retained to serve as the independent fiduciary and to make the
exchange decision with regard to any LMC shares allocated to participant
accounts for which no properly completed Instruction Card is received.
Your account balance will be updated for purchases or sales of LMC
shares in your account through August 31st, which will be the date used to
calculate the actual number of LMC shares to be exchanged. (This later date is
called the "Share Determination Date.") For example, if your Instruction Card
shows 100 LMC shares allocated to your account and you elect to exchange 60% of
your shares, but your account balance as of the Share Determination Date
2
has increased to 120 shares, the Trustee will tender 72 LMC shares (i.e., 60% of
120 shares). The LMC shares exchanged will include fractional shares. LMC shares
credited to your account after the Share Determination Date will not be
exchanged.
THE DEADLINE FOR RECEIPT OF YOUR INSTRUCTION CARD IS OCTOBER 11, 1996.
An original signed Instruction Card must be received by mail on or before that
date at the address listed on the enclosed self-addressed envelope. Facsimiles
will NOT be accepted. Although the Exchange Offer closes on October 18, 1996
for individuals who own shares directly, instructions from participants in
Individual Account Plans must be received by October 11th in order to allow the
Plan Trustee to accurately tabulate instructions and submit Exchange Offer
instructions to the Exchange Agent.
Any instruction regarding the exchange of LMC shares allocated to your
account may be modified so long as your Instruction Card is received by the
close of business on October 11th. If you want to modify your instructions, you
must obtain and mail in a new Instruction Card. A new Card may be obtained by
calling Bankers Trust Company at 1-800-949-8496.
AS REQUIRED BY LAW, ALL EXCHANGE DECISIONS ARE STRICTLY CONFIDENTIAL.
Your exchange decision will be processed by the Plan Trustee. Your exchange
decision will not be disclosed to any member of Lockheed Martin Corporation
management.
It is possible that the terms of the Exchange Offer may change. For
example, if too few shares are tendered, it is possible that the length of time
to respond to the Exchange Offer may be extended, the terms of the Exchange
Offer may be changed, or other steps may be taken. You will be notified of any
material changes.
It is possible that, if the number of tendered shares is less than is
required to distribute all of the Materials stock, the remaining Materials
shares will be distributed as a stock dividend to the remaining holders of LMC
shares. If this occurs, appropriate notifications will be sent to all
shareholders, including participants in the Individual Account Plans.
It is also possible that more LMC shares will be tendered than can be
exchanged for Materials stock. In this case, the amount of shares accepted for
exchange will be reduced proportionately. If the Exchange Offer is
oversubscribed by 50%, for example, only 2/3 of the shares you elected to tender
will be accepted for exchange.
Procedures for Handling Accounts After the Close of The Exchange Offer
Any transaction involving LMC shares in your account -- including
purchases, sales, distributions or loans -- that otherwise
3
would be processed as of September 30 will be delayed for approximately one
week. This delay will apply to all participants, regardless of whether the
participants elects to tender all or a portion of the LMC shares in his or her
account. Also, if you exchange a portion of your LMC shares, or if you fail to
return a properly completed Instruction Card by October 11 and the independent
fiduciary exchanges LMC shares on your behalf, the Plan Trustee will not process
September instructions to purchase or sell LMC shares in your account, which
would otherwise be effective as of October 31, until the exchange is complete.
We anticipate the exchange will be completed by mid-November. These delays are
necessary to accurately process the exchange instructions received from
participants. The exchange will be processed as a September transaction. Once
the exchange is complete, your entire account will once again be available for
all plan transactions, subject to the various limitations described below.
There are several ways in which you can learn the number of LMC shares
accepted for exchange. If your Plan has a voice response system, you should be
able to determine your new balances on or around November 15, 1996. In
addition, you receive quarterly statements showing your account balance. The
next quarterly statement will also show the number of LMC shares exchanged. In
addition, you will receive a transaction confirmation statement describing the
results of the exchange.
Description of Materials Stock Fund
In considering whether to exchange your LMC shares, in addition to
reviewing all of the enclosed communication material, it is very important that
you understand the treatment under your Plan of any Materials common stock that
you receive in exchange for your LMC shares. Materials common stock received by
participants in the Plan will be held in a separate fund, the "Materials Stock
Fund," established as part of completing the exchange. The Materials Stock Fund
will be a unitized fund and will operate in a manner different from the other
funds under the Plan.
You will not be able to add to your Materials Stock Fund balance.
Cash dividends on Materials stock will be held in the Materials Stock Fund in
short term investments and will not be invested in shares of Materials common
stock. Distributions from the Materials Stock Fund will be made in cash and not
in shares of stock.
In any event, the Materials Stock Fund under your Plan will be
terminated as of October 30, 1998. The termination may be extended, in which
case you will be notified of the extension prior to August 1, 1998. If you have
not disposed of your Materials Stock Fund balance by the termination date, the
Plan will provide for the orderly liquidation of the remaining balances in the
Materials Stock Fund as of that date and the reinvestment of the
4
proceeds in the most conservative investment option offered under the Plan, as
selected by the Benefit Plan Committee.
The LMC shares presently in your account may come from different
contribution sources, such as employee pre-tax deferrals, employee after-tax
contributions, or company matching contributions. The types and percentages of
contribution sources of Materials shares credited to your account after the
Exchange Offer will be identical to the types and percentages of contribution
sources of the LMC shares in your account as of August 31, 1996. Your balance in
the Materials Stock Fund will be available for loans and all withdrawals
(hardship or otherwise) to the extent permitted under the Plan for those types
of contributions.
Description of Tax Consequences
Exchanging LMC shares for Materials shares could change how you are
taxed on the amounts distributed to you from the plan. Depending on the type of
distribution, a participant who takes an in-kind distribution of shares of stock
may elect not to be taxed at the time of distribution on the "net unrealized
appreciation" attributable to certain types of contributions. The "net
unrealized appreciation" is the difference between the value of the units in the
stock fund at the time they were allocated to your account and at the time the
shares representing the value of those units are distributed to you. Net
unrealized appreciation will not be taxed until the stock is sold and the
appreciation is realized.
For tax purposes, the cost basis of the LMC shares currently allocated
to your account will be apportioned between your remaining shares in the LMC
Stock Fund and your units in the Materials Stock Fund. Distributions upon
termination of employment or withdrawals from the Materials Stock Fund will be
made, however, only in cash. As a result, distributions from the Materials
Stock Fund will not be eligible for "net unrealized appreciation" tax treatment.
5
For example, suppose that (1) prior to the Exchange Offer, you
intended to receive your entire distribution from the LMC Stock Fund in shares
and (2) after the Exchange Offer, you intend to receive your LMC Stock Fund
balance in shares and your Materials Stock Fund balance in cash. In this case
(and assuming that the value of your Materials stock is equal to the value of
the LMC stock that would have remained in your account if the Exchange Offer had
not occurred) you will pay a higher tax at the time of the distribution (and a
lesser tax upon sale of your LMC shares) than would be the case if you had not
exchanged your LMC shares. This is because the tax due on the appreciation of
the LMC shares would have been deferred until you sold the LMC shares, whereas
you are taxed on the full amount of your cash distribution from the Materials
Stock Fund (less the amount of your after-tax contributions invested in that
fund).
6
EXCHANGE PROCEDURES
KEY DATES AND TERMS
KEY DATES (Based on schedule as of September 16, 1996; dates are approximate and
- ----------
may change if the Exchange Offer deadline is extended).
Date Event
- --------------------------------------------------------------------------------
August 30, 1996 Share Determination Date - Participant LMC account
balances updated to reflect July transactions
processed in August. It is this balance that will
be used to determine the number of shares
exchanged.
September 16, 1996 Exchange Offer Commences - Begin mailing materials
to plan participants
September 30, 1966 Transactions normally processed as of September 30
delayed for one week for all participants.
October 11, 1996 Deadline for receipt by Trustee of Participant
Instruction Cards
October 18, 1996 Exchange Offer Closes - Trustee submits exchange
instructions to LMC Exchange Agent
Approximately October 25, Exchange Agent announces whether Exchange Offer
1996 was oversubscribed and if so, the percentage of
shares tendered which will be exchanged.
October 30, 1996 September transactions normally processed at end
of October delayed for all participants who
directed Trustee to exchange all or a percentage
of LMC account (or participants who provided no
properly completed directions in the event the
independent fiduciary directs a exchange of all or
a percentage of those shares)
Week of November 4, 1996 Trustee receives new Materials shares
Week of November 11, 1996 Trustee allocates shares of Materials to plan
accounts of exchanging participants
Week of November 11, 1996 Processing of September transactins completed for
all participants who directed Trustee to
exchange all or a percentage of LMC account (or
participants who provided no properly completed
instructions in the event the independent
fiduciary directs an exchange of all or a
percentage of those shares).
KEY TERMS
- ---------
"Exchange Offer" - the opportunity being provided to shareholders of
Lockheed Martin Corporation to exchange shares of common stock of Lockheed
Martin Corporation for shares of common stock of Martin Marietta Materials, Inc.
"Independent Fiduciary" - U.S. Trust Company, the special fiduciary
appointed to respond to the Exchange Offer on behalf of participants for whom
properly completed instructions are not received by the deadline.
"Instruction Card" - (or "Card" or "Participant Instruction Card") -
the card/form on which a participant may give instructions to the Trustee as to
whether or not to exchange in response to the Exchange Offer.
"Offering Circular/Prospectus" - a document provided to all
shareholders of Lockheed Martin Corporation which describes the Exchange Offer.
"Plan Exchange Procedures" - a document provided to employees who
participate in plans sponsored by Lockheed Martin Corporation or its
subsidiaries which permit investment of account balances in Lockheed Martin
Corporation common stock. The Plan Exchange Procedures set forth the procedures
whereby a participant in one of those plans may instruct the plan trustee as to
how to respond to the Exchange Offer.
"Share Determination Date: - August 31, 1996, the balance in a
participant's account on this date will be used to determine the number of
shares that will be tendered as part of the Exchange Offer, if the participant
(or the independent fiduciary tenders in the case of a participant who does not
turn in a properly completed Instruction Card) directs the trustee to tender a
percentage of his/her account.
7
[Trustee Letterhead]
September 16, 1996
Re: Sandia Corporation Savings and
Security Plan; Sandia Corporation
Savings and Income Plan
Dear Plan Participant:
Lockheed Martin Corporation ("Lockheed Martin") is offering each of
the holders of record of its common stock the opportunity to exchange all or a
portion of each Lockheed Martin share held by the stockholder for a specified
number of shares of common stock of Martin Marietta Materials, Inc. up to a
maximum number (the "Exchange Offer"). In cases where the Lockheed Martin
shares are held by one of the employee benefit plans listed above, the plan
trustee is the holder of record of the Lockheed Martin common stock for purposes
of responding to the Exchange Offer. Nonetheless, participants in the plans
listed above may direct the plan trustee on the decision as to whether to
exchange Lockheed Martin shares allocated to the participant's plan account.
This letter and the enclosed materials are being sent to all
participants in the plans listed above, regardless of whether any portion of a
participant's account balance is attributable to Lockheed Martin common stock.
This is being done to assure that all participants have an opportunity to direct
the Trustee as to a response to the Exchange Offer. However, if no portion of
your account balance currently is attributable to Lockheed Martin common stock
and you do not intend to invest any portion of your account in Lockheed Martin
stock by October 11, 1996, you do not need to take any actions with regard to
the Exchange Offer or this package.
The attached materials have been prepared by Lockheed Martin and
describe the Exchange Offer and the procedures plan participants should follow
in responding to the Exchange Offer. The materials contain important
information including the following:
. Offering Circular/Prospectus - This document has been provided to all
holders of record of Lockheed Martin common stock.
. Questions and Answers - This document also has been provided to all holders
of record of Lockheed Martin common stock.
. Explanation of Procedures Concerning Exchange of Lockheed Martin
Corporation Common Stock for Martin Marietta Materials, Inc. Common Stock
("Plan Exchange Procedures") - This document describes the special
procedures applicable to responses for plan participants.
. Participant Instruction Card - This is the card on which you may direct the
plan trustee confidentially as to how to respond to the Exchange Offer with
respect to Lockheed Martin shares attributable to your plan account.
. Self-addressed stamped envelope - This envelope should be used for return
of your Participant Instruction Card.
All of the enclosed documents should be read in their entirety prior
to making a decision regarding how to respond to the Exchange Offer. Neither
Lockheed Martin, Sandia Corporation, their Boards of Directors nor the Plan
Trustee makes any recommendation whether to tender or to refrain from tendering
LMC shares in the Exchange Offer.
Please note that the Offering Circular/Prospectus and the Exchange
Procedures differ on the procedures for responding to the Exchange Offer. This
is because, as noted above, the Offering Circular/Prospectus is directed to the
record holder of the common stock (in this case, the plan trustee) rather than
the plan participants. The Exchange Procedures, on the other hand, are
specifically directed to plan participants and are the exclusive means for plan
participants to respond to the Exchange Offer. Plan participants should follow
-------------------------------
the procedures set forth in the Exchange Procedures and not the procedures in
- -----------------------------------------------------------------------------
the Offering Circular/Prospectus. In particular,
- --------------------------------
. You should indicate your response to the Exchange Offer for Lockheed Martin
shares attributable to your plan
2
accouunt on the enclosed Participant Instruction Card and not on the Letter
of Transmittal sent to other shareholders.
. An original signed and properly completed instruction card must be received
----
by the plan trustee at the address on the enclosed self-addressed stamped
envelope by midnight on October 11, 1996 (unless a later deadline is
announced for the Exchange Offer).
. You must return an original signed and properly completed Participant
---------------------------------------------------------------------
Instruction Card even if you do not want to exchange any of the shares
----------------------------------------------------------------------
attributable to your plan account; if the trustee does not receive an
---------------------------------
original signed and properly completed card, no shares attributable to your
plan account will be exchanged for shares of Martin Marietta Materials,
Inc.
If you hold shares directly as a shareholder in addition to the
shares held through one of the plans listed above, you will also receive, under
separate cover, Exchange Offer materials which can be used to exchange those
shares directly with Lockheed Martin. Those Exchange Offer materials may not be
used to direct the Trustee to tender or not tender Lockheed Martin shares
attributable to your plan account. Directions regarding your plan account may
only be given on a Participant Instruction Card submitted in accordance with the
Plan Exchange Procedures.
The Exchange Procedures contain telephone numbers you may call should
you have any questions concerning the Exchange Offer.
Your instructions are confidential and will not be disclosed to
members of Lockheed Martin or Sandia Corporation management. PLEASE REMEMBER
TO RETURN YOUR PARTICIPANT INSTRUCTION CARD BY OCTOBER 11, 1996 TO THE ADDRESS
LISTED ON THE RETURN ENVELOPE.
[Trustee Name]
3
[Trustee Letterhead]
September 16, 1996
Re: List of U.S.
Trust Plan Names
Dear Plan Participant:
Lockheed Martin Corporation ("Lockheed Martin") is offering each of
the holders of record of its common stock the opportunity to exchange all or a
portion of each Lockheed Martin share held by the stockholder for a specified
number of shares of common stock of Martin Marietta Materials, Inc. up to a
maximum number (the "Exchange Offer"). In cases where the Lockheed Martin
shares are held by one of the employee benefit plans listed above, the plan
trustee is the holder of record of the Lockheed Martin Common stock for purposes
of responding to the Exchange Offer. Nonetheless, participants in the plans
listed above may direct the plan trustee on the decision as to whether to
exchange Lockheed Martin shares allocated to the participant's plan account.
The attached materials have been prepared by Lockheed Martin and
describe the Exchange Offer and the procedures plan participants should follow
in responding to the Exchange Offer. The materials contain important
information including the following:
. Offering Circular/Prospectus - This document has been provided to all
holders of record of Lockheed Martin common stock.
. Questions and Answers - This document also has been provided to all holders
of record of Lockheed Martin common stock.
. Explanation of Procedures Concerning Exchange of Lockheed Martin
Corporation Common Stock for Martin Marietta Materials, Inc. Common Stock
("Plan Exchange Procedures") - This document describes the special
procedures applicable to responses for plan participants.
. Participant Instruction Card - This is the card on which you may direct the
plan trustee confidentially as to how to respond to the Exchange Offer with
respect to Lockheed Martin shares allocated to your plan account.
. Self-addressed stamped envelope - This envelope should be used for return
of your Participant Instruction Card.
All of the enclosed documents should be read in their entirety prior
to making a decision regarding how to respond to the Exchange Offer. Neither
Lockheed Martin, its Board of Directors nor the Plan Trustee makes any
recommendation whether to tender or to refrain from tendering LMC shares in the
Exchange Offer.
Please note that the Offering Circular/Prospectus and the Exchange
Procedures differ on the procedures for responding to the Exchange Offer. This
is because, as noted above, the Offering Circular/Prospectus is directed to the
record holder of the common stock (in this case, the plan trustee) rather than
the plan participants. The Exchange Procedures, on the other hand, are
specifically directed to plan participants and are the exclusive means for plan
participants to respond to the Exchange Offer. Plan participants should follow
------------------------------
the procedures set forth in the Exchange Procedures and not the procedures in
- -----------------------------------------------------------------------------
the Offering Circular/Prospectus. In particular,
- --------------------------------
. You should indicate your response to the Exchange Offer for Lockheed Martin
shares allocated to your plan account on the enclosed Participant
Instruction Card
2
and not on the Letter of Transmittal sent to other shareholders.
. An original signed and properly completed instruction card must be received
----
by the plan trustee at the address on the enclosed self-addressed stamped
envelope by close of business on October 11, 1996 (unless a later deadline
is announced for the Exchange Offer).
. You must return an original signed and properly completed Participant
---------------------------------------------------------------------
Instruction Card even if you do not want to exchange any of the shares
----------------------------------------------------------------------
attributable to your plan account; if the trustee does not receive an
---------------------------------
original signed and properly completed card, an independent fiduciary will
determine whether or not any of the Lockheed Martin shares allocated to
your plan account will be exchanged for shares of Martin Marietta
Materials, Inc.
If you hold shares directly as a shareholder in addition to the
shares held through one of the plans listed above, you will also receive, under
separate cover, Exchange Offer materials which can be used to exchange those
shares directly with Lockheed Martin. Those Exchange Offer materials may not be
used to direct the Trustee to tender or not tender Lockheed Martin shares
allocated to your plan account. Directions regarding your plan account may only
be given on a Participant Instruction Card submitted in accordance with the Plan
Exchange Procedures.
The Exchange Procedures contain telephone numbers you may call should
you have any questions concerning the Exchange Offer.
Your instructions are confidential and will not be disclosed to
members of Lockheed Martin management. PLEASE REMEMBER TO RETURN YOUR
PARTICIPANT INSTRUCTION CARD BY OCTOBER 11, 1996 TO THE ADDRESS LISTED ON THE
RETURN ENVELOPE.
[Trustee Name]
3
[Trustee Letterhead]
September 16, 1996
Re: Idaho National
Engineering
Laboratory Employee
Investment Plan
Dear Plan Participant:
Lockheed Martin Corporation ("Lockheed Martin") is offering each of
the holders of record of its common stock the opportunity to exchange all or a
portion of each Lockheed Martin share held by the stockholder for a specified
number of shares of common stock of Martin Marietta Materials, Inc. up to a
maximum number (the "Exchange Offer"). In cases where the Lockheed Martin
shares are held by an employee benefit plan such as the Idaho National
Engineering Laboratory Employee Investment Plan ("Plan"), the plan trustee is
the holder of record of the Lockheed Martin Common stock for purposes of
responding to the Exchange Offer. Nonetheless, participants in the Plan may
direct the plan trustee on the decision as to whether to exchange Lockheed
Martin shares allocated to the participant's Plan account.
This letter and the enclosed materials are being sent to all
participants in the plan listed above, regardless of whether any portion of a
participant's account balance is attributable to Lockheed Martin common stock.
This is being done to assure that all participants have an opportunity to direct
the Trustee as to a response to the Exchange Offer. However, if no portion of
your account balance currently is attributable to Lockheed Martin common stock
and you do not intend to invest any portion of your account in Lockheed Martin
stock by September 30, 1996, you do not need to take any actions with regard to
the Exchange Offer or this package.
The attached materials have been prepared by Lockheed Martin and
describe the Exchange Offer and the procedures plan participants should follow
in responding to
the Exchange Offer. The materials contain important
information including the following:
. Offering Circular/Prospectus - This document has been provided to all
holders of record of Lockheed Martin common stock.
. Questions and Answers - This document also has been provided to all holders
of record of Lockheed Martin common stock.
. Explanation of Procedures Concerning Exchange of Lockheed Martin
Corporation Common Stock for Martin Marietta Materials, Inc. Common Stock
("Plan Exchange Procedures") - This document describes the special
procedures applicable to responses for plan participants.
. Participant Instruction Card - This is the card on which you may direct the
plan trustee confidentially as to how to respond to the Exchange Offer with
respect to Lockheed Martin shares attributable to your plan account.
. Self-addressed stamped envelope - This envelope should be used for return
of your Participant Instruction Card.
All of the enclosed documents should be read in their entirety prior
to making a decision regarding how to respond to the Exchange Offer. Neither
Lockheed Martin, its subsidiaries, their Boards of Directors nor the Plan
Trustee makes any recommendation whether to tender or to refrain from tendering
LMC shares in the Exchange Offer.
Please note that the Offering Circular/Prospectus and the Exchange
Procedures differ on the procedures for responding to the Exchange Offer. This
is because, as noted above, the Offering Circular/Prospectus is directed to the
record holder of the common stock (in this case, the plan trustee) rather than
the plan participants. The Exchange Procedures, on the other hand, are
specifically directed to plan participants and are the exclusive means for plan
participants to respond to the Exchange Offer. Plan participants should follow
------------------------------
the procedures set forth in the Exchange Procedures and not the procedures in
- -----------------------------------------------------------------------------
the Offering Circular/Prospectus. In particular,
- --------------------------------
2
. You should indicate your response to the Exchange Offer for Lockheed Martin
shares attributable to your plan account on the enclosed Participant
Instruction Card and not on the Letter of Transmittal sent to other
shareholders.
. An original signed and properly completed instruction card must be received
----
by the plan trustee at the address on the enclosed self-addressed stamped
envelope by close of business on October 11 1996 (unless a later deadline
is announced for the Exchange Offer).
. You must return an original signed and properly completed Participant
---------------------------------------------------------------------
Instruction Card even if you do not want to exchange any of the shares
----------------------------------------------------------------------
attributable to your plan account; if the trustee does not receive an
---------------------------------
original signed and properly completed card, an independent fiduciary will
determine whether or not any of the Lockheed Martin shares attributable to
your plan account will be exchanged for shares of Martin Marietta
Materials, Inc.
If you hold shares directly as a shareholder in addition to the
shares held through one of the plans listed above, you will also receive, under
separate cover, Exchange Offer materials which can be used to exchange those
shares directly with Lockheed Martin. Those Exchange Offer materials may not be
used to direct the Trustee to tender or not tender Lockheed Martin shares
attributable to your plan account. Directions regarding your plan account may
only be given on a Participant Instruction Card submitted in accordance with the
Plan Exchange Procedures.
The Exchange Procedures contain telephone numbers you may call should
you have any questions concerning the Exchange Offer.
Your instructions are confidential and will not be disclosed to
members of Lockheed Martin management. PLEASE REMEMBER TO RETURN YOUR
PARTICIPANT INSTRUCTION CARD BY OCTOBER 11, 1996 TO THE ADDRESS LISTED ON THE
RETURN ENVELOPE.
[Trustee Name]
3
[Trustee Letterhead]
September 16, 1996
Re: List of Bankers
Trust Plan Names
Dear Plan Participant:
Lockheed Martin Corporation ("Lockheed Martin") is offering each of
the holders of record of its common stock the opportunity to exchange all or a
portion of each Lockheed Martin share held by the stockholder for a specified
number of shares of common stock of Martin Marietta Materials, Inc. up to a
maximum number (the "Exchange Offer"). In cases where the Lockheed Martin
shares are held by one of the employee benefit plans listed above, the plan
trustee is the holder of record of the Lockheed Martin Common stock for purposes
of responding to the Exchange Offer. Nonetheless, participants in the plans
listed above may direct the plan trustee on the decision as to whether to
exchange Lockheed Martin shares allocated to the participant's plan account.
The attached materials have been prepared by Lockheed Martin and
describe the Exchange Offer and the procedures plan participants should follow
in responding to the Exchange Offer. The materials contain important
information including the following:
. Offering Circular/Prospectus - This document has been provided to all
holders of record of Lockheed Martin common stock.
. Questions and Answers - This document also has been provided to all holders
of record of Lockheed Martin common stock.
. Explanation of Procedures Concerning Exchange of Lockheed Martin
Corporation Common Stock for Martin Marietta Materials, Inc. Common Stock
("Plan Exchange Procedures") - This document describes the special
procedures applicable to responses for plan participants.
. Participant Instruction Card - This is the card on which you may direct the
plan trustee confidentially as to how to respond to the Exchange Offer with
respect to Lockheed Martin shares allocated to your plan account.
. Self-addressed stamped envelope - This envelope should be used for return
of your Participant Instruction Card.
All of the enclosed documents should be read in their entirety prior
to making a decision regarding how to respond to the Exchange Offer. Neither
Lockheed Martin, its Board of Directors nor the Plan Trustee makes any
recommendation whether to tender or to refrain from tendering LMC shares in the
Exchange Offer.
Please note that the Offering Circular/Prospectus and the Exchange
Procedures differ on the procedures for responding to the Exchange Offer. This
is because, as noted above, the Offering Circular/Prospectus is directed to the
record holder of the common stock (in this case, the plan trustee) rather than
the plan participants. The Exchange Procedures, on the other hand, are
specifically directed to plan participants and are the exclusive means for plan
participants to respond to the Exchange Offer. Plan participants should follow
------------------------------
the procedures set forth in the Exchange Procedures and not the procedures in
- -----------------------------------------------------------------------------
the Offering Circular/Prospectus. In particular,
- --------------------------------
. You should indicate your response to the Exchange Offer for Lockheed Martin
shares allocated to your plan account on the enclosed Participant
Instruction Card
2
and not on the Letter of Transmittal sent to other shareholders.
. An original signed and properly completed instruction card must be received
----
by the plan trustee at the address on the enclosed self-addressed stamped
envelope by close of business on October 11, 1996 (unless a later deadline
is announced for the Exchange Offer).
. You must return an original signed and properly completed Participant
---------------------------------------------------------------------
Instruction Card even if you do not want to exchange any of the shares
----------------------------------------------------------------------
attributable to your plan account; if the trustee does not receive an
---------------------------------
original signed and properly completed card, an independent fiduciary will
determine whether or not any of the Lockheed Martin shares allocated to
your plan account will be exchanged for shares of Martin Marietta
Materials, Inc.
If you hold shares directly as a shareholder in addition to the shares
held through one of the plans listed above, you will also receive, under
separate cover, Exchange Offer materials which can be used to exchange those
shares directly with Lockheed Martin. Those Exchange Offer materials may not be
used to direct the Trustee to tender or not tender Lockheed Martin shares
allocated to your plan account. Directions regarding your plan account may only
be given on a Participant Instruction Card submitted in accordance with the Plan
Exchange Procedures.
The Exchange Procedures contain telephone numbers you may call should
you have any questions concerning the Exchange Offer.
Your instructions are confidential and will not be disclosed to
members of Lockheed Martin management. PLEASE REMEMBER TO RETURN YOUR
PARTICIPANT INSTRUCTION CARD BY OCTOBER 11, 1996 TO THE ADDRESS LISTED ON THE
RETURN ENVELOPE.
[Trustee Name]
3
[Trustee Letterhead]
September 16, 1996
Re: List of MMES
Plan Names
Dear Plan Participant:
Lockheed Martin Corporation ("Lockheed Martin") is offering each of
the holders of record of its common stock the opportunity to exchange all or a
portion of each Lockheed Martin share held by the stockholder for a specified
number of shares of common stock of Martin Marietta Materials, Inc. up to a
maximum number (the "Exchange Offer"). In cases where the Lockheed Martin
shares are held by one of the employee benefit plans listed above, the plan
trustee is the holder of record of the Lockheed Martin Common stock for purposes
of responding to the Exchange Offer. Nonetheless, participants in the plans
listed above may direct the plan trustee on the decision as to whether to
exchange Lockheed Martin shares allocated to the participant's plan account.
The attached materials have been prepared by Lockheed Martin and
describe the Exchange Offer and the procedures plan participants should follow
in responding to the Exchange Offer. The materials contain important
information including the following:
. Offering Circular/Prospectus - This document has been provided to all
holders of record of Lockheed Martin common stock.
. Questions and Answers - This document also has been provided to all holders
of record of Lockheed Martin common stock.
. Explanation of Procedures Concerning Exchange of Lockheed Martin
Corporation Common Stock for Martin Marietta Materials, Inc. Common Stock
("Plan Exchange Procedures") - This document describes the special
procedures applicable to responses for plan participants.
. Participant Instruction Card - This is the card on which you may direct the
plan trustee confidentially as to how to respond to the Exchange Offer with
respect to Lockheed Martin shares allocated to your plan account.
. Self-addressed stamped envelope - This envelope should be used for return
of your Participant Instruction Card.
All of the enclosed documents should be read in their entirety prior
to making a decision regarding how to respond to the Exchange Offer. Neither
Lockheed Martin, Lockheed Martin Energy Systems, Inc., their Boards of Directors
nor the Plan Trustee makes any recommendation whether to tender or to refrain
from tendering LMC shares in the Exchange Offer.
Please note that the Offering Circular/Prospectus and the Exchange
Procedures differ on the procedures for responding to the Exchange Offer. This
is because, as noted above, the Offering Circular/Prospectus is directed to the
record holder of the common stock (in this case, the plan trustee) rather than
the plan participants. The Exchange Procedures, on the other hand, are
specifically directed to plan participants and are the exclusive means for plan
participants to respond to the Exchange Offer. Plan participants should follow
------------------------------
the procedures set forth in the Exchange Procedures and not the procedures in
- -----------------------------------------------------------------------------
the Offering Circular/Prospectus. In particular,
- --------------------------------
. You should indicate your response to the Exchange Offer for Lockheed Martin
shares allocated to your plan account on the enclosed Participant
Instruction Card
2
and not on the Letter of Transmittal sent to other
shareholders.
. An original signed and properly completed instruction card must be received
----
by the plan trustee at the address on the enclosed self-addressed stamped
envelope by close of business on October 11, 1996 (unless a later deadline
is announced for the Exchange Offer).
. You must return an original signed and properly completed Participant
---------------------------------------------------------------------
Instruction Card even if you do not want to exchange any of the shares
----------------------------------------------------------------------
attributable to your plan account; if the trustee does not receive an
---------------------------------
original signed and properly completed card, an independent fiduciary will
determine whether or not any of the Lockheed Martin shares allocated to
your plan account will be exchanged for shares of Martin Marietta
Materials, Inc.
If you hold shares directly as a shareholder in addition to the
shares held through one of the plans listed above, you will also receive, under
separate cover, Exchange Offer materials which can be used to exchange those
shares directly with Lockheed Martin. Those Exchange Offer materials may not be
used to direct the Trustee to tender or not tender Lockheed Martin shares
allocated to your plan account. Directions regarding your plan account may only
be given on a Participant Instruction Card submitted in accordance with the Plan
Exchange Procedures.
The Exchange Procedures contain telephone numbers you may call should
you have any questions concerning the Exchange Offer.
Your instructions are confidential and will not be disclosed to
members of Lockheed Martin management. PLEASE REMEMBER TO RETURN YOUR
PARTICIPANT INSTRUCTION CARD BY OCTOBER 11, 1996 TO THE ADDRESS LISTED ON THE
RETURN ENVELOPE.
[Trustee Name]
3
[State Street Letterhead]
September 16, 1996
Re: List of MMC Plans
Dear Plan Participant:
Lockheed Martin Corporation ("Lockheed Martin") is offering each of
the holders of record of its common stock the opportunity to exchange all or a
portion of each Lockheed Martin share held by the stockholder for a specified
number of shares of common stock of Martin Marietta Materials, Inc. up to a
maximum number (the "Exchange Offer"). In cases where the Lockheed Martin
shares are held by one of the employee benefit plans listed above, the plan
trustee is the holder of record of the Lockheed Martin Common stock for purposes
of responding to the Exchange Offer. Nonetheless, participants in the plans
listed above may direct the plan trustee on the decision as to whether to
exchange Lockheed Martin shares allocated to the participant's plan account.
This letter and the enclosed materials are being sent to all
participants in the plans listed above, regardless of whether any portion of a
participant's account balance is attributable to Lockheed Martin common stock.
This is being done to assure that all participants have an opportunity to direct
the Trustee as to a response to the Exchange Offer. However, if no portion of
your account balance currently is attributable to Lockheed Martin common stock
and you do not intend to invest any portion of your account in Lockheed Martin
stock by October 16, 1996, you do not need to take any actions with regard to
the Exchange Offer or this package.
The attached materials have been prepared by Lockheed Martin and
describe the Exchange Offer and the procedures plan participants should follow
in responding to the Exchange Offer. The materials contain important
information including the following:
. Offering Circular/Prospectus - This document has been provided to all
holders of record of Lockheed Martin
common stock.
. Questions and Answers - This document also has been provided to all holders
of record of Lockheed Martin common stock.
. Explanation of Procedures Concerning Exchange of Lockheed Martin
Corporation Common Stock for Martin Marietta Materials, Inc. Common Stock
("Plan Exchange Procedures") - This document describes the special
procedures applicable to responses for plan participants.
. Participant Instruction Card - This is the card on which you may direct the
plan trustee confidentially as to how to respond to the Exchange Offer with
respect to Lockheed Martin shares attributable to your plan account.
. Self-addressed stamped envelope - This envelope should be used for return
of your Participant Instruction Card.
All of the enclosed documents should be read in their entirety prior
to making a decision regarding how to respond to the Exchange Offer. Neither
Lockheed Martin, its Board of Directors nor the Plan Trustee makes any
recommendation whether to tender or to refrain from tendering LMC shares in the
Exchange Offer.
Please note that the Offering Circular/Prospectus and the Exchange
Procedures differ on the procedures for responding to the Exchange Offer. This
is because, as noted above, the Offering Circular/Prospectus is directed to the
record holder of the common stock (in this case, the plan trustee) rather than
the plan participants. The Exchange Procedures, on the other hand, are
specifically directed to plan participants and are the exclusive means for plan
participants to respond to the Exchange Offer. Plan participants should follow
------------------------------
the procedures set forth in the Exchange Procedures and not the procedures in
- -----------------------------------------------------------------------------
the Offering Circular/Prospectus. In particular,
- --------------------------------
. You should indicate your response to the Exchange Offer for Lockheed Martin
shares attributable to your plan account on the enclosed Participant
Instruction Card and not on the Letter of Transmittal sent to other
shareholders.
2
. An original signed and properly completed instruction card must be received
----
by the plan trustee at the address on the enclosed self-addressed stamped
envelope by close of business on October 11, 1996 (unless a later deadline
is announced for the Exchange Offer).
. You must return an original signed and properly completed Participant
---------------------------------------------------------------------
Instruction Card even if you do not want to exchange any of the shares
----------------------------------------------------------------------
attributable to your plan account; if the trustee does not receive an
---------------------------------
original signed and properly completed card, an independent fiduciary will
determine whether or not any of the Lockheed Martin shares attributable to
your plan account will be exchanged for shares of Martin Marietta
Materials, Inc.
If you hold shares directly as a shareholder in addition to the
shares held through one of the plans listed above, you will also receive, under
separate cover, Exchange Offer materials which can be used to exchange those
shares directly with Lockheed Martin. Those Exchange Offer materials may not be
used to direct the Trustee to tender or not tender Lockheed Martin shares
attributable to your plan account. Directions regarding your plan account may
only be given on a Participant Instruction Card submitted in accordance with the
Plan Exchange Procedures.
The Exchange Procedures contain telephone numbers you may call should
you have any questions concerning the Exchange Offer.
Your instructions are confidential and will not be disclosed to
members of Lockheed Martin management. PLEASE REMEMBER TO RETURN YOUR
PARTICIPANT INSTRUCTION CARD BY OCTOBER 11, 1996 TO THE ADDRESS LISTED ON THE
RETURN ENVELOPE.
[Trustee Name]
3
[Trustee Letterhead]
September 16, 1996
Re: List of Loral
Plan Names
Dear Plan Participant:
Lockheed Martin Corporation ("Lockheed Martin") is offering each of
the holders of record of its common stock the opportunity to exchange all or a
portion of each Lockheed Martin share held by the stockholder for a specified
number of shares of common stock of Martin Marietta Materials, Inc. up to a
maximum number (the "Exchange Offer"). In cases where the Lockheed Martin
shares are held by one of the employee benefit plans listed above, the plan
trustee is the holder of record of the Lockheed Martin common stock for purposes
of responding to the Exchange Offer. Nonetheless, participants in the plans
listed above may direct the plan trustee on the decision as to whether to
exchange Lockheed Martin shares allocated to the participant's plan account.
This letter and the enclosed materials are being sent to all
participants in the plans listed above, regardless of whether any portion of a
participant's account balance is attributable to Lockheed Martin common stock.
This is being done to assure that all participants have an opportunity to direct
the Trustee as to a response to the Exchange Offer. However, if no portion of
your account balance currently is attributable to Lockheed Martin common stock
and you do not intend to invest any portion of your account in Lockheed Martin
stock by October 11, 1996, you do not need to take any actions with regard to
the Exchange Offer or this package.
The attached materials have been prepared by Lockheed Martin and
describe the Exchange Offer and the procedures plan participants should follow
in responding to the Exchange Offer. The materials contain important
information including the following:
. Offering Circular/Prospectus - This document has been provided to
participants as well as all holders of record of Lockheed Martin common
stock.
. Questions and Answers - This document also has been provided to
participants as well as all holders of record of Lockheed Martin common
stock.
. Explanation of Procedures Concerning Exchange of Lockheed Martin
Corporation Common Stock for Martin Marietta Materials, Inc. Common Stock
("Plan Exchange Procedures") - This document describes the special
procedures applicable to responses for plan participants.
. Participant Instruction Card - This is the card on which you may direct the
plan trustee confidentially as to how to respond to the Exchange Offer with
respect to Lockheed Martin shares attributable to your plan account.
. Self-addressed stamped envelope - This envelope should be used for return
of your Participant Instruction Card.
All of the enclosed documents should be read in their entirety prior
to making a decision regarding how to respond to the Exchange Offer. Neither
Lockheed Martin, its Board of Directors nor the Plan Trustee makes any
recommendation whether to tender or to refrain from tendering LMC shares in the
Exchange Offer.
Please note that the Offering Circular/Prospectus and the Exchange
Procedures differ on the procedures for responding to the Exchange Offer. This
is because, as noted above, the Offering Circular/Prospectus is directed to the
record holder of the common stock (in this case, the plan trustee) rather than
the plan participants. The Exchange Procedures, on the other hand, are
specifically directed to plan participants and are the exclusive means for plan
participants to respond to the Exchange Offer. Plan participants should follow
------------------------------
the procedures set forth in the Exchange Procedures and not the procedures in
- -----------------------------------------------------------------------------
the Offering Circular/Prospectus. In particular,
- --------------------------------
. You should indicate your response to the Exchange Offer for Lockheed Martin
shares attributable to your plan account on the enclosed Participant
Instruction Card
2
and not on the Letter of Transmittal sent to other
shareholders.
. An original signed and properly completed instruction card must be received
----
by the plan trustee at the address on the enclosed self-addressed stamped
envelope by midnight on October 11, 1996 (unless a later deadline is
announced for the Exchange Offer).
. You must return an original signed and properly completed Participant
---------------------------------------------------------------------
Instruction Card even if you do not want to exchange any of the shares
----------------------------------------------------------------------
attributable to your plan account; if the trustee does not receive an
---------------------------------
original signed and properly completed card, an independent fiduciary will
determine whether or not any of the Lockheed Martin shares attributable to
your plan account will be exchanged for shares of Martin Marietta
Materials, Inc.
If you hold shares directly as a shareholder in addition to the
shares held through one of the plans listed above, you will also receive, under
separate cover, Exchange Offer materials which can be used to exchange those
shares directly with Lockheed Martin. Those Exchange Offer materials may not be
used to direct the Trustee to tender or not tender Lockheed Martin shares
attributable to your plan account. Directions regarding your plan account may
only be given on a Participant Instruction Card submitted in accordance with the
Plan Exchange Procedures.
The Exchange Procedures contain telephone numbers you may call should
you have any questions concerning the Exchange Offer.
Your instructions are confidential and will not be disclosed to
members of Lockheed Martin management. PLEASE REMEMBER TO RETURN YOUR
PARTICIPANT INSTRUCTION CARD BY OCTOBER 11, 1996 TO THE ADDRESS LISTED ON THE
RETURN ENVELOPE.
[Trustee Name]
3
PARTICIPANT INSTRUCTION CARD
EXCHANGE OFFER
DEADLINE 5 P.M. EAST COAST TIME ON OCTOBER 11, 1996
IMPORTANT: YOU SHOULD RETURN THIS CARD WHETHER OR NOT YOU WANT TO EXCHANGE YOUR
LOCKHEED MARTIN SHARES FOR MARTIN MARIETTA MATERIALS, INC. SHARES IN YOUR AC-
COUNT.
Neither Lockheed Martin Corporation, the Board of Directors nor the Trustee
makes any recommendation to any participant as to whether to tender or refrain
from tendering shares. Your instructions on this card will be confidentially
tabulated and will not be divulged or revealed to management.
By signing on the reverse side, the participant acknowledges receipt of the Of-
fering Circular/Prospectus and the Explanation of Procedures Concerning Ex-
change of Lockheed Martin Stock for Martin Marietta Materials, Inc. Stock and
has indicated his or her directions to the Trustee on the reverse side of this
Participant Instruction Card.
CARDS MUST BE RECEIVED BY MAIL NO LATER THAN 5 P.M. EAST COAST
TIME ON OCTOBER 11, 1996
-------------
SEE REVERSE
SIDE
-------------
[X] PLEASE MARK +++ +
YOUR INSTRUCTIONS + + XXXX
AS IN THIS EXAMPLE. ++++
THE PARTICIPANT HEREBY INSTRUCTS THE TRUSTEE TO EXCHANGE THE FOLLOWING
PERCENTAGE OF SHARES OF LOCKHEED MARTIN COMMON STOCK ATTRIBUTABLE TO HIS OR HER
SAVINGS PLAN OR 401(K) ACCOUNT FOR SHARES OF MARTIN MARIETTA MATERIALS, INC. IN
ACCORDANCE WITH THE OFFERING CIRCULAR/PROSPECTUS AND PLAN EXCHANGE PROCEDURES
AND TO RETAIN THE REMAINING PERCENTAGE INVESTED IN THE LOCKHEED MARTIN COMMON
STOCK FUND.
- --------------------------------------------------------------------------------
CHECK ONLY ONE BOX TO INDICATE PERCENTAGE OF LOCKHEED MARTIN SHARES IN YOUR
ACCOUNT TO BE TENDERED IN EXCHANGE FOR MARTIN MARIETTA MATERIALS, INC. SHARES.
0% [_] 30% [_] 60% [_]
10% [_] 40% [_] 70% [_]
20% [_] 50% [_] 80% [_]
90% [_]
100% [_]
Please sign and date this instruction card and return in the enclosed envelope
for receipt no later than 5 P.M. east coast time on October 11, 1996.
. If a signed card is returned with no box checked your card will be treated as
an instruction to tender zero percentage of the shares attributable to your
account.
. If no card or an improperly completed card is returned, an independent
fiduciary will determine the extent to which shares in your account may be
exchanged in accordance with applicable law and the respective plan
documents.
SIGNATURE ___________________________________________ DATE __________________
NOTE: Please sign exactly as name appears hereon. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as
such.
This announcement is neither an offer to exchange nor a solicitation of an
offer to exchange the securities. The Exchange Offer is made solely by the
Offering Circular-Prospectus dated September 16, 1996 and the related Letter
of Transmittal and is not being made to Lockheed Martin Corporation
stockholders in any jurisdiction in which the making of the Exchange
Offer or acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. In those
jurisdictions in the United States where the securities, blue
sky or other laws require the Exchange Offer to be made by a
licensed broker or dealer, the Exchange Offer shall be
deemed to be made on behalf of Lockheed Martin Corporation
by Morgan Stanley & Co. Incorporated.
Notice of Offer to Exchange
4.72 Shares of Common Stock
of
Martin Marietta Materials, Inc.
for each share of Common Stock of
Lockheed Martin Corporation
up to 7,913,136 shares of Common Stock of
Lockheed Martin Corporation
----------------------------------------------------------------------
THE EXCHANGE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON OCTOBER 18, 1996,
UNLESS THE EXCHANGE OFFER IS EXTENDED.
----------------------------------------------------------------------
Lockheed Martin Corporation, a Maryland corporation ("Lockheed Martin"), is
offering to exchange, and Lockheed Martin will exchange, 4.72 shares of Common
Stock, par value $0.01 per share, of Martin Marietta Materials, Inc., a North
Carolina corporation ("Materials" and such shares, "Materials Common Stock"),
for each share of Common Stock, par value $1.00 per share, of Lockheed Martin
("Lockheed Martin Common Stock"), up to a maximum of 7,913,136 shares of
Lockheed Martin Common Stock, that is validly tendered and not properly
withdrawn by 12:00 midnight, New York City time, on October 18, 1996, unless
the Exchange Offer is extended (the "Expiration Date"), upon the terms and
subject to the conditions set forth in the Offering Circular-Prospectus dated
September 16, 1996 (the "Offering Circular-Prospectus") and in the related
Letter of Transmittal (which together constitute the "Exchange Offer"). Lockheed
Martin is making the Exchange Offer as part of a transaction to separate
Materials' aggregates and magnesia specialties businesses from Lockheed Martin's
core aerospace and defense businesses, as described in the Offering Circular-
Prospectus. The Exchange Offer also provides Lockheed Martin's stockholders with
an opportunity to adjust, in a tax-efficient manner, their investment between
Lockheed Martin's remaining businesses in advanced technology products and
services and Materials' aggregates and magnesia specialties businesses.
The Exchange Offer is conditioned upon, among other things, at least
5,275,424 shares of Lockheed Martin Common Stock (approximately 2.6% of the
outstanding Lockheed Martin Common Stock and a sufficient number of shares to
result in at least 66% of the Materials Common Stock to be distributed being
exchanged pursuant to the Exchange Offer) being validly tendered and not
withdrawn on or prior to the Expiration Date.
Lockheed Martin currently holds 37,350,000 shares of Materials Common Stock,
all of which are being offered pursuant to the Exchange Offer. If all such
shares are not exchanged in the Exchange Offer and the Exchange Offer is
consummated, the remaining shares will be distributed by Lockheed Martin on a
pro rata basis to the Lockheed Martin stockholders remaining after the Exchange
Offer. If more than 7,913,136 shares of Lockheed Martin Common Stock are
validly tendered and not withdrawn on or prior to the Expiration Date, Lockheed
Martin will accept such shares for exchange on a pro rata basis, except that any
holder of Lockheed Martin Common Stock who beneficially owns an aggregate of
fewer than 100 shares of Lockheed Martin Common Stock and who validly tenders
all such shares, and does not withdraw any such shares, on or prior to the
Expiration Date will not be subject to proration if such holder elects, as
described in the Offering Circular-Prospectus.
NEITHER THE BOARD OF DIRECTORS OF LOCKHEED MARTIN OR LOCKHEED MARTIN NOR THE
BOARD OF DIRECTORS OF MATERIALS OR MATERIALS MAKES ANY RECOMMENDATION TO ANY
STOCKHOLDER WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES OF LOCKHEED
MARTIN COMMON STOCK PURSUANT TO THE EXCHANGE OFFER. EACH STOCKHOLDER OF
LOCKHEED MARTIN MUST MAKE HIS OR HER OWN DECISION WHETHER TO TENDER SHARES OF
LOCKHEED MARTIN COMMON STOCK PURSUANT TO THE EXCHANGE OFFER AND IF SO, HOW MANY
SHARES TO TENDER.
For purposes of the Exchange Offer, Lockheed Martin shall be deemed, subject
to the proration provisions of the Exchange Offer, to have accepted for exchange
and exchanged shares of Lockheed Martin Common Stock validly tendered for
exchange when, as and if Lockheed Martin gives oral or written notice thereof
to First Chicago Trust Company of New York (the "Exchange Agent"). Exchange of
shares of Lockheed Martin Common Stock accepted for exchange pursuant to the
Exchange Offer will be made by deposit of tendered shares Lockheed Martin Common
Stock with the Exchange Agent, which will act as agent for the tendering
stockholders for the purpose of receiving shares of Materials Common Stock from
Lockheed Martin and transmitting such shares to tendering stockholders. In all
cases, exchange of shares of Lockheed Martin Common Stock will be made only
after timely receipt by the Exchange Agent of (i) certificates for such shares
of Lockheed Martin Common Stock (or timely confirmation of a book entry transfer
of such Lockheed Martin Common Stock into the Exchange Agent's account at the
Depository Trust Company) and (ii) a properly completed and duly executed Letter
of Transmittal (or manually signed facsimile thereof) or an Agent's Message (as
defined in the Offering Circular-Prospectus) in connection with a book-entry
transfer of shares, together with any other documents required by the Letter of
Transmittal. Under no circumstances will interest be paid by Lockheed Martin
pursuant to the Exchange Offer, regardless of any delay in making such exchange.
Lockheed Martin expressly reserves the right, at any time or from time to
time, in its sole discretion and regardless of whether any of the conditions
specified in the Offering Circular-Prospectus under the caption "The Exchange
Offer-Certain Conditions of the Exchange Offer" have been satisfied, (i) to
extend the period of time during which the Exchange Offer is open by giving oral
or written notice of such extension to the Exchange Agent and by making a
public announcement of such extension or (ii) to amend the Exchange Offer in any
respect by making a public announcement of such amendment.
Tenders of shares of Lockheed Martin Common Stock made pursuant to the
Exchange Offer are irrevocable provided that tenders of shares may be withdrawn
as set forth in the Offering Circular-Prospectus under the caption "The Exchange
Offer - Withdrawal Rights" and in the Letter of Transmittal. Tendered shares
may be withdrawn at any time prior to the Expiration Date and may also be
withdrawn after the expiration of 40 business days from the commencement of the
Exchange Offer, unless theretofore accepted for exchange. To be effective, a
written or facsimile transmission notice of withdrawal must be timely received
by the Exchange Agent at one of its addresses set forth in the Letter of
Transmittal and must specify the name of the person who tendered the shares of
Lockheed Martin Common Stock to be withdrawn and the number of shares of
Lockheed Martin Common Stock to be withdrawn precisely as they appear in the
Letter of Transmittal. All questions as to the form of documents (including
notices of withdrawal) and the validity, form, eligibility (including time of
receipt) and acceptance for exchange of any tender of shares of Lockheed Martin
Common Stock will be determined by Lockheed Martin in its sole discretion, which
determination will be final and binding on all tendering stockholders. None of
Lockheed Martin, Materials, the Dealer Manager, the Exchange Agent, the
Information Agent or any other person will be under any duty to give
notification of any defect or irregularity in tenders or notices of withdrawal
or incur any liability for failure to give any such notification.
The information required to be disclosed by Rule 13e-4(d)(1) of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended, is
contained in the Offering Circular-Prospectus and is incorporated herein by
reference.
The Offering Circular-Prospectus, the Letter of Transmittal and other
relevant materials are being mailed to record holders of Lockheed Martin Common
Stock and furnished to brokers, dealers, banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the stockholder
list of Lockheed Martin or, if applicable, who are listed as participants in a
clearing agency's security position listing for subsequent transmittal to
beneficial owners of Lockheed Martin Common Stock. The Offering
Circular-Prospectus, the Letter of Transmittal and the related materials contain
important information which should be read carefully before any decision is
made with respect to the Exchange Offer.
Questions and requests for assistance or for additional copies of the
Offering Circular-Prospectus, the Letter of Transmittal and other Exchange Offer
materials may be directed to the Information Agent or the Dealer Manager, at
their respective addresses and telephone numbers set forth below, and copies
will be furnished promptly at Lockheed Martin's expense.
The Information Agent for the Exchange Offer is:
MORROW & CO., INC.
909 Third Avenue, 20th Floor
New York, New York 10022
(212) 764-8000
Toll Free (800) 566-9058
Banks and Brokerage Firms, please call:
(800) 662-5200
The Dealer Manager for the Exchange Offer is:
MORGAN STANLEY & CO.
Incorporated
1585 Broadway
New York, New York 10036
(212) 761-7486
September 16, 1996
September 13, 1996
Lockheed Martin Corporation
6801 Rockledge Drive
Bethesda, Maryland 20817
Martin Marietta Materials, Inc.
2710 Wycliff Road
Raleigh, North Carolina 27607
Re: Registration Statement on Form S-4 of
Martin Marietta Materials, Inc.
-------------------------------------
Ladies and Gentlemen:
This opinion is delivered to you in connection with the Registration
Statement on Form S-4 (Reg. No. 333-08895) (the "Registration Statement") to
be filed with the Securities and Exchange Commission by Martin Marietta
Materials, Inc. ("Materials") in connection with the proposed distribution by
Lockheed Martin Corporation ("Lockheed Martin") of its shares of common stock
of Materials to Lockheed Martin stockholders in exchange for Lockheed Martin
common stock, followed by a distribution by Lockheed Martin of its remaining
shares of Materials common stock, if any (the "Transaction").
INFORMATION RELIED UPON
-----------------------
In rendering the opinion expressed herein, we have examined such documents
as we have deemed appropriate. Specifically, we have examined, among other
documents, the originals or drafts, as may be applicable, of (i) the
Registration Statement, including the Offering Circular-Prospectus (the
"Offering Circular-Prospectus"); (ii) the Schedule 13E-4 Issuer Tender Offer
Statement to be filed with the Securities and Exchange Commission by Lockheed
Martin; (iii) the Tax Sharing Agreement, dated February 18, 1994, by and
between Martin Marietta Corporation ("Martin Marietta"), as a predecessor in
interest to Lockheed Martin, and Materials; (iv) the Supplemental Tax Sharing
Agreement to be entered into on the date hereof by and
Lockheed Martin Corporation
Martin Marietta Materials, Inc.
September 13, 1996
Page 2
between Lockheed Martin and Materials; (v) the Tax Assurance Agreement to be
entered into on the date hereof by and between Lockheed Martin and Materials;
(vi) the Intercompany Services Agreement, dated February 17, 1994, by and
between Materials and Martin Marietta, as a predecessor in interest to
Lockheed Martin; (vii) the Corporate Agreement, dated February 17, 1994, by
and between Martin Marietta, as a predecessor in interest to Lockheed Martin,
and Materials; (viii) the Amended and Restated Credit Agreement, dated January
2, 1995, by and between Materials and Martin Marietta Technologies, Inc., a
predecessor in interest to Martin Marietta, as a predecessor in interest to
Lockheed Martin, and the amendments thereto dated January 31, 1995, March 31,
1995, and March 14, 1996; (ix) the Cash Management Agreement, dated February
17, 1994, by and between Materials and Martin Marietta Technologies, Inc., a
predecessor in interest to Martin Marietta, as a predecessor in interest to
Lockheed Martin; (x) the Transition Agreement to be entered by and between
Materials and Lockheed Martin; and (xi) the Lockheed Martin Letter of
Transmittal. We understand that Lockheed Martin and Materials (together, the
"Companies") have provided to us all documents and materials submitted or
presented to the Boards of Directors of each of the Companies in connection
with the Transaction, as well as the draft resolutions and minutes of the
Boards of Directors of each of the Companies relating to the Transaction.
Moreover, we have participated in conferences with officers and
representatives of the Companies and the Dealer Manager at which the contents
of the Registration Statement and the Offering Circular-Prospectus and related
matters were discussed.
In our examination of the documents and in our reliance upon them in
issuing this opinion, we have assumed, with your consent, that all documents
submitted to us as photocopies or by telecopy faithfully reproduce the
originals thereof, that the originals are authentic, that all such documents
submitted to us have been or will be duly executed and validly signed (or
filed, where applicable) to the extent required in substantially the same form
as they have been provided to us, that each executed document will constitute
the legal, valid, binding and enforceable agreement of the signatory parties,
except as such enforceability may, following completion of the Transaction, be
limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforceability of creditors' rights
generally and (b) the application of principles of equity (regardless of
whether such enforceability is considered in a proceeding at law or in equity)
including, without limitation, (i) the possible unavailability of specific
performance, injunctive relief or other equitable remedies and (ii) concepts
of materiality, reasonableness, good faith and fair dealing, that all
representations and statements set forth in the documents are and will remain
true, correct, and complete in all material respects, and that all obligations
imposed on the parties by any of
Lockheed Martin Corporation
Martin Marietta Materials, Inc.
September 13, 1996
Page 3
the documents have been or will be performed or satisfied in accordance with
their terms in all material respects. We have further assumed that, for our
examination in connection with this opinion, you have disclosed to us all of
the documents that are material to the transaction that is the subject of this
opinion.
We also have obtained such additional information and representations, upon
which we also have relied in rendering this opinion, as we have deemed
relevant and necessary through consultations with various representatives of
the Companies. Likewise, we have obtained written certificates from each of
the Companies and from trustees of certain of the Lockheed Martin employee
benefit plans to verify certain relevant facts that have been represented to
us or that we have been authorized to assume and upon which we have relied in
rendering this opinion. Moreover, with your consent, we have relied upon the
information contained in the memorandum from King & Spalding to Lockheed
Martin and Materials dated July 22, 1996, regarding Materials' strategy of
growth through acquisitions, and the business purpose letter to Lockheed
Martin and Materials from Morgan Stanley & Co. Incorporated dated July 22,
1996.
In addition, we have assumed, with your consent and based upon the
existence of the Materials Rights Plan which will become effective when
Lockheed Martin's ownership interest in Materials is reduced below 15 percent,
information that will be received from the Lockheed Martin Letters of
Transmittal and the Exchange Agent, and representations that Lockheed Martin
has obtained from various Lockheed Martin employee benefit plans, that no
holder of Lockheed Martin common stock (and any person that may be acting
pursuant to a plan or arrangement with such holder with respect to the
acquisition of Materials common stock) will acquire a sufficient number of
shares of Materials common stock such that it would be possible for the
Transaction to constitute a disqualified distribution within the meaning of
Section 355(d) of the Code. We also have assumed, with your consent and based
upon the same information and representations, that there is no reasonable
basis to believe that any disposition of Materials common stock by persons who
are shareholders of Materials immediately following consummation of the
Transaction would jeopardize the opinion set forth below due to a failure of
such shareholders to satisfy the continuity of interest requirement of
Treasury Regulation Section 1.355-2(c).
Lockheed Martin Corporation
Martin Marietta Materials, Inc.
September 13, 1996
Page 4
OPINION
-------
Based on the foregoing, it is our opinion that (i) the statements contained
in the Offering Circular-Prospectus in the section captioned "CERTAIN FEDERAL
INCOME TAX CONSEQUENCES" fairly present in all material respects the
information set forth therein and fairly summarize the matters referred to
therein and (ii) the statements contained in the section captioned
"RELATIONSHIP BETWEEN MATERIALS AND LOCKHEED MARTIN--The Tax Sharing,
Supplemental Tax Sharing and Tax Assurance Agreements," insofar as such
statements constitute summaries of the legal matters, documents or proceedings
referred to therein, fairly present in all material respects the information
called for with respect to such legal matters, documents and proceedings and
fairly summarize the matters referred to therein.
This opinion is based on current authorities and upon facts and assumptions
as of this date. It is subject to change in the event of a change in the
applicable law or a change in the interpretation of such law by the courts or
by the Internal Revenue Service. There can be no assurance that legislative
or administrative changes or court decisions will not be forthcoming that
would significantly modify this opinion or cause its withdrawal. We are under
no obligation to inform you of any such changes or decisions. In addition,
our opinion is based solely on the documents that we have examined, the
additional information that we have obtained, and the representations referred
to herein that we have assumed with your consent to be true on the date
hereof. Our opinion cannot be relied upon if any of the material facts
contained in such documents or any such additional information is, or later
becomes, materially inaccurate or if any of the representations referred to
herein are, or later become, materially inaccurate. Our opinion represents
our legal judgment and has no official status of any kind. Finally, our
opinion is limited to the tax matters specifically covered thereby.
This letter is furnished by us as counsel for Lockheed Martin and is solely
for the benefit of Lockheed Martin and Materials. We consent to the filing of
this opinion as an exhibit to the Registration Statement in connection with
the Transaction and to the use of our name in the Offering Circular-
Prospectus.
Very truly yours,
KING & SPALDING
