Lockheed Martin Announces Third Quarter 2012 Results

             Lockheed Martin Announces Third Quarter 2012 Results

- Net sales of $11.9 billion

- Net earnings from continuing operations of $727 million or $2.21 per diluted
share

- Cash from operations of $1.6 billion

- Increases quarterly dividend rate 15 percent to $1.15 per share

- Increases 2012 outlook and provides trend information for 2013

PR Newswire

BETHESDA, Md., Oct. 24, 2012

BETHESDA, Md., Oct. 24, 2012 /PRNewswire/ --Lockheed Martin Corporation
(NYSE: LMT) today reported third quarter 2012 net sales of $11.9 billion
compared to $12.1 billion in 2011. Net earnings from continuing operations
for the third quarter of 2012 were $727 million, or $2.21 per diluted share,
compared to $665 million, or $1.99 per diluted share, in 2011. Cash from
operations during the third quarter of 2012 was $1.6 billion, compared to cash
from operations of $551 million after pension contributions of $960 million
during the third quarter of 2011.

The third quarter of 2012 included a non-cash FAS/CAS pension adjustment of
$207 million, which reduced net earnings by $128 million, or $0.39 per diluted
share, compared to a non-cash FAS/CAS pension adjustment of $231 million,
which reduced net earnings by $143 million, or $0.43 per diluted share, in
2011. The third quarter of 2012 also included a special charge of $23
million, which reduced net earnings by $15 million, or $0.05 per diluted
share, related to the previously announced workforce reductions at Electronic
Systems. The third quarter of 2011 included special charges of $39 million,
which reduced net earnings by $25 million, or $0.07 per diluted share, related
to workforce reductions at the Corporation's Information Systems & Global
Solutions (IS&GS) business segment and Corporate Headquarters.

"Our strong operating results this quarter are a reflection of several
factors, including our relentless focus on affordability and program
execution," said Bob Stevens, chairman and chief executive officer. "We also
have a strategy that is aligned with our customers, a proven portfolio of
products and technologies, and a team that is talented and dedicated, even
with the uncertainties that lie ahead. We remain focused on meeting our
customer commitments and delivering value to our shareholders."

Summary Reported Results

The following table presents the Corporation's results for the periods
referenced in accordance with generally accepted accounting principles (GAAP):

 SUMMARY REPORTED RESULTS
 (in millions, except per share data)
                    Quarters Ended                Nine Months Ended
                    Sept. 30,      Sept. 25,      Sept. 30,      Sept. 25,

                    2012           2011           2012           2011
 Net sales     $  11,869      $  12,119      $  35,083      $  34,288
 Operating profit
  Business 
 segment            $  1,434       $  1,355       $  4,244       $  3,877
 operating profit
  Unallocated
 expense, net
  Non-cash
 FAS/CAS pension       (207)          (231)          (622)          (692)
 adjustment^1
  Special
 items –               (23)           (39)           (23)           (136)
 severance
 charges^2
  Stock-based      (42)           (37)           (129)          (116)
 compensation
  Other, net       (64)           (7)            (160)          (35)
 Total
 consolidated       $  1,098       $  1,041       $  3,310       $  2,898
 operating profit
 Net earnings
 from
  Continuing       $  727         $  665         $  2,176       $  1,969
 operations
  Discontinued        -              35             -              3
 operations^3
 Net earnings       $  727         $  700         $  2,176       $  1,972
 Diluted earnings
 per share from
  Continuing       $  2.21        $  1.99        $  6.62        $  5.72
 operations
  Discontinued        -              0.11           -              0.01
 operations^3
 Diluted earnings   $  2.21        $  2.10        $  6.62        $  5.73
 per share
 Cash from          $  1,573       $  551         $  2,876       $  3,164
 operations
 

 ^1 ^The non-cash FAS/CAS pension adjustment represents the difference
 between pension expense calculated in accordance with GAAP and pension costs
 calculated and funded in accordance with U.S. Government Cost Accounting
 Standards (CAS).

 

 ^2 Severance charges for 2012 consisted of amounts, net of state tax
 benefits, associated with the elimination of certain positions at the
 Electronic Systems business segment. For 2011, severance charges consisted
 of amounts related to actions taken at various business segments as well as
 Corporate Headquarters. Severance charges for initiatives that are not
 significant are included in business segment operating profit.

 

 ^3 Discontinued operations for 2011 include the operating results of Savi
 Technology, Inc. (Savi) and also Pacific Architects and Engineers, Inc.
 (PAE) through the date of its sale on April 4, 2011. Amounts related to
 discontinued operations during 2012 were not significant and, accordingly,
 were included in operating profit.

 

2012 Financial Outlook

The following table and other sections of this press release contain
forward-looking statements, which are based on the Corporation's current
expectations. Actual results may differ materially from those projected. It
is the Corporation's practice not to incorporate adjustments into its outlook
for proposed acquisitions, divestitures, joint ventures, changes in tax laws,
or special items until such transactions have been consummated or enacted.
See the "Disclosure Regarding Forward-Looking Statements" section contained in
this press release.

 2012 FINANCIAL OUTLOOK
 (in millions, except per share data)
                                       Current              July 2012
 Net sales                        $45,500 – $46,500    $45,000 –
                                                            $46,000
 Operating profit
  Business  segment operating profit  $5,375– $5,475       $5,200– $5,300
  Unallocated expense, net
  Non-cash FAS/CAS pension         ~ (835)              ~ (835)
 adjustment
  Stock-based compensation and     ~ (390)              ~ (340)
 other, net
 Total consolidated operating profit   $4,150 – $4,250      $4,025 – $4,125
 Diluted earnings per share from       $8.20 – $8.40        $7.90 – $8.10
 continuing operations
 Cash from operations^1                >/= $4,000           >/= $3,900
 

 

 ^1 The Corporation's 2012 financial outlook for cash from operations
 includes required contributions of $1.1 billion to its pension trust, which
 were completed during the first six months of 2012. The Corporation also
 anticipates recovering these pension contributions as CAS costs in 2012.
 Consistent with prior years, the Corporation will consider options for
 further contributions in the remainder of the year.

2013 Financial Trends

The Corporation's preliminary outlook for 2013 is premised on the assumption
that sequestration does not occur, that the U.S. Government continues to
support and fund the Corporation's programs, which is consistent with the
continuing resolution funding measure through March 2013, and that Congress
approves defense budget legislation for government fiscal year 2013 at a level
consistent with the President's proposed defense budget for the second half of
the U.S. Government's fiscal year 2013. With these assumptions, the
Corporation expects 2013 net sales will decline at a low single digit rate
from 2012 levels primarily as a result of a projected mid single digit decline
in IS&GS net sales. The Corporation's preliminary outlook also indicates that
the2013 business segment operating profit margin will remain above 11
percent. If sequestration or other budgetary cuts to avoid sequestration
occur, the Corporation expects these budget reductions could have a material
effect on its 2013 results of operations, earnings, and cash flows (see the
Corporation's Annual Report on Form 10-K for the year ended Dec. 31, 2011 and
Quarterly Report on Form 10-Q for the quarter ended June 24, 2012).

The Corporation's outlook for its 2013 non-cash FAS/CAS pension expense
adjustment is premised on the assumptions that the discount rate at the end of
2012 is 4.0 percent, a 75 basis points decrease from 2011, actual investment
returns for 2012are 8.0 percent, pension funding is comparable to 2012, and
all other assumptions are held constant. With these assumptions, the
Corporation expects its 2013 non-cash FAS/CAS pension expense adjustment would
be approximately $700 million. A change of plus or minus 25 basis points to
the assumed discount rate, with all other assumptions held constant, would
result in a decrease or increase of approximately $145 million in the
estimated 2013 non-cash FAS/CAS pension expense adjustment. The Corporation
will finalize its postretirement benefit plan assumptions and determine the
actual return on plan assets on Dec. 31, 2012. The final assumptions and
actual return on plan assets for 2012 may differ materially from those
discussed.

Cash Deployment Activities

The Corporation deployed cash in 2012 by:

  opaying cash dividends of $326 million in the third quarter and $979
    million during the year-to-date period;
  orepurchasing 3.3 million shares at a cost of $294 million in the third
    quarter and 8.2 million shares at a cost of $722 million during the
    year-to-date period;
  omaking contributions of $1.1 billion to its pension trust during the
    year-to-date period; and
  omaking capital expenditures of $208 million in the third quarter and $514
    million during the year-to-date period.

On Sept. 27, 2012, the Corporation increased its quarterly dividend rate 15
percent, or $0.15 per share, to $1.15 per share beginning with the payment on
Dec. 28, 2012, to the stockholders of record as of the close of business on
Dec. 3, 2012.

Segment Results

The Corporation currently operates in four business segments: Aeronautics;
Electronic Systems; IS&GS; and Space Systems. Operating profit for the
business segments includes equity earnings and losses from investees because
the operating activities of the investees are closely aligned with the
operations of those segments. The Corporation's equity investments primarily
include United Launch Alliance (ULA) and United Space Alliance (USA), both of
which are part of Space Systems.

As announced on Oct. 8, 2012, in order to streamline the Corporation's
operations and enhance customer alignment, the Electronic Systems business
segment will be reorganized effective Dec. 31, 2012 into two new business
segments: Missiles and Fire Control (MFC) and Mission Systems and Training
(MST). In connection with this reorganization, the Electronic Systems
corporate management layer will be eliminated, and the Global Training and
Logistics business will be split between the two new business segments. In
addition, the business reporting relationship for the Sandia National
Laboratories and the U.K. Atomic Weapons Establishment joint venture will
transfer from Electronic Systems to Space Systems. Following the
reorganization, the Corporation will have five business segments comprised of
Aeronautics, IS&GS, MFC, MST, and Space Systems. These changes do not affect
the amounts, discussion, or presentation of the Corporation's business
segments as set forth in this press release. The Corporation will begin to
report its financial results consistent with this new structure beginning with
its earnings press release reporting fourth quarter and full year 2012 results
and 2013 outlook.

The following table presents summary operating results of the current four
business segments and reconciles these amounts to the Corporation's
consolidated financial results.

 SEGMENT RESULTS
 (in millions)
                                   Quarters Ended        Nine Months Ended
                                   Sept. 30,  Sept. 25,  Sept. 30,  Sept. 25,

                                   2012       2011       2012       2011
 Net sales
  Aeronautics                     $ 3,698    $ 3,965    $ 10,812   $ 10,507
  Electronic Systems                3,818      3,663      11,293     10,925
 Information Systems & Global        2,292      2,323      6,645      6,833
 Solutions
  Space Systems                     2,061      2,168      6,333      6,023
 Total net sales                   $ 11,869   $ 12,119   $ 35,083   $ 34,288
 Operating profit
  Aeronautics                     $ 415      $ 444      $ 1,254    $ 1,169
  Electronic Systems                509        447        1,576      1,357
 Information Systems & Global        209        213        605        620
 Solutions
  Space Systems                     301        251        809        731
 Total business segment operating    1,434      1,355      4,244      3,877
 profit
 Unallocated expense, net            (336)      (314)      (934)      (979)
 Total consolidated operating      $ 1,098    $ 1,041    $ 3,310    $ 2,898
 profit

In the discussion of comparative segment results, changes in net sales and
operating profit generally are expressed in terms of volume. Changes in
volume refer to increases or decreases in sales resulting from varying
production activity levels, deliveries, or service levels on individual
contracts. Volume changes typically include a corresponding change in segment
operating profit based on the current profit booking rate for a particular
contract.

In addition, comparability of the Corporation's operating profit may be
impacted by changes in estimated profit booking rates on the Corporation's
contracts accounted for using the percentage-of-completion method of
accounting. Increases in the estimated profit booking rates, typically
referred to as risk retirements, usually relate to revisions in the total
estimated costs at completion that reflect improved conditions on a particular
contract. Conversely, conditions on a particular contract may deteriorate
resulting in an increase in the estimated costs at completion and a reduction
of the estimated profit booking rate. Increases or decreases in estimated
profit booking rates are recognized in the current period and reflect the
inception-to-date effect of such changes. Segment operating profit may also
be impacted, favorably or unfavorably, by matters that are not accounted for
using the percentage-of-completion method of accounting, such as the
resolution of contractual matters, reserves for disputes, asset impairments,
and insurance recoveries, among others. Segment operating profit and items
such as risk retirements, reductions of profit booking rates, or other matters
are presented net of state income taxes.

The Corporation's consolidated net adjustments not related to volume,
including net profit rate adjustments and other matters, represented
approximately 30 percent and 36 percent of total segment operating profit for
the third quarter and first nine months of 2012, respectively, and
approximately 30 percent of total segment operating profit for both the third
quarter and first nine months of 2011.

Aeronautics

 (in millions)
                    Quarters Ended        Nine Months Ended
                    Sept. 30,  Sept. 25,  Sept. 30,   Sept. 25,

                    2012       2011       2012        2011
 Net sales          $ 3,698    $ 3,965    $ 10,812    $ 10,507
 Operating profit   $ 415      $ 444      $ 1,254     $ 1,169
 Operating margins    11.2  %    11.2  %    11.6   %    11.1   %

Net sales for the Aeronautics business segment decreased $267 million, or 7
percent, during the third quarter of 2012, compared to the corresponding
period in 2011. The decrease in net sales was attributable to a decline of
approximately $375 million for C-130 programs due to fewer aircraft deliveries
(eight aircraft delivered in the third quarter of 2012 compared to 13 in the
same 2011 period); a decrease of about $135 million for the F-22 programs due
to lower production as final aircraft deliveries were completed in the second
quarter of 2012 and lower risk retirements; and approximately $40 million
related to F-16 programs due to lower volume on sustainment activities
partially offset by increased aircraft deliveries (six aircraft delivered in
the third quarter of 2012 compared to five in the same 2011 period).
Partially offsetting the decreases was an increase in net sales of
approximately $300 million due to increased production volume for F-35 Low
Rate Initial Production (LRIP) contracts.

Net sales for the Aeronautics business segment increased $305 million, or 3
percent, during the first nine months of 2012, compared to the corresponding
period in 2011. The increase in net sales was attributable to an increase of
approximately $760 million for F-35 LRIP contracts as a result of increased
production volume and about $305 million for F-16 programs primarily due to
higher aircraft deliveries (29 F-16 aircraft delivered in the first nine
months of 2012 compared to 17 in the same 2011 period). Partially offsetting
the increases were lower net sales of about $350 million for the F-22 programs
due to decreased production and lower risk retirements; a decline of about
$145 million for the F-35 development contract due to the inception-to-date
effect of reducing the profit booking rate in the second quarter of 2012 and
to a lesser extent lower volume; approximately $140 million for C-130 programs
principally due to decreased aircraft deliveries (25 C-130J aircraft delivered
in the first nine months of 2012 compared to 26 in the same 2011 period) and
aircraft configuration mix; and a decrease of approximately $125 million for
other sustainment activities as a result of lower risk retirements and
decreased volume.

Operating profit for the Aeronautics business segment decreased $29 million,
or 7 percent, during the third quarter of 2012, compared to the corresponding
period in 2011. The decrease was attributable to lower operating profit of
approximately $65 million for the F-22 programs and about $45 million for
other sustainment activities both due to declines in risk retirements.
Partially offsetting the decreases were higher operating profit of
approximately $50 million for F-16 programs as a result of higher risk
retirements, and about $35 million due to increased volume and risk
retirements for other various programs. Operating profit for C-130 programs
was comparable as the decline in profit from aircraft deliveries was largely
offset by increased risk retirements. Adjustments not related to volume,
including net profit rate adjustments described above, were approximately $10
million lower in the third quarter of 2012, compared to the corresponding
period in 2011.

Operating profit for the Aeronautics business segment increased $85 million,
or 7 percent, during the first nine months of 2012, compared to the
corresponding period in 2011. The increase in operating profit was
attributable to approximately $100 million for F-16 programs driven by
increased risk retirements and higher aircraft deliveries, an increase of
about $95 million for C-130 programs due to risk retirements on international
production contracts, an increase of about $50 million for F-35 LRIP contracts
due to increased risk retirements and higher production volume, an increase of
about $40 million due to increased risk retirements on various programs, and a
reduction of purchased intangible amortization expense on F-16 contractsof
about $40 million. Partially offsetting the increases were lower operating
profit of approximately $95 million for other sustainment activities
principally due to declines in risk retirements; a decline of about $90
million for the F-35 development contract primarily due to the
inception-to-date effect of reducing the profit booking rate in the second
quarter of 2012; and a decrease of approximately $50 million for the F-22
programs due to lower volume and risk retirements partially offset by a
resolution of a contractual matter in the second quarter of 2012. Adjustments
not related to volume, including net profit rate adjustments and the
resolution of the contractual matter described above, were approximately $5
million higher in the first nine months of 2012, compared to the corresponding
period in 2011.

Electronic Systems

 (in millions)
                    Quarters Ended        Nine Months Ended
                    Sept. 30,  Sept. 25,  Sept. 30,   Sept. 25,

                    2012       2011       2012        2011
 Net sales          $ 3,818    $ 3,663    $ 11,293    $ 10,925
 Operating profit   $ 509      $ 447      $ 1,576     $ 1,357
 Operating margins    13.3  %    12.2  %    14.0   %    12.4   %

Net sales for the Electronic Systems business segment increased $155 million,
or 4 percent, during the third quarter of 2012, compared to the corresponding
period in 2011. The increase in net sales was attributable to higher volume
of approximately $95 million for integrated warfare systems and sensors
programs (Aegis and other radar systems), increased volume of about $40
million on tactical missile programs (Javelin), about $35 million for air and
missile defense programs (Patriot Advanced Capability-3), and approximately
$25 million for fire control systems programs (Longbow). Partially offsetting
the increases were lower net sales of about $35 million for undersea systems
programs due to lower volume.

Net sales for the Electronic Systems business segment increased $368 million,
or 3 percent, during the first nine months of 2012, compared to the
corresponding period in 2011. The increase was attributable to higher volume
and risk retirements of approximately $410 million from ship and aviation
programs (Persistent Threat Detection System (PTDS), Littoral Combat Ship,
MH-60), and about $135 million from tactical missile programs (Joint
Air-to-Surface Stand-off Missile (JASSM), Javelin). Partially offsetting the
increase were lower net sales due to decreased volume of about $65 million
primarily from training and logistics programs, approximately $60 million from
fire control systems programs (Sniper^®), and $45 million from undersea
systems programs.

Operating profit for the Electronic Systems business segment increased $62
million, or 14 percent, during the third quarter of 2012, compared to the
corresponding period in 2011. The increase was attributable to higher
operating profit of approximately $35 million for air and missile defense
programs (Terminal High Altitude Area Defense) as a result of increased risk
retirements and approximately $25 million for ship and aviation programs
primarily due to reserves recorded in the third quarter of 2011. Adjustments
not related to volume, including net profit rate adjustments described above,
were approximately $45 million higher in the third quarter of 2012, compared
to the corresponding period in 2011.

Operating profit for the Electronic Systems business segment increased $219
million, or 16 percent, during the first nine months of 2012, compared to the
corresponding period in 2011. The increase was attributable to higher
operating profit of approximately $165 million from ship and aviation programs
(PTDS, Vertical Launching System, MH-60) as a result of increased risk
retirements in the third quarter of2012and reserves recorded in the third
quarter of 2011, about $75 million from tactical missile programs (Javelin,
Hellfire, JASSM, Multiple Launch Rocket System) due to increased risk
retirements and volume, and about $50 million from a resolution of contractual
matters. Partially offsetting these increases was lower operating profit from
reducing profit booking rates on certain programs, including training and
logistics programs, and a net increase in various costs, including severance.
Adjustments not related to volume, including net profit rate adjustments and
the resolution of contractual matters described above, were approximately $280
million higher in the first nine months of 2012, compared to the corresponding
period in 2011.

Information Systems & Global Solutions

 (in millions)
                    Quarters Ended        Nine Months Ended
                    Sept. 30,  Sept. 25,  Sept. 30,  Sept. 25,

                    2012       2011       2012       2011
 Net sales          $ 2,292    $ 2,323    $ 6,645    $ 6,833
 Operating profit   $ 209      $ 213      $ 605      $ 620
 Operating margins    9.1   %    9.2   %    9.1   %    9.1   %

Net sales for the IS&GS business segment decreased $31 million, or 1 percent,
during the third quarter and $188 million, or 3 percent, during the first nine
months of 2012, compared to the corresponding periods in 2011. The decreases
in net sales during both periods were attributable to declines of
approximately $40 million during the third quarter and $100 million during the
first nine months from the completion of the Outsourcing Desktop Initiative
program for NASA, decreases of about $30 million during the third quarter and
$150 million during the first nine months due to cessation of the Airborne
Maritime Fixed Station Joint Tactical Radio System program, and declines of
about $30 million during the third quarter and $85 million during the first
nine months from the completion of the U.K. Census program in the fourth
quarter of 2011. Additionally, net sales also decreased during the first nine
months by about $75 million due to lower volume on the Hanford program as a
result of decreased funding under the American Recovery and Reinvestment Act
of 2009. Partially offsetting the decreases were increases of approximately
$70 million during the third quarter and $220 million during the first nine
months as a result of increased activity for other numerous programs,
primarily federal cyber security programs and PTDS operational support, as
well as net sales from an acquisition in the fourth quarter of 2011.

The declines in operating profit for the IS&GS business segment during the
third quarter and first nine months of 2012, compared to the corresponding
periods in 2011 primarily were attributable to lower net sales. Adjustments
not related to volume, including net profit rate adjustments, were
approximately $5 million lower in the third quarter of 2012, compared to the
corresponding period in 2011, and approximately $35 million higher in the
first nine months of 2012, compared to the corresponding period in 2011.

Space Systems

 (in millions)
                    Quarters Ended        Nine Months Ended
                    Sept. 30,  Sept. 25,  Sept. 30,  Sept. 25,

                    2012       2011       2012       2011
 Net sales          $ 2,061    $ 2,168    $ 6,333    $ 6,023
 Operating profit   $ 301      $ 251      $ 809      $ 731
 Operating margins    14.6  %    11.6  %    12.8  %    12.1  %

Net sales for the Space Systems business segment decreased $107 million, or 5
percent, during the third quarter of 2012, compared to the corresponding
period in 2011. The decrease in net sales was attributable to a decline of
approximately $105 million for commercial and government satellite programs
primarily as a result of fewer commercial satellite deliveries (no satellites
delivered in the third quarter of 2012 compared to one in the same 2011
period).

Net sales for the Space Systems business segment increased $310 million, or 5
percent, during the first nine months of 2012, compared to the corresponding
period in 2011. The increase in net sales was attributable to an increase of
approximately $165 million for commercial and government satellite programs
primarily driven by higher commercial satellite deliveries (two deliveries in
the first nine months of 2012 compared to one in the same 2011 period), an
increase of about $125 million due to higher production volume and risk
retirements for the Orion Multi-Purpose Crew Vehicle (Orion) program, and an
increase of approximately $65 million due to higher volume on various
strategic and defensive missile programs. Partially offsetting the increases
were lower net sales of about $45 million for the NASA External Tank program,
which ended in connection with the completion of the Space Shuttle program
during the second quarter of 2011.

Operating profit for the Space Systems business segment increased $50 million,
or 20 percent, during the third quarter of 2012, compared to the corresponding
period in 2011. The increase in operating profit was attributable to
approximately $85 million of higher equity earnings for ULA and USA inclusive
of launch related activities at ULA and the resolution of contract cost
matters associated with the wind-down of USA, which was partially offset by
decreased volume and lower risk retirements of about $30 million for
commercial and government satellite activities. Adjustments not related to
volume, including net profit rate adjustments described above, were
approximately $10 million lower in the third quarter of 2012, compared to the
corresponding period in 2011.

Operating profit for the Space Systems business segment increased $78 million,
or 11 percent, during the first nine months of 2012, compared to the
corresponding period in 2011. The increase in operating profit was
attributable to an increase of approximately $40 million primarily due to
increased risk retirements on the Orion program and about $40 million for
commercial and government satellite programs as a result of higher commercial
satellite deliveries and risk retirements. Adjustments not related to volume,
including net profit rate adjustments described above, were approximately $30
million higher in the first nine months of 2012, compared to the corresponding
period in 2011.

Total equity earnings recognized by the Space Systems business segment from
ULA and USA represented about $120 million, or 40 percent, and approximately
$170 million, or 21 percent, of this segment's operating profit during the
third quarter and first nine months of 2012, respectively.During the third
quarter and first nine months of 2011, total equity earnings recognized by the
Space Systems business segment from ULA and USA represented about $35 million,
or 14 percent, and approximately $165 million, or 23 percent, respectively of
this segment's operating profit.

Income Taxes

The Corporation's effective income tax rates from continuing operations were
30.5 percent and 30.1 percent during the third quarter and first nine months
of 2012, respectively, and 29.9 percent and 26.1 percent during the third
quarter and first nine months of 2011. The rates for all periods benefited
from tax deductions for U.S. manufacturing activities and dividends paid to
certain defined contribution plans with an employee stock ownership plan
feature. The effective income tax rates for the third quarter and first nine
months of 2011 also included the U.S. research and development tax credit that
expired on Dec. 31, 2011. This benefit will not be incorporated into the
Corporation's 2012 outlook unless new legislation is enacted. In addition,
the effective income tax rates for the first nine months of 2011 included a
reduction to income tax expense of $89 million, or $0.26 per diluted share,
through the elimination of liabilities for unrecognized tax benefits as a
result of the U.S. Congressional Joint Committee on Taxation completing its
review of the Internal Revenue Service Appeals Division's resolution of
adjustments related to tax years 2003 through 2008.

About Lockheed Martin

Headquartered in Bethesda, Md., Lockheed Martin is a global security and
aerospace company that employs about 120,000 people worldwide and is
principally engaged in the research, design, development, manufacture,
integration and sustainment of advanced technology systems, products and
services. The Corporation's net sales for 2011 were $46.5 billion.

Web site: www.lockheedmartin.com

Conference Call Information

Conference call: Lockheed Martin will webcast the earnings conference call
(listen-only mode) at 3:00 p.m. E.T. on Oct. 24, 2012. A live audio broadcast,
including relevant charts, will be available on the Investor Relations page of
the Corporation's web site at: http://www.lockheedmartin.com/investor.

Disclosure Regarding Forward-Looking Statements

Statements in this release that are "forward-looking statements" are based on
Lockheed Martin's current expectations and assumptions. Forward-looking
statements in this release include estimates of future sales, earnings, and
cash flows. These statements are not guarantees of future performance and are
subject to risks and uncertainties. Actual results could differ materially
due to factors such as:

  othe availability of government funding for the Corporation's products and
    services both domestically and internationally due to budgetary
    constraints, performance, cost, or other factors;
  osequestration under the Budget Control Act of 2011 or alternative measures
    that may be adopted in lieu of sequestration;
  ochanges in government and customer priorities, requirements, or
    contracting practices (including the potential for deferral, reduction or
    termination of programs);
  oquantity revisions to the F-35 program, including in the U.S. or
    internationally;
  oactual returns (or losses) on pension plan assets, movements in interest
    rates, and other changes that may affect pension plan assumptions;
  othe effect of capitalization changes (such as share repurchase activity,
    accelerated pension funding, stock option exercises, or debt levels);
  odifficulties in developing and producing operationally advanced technology
    systems;
  othe timing and customer acceptance of product deliveries;
  omaterials availability and performance by key suppliers, subcontractors,
    and customers;
  ocharges from any future impairment reviews that may result in the
    recognition of losses and a reduction in the book value of goodwill or
    other long-term assets;
  othe effect of future legislation, rulemaking, and changes in accounting,
    tax (including potential corporate tax reform), defense, and procurement
    policy or interpretations, or challenges to the allowability and recovery
    of costs incurred under government cost accounting standards (including
    potentialcosts associated with sequestration or other budgetary cuts to
    avoid sequestration, such as severance payments made to employees and
    facility closure expenses);
  othe effect of future acquisitions or divestitures, joint ventures, teaming
    arrangements, or internal reorganizations;
  othe outcome of legal proceedings and other contingencies (including
    lawsuits, government investigations or audits, and the cost of completing
    environmental remediation efforts);
  othe competitive environment for the Corporation's products and services,
    export policies, and potential for delays in procurement due to bid
    protests;
  othe ability to attract and retain key personnel and suppliers (including
    the potential for disruption associated with sequestration and related
    employee severance or supplier termination costs); and
  odomestic and international economic, business, and political conditions.

These are only some of the factors that may affect the forward-looking
statements contained in this press release. For further information regarding
risks and uncertainties associated with Lockheed Martin's business, please
refer to the Corporation's U.S. Securities and Exchange Commission filings,
including the "Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Risk Factors," and "Legal Proceedings" sections of
the Corporation's Annual Report on Form 10-K for the year ended Dec. 31, 2011
and 2012 Quarterly Reports on Form 10-Q, which may be obtained at the
Corporation's website: http://www.lockheedmartin.com.

It is the Corporation's policy to update or reconfirm its financial
projections only by issuing a press release. The Corporation generally plans
to provide a forward-looking outlook as part of its quarterly earnings release
but reserves the right to provide an outlook at different intervals or to
revise its practice in future periods. All information in this release is as
of Oct. 23, 2012. Lockheed Martin undertakes no duty to update any
forward-looking statement to reflect subsequent events, actual results, or
changes in the Corporation's expectations. The Corporation also disclaims any
duty to comment upon or correct information that may be contained in reports
reports published by investment analysts or others.





Lockheed Martin Corporation
Consolidated Statements of Earnings ^1
(unaudited; in millions, except per share data)
                         Quarters Ended                  Nine Months Ended
                         Sept. 30,        Sept. 25,      Sept. 30,   Sept. 25,
                         2012             2011           2012        2011
Net sales                $            $          $       $    
                         11,869          12,119        35,083     34,288
Cost of sales            (10,888)         (11,123)       (31,945)    (31,572)
Gross profit             981              996            3,138       2,716
Other income, net        117              45             172         182
Operating profit         1,098            1,041          3,310       2,898
Interest expense         (97)             (89)           (289)       (258)
Other non-operating      45               (3)            93          25
income (expense), net
Earnings from
continuing operations    1,046            949            3,114       2,665
before income taxes
Income tax expense      (319)            (284)          (938)       (696)
Net earnings from        727              665            2,176       1,969
continuing operations
Net earnings from
discontinued             -                35             -           3
operations ^2
Net earnings            $          $         $       $    
                          727              700         2,176     1,972
 Effective tax rate    30.5%            29.9%          30.1%       26.1%
Earnings per common
share
 Basic
Continuing operations    $          $         $       $    
                         2.25             2.01          6.72     5.78
Discontinued             -                0.11           -           0.01
operations
 Basic earnings per    $          $         $       $    
common share             2.25             2.12          6.72     5.79
 Diluted
Continuing operations    $          $         $       $    
                         2.21             1.99          6.62     5.72
Discontinued             -                0.11           -           0.01
operations
 Diluted earnings      $          $         $       $    
per common share         2.21             2.10          6.62     5.73
Weighted average
number of shares
outstanding
 Basic                 323.5            329.8          324.0       340.4
 Diluted               328.3            333.6          328.6       344.3
Common shares
reported in                                              321.4       321.3
stockholders' equity
at end of period
^1 The Corporation closes its books and records on the last Sunday of the
calendar quarter to align its financial closing with its business processes,
which wason Sept. 30 for the third quarter of 2012. The interim financial
statements and tables of financial information included herein are labeled
based on that convention. This practice only affects interim periods, as the
Corporation's fiscal year ends on Dec. 31.
^2 Discontinued operations for 2011 include the operating results of Savi
Technology, Inc. (Savi) and also Pacific Architects and Engineers, Inc. (PAE)
through the date of its sale on April 4, 2011. Amounts related to
discontinued operations during 2012 were not significant and,
accordingly,were included in operating profit.





Lockheed Martin Corporation
Business Segment Net Sales, Operating Profit, and
Operating Margins
(unaudited; in millions)
                  Quarters Ended                 Nine Months Ended
                  Sept.     Sept.                Sept.     Sept.
                  30,       25,        % Change  30,       25,        % Change
                  2012      2011                2012     2011
Net sales
                  $      $                 $      $   
 Aeronautics                    (7)   %                    3     %
                  3,698    3,965               10,812   10,507
 Electronic      3,818     3,663      4     %   11,293    10,925     3     %
Systems
 Information
Systems & Global  2,292     2,323      (1)   %   6,645     6,833      (3)   %
Solutions
 Space Systems   2,061     2,168      (5)   %   6,333     6,023      5     %
 Total net    $      $                 $      $   
sales                              (2)   %                    2     %
                  11,869   12,119              35,083   34,288
Operating profit
                  $      $                 $      $   
 Aeronautics                  (7)   %                  7     %
                   415      444                1,254    1,169
 Electronic      509       447        14    %   1,576     1,357      16    %
Systems
 Information
Systems & Global  209       213        (2)   %   605       620        (2)   %
Solutions
 Space Systems   301       251        20    %   809       731        11    %
 Total
business segment  1,434     1,355      6     %   4,244     3,877      9     %
operating profit
 Unallocated     (336)     (314)      7     %   (934)     (979)      (5)   %
expense, net
 Total        $      $                 $      $   
consolidated                     5     %                  14    %
operating profit  1,098    1,041               3,310    2,898
Operating margins
 Aeronautics     11.2    % 11.2    %            11.6    % 11.1    %
 Electronic      13.3    % 12.2    %            14.0    % 12.4    %
Systems
 Information
Systems & Global  9.1     % 9.2     %            9.1     % 9.1     %
Solutions
 Space Systems   14.6    % 11.6    %            12.8    % 12.1    %
 Total
business segment  12.1    % 11.2    %            12.1    % 11.3    %
operating margins
 Total
consolidated      9.3     % 8.6     %            9.4     % 8.5     %
operating margins



Lockheed Martin Corporation
Selected Financial Data
(unaudited; in millions)
                     Quarters Ended                Nine Months Ended
                     Sept. 30,       Sept. 25,     Sept. 30,      Sept. 25,
                     2012            2011         2012           2011
Unallocated expense,
net
Non-cash FAS/CAS
pension adjustment
 FAS pension    $          $        $         $     
expense                 (485)        (455)    (1,456)       (1,366)
 Less: CAS      (278)           (224)         (834)          (674)
expense
Non-cash FAS/CAS     (207)           (231)         (622)          (692)
pension adjustment
Special items -      (23)            (39)          (23)           (136)
severance charges^1
Stock-based          (42)            (37)          (129)          (116)
compensation
Other, net           (64)            (7)           (160)          (35)
Total unallocated    $          $        $         $     
expense, net            (336)        (314)      (934)       (979)
^1 Severance charges for 2012 consisted of amounts, net of state tax benefits,
associated with the elimination of certain positions at theElectronic Systems
business segment. For 2011, severance charges consisted of amounts related to
actions taken at various business segments as well as Corporate Headquarters.
Severance charges for initiatives that are not significant are included in
business segment operating profit.



Lockheed Martin Corporation
Consolidated Balance Sheets
(unaudited; in millions, except par
value)
                                            Sept. 30,         Dec. 31,
                                            2012              2011
Assets
Current assets
 Cash and cash equivalents                 $     4,652  $     3,582
 Receivables, net                          6,428             6,064
 Inventories, net                          2,878             2,481
 Deferred income taxes                     1,281             1,339
 Other current assets                      552               628
 Total current assets                    15,791            14,094
Property, plant, and equipment, net         4,486             4,611
Goodwill                                   10,183            10,148
Deferred income taxes                       4,073             4,388
Other noncurrent assets                     4,788             4,667
 Total assets                          $    39,321   $    37,908
Liabilities and stockholders' equity
Current liabilities
 Accounts payable                          $     2,184  $     2,269
 Customer advances and amounts in excess   6,396             6,399
of costs incurred
 Salaries, benefits, and payroll taxes     1,725             1,664
 Current portion of long-term debt         150               -
 Other current liabilities                 2,213             1,798
 Total current liabilities             12,668            12,130
Long-term debt, net                         6,374             6,460
Accrued pension liabilities                 12,967            13,502
Other postretirement benefit liabilities    1,245             1,274
Other noncurrent liabilities                3,625             3,541
 Total liabilities                     36,879            36,907
Stockholders' equity
 Common stock, $1 par value per share      321               321
 Additional paid-in capital                -                 -
 Retained earnings                         12,703            11,937
 Accumulated other comprehensive loss      (10,582)          (11,257)
 Total stockholders' equity            2,442             1,001
 Total liabilities and                 $    39,321   $    37,908
stockholders' equity



Lockheed Martin Corporation
Consolidated Statements of Cash Flows
(unaudited; in millions)
                                            Nine Months Ended
                                            Sept. 30,         Sept. 25,
                                            2012              2011
Operating activities
Net earnings                                $     2,176  $     1,972
Adjustments to reconcile net earnings to
net cash provided by operating activities:
 Depreciation and amortization             711               739
 Stock-based compensation                  129               116
 Severance charges                         23                136
 Reduction in tax expense from resolution  -                 (89)
of certain tax matters
 Tax benefit related to discontinued       -                 (81)
operations
 Changes in operating assets and
liabilities:
 Receivables, net                      (365)             (853)
 Inventories, net                      (387)             575
 Accounts payable                      (86)              707
 Customer advances and amounts in      (3)               (342)
excess of costs incurred
 Postretirement benefit plans          329               134
 Income taxes                          48                7
 Other, net                                301               143
 Net cash provided by operating        2,876             3,164
activities
Investing activities
Capital expenditures                        (514)             (569)
Net cash provided by short-term investment  -                 510
transactions
Other, net                                  (33)              270
 Net cash (used for) provided by       (547)             211
investing activities
Financing activities
Repurchases of common stock                 (708)             (2,317)
Dividends paid                              (979)             (770)
Issuance of long-term debt, net of related  -                 1,980
costs
Proceeds from stock option exercises        337               81
Other, net                                  91                (46)
 Net cash used for financing           (1,259)           (1,072)
activities
Net change in cash and cash equivalents     1,070             2,303
Cash and cash equivalents at beginning of   3,582             2,261
period
Cash and cash equivalents at end of period  $     4,652  $     4,564



Lockheed Martin Corporation
Consolidated Statement of Stockholders' Equity
(unaudited; in millions)
                                                  Accumulated
                            Additional            Other          Total
                  Common    Paid-In     Retained  Comprehensive  Stockholders'
                  Stock     Capital     Earnings  Loss           Equity
Balance at Dec.   $      $       $      $           $     
31, 2011            321  -          11,937    (11,257)      1,001
Net earnings      -         -           2,176     -              2,176
Other
comprehensive     -         -           -         675            675
income, net of
tax ^1
Repurchases of    (8)       (669)       (45)      -              (722)
common stock ^2
Dividends         -         -           (1,365)   -              (1,365)
declared ^3
Stock-based
awards and ESOP   8         669         -         -              677
activity
Balance at Sept.  $      $       $      $           $     
30, 2012            321  -          12,703    (10,582)      2,442
^1 Primarily represents the reclassification adjustment for recognition of
prior period amounts related to postretirement benefit plans of $609 million.
^2 The Corporation repurchased 3.3 million shares of its common stock for
$294 million during the quarter ended Sept. 30, 2012. For the nine months
ended Sept. 30, 2012,the Corporation repurchased 8.2 million shares for $722
million. The Corporation's Board of Directors has approved a share repurchase
program, authorizing an amountavailable for share repurchases of $6.5
billion. As of Sept. 30, 2012, the Corporation had repurchased a total of
51.2 million shares of its common stock under its sharerepurchase program for
$3.9 billion, and had remaining authorization of $2.6 billion for future share
repurchases.
^3 Includes dividends of $1.00 per share declared during each of the quarters
ended March 25, 2012, June 24, 2012 and Sept. 30, 2012. Additionally includes
a fourth quarterdividend of $1.15 per share declared during the quarter ended
Sept. 30, 2012.



Lockheed Martin Corporation
Operating Data
(unaudited)
                           Sept. 30,      Dec. 31,
                           2012           2011
Backlog                    (in millions)
Aeronautics                $           $   
                           26,600        30,500
Electronic Systems         25,300         24,900
Information Systems &      8,200          9,300
Global Solutions
Space Systems              15,500         16,000
 Total backlog            $           $   
                           75,600        80,700
                           Quarters Ended                Nine Months Ended
Aircraft Deliveries       Sept. 30,      Sept. 25,       Sept. 30,  Sept. 25,
                           2012           2011            2012       2011
F-16                      6              5               29         17
F-22                      -              -               8          8
F-35                       12             5               17         7
C-130J                     8              13              25         26
C-5M                       1              1               2          2



SOURCE Lockheed Martin Corporation

Website: http://www.lockheedmartin.com
Contact: News Media Contact, Jennifer Whitlow, 301-897-6352 or Investor
Relations Contact, Jerry Kircher, 301-897-6584
 
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