LOCKHEED MARTIN CORPORATION
Consolidated Results(1)
Preliminary and Unaudited
(In millions, except per share data and percentages)
QUARTER ENDED SEPTEMBER 30, YEAR TO DATE SEPTEMBER 30,
2002 2001 % Change 2002 2001 % Change
Net Sales $6,542 $6,221 5% $18,798 $16,656 13%
Earnings before
Interest and
Taxes(2) $576 $58 N/M $1,576 $876 80%
Interest Expense $147 $172 (15)% $440 $549 (20)%
Pre-tax Earnings
(Loss) $429 ($114) N/M $1,136 $327 247%
Income Tax Expense
(Benefit)(3) $129 ($27) N/M $261 $138 89%
Effective Tax
Rate(3) 30% 24% 23% 42%
Earnings (Loss)
from Continuing
Operations $300 ($87) N/M $875 $189 363%
(Loss) Earnings
from Discontinued
Operations(4) ($10) $300 N/M ($28) $273 N/M
Net Earnings $290 $213 36% $847 $462 83%
Basic Earnings
(Loss) Per Share:
Earnings (Loss)
from Continuing
Operations $0.67 ($0.20) N/M $1.97 $0.45 338%
(Loss) Earnings
from
Discontinued
Operations(4) (0.02) 0.70 N/M (0.06) 0.64 N/M
Earnings Per
Share $0.65 $0.50 30% $1.91 $1.09 75%
Average Basic
Shares
Outstanding 448.5 428.0 443.5 425.7
Diluted Earnings
(Loss) Per Share:
Earnings (Loss)
from Continuing
Operations $0.66 ($0.20) N/M $1.94 $0.44 341%
(Loss) Earnings
from
Discontinued
Operations(4) (0.02) 0.70 N/M (0.06) 0.63 N/M
Earnings Per
Share $0.64 $0.50 28% $1.88 $1.07 76%
Average Diluted
Shares
Outstanding 455.7 428.0(5) 450.9 430.3
(1) On January 1, 2002, the Corporation adopted SFAS No. 142, "Accounting
for Goodwill and Other Intangible Assets," which eliminates the
amortization of goodwill. As part of its adoption of SFAS No. 142,
the Corporation extended the estimated remaining useful life of
Aeronautics' contract intangibles related to the F-16 program from 6
to 10 years. Consolidated results for 2001 are consistent with
previous disclosures, however for comparative purposes, segment
results which follow have been adjusted for the adoption of SFAS No.
142.
(2) Reflects the Corporation's adoption of SFAS No. 145 in 2002, which
rescinded SFAS No. 4, "Reporting Gains and Losses from Extinguishment
of Debt." As a result the third quarter 2001 loss on extinguishment
of debt, which was previously reported, net of taxes, as an
extraordinary item, has been reclassified on a pre-tax basis to other
income and expenses, net.
(3) Income tax expense for the year to date period ended September 30,
2002 include the impact of a research & development tax credit benefit
of $90 million. Excluding this benefit the effective tax rate would
be 31% for the year to date period.
(4) On December 7, 2001, the Corporation announced that it would exit its
global telecommunications services business. Includes discontinued
operations of LMGT (World Systems, Mobile Communications, Lockheed
Martin Intersputnik, and COMSAT International) and Lockheed Martin IMS
Corporation (sold in July 2001).
(5) Due to antidilution, basic shares are utilized as diluted shares.
LOCKHEED MARTIN CORPORATION
Segment Results Including Nonrecurring and Unusual Items 1
Preliminary and Unaudited
(In millions, except percentages)
QUARTER ENDED YEAR TO DATE
SEPTEMBER 30, SEPTEMBER 30,
% %
2002 2001 Change 2002 2001 Change
Systems Integration
Net Sales $2,253 $2,237 1 % $6,586 $6,282 5 %
Segment EBIT $248 $246 1 % $702 $698 1 %
Margins 11.0% 11.0% 10.7% 11.1%
Depreciation and
Amortization $52 $48 $150 $145
Space Systems(2)
Net Sales $1,843 $1,793 3 % $5,496 $5,023 9 %
Segment EBIT $126 $128 (2) % $370 $442 (16)%
Margins 6.8% 7.1% 6.7% 8.8%
Depreciation and
Amortization $29 $44 $105 $117
Aeronautics
Net Sales $1,668 $1,449 15 % $4,549 $3,362 35 %
Segment EBIT $126 $125 1 % $360 $308 17 %
Margins 7.6% 8.6% 7.9% 9.2%
Depreciation and
Amortization $33 $33 $97 $98
Technology Services(2)
Net Sales $776 $734 6 % $2,157 $1,972 9 %
Segment EBIT $48 $39 23 % $131 $109 20 %
Margins 6.2% 5.3% 6.1% 5.5%
Depreciation and
Amortization $9 $9 $30 $18
Corporate and Other (2)(3)
Segment EBIT $28 ($480) N/M $13 ($681) N/M
Impact of SFAS No. 142
adoption - $68 - $205
Depreciation and
Amortization $8 $5 $21 $17
(1) As part of its adoption of SFAS No. 142, the Corporation now reports
all goodwill amortization for periods prior to January 1, 2002 in the
Corporate and Other Segment. Previously, goodwill amortization for the
third quarter 2001 had been reported as follows: Systems Integration
$43 million, Space Systems $9 million, Technology Services $3 million
and Corporate and Other $5 million. Additionally, the Corporation
extended the useful life of Aeronautics' contract intangibles related
to the F-16 program from 6 to 10 years. This change reduces
Aeronautics' annual amortization of contract intangibles by $30
million, or $7.5 million a quarter. Consistent with the treatment of
goodwill, the impact of this contract intangible amortization change
is reflected in the Corporate and Other segment for periods prior to
January 1, 2002.
(2) On December 7, 2001, the Corporation announced that it would exit its
global telecommunications services business. The Corporation
reassigned LMGT's Systems and Technology line of business, and COMSAT
General business to the Space segment, LMGT's Enterprise Solutions -
US to the Technology Services segment and LMGT's telecommunications
equity investments to the Corporate and Other segment. Prior period
amounts have been reclassified to conform to the new reporting
structure.
(3) Reflects the Corporation's adoption of SFAS No. 145 in 2002, which
rescinded SFAS No. 4, "Reporting Gains and Losses from Extinguishment
of Debt." As a result the third quarter 2001 loss on extinguishment
of debt, which was previously reported, net of taxes, as an
extraordinary item, has been reclassified on a pre-tax basis to other
income and expenses, net.
LOCKHEED MARTIN CORPORATION
Adjusted Segment Results Excluding Nonrecurring and Unusual Items
Preliminary and Unaudited
(In millions, except percentages)
QUARTER ENDED YEAR TO DATE
SEPTEMBER 30, SEPTEMBER 30,
2002 2001 % Change 2002 2001 % Change
Systems Integration
Net Sales $2,253 $2,237 1 % $6,586 $6,282 5 %
Segment EBIT $248 $246 1 % $702 $698 1 %
Margins 11.0% 11.0% 10.7% 11.1%
Depreciation and
Amortization $52 $48 $150 $145
Space Systems
Net Sales $1,843 $1,793 3 % $5,496 $5,023 9 %
Segment EBIT $126 $128 (2)% $370 $331 12 %
Margins 6.8% 7.1% 6.7% 6.6%
Depreciation and
Amortization $29 $44 $105 $117
Aeronautics
Net Sales $1,668 $1,449 15 % $4,549 $3,362 35 %
Segment EBIT $126 $125 1 % $360 $308 17 %
Margins 7.6% 8.6% 7.9% 9.2%
Depreciation and
Amortization $33 $33 $97 $98
Technology Services
Net Sales $776 $734 6 % $2,157 $1,972 9 %
Segment EBIT $48 $39 23 % $131 $109 20 %
Margins 6.2% 5.3% 6.1% 5.5%
Depreciation and
Amortization $9 $9 $30 $18
Corporate and Other
Segment EBIT $28 $9 211 % $13 $45 (71)%
Depreciation and
Amortization $8 $5 $21 $17
LOCKHEED MARTIN CORPORATION
Reconciliation of Adjusted Earnings from Continuing Operations(1)
Preliminary and Unaudited
(In millions, except per share amounts and percentages)
QUARTER ENDED YEAR TO DATE
SEPTEMBER 30, SEPTEMBER 30,
2002 2001 2002 2001
Earnings (Loss) from Continuing
Operations $300 ($87) $875 $189
Nonrecurring and Unusual Items in
Continuing Operations
Loss on Loral Space Investment - 235 - 235
(Gain) on Sale of Surplus Real
Estate - - - (72)
Loss on Americom Asia-Pacific
Investment - - - 65
Loss on Early Extinguishment of
Debt 2 - 36 - 36
Net Loss on Divestitures and Other - 3 - 3
Total - 274 - 267
Effect of R&D tax credit - - (90) -
Effect of SFAS No. 142 on 2001
Continuing Operations - 67 - 183
Adjusted Earnings(1) $300 $254 $785 $639
Adjusted Effective Tax Rate 30% 40% 31% 38%
Earnings (Loss) Per Share from
Continuing Operations $0.66 ($0.20) $1.94 $0.44
Nonrecurring and Unusual Items in
Continuing Operations
Loss on Loral Space Investment - 0.54 - 0.55
(Gain) on Sale of Surplus Real
Estate - - - (0.17)
Loss on Americom Asia-Pacific
Investment - - - 0.15
Loss on Early Extinguishment of
Debt(2) - 0.08 - 0.08
Net Loss on Divestitures and Other - 0.01 - 0.01
Total - 0.63 - 0.62
Effect of R&D tax credit - - (0.20) -
Effect of SFAS No. 142 on 2001
Continuing Operations - 0.16 - 0.43
Adjusted Earnings Per Share(1) $0.66 $0.59 $1.74 $1.49
(1) Excludes nonrecurring and unusual items and adjusts for the adoption
of SFAS No. 142 as of January 1, 2001.
(2) Previously reported as an extraordinary item.
LOCKHEED MARTIN CORPORATION
Other Financial Information
Preliminary and Unaudited
(In millions, except per share amounts and percentages)
QUARTER ENDED YEAR TO DATE
SEPTEMBER 30, SEPTEMBER 30,
2002 2001 2002 2001
Adjusted EBIT(1) $576 $547 $1,576 $1,491
Adjusted EBIT to Sales Margin 8.8% 8.8% 8.4% 9.0%
Amortization of Contract Intangibles $31 $30 $94 $92
Depreciation and Amortization $100 $109 $309 $303
Adjusted EBITDA $707 $686 $1,979 $1,886
(1) Excludes nonrecurring and unusual items and adjusts for the adoption
of SFAS No. 142. Adjusted results exclude goodwill amortization
expense and include the effect of extending the remaining useful life
of Aeronautics' contract intangible related to the F-16 program.
SEPTEMBER 30, DECEMBER 31,
2002 2001
Backlog
Systems Integration $16,789 $17,027
Space Systems 12,573 12,977
Aeronautics 36,003 36,149
Technology Services 4,741 5,116
Total $70,106 $71,269
Long-Term Debt
Current maturities $763 $89
Long-Term 6,693 7,422
Total $7,456 $7,511
Cash and Cash Equivalents $3,490 $912
Stockholders' Equity $7,700 $6,443
Total Debt-to-Capital 49.2% 53.8%
Total Debt-to-Capital (net of invested
cash) 34.0% 50.6%
LOCKHEED MARTIN CORPORATION
Consolidated Condensed Balance Sheet
Preliminary and Unaudited
(In millions)
SEPTEMBER 30, DECEMBER 31,
2002 2001
Assets
Cash and cash equivalents $3,490 $912
Accounts receivable 3,730 4,049
Inventories 2,254 3,140
Assets of businesses held for sale 508 638
Other current assets 1,965 2,039
Total current assets 11,947 10,778
Property, plant and equipment, net 3,153 2,991
Investments in equity securities 1,751 1,884
Goodwill 7,371 7,371
Intangible assets, related to
contracts and programs acquired 846 939
Other noncurrent assets 3,851 3,691
Total assets $28,919 $27,654
Liabilities and Stockholders' Equity
Accounts payable $1,107 $1,419
Customer advances and amounts in
excess of costs incurred 5,140 5,002
Other accrued expenses 2,919 2,792
Liabilities of businesses held for
sale 328 387
Current maturities of long-term debt 763 89
Total current liabilities 10,257 9,689
Long-term debt 6,693 7,422
Post-retirement and other noncurrent
liabilities 4,269 4,100
Stockholders' equity 7,700 6,443
Total liabilities and stockholders'
equity $28,919 $27,654
LOCKHEED MARTIN CORPORATION
Consolidated Condensed Statement of Cash Flows
Preliminary and Unaudited
(In millions)
NINE MONTHS ENDED SEPTEMBER 30,
2002 2001
Operating Activities
Earnings from continuing operations $875 $189
Adjustments to reconcile earnings
from continuing operations
to net cash provided by operating
activities:
(Loss) earnings from discontinued
operations (28) 273
Depreciation and amortization 403 600
Changes in operating assets and
liabilities:
Receivables 319 289
Inventories 756 446
Accounts payable (312) (216)
Customer advances and amounts in
excess of costs incurred 138 681
Other 577 (68)
Net cash provided by operating
activities 2,728 2,194
Investing Activities
Expenditures for property, plant and
equipment (396) (312)
Acquisitions / investments in
affiliated companies (88) (235)
Proceeds from divestitures of
affiliated companies 84 875
Other 55 96
Net cash (used for) provided by
investing activities (345) 424
Financing Activities
Net decrease in short-term borrowings - (12)
Net repayments of long-term debt (87) (2,289)
Issuances of common stock 431 123
Common stock dividends (149) (144)
Net cash provided by (used for)
financing activities 195 (2,322)
Net increase in cash and cash
equivalents 2,578 296
Cash and cash equivalents at
beginning of period 912 1,505
Cash and cash equivalents at end of
period $3,490 $1,801
LOCKHEED MARTIN CORPORATION
Reconciliation of Free Cash Flow(1)
Preliminary and Unaudited
(In millions)
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2002 2001 2002 2001
Net cash provided by
operating activities -
GAAP $1,180 $997 $2,728 $2,194
Expenditures for property,
plant and equipment (135) (119) (396) (312)
Proceeds from disposals of
property, plant and
equipment 30 11 55 96
Income taxes paid on
divested businesses 10 - 10 391
Free Cash Flow(1) $1,085 $889 $2,397 $2,369
(1) Free cash flow is defined as cash provided by operating activities
less capital expenditures and excludes any proceeds from, or income tax
payments on, divestitures.
LOCKHEED MARTIN CORPORATION
Selected Operating Data
QUARTER ENDED YEAR TO DATE
SEPTEMBER 30, SEPTEMBER 30,
2002 2001 2002 2001
Deliveries
F-16 6 6 16 18
C-130J 1 5 6 5
Launches
Atlas 2 2 4 3
Proton 1 - 3 2
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