01—Abstract
Summary
Summary of the 10-K filed February 28, 2013. Cited figures are marked; the original filing is the authoritative source.
Lockheed Martin Corporation (LMT) reported strong performance in its 2012 fiscal year, with net sales reaching $47.2 billiona.
The company's business is heavily reliant on U.S. Government contracts, which accounted for 82% of net sales, with the Department of Defense representing 61% of that total. Despite economic pressures and ongoing budget discussions in the U.S., LMT demonstrated resilience across its five business segments: Aeronautics, Information Systems & Global Solutions (IS&GS), Missiles and Fire Control (MFC), Mission Systems and Training (MST), and Space Systems. Key financial highlights include a robust backlog of $82.3 billionb at year-end 2012, indicating strong future revenue visibility.
The company also continued to return value to shareholders through increased dividends and share repurchases, signaling financial health and confidence in future operations. While facing potential headwinds from government budget uncertainties, including sequestration, Lockheed Martin strategically focused on program execution, technological advancement, and disciplined portfolio management to maintain its market leadership in global security and aerospace.
02—Key points
Key Highlights
- Net sales reached $47.2 billion in 2012, driven primarily by U.S. Government contracts (82% of total sales).
- Backlog stood at $82.3 billion at the end of 2012, providing significant revenue visibility.
- The company operates across five key segments: Aeronautics, IS&GS, MFC, MST, and Space Systems, with Aeronautics being the largest contributor to net sales.
- Lockheed Martin's largest program, the F-35 Lightning II Joint Strike Fighter, accounted for 14% of total consolidated net sales in 2012.
- The company returned cash to investors through dividends ($4.15 per share in 2012) and share repurchases, totaling $1.0 billion for the year.
- Despite a challenging fiscal environment, the company managed its operations effectively, with operating profit reaching $4.4 billion.
- Significant attention is given to managing risks related to U.S. Government contract funding and potential budget cuts like sequestration.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2012, Lockheed Martin kept $0.06.
- Revenue$47.18B100.0%
- Cost of revenue−$42.99B91.1%
- Gross profit$4.20B8.9%
- Operating costs$238.0M0.5%
- Operating income$4.43B9.4%
- Interest, other & tax−$1.69B3.6%
- Net income$2.75B5.8%
04—Financials
Financial Highlights
Figures from 10-KFY2012filed February 28, 2013Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $47.18B$46.50B | +1.5% |
| Cost of Revenue | $42.99B$42.76B | +0.5% |
| Gross Profit | $4.20B$3.74B | +12.1% |
| R&D Expenses | $616.00M$585.00M | +5.3% |
| Operating Income | $4.43B$4.02B | +10.3% |
| Interest Expense | $383.00M$354.00M | +8.2% |
| Net Income | $2.75B$2.65B | +3.4% |
| EPS (Basic) | $8.48$7.90 | +7.3% |
| EPS (Diluted) | $8.36$7.81 | +7.0% |
| Shares Outstanding (Basic) | 323.70M335.90M | −3.6% |
| Shares Outstanding (Diluted) | 328.40M339.90M | −3.4% |
05—Questions
Frequently Asked Questions
What is Lockheed Martin's primary source of revenue?
Lockheed Martin's primary source of revenue is U.S. Government contracts, which accounted for 82% of its net sales in 2012. The Department of Defense represented a significant portion of this, at 61%.
How did Lockheed Martin's business segments perform in 2012?
Lockheed Martin's five business segments all contributed to the company's performance in 2012. The Aeronautics segment generated the highest net sales at $15.0 billion, followed by Information Systems & Global Solutions (IS&GS) at $8.8 billion, Mission Systems and Training (MST) at $7.6 billion, Space Systems at $8.3 billion, and Missiles and Fire Control (MFC) at $7.5 billion.
What are the main risks facing Lockheed Martin based on this filing?
The primary risks highlighted include heavy dependence on U.S. Government contracts, which are subject to budget fluctuations, program changes, and potential cuts like sequestration. Other risks involve compliance with government procurement laws, increased competition, international sales complexities, cyber security threats, and managing significant postretirement benefit plan obligations.
How is the company managing its financial obligations and returning value to shareholders?
Lockheed Martin has a balanced cash deployment strategy. In 2012, it generated strong operating cash flow, managed its debt levels, and returned value to shareholders through dividends totaling $1.4 billion and share repurchases totaling $1.0 billion, demonstrating a commitment to shareholder returns.
06—Continue