10-K/APeriod: FY2017

LOCKHEED MARTIN CORP Annual Report (Amendment), Year Ended Dec 31, 2017

Filed February 16, 2018For Securities:LMT

Summary

Lockheed Martin Corporation (LMT) filed its 2017 10-K on February 15, 2018, which primarily served as an amendment to its original filing, incorporating new consent and certification documents. The financial statements themselves presented a mixed performance for the year. Total net sales increased by approximately 8% year-over-year to $51.05 billion, driven by growth in the Products segment. However, net earnings saw a significant decrease of over 62% to $2.00 billion, primarily due to a substantial income tax charge related to the Tax Cuts and Jobs Act of 2017. The company also reported increased liabilities related to postretirement benefit plans. Despite the net earnings dip, operating profit showed a healthy increase, indicating underlying operational strength. The company continued its commitment to shareholder returns through share repurchases and dividends.

Financial Highlights

52 data points
Beta

Revenue

$49.96B

12.8% Gross Margin

Net Income

$1.96B

3.9% Net Margin

EPS (Diluted)

$6.75

Total Assets

$46.62B

Cash & Equivalents

$2.86B

Free Cash Flow

$6.48B

Financial Statements
Beta
Revenue$49.96B
Cost of Revenue$43.59B
Gross Profit$6.37B
R&D Expenses$1.20B
Operating Income$6.74B
Interest Expense$651.00M
Net Income$1.96B
EPS (Basic)$6.82
EPS (Diluted)$6.75
Shares Outstanding (Basic)287.80M
Shares Outstanding (Diluted)290.60M

Key Highlights

  • 1Total net sales increased to $51.05 billion in 2017, up from $47.25 billion in 2016, primarily driven by product sales.
  • 2Net earnings decreased significantly to $2.00 billion in 2017 from $5.30 billion in 2016, largely impacted by a $1.9 billion one-time tax charge related to the Tax Cuts and Jobs Act.
  • 3Operating profit increased to $5.92 billion in 2017, up from $5.55 billion in 2016, signaling strong operational performance.
  • 4The company repurchased $2.0 billion of its common stock in 2017 and paid $2.2 billion in dividends, demonstrating a commitment to shareholder returns.
  • 5Total liabilities increased to $47.13 billion from $46.20 billion, with a notable increase in accrued pension liabilities.
  • 6The company successfully remediated a material weakness in internal controls at its Sikorsky business by year-end 2017.
  • 7Two major business divestitures/acquisitions were highlighted: the divestiture of IS&GS and the consolidation of AWE following an increased ownership stake.

Frequently Asked Questions

The primary driver for the significant decrease in net earnings from $5.30 billion in 2016 to $2.00 billion in 2017 was a substantial one-time income tax charge of $1.9 billion related to the enactment of the Tax Cuts and Jobs Act of 2017. This charge included the re-measurement of deferred tax assets at the new lower corporate tax rate and a deemed repatriation tax.

Long-term debt, net, slightly decreased from $14.28 billion in 2016 to $13.51 billion in 2017. The company issued new notes totaling approximately $1.6 billion in exchange for existing notes and made interest payments totaling $610 million. There were no borrowings outstanding under its main revolving credit facility at year-end 2017.

Accrued pension liabilities increased from $13.86 billion in 2016 to $15.70 billion in 2017, and other postretirement benefit liabilities also saw an increase. The company expects to make significant contributions ($5.0 billion) to its qualified defined benefit pension plans in 2018, utilizing cash on hand and commercial paper. While these liabilities are substantial, the company is actively managing them through contributions and strategic funding.

The 2017 10-K filing primarily discusses events from previous years. The divestiture of the Information Systems & Global Solutions (IS&GS) business was completed in August 2016, with some final adjustments recognized in 2017. The consolidation of AWE Management Limited, following an increased ownership stake, also occurred in 2016. The acquisition of Sikorsky in November 2015 continued to be reflected in the financial statements.