What was the primary driver of the significant increase in net earnings?

The significant increase in net earnings was driven by a combination of factors including higher net sales across most business segments, improved operating profit, gains from asset sales (such as Inmarsat stock and land sales), and a tax benefit related to export tax benefit claims. Operational efficiencies and strong performance in key programs also contributed.

How has the company managed its capital and shareholder returns?

Lockheed Martin actively managed its capital through substantial share repurchases ($1.9 billion in the first nine months of 2006) and a strategic debt exchange. The company also increased its quarterly dividend and continued to invest in capital expenditures and strategic acquisitions.

What is the impact of the adoption of FAS 123(R) on the financial statements?

The adoption of FAS 123(R) for stock-based compensation, effective January 1, 2006, resulted in the recognition of compensation cost based on the estimated fair value of stock options and restricted stock. This led to an increase in reported costs, with a net impact of $52 million ($0.12 per share) on earnings for the nine months ended September 30, 2006, as compared to prior accounting methods.

Are there any significant legal or environmental matters that could impact the company?

The company is involved in various legal proceedings and environmental matters. While management believes the probability of a material adverse effect is remote, these matters can be complex and outcomes cannot be predicted with certainty. These include environmental remediation liabilities totaling $464 million and ongoing litigation, such as those related to the Paducah Gaseous Diffusion Plant and the SRAM program.

LMT 10-Q Quarterly Report Q3 FY2006 — Revenue, Net Income, EPS

Summary

Lockheed Martin Corporation (LMT) reported solid financial performance for the nine months ended September 30, 2006, with net sales increasing by 7% to $28.8 billion and net earnings growing by 43% to $1.8 billion. This growth was driven by strong performance across most business segments, particularly Electronic Systems, Space Systems, and Information & Technology Services. The company also saw a significant increase in operating profit, up 34% year-over-year, reflecting improved operational efficiency and favorable program performance. Key financial activities during the period included substantial share repurchases totaling $1.9 billion and a strategic debt exchange that optimized the company's debt structure. Lockheed Martin also continued to invest in its business through capital expenditures and strategic acquisitions, enhancing its capabilities in key growth areas. The company maintained a strong liquidity position with over $2.6 billion in cash and short-term investments, supporting its growth initiatives and shareholder returns through increased dividends.

Key Highlights

1Net sales increased by 7% to $28.8 billion for the first nine months of 2006, compared to $26.98 billion in the prior year period.
2Net earnings rose significantly by 43% to $1.8 billion for the nine months ended September 30, 2006, up from $1.26 billion in the same period of 2005.
3Operating profit showed robust growth, increasing by 34% to $2.82 billion for the nine months of 2006.
4The company repurchased approximately $1.9 billion of its common stock during the first nine months of 2006.
5Lockheed Martin adopted FAS 123(R) for stock-based compensation, impacting reported expenses and earnings per share.
6Total stockholders' equity increased to $8.08 billion at September 30, 2006, from $7.87 billion at December 31, 2005.
7The company completed several strategic acquisitions in the first nine months of 2006, including Pacific Architects and Engineers, Inc. and Aspen Systems Corporation.

LOCKHEED MARTIN CORP Quarterly Report for Q3 Ended Sep 30, 2006

Summary

Key Highlights

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