10-QPeriod: Q2 FY2008

LOCKHEED MARTIN CORP Quarterly Report for Q2 Ended Jun 29, 2008

Filed July 23, 2008For Securities:LMT

Summary

Lockheed Martin Corporation (LMT) reported strong financial results for the second quarter and first six months of 2008, demonstrating robust growth and profitability. Net sales increased by 4% in the second quarter and 6% for the first six months, reflecting growth across most business segments, particularly in Electronic Systems and Information Systems & Global Services. Operating profit saw even stronger gains, up 17% for the quarter and 18% year-to-date, driven by improved performance and volume increases. Key financial highlights include a significant increase in net earnings to $882 million ($2.15 per share) for the quarter and $1.612 billion ($3.90 per share) for the six months, compared to the prior year. The company's strong cash flow generation allowed for substantial share repurchases totaling $1.93 billion in the first six months of 2008, alongside a 17% increase in dividends declared per share. While facing some headwinds in the Aeronautics segment, overall operational performance and financial health appear robust, supported by a solid backlog and strategic execution.

Financial Highlights

27 data points
Beta

Revenue

$11.04B

10.8% Gross Margin

Net Income

$882.00M

8.0% Net Margin

EPS (Diluted)

$2.15

Cash & Equivalents

$3.21B

Free Cash Flow

$2.09B

Financial Statements
Beta
Revenue$11.04B
Cost of Revenue$9.85B
Gross Profit$1.19B
Operating Income$1.36B
Interest Expense$92.00M
Net Income$882.00M
EPS (Basic)$2.21
EPS (Diluted)$2.15

Key Highlights

  • 1Net sales increased by 4% to $11.0 billion for the quarter ended June 29, 2008, and by 6% to $21.0 billion for the six months ended June 29, 2008, compared to the prior year periods.
  • 2Operating profit grew significantly, up 17% to $1.36 billion for the quarter and 18% to $2.54 billion for the six months, indicating strong operational efficiency and profitability.
  • 3Net earnings rose to $882 million ($2.15 per diluted share) for the quarter and $1.612 billion ($3.90 per diluted share) for the six months, showing a substantial increase in bottom-line profitability.
  • 4The company repurchased $1.93 billion of its common stock in the first six months of 2008, demonstrating a commitment to returning value to shareholders.
  • 5Cash and cash equivalents increased by $566 million during the first six months of 2008, reaching $3.214 billion, indicating strong liquidity.
  • 6Dividends declared per share increased to $0.42 for the quarter and $0.84 for the six months, reflecting an increase from $0.35 and $0.70 respectively in the prior year, signaling confidence in future performance.
  • 7The Aeronautics segment experienced a decrease in net sales and operating profit, primarily due to lower volume on certain programs, while other segments showed growth.

Frequently Asked Questions

In the second quarter ended June 29, 2008, Lockheed Martin reported net sales of $11.0 billion, a 4% increase compared to the same period in 2007. Operating profit increased by a significant 17% to $1.36 billion, and net earnings were $882 million, or $2.15 per diluted share, up from $778 million ($1.82 per diluted share) in the prior year's quarter.

For the first six months of 2008, net cash provided by operating activities was $2.37 billion. The company's cash and cash equivalents increased by $566 million to $3.21 billion. This strong cash generation supported significant share repurchases totaling $1.93 billion.

Lockheed Martin is involved in several legal proceedings and environmental matters, including investigations and lawsuits related to environmental contamination and alleged false claims. While the company believes the probability of a material adverse effect on its financial condition is remote, it cannot predict the outcome with certainty. Liabilities recorded for environmental matters were $619 million as of June 29, 2008. The company is actively defending against these allegations and pursuing contributions from other potentially responsible parties.

Lockheed Martin announced the planned redemption of its $1.0 billion in floating rate convertible debentures. Holders have the option to convert these debentures into common stock before redemption. The company intends to settle conversion obligations exceeding the accreted principal amount with shares of its common stock. The actual impact on outstanding shares will depend on the conversion price at the time of conversion and the number of debentures converted.