10-QPeriod: Q3 FY2008

LOCKHEED MARTIN CORP Quarterly Report for Q3 Ended Sep 28, 2008

Filed October 24, 2008For Securities:LMT

Summary

Lockheed Martin Corporation (LMT) reported its third-quarter and nine-month results for the period ending September 28, 2008. Overall net sales saw a slight decrease in the third quarter compared to the prior year, primarily due to lower deliveries in the Aeronautics and Space Systems segments. However, for the nine-month period, net sales increased, driven by growth in Electronic Systems and Information Systems & Global Services (IS&GS). Profitability showed a positive trend, with operating profit increasing in both the third quarter and the nine-month period. This improvement was supported by favorable impacts from pension adjustments and higher equity earnings from United Launch Alliance (ULA). Net earnings also rose year-over-year for both periods. The company continues to manage its capital through share repurchases, dividend payments, and strategic debt management, reflecting a disciplined approach to shareholder value enhancement amidst a complex economic environment.

Financial Highlights

26 data points
Beta

Revenue

$10.58B

10.6% Gross Margin

Net Income

$782.00M

7.4% Net Margin

EPS (Diluted)

$1.92

Cash & Equivalents

$2.46B

Free Cash Flow

$827.00M

Financial Statements
Beta
Revenue$10.58B
Cost of Revenue$9.46B
Gross Profit$1.12B
Operating Income$1.24B
Interest Expense$85.00M
Net Income$782.00M
EPS (Basic)$1.97
EPS (Diluted)$1.92

Key Highlights

  • 1Net sales for Q3 2008 decreased by 5% to $10.6 billion, while nine-month sales increased by 2% to $31.6 billion.
  • 2Operating profit increased by 7% to $1,242 million in Q3 2008 and by 14% to $3,783 million for the nine months.
  • 3Net earnings for Q3 2008 were $782 million ($1.92 per share), up from $766 million ($1.80 per share) in Q3 2007.
  • 4The Aeronautics segment experienced a 13% sales decline in Q3, mainly due to lower combat aircraft and C-130J program deliveries.
  • 5Electronic Systems and Information Systems & Global Services (IS&GS) reported sales growth for the nine-month period, driven by missile programs and global services activities, respectively.
  • 6Space Systems saw a significant 14% sales decrease in Q3, impacted by fewer commercial satellite deliveries.
  • 7The company repurchased $2,338 million of common stock in the first nine months of 2008 and increased its quarterly dividend to $0.57 per share, effective Q4 2008.

Frequently Asked Questions

The decrease in net sales for the third quarter of 2008 was primarily driven by lower deliveries of combat aircraft in the Aeronautics segment and commercial satellites in the Space Systems segment.

Profitability showed a positive trend. Operating profit increased by 7% in the third quarter and 14% for the nine months, supported by favorable pension adjustments and higher equity earnings from United Launch Alliance (ULA). Net earnings also saw an increase year-over-year for both periods.

Lockheed Martin maintains a balanced cash deployment strategy focused on shareholder value. This includes investments in business growth, selective acquisitions, share repurchases ($2,338 million in the first nine months of 2008), and increased dividend payments (with a planned increase to $0.57 per share in Q4 2008).

The company highlights risks related to government funding availability, changes in government priorities, economic conditions, contract awards/terminations, pension plan asset returns, interest rate fluctuations, and potential issues with developing and producing advanced technology systems. They also note that actual results may differ materially from forward-looking statements due to these factors.