Summary
Lockheed Martin Corporation (LMT) announced on November 13, 2013, a significant restructuring plan involving facility closures and workforce reductions. This strategic move will impact approximately 4,000 positions across its Information Systems & Global Solutions (IS&GS), Mission Systems and Training (MST), and Space Systems business segments. The company plans to close specific leased and owned facilities in Goodyear, AR; Akron, OH; Newtown, PA; and Sunnyvale, CA. These actions are driven by a strategic review aimed at aligning organizational structure and cost structure with declining U.S. government spending and evolving market dynamics. Investors should note that these changes are expected to be substantially completed by mid-2015.
Key Highlights
- 1Lockheed Martin is implementing a plan to close facilities and reduce its workforce by approximately 4,000 positions.
- 2The workforce reduction will affect the Information Systems & Global Solutions (IS&GS), Mission Systems and Training (MST), and Space Systems segments.
- 3Specific facilities in Goodyear, AR; Akron, OH; Newtown, PA; and Sunnyvale, CA are slated for closure.
- 4These actions are a response to declining U.S. government spending and a changing competitive landscape.
- 5The company estimates a special charge of approximately $175 million (net of tax benefits) for severance costs, to be recorded in the fourth quarter of 2013.
- 6The special charge is expected to impact earnings by approximately $0.35 per diluted share.
- 7The restructuring is expected to be substantially completed by the middle of 2015.
Frequently Asked Questions
The primary reasons are a strategic review of facility capacity and future workload projections, aimed at aligning the organization's cost structure with declining U.S. government spending and the rapidly changing competitive and economic landscape.
Lockheed Martin estimates a special charge of approximately $175 million (net of state tax benefits), or about $115 million after-tax, primarily for severance costs. This charge will be recorded in the fourth quarter of 2013 and is expected to reduce earnings per diluted share by approximately $0.35.
The workforce reductions, facility closures, and consolidation of programs are expected to be substantially completed by the middle of 2015.
While the special charge for severance costs will be recorded in the fourth quarter of 2013, incremental costs for accelerated depreciation, relocation, and other expenses will be expensed as incurred from the fourth quarter of 2013 through the completion of closures in 2015. The company expects to recover a substantial amount of these costs in future periods through improved efficiency.