<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) - January 27 and 28, 2000
____________
LOCKHEED MARTIN CORPORATION
(Exact name of registrant as specified in its charter)
Maryland 1-11437 52-1893632
(State or other jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
6801 Rockledge Drive, Bethesda, Maryland 20817
(Address of principal executive offices) (Zip Code)
(301) 897-6000
(Registrant's telephone number, including area code)
____________
Not Applicable
(Former name or address, if changed since last report)
- --------------------------------------------------------------------------------
<PAGE>
Item 5. Other Events
The Corporation is filing this Current Report on Form 8-K to provide the
information contained in the Corporation's press releases dated January 27, 2000
and January 28, 2000. The January 27, 2000 press release relates to an
announcement of a reduction in work force and relocation of the head offices of
two business areas (included as Exhibit 99.1 to this Form). The January 28, 2000
press release (and the two attachments, including financial tables) relates to
the Corporation's financial performance for fiscal 1999 and an announced cut in
the Corporation's dividend rate (included as Exhibit 99.2 to this Form).
Item 7. Financial Statements and Exhibits
Exhibit No. Description
----------- -----------
99.1 Lockheed Martin Corporation Press Release dated
January 27, 2000.
99.2 Lockheed Martin Corporation Press Release (and the two
attachments, including financial tables) dated January
28, 2000.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LOCKHEED MARTIN CORPORATION
/s/ Marian S. Block
----------------------
Marian S. Block
Vice President, Associate General
Counsel and Assistant Secretary
28 January 2000
INDEX TO EXHIBITS
Exhibit No. Description
----------- -----------
99.1 Lockheed Martin Corporation Press Release dated
January 27, 2000.
99.2 Lockheed Martin Corporation Press Release (and the two
attachments, including financial tables) dated
January 28, 2000.
<PAGE>
Exhibit 99.1
[LOCKHEED MARTIN LOGO]
For Immediate Release
---------------------
LOCKHEED MARTIN STREAMLINES AERONAUTICAL AND SPACE BUSINESSES
Expected Savings Total $200 Million; 2800 Workforce Reduction Announced
Bethesda, Maryland, January 27, 2000 -Lockheed Martin Corporation (NYSE: LMT)
today announced actions to streamline its Aeronautical Systems and Space Systems
business areas in a move to improve business operations by reducing general and
administrative costs, speed decision-making processes and focus resources on
program execution. These actions are expected to generate $200 million in
annual savings and result in a reduction of more than 2800 employees.
The majority of the savings will be achieved in the Aeronautical Systems
business area and will be realized by the streamlining of the management
structures, the centralization of core administrative functions and
consolidation of selected Aeronautics activities in engineering, production
operations and material management.
In conjunction with these actions, the Corporation expects to incur severance
and other related expenses in the near term. However, the financial effects
associated with these expenses will be off-set by cost reductions and are not
expected to affect the previously announced earnings outlook.
"These actions are the direct result of our continuing drive to improve our
customer focus, flatten
<PAGE>
our management structure and enhance our financial performance," stated Vance
Coffman, Chairman and Chief Executive Officer of Lockheed Martin. "They will
result in real savings and ensure greater flexibility allowing us to
successfully adapt to changing market conditions, maintain the level of program
execution our customers expect, while improving our ability to react to new
business opportunities," he said.
Effective immediately, the Aeronautical Systems business area will consolidate
its organization and operations into a focused one-company structure named the
Lockheed Martin Aeronautics Company headquartered in Ft. Worth, Texas. The
organization will be led by Dain Hancock, a Lockheed Martin Corporate Executive
Vice President. Within this one-company structure, the Palmdale, California
site will remain engaged in advanced development initiatives. The Ft. Worth,
Texas and Marietta, Georgia facilities will concentrate and focus on aircraft
production and assembly. In addition to these sites, four subassembly plants in
Clarksburg, West Virginia; Johnstown, Pennsylvania; Meridian, Mississippi and
Pinellas, Florida also will report administratively to the new Lockheed Martin
Aeronautics Company.
This streamlining of the Aeronautical Systems business area reflects an
adjustment to market conditions and is intended to reduce duplication and
administrative costs while improving customer satisfaction. The workforce
reduction announced today will total 2500. These actions are expected to come
in approximately equal measure from the company's three primary sites in
Georgia, California and Texas. Today's announced layoffs, plus the 2000 person
reduction previously announced for the Marietta, Georgia facility, bring the
business area's total announced workforce reduction to 4500. Reductions have
been on-going since September 1999 and will be completed within 18 months, with
most actions completed prior to the end of 2000. These actions are expected to
generate annual savings ranging from $160 to $175 million.
In a similar fashion, the Space Systems business area will integrate its
organization and operations by establishing a new Lockheed Martin Space Systems
Company in Denver, Colorado. This company will be led by Albert Smith, Lockheed
Martin Corporate Executive Vice President. Denver Operations President and
General Manager Tom Marsh will join Smith in this new office as his deputy.
<PAGE>
Reporting to the Space Systems Company are operations in Sunnyvale, California,
Denver, Colorado and New Orleans, Louisiana. In addition, Special Programs,
International Launch Services and Commercial Space Systems will also report to
Smith in this new organization.
Reductions in the Space Systems business area are focused on management
realignments and consolidations of staff support activities such as finance,
human resources, legal and communications. Total workforce reductions are
expected to be 300-400, of which approximately 60 percent will come from
Sunnyvale, 30 percent from Denver, and 10 percent from Michoud. These actions
are expected to generate annual savings in the $30-$40 million range and are
effective immediately.
Headquartered in Bethesda, Maryland, Lockheed Martin is a global enterprise
principally engaged in the research, design, development, manufacture and
integration of advanced-technology systems, products and services. The
Corporation employs 140,000 people with core businesses in systems integration,
space, aeronautics, and technology services. Lockheed Martin had 1998 sales
surpassing $26 billion.
###
NEWS MEDIA CONTACT: James Fetig, 301/897-6352
INVESTOR RELATIONS CONTACT: James Ryan, 301/897-6584or
Randa Middleton, 301/897-6455
Web site: www.lmco.com
------------
NOTE: Statements in this press release, including the statements relating
to projected future financial performance, are considered forward-looking
statements under the federal securities laws, including the Private
Securities Litigation Reform Act of 1995. Sometimes these statements will
contain words such as "believes," "expects," "intends," "plans," estimates,
"outlook," "forecast, " and other similar words. These statements are not
guarantees of our future performance and are subject to risks,
uncertainties and other important factors that could cause our actual
performance or achievements to be materially different from those we may
project.
<PAGE>
As for the forward-looking statements that relate to future financial
results and other projections, actual results will be different due to the
inherent nature of projections and may be better or worse than projected.
Given these uncertainties, you should not place any reliance on these
forward-looking statements. These forward-looking statements also represent
our estimates and assumptions only as of the date that they were made. We
expressly disclaim a duty to provide updates to these forward-looking
statements, and the estimates and assumptions associated with them, after
the date of this press release to reflect events or circumstances or
changes in expectations or the occurrence of anticipated events.
In addition to the factors set forth in our filings with the Securities and
Exchange Commission (www.sec.gov), the following factors could affect the
-----------
forward-looking statements: the ability to achieve or quantify savings for
our customers or ourselves as a result of our reorganization efforts,
including the recently announced business area streamlining and staff
reductions, or in our global cost-cutting program; our ability to grow
earnings and generate cash flow in accordance with our beliefs;
difficulties during space launches; the ability to obtain or the timing of
obtaining future government awards; the availability of government funding
and customer requirements; economic conditions, competitive environment,
international business and political conditions, timing of awards and
contracts; timing and customer acceptance of product delivery and launches;
the outcome of contingencies, including completion of any acquisitions and
divestitures, litigation and environmental remediation, program
performance, and our ability to consummate the Comsat transaction. These
are only some of the numerous factors which may affect the forward-looking
statements in this press release.
<PAGE>
Exhibit 99.2
L
For Immediate Release
---------------------
. LOCKHEED MARTIN REPORTS 1999 EPS OF $0.99, $1.50 EXCLUDING UNUSUAL AND
NONRECURRING ITEMS
. GENERATES $873 MILLION OF FREE CASH FLOW FOR FULL YEAR
. REAFFIRMS 2000 EARNINGS OUTLOOK; PROJECTS 15-25 PERCENT ANNUAL GROWTH IN THE
NEAR TERM
. INCREASED 2000 CASH OUTLOOK WITH GROWTH PROJECTED
. REDUCES DIVIDEND AND EMPHASIZES DEBT REDUCTION
BETHESDA, Maryland, January 28, 2000 - Lockheed Martin Corporation (NYSE: LMT)
today reported fourth quarter 1999 net earnings per share of $0.76 on a diluted
basis, compared to fourth quarter 1998 diluted earnings per share of $0.33.
Nonrecurring and unusual items contributed $0.17 per share to 1999's quarterly
results while such items in 1998 reduced earnings per diluted share by $0.42.
For the year 1999, the company reported earnings per diluted share of $0.99
compared to $2.63 per diluted share for the year 1998. Nonrecurring and unusual
items reduced 1999's earnings by $0.51 per diluted share and reduced 1998
earnings by $0.36 per diluted share. For the year 1999, nonrecurring and
unusual items included a cumulative effect adjustment of $0.93 per diluted share
relating to the adoption of a new accounting standard for start-up costs,
partially offset by a net gain of $0.42 per diluted share from portfolio shaping
and other activities throughout the year. Excluding the aforementioned
nonrecurring and unusual items, diluted earnings per share would have been $1.50
for 1999 compared to $2.99 in 1998.
The company also reported it generated $548 million of free cash flow in the
fourth quarter of 1999 and $873 million for the full year. However, due mainly
to completion of the cash tender offer for 49 percent of Comsat shares and
investments in certain equity joint ventures, Lockheed
<PAGE>
Martin's debt to capitalization ratio, net of invested cash, was up slightly to
64 percent at year end 1999 compared to 63 percent at year end 1998.
Additionally, the Board of Directors approved management's recommendation to
reduce the dividend from a quarterly payment of $0.22 per share to $0.11 per
share, payable March 31, 2000 to shareholders of record on March 6, 2000.
"Consistent with our previously announced focus on reducing debt, it is prudent
to change the dividend at this time," said Lockheed Martin Chairman and Chief
Executive Officer Vance Coffman.
The Corporation reaffirmed its 2000 earnings outlook of about $1.00 per diluted
share, excluding the effects of any nonrecurring and unusual items. Lockheed
Martin also announced that it expects earnings per diluted share to increase by
15-25 percent annually in the near term with expected results for 2001 closer to
the lower end of the range.
Due to the timing of space launches, aircraft deliveries and investment in new
products such as Evolved Expendable Launch Vehicle (EELV), 2000 earnings and
cash generation are expected to be heavily weighted towards the second half of
the year. The Corporation estimates the quarterly distribution of diluted EPS
for 2000 to be 5-15 percent, 15-25 percent, 20-30 percent and 40-50 percent,
respectively.
The Corporation increased its 2000 free cash flow outlook to be at least $500
million with an objective of generating $1.3 billion in free cash over the two-
year period 2000-2001.
Sales for the fourth quarter of 1999 were $7.0 billion, compared with fourth
quarter 1998 sales of $7.2 billion. Sales for the year 1999 were $25.5 billion,
down 3 percent when compared to 1998. The Corporation's backlog increased for
the first time in three years to $45.9 billion at year-end 1999 compared with
$45.3 billion at the end of last year.
"We believe we must build on these results and improve our performance as we
create a corporate culture directed toward streamlining our business operations,
dedicated to customer satisfaction and committed to creating shareholder value,"
Coffman said.
<PAGE>
Noting yesterday's announcements to further streamline the Aeronautical and
Space Systems businesses, Coffman added, "The purpose of these actions is to
drive down indirect and administrative costs to improve earnings and cash flow
and reduce debt while improving focus on these businesses and their mission
success. We also are moving forward on our evaluation of the divestiture
candidates we announced on September 27. Since then, we have decided to add
Lockheed Martin IMS to that group for evaluation. These actions are part of our
continuing process to improve operating and financial performance."
Lockheed Martin IMS, headquartered in Teaneck, N.J., with annual sales of
approximately $500 million, provides data processing, systems integration and
program management services to state and municipal government clients. If
divested, it is anticipated that a gain would be recognized on this transaction.
FOURTH QUARTER AND YEAR 1999 DETAILED REVIEW
Net earnings for the fourth quarter 1999 totaled $293 million, or $0.76 per
diluted share. In the comparable period of 1998, net earnings were $125
million, or $0.33 per diluted share. Fourth quarter pretax earnings for 1999
included a gain of $41 million associated with the sale of the Corporation's
remaining interest in L3 Communications Holdings, Inc. (L3) stock, $33 million
of gains from transactions associated with the sale of surplus real estate, and
a net gain of $28 million associated with the sale of non-core businesses and
investments, and other portfolio shaping actions. The combination of these items
contributed $0.17 to earnings per diluted share. In the comparable 1998 period,
a pretax charge of $233 million associated with the shutdown of CalComp Inc.
operations was partially offset by approximately $35 million in pretax gains
associated with the sale of surplus real estate. The combination of these items
reduced earnings per diluted share by $0.42. In summary, excluding the above
mentioned nonrecurring and unusual items, fourth quarter 1999 diluted earnings
per share would have been $0.59 compared to $0.75 in the comparable 1998 period.
Reported net earnings for the year 1999 were $382 million, or $0.99 per diluted
share,
<PAGE>
compared to $1.0 billion, or $2.63 per diluted share, for the same period in
1998. Reported 1999 net earnings were reduced by a cumulative effect adjustment
of $355 million, or $0.93 per diluted share, related to adopting the new
accounting standard for start-up costs. Pretax earnings for 1999 included gains
of $155 million resulting from sales of L3 stock, $57 million of gains from
transactions associated with the sale of surplus real estate, and a net gain of
$37 million associated with the sale of various non-core businesses and
investments, and other portfolio shaping actions. The combination of these items
contributed $0.42 to earnings per diluted share. Pretax earnings for 1998
included the previously mentioned pretax charge of $233 million related to
CalComp. Pretax gains totaling $71 million in 1998 included an $18 million gain
related to the initial public offering of L3's stock, $35 million associated
with the sale of surplus real estate and an $18 million pretax gain from
portfolio shaping actions. The combination of the 1998 items reduced earnings
per diluted share by $0.36. In summary, excluding the above mentioned
nonrecurring and unusual items, diluted earnings per share would have been $1.50
for 1999 compared to $2.99 in 1998.
Segment Results:
- ----------------
Systems Integration
- --------------------
$Millions
<TABLE>
<CAPTION>
4th Quarter Full Year
--------------- ------------------
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net sales $2,974 $3,193 $10,954 $10,895
EBIT $ 255 $ 226 $ 967 $ 949
Nonrecurring and
unusual items (13) (4) (13) (4)
------ ------ ------- -------
Pro forma EBIT $ 242 $ 222 $ 954 $ 945
Pro forma margin 8.1% 7.0% 8.7% 8.7%
</TABLE>
Systems Integration earnings before interest and taxes (EBIT) excluding
nonrecurring and unusual items (Pro forma EBIT) for the fourth quarter 1999 was
higher reflecting performance improvements in several areas including
information systems, postal systems, classified activities, and missile and fire
control programs. Sales declined 7 percent from the comparable 1998 period due
to volume decreases in several areas including classified activities, space
electronics, various C4I programs and electronics systems activities in the
United Kingdom. For all of 1999, Pro forma EBIT was up slightly as performance
improvements on various programs were partially offset by a $15 million THAAD
program performance penalty. The nonrecurring and unusual items in each of 1999
and 1998 related to gains associated with sales of surplus real estate.
<PAGE>
Space Systems
- -------------
$Millions
<TABLE>
<CAPTION>
4th Quarter Full Year
--------------- ------------------
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net sales $1,480 $1,707 $5,825 $7,039
EBIT $ 206 $ 204 $ 474 $ 954
Nonrecurring and
unusual items (22) 0 (21) 0
------ ------ ------ ------
Pro forma EBIT $ 184 $ 204 $ 453 $ 954
Pro forma margin 12.4% 12.0% 7.8% 13.6%
</TABLE>
Space Systems Pro forma EBIT in the fourth quarter of 1999 was lower than the
same period in 1998 primarily due to the expensing of start-up costs associated
with the EELV program and lower classified volume. Incentive fees in 1999 for a
commercial satellite successfully launched earlier in the year produced a
positive Pro forma EBIT comparison to the year-ago period in that product line.
In the fourth quarter of 1998, EBIT of approximately $50 million associated with
the restructure of a commercial satellite program was partially offset by
performance related issues. During the fourth quarter of 1999, sales decreased
13 percent due to a decline in volume in military satellites and other
classified programs as well as other activities. In the quarter, there were
launches of one Titan II and two Atlas vehicles. Proton launches were on hold
during the quarter, following a failure of a Russian government Proton launch in
October. The Proton launch vehicle has since returned to flight status. In
addition to the items mentioned for the fourth quarter, Pro forma EBIT for the
year 1999 was lower due to a positive adjustment on the Atlas II program of $120
million recorded in the third quarter of 1998, negative adjustments in 1999 of
$90 million related to a change in estimate on the Titan IV program and $30
million related to a launch vehicle cancellation, as well as reduced Fleet
Ballistic Missile activities. In 1999, the nonrecurring and unusual items
included gains associated with the sales of surplus real estate and
approximately $20 million related to a write-down of the Iridium investment.
<PAGE>
Aeronautical Systems
- --------------------
$Millions
<TABLE>
<CAPTION>
4th Quarter Full Year
--------------- ------------------
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net sales $1,519 $1,485 $5,499 $5,459
EBIT $ 96 $ 178 $ 247 $ 649
Nonrecurring and
unusual items 0 0 0 0
------ ------ ------ ------
EBIT $ 96 $ 178 $ 247 $ 649
Margin 6.3% 12.0% 4.5% 11.9%
</TABLE>
Aeronautical Systems EBIT for the fourth quarter of 1999 was lower than 1998 due
to the Corporation's decision earlier in 1999 not to record profit on C-130J
deliveries, as a result of anticipated higher costs and expected lower
production levels, until further favorable progress occurs in terms of orders
and cost. EBIT for the fourth quarter of 1999 was also impacted by fewer F-16
deliveries. Sales increased 2 percent in the 1999 period due mainly to
increased revenues on the C-130J and other aircraft programs, but were partially
offset by reduced F-16 deliveries. For the full year 1999, EBIT was lower
reflecting the effect of the $210 million reversal of previously recorded profit
on the C-130J program due to a change estimate recorded in the second quarter,
as well as the fourth quarter factors previously discussed. The Corporation has
elected to rebalance the C-130J production line by reducing production levels
over time from 16 to 8 per year.
Technology Services
- -------------------
$Millions
<TABLE>
<CAPTION>
4th Quarter Full Year
--------------- ------------------
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net sales $ 692 $ 527 $2,261 $1,935
EBIT $ 40 $ 33 $ 137 $ 135
Nonrecurring and
unusual items 0 0 0 0
------ ------ ------ ------
EBIT $ 40 $ 33 $ 137 $ 135
Margin 5.8% 6.3% 6.1% 7.0%
</TABLE>
Technology Services EBIT was higher due to a 31 percent increase in sales.
Sales for the quarter were higher due to volume on the Consolidated Space
Operations Contract as well as increased aircraft logistics and services
activities. The decline in margin was due to lower profit on certain energy-
related contracts which had a minimal impact on the sales comparison. For the
full year, Technology Services sales were up 17 percent due to the same items
discussed for the quarter.
<PAGE>
Corporate and Other
- -------------------
$Millions
<TABLE>
<CAPTION>
4th Quarter Full Year
--------------- ------------------
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net sales $ 317 $ 268 $ 991 $ 938
EBIT $ 104 ($175) $ 184 ($165)
Nonrecurring and
unusual items (67) 202 (215) 166
------ ------ ------ ------
Pro forma EBIT $ 37 $ 27 ($31) $ 1
</TABLE>
Corporate and Other sales for the fourth quarter 1999 were higher by 18 percent
due to growth in state and municipal services contracts and information
technology outsourcing services, and from the operations of Lockheed Martin
Global Telecommunications. These increases were partially offset by CalComp
sales recorded in the fourth quarter of 1998, with none in the comparable 1999
period. Operations at CalComp ceased in 1999. Pro forma EBIT for the fourth
quarter of 1999 is higher than the year-ago period primarily due to the absence
of CalComp and Real 3D operating losses as well as increased profits in
outsourcing services. Somewhat offsetting the aforementioned increases were
operating losses of $30 million in the current quarter for Lockheed Martin
Global Telecommunications. For all of 1999, the Pro forma loss in Corporate and
Other is mainly attributed to $103 million of Lockheed Martin Global
Telecommunications operating losses, partially offset by the absence of CalComp
and Real 3D operating losses as previously discussed. In 1999, the nonrecurring
and unusual items were associated with sales of L3 stock and the sale of various
non-core businesses and investments. In 1998, the nonrecurring and unusual
items included a charge associated with the shutdown of CalComp operations
partially offset by gains related to the initial public offering of L3's common
stock and sales of surplus real estate, as well other portfolio shaping actions.
1999 Achievements
-----------------
In announcing 1999 earnings, Vance Coffman, Lockheed Martin's Chairman and Chief
Executive Officer, cited additional events, program awards and Mission Success
achievements during the year with positive implications for Lockheed Martin's
outlook:
. The Corporation completed the divestitures of its holdings in L3
Communications, Real 3D, Airport Group International, and its Lockheed Martin
Hanford Corporation subsidiary.
<PAGE>
. Systems Integration: During 1999, we brought to four the number of Lockheed
Martin units that have attained the Software Engineering Institute's highest
rating for software development -- Level 5. That number represents one-third
of the companies in the world which have achieved this distinction. The THAAD
(Theater High-Altitude Area Defense) missile hit its designated target twice
in a row and earned approval to move into Engineering and Manufacturing
Development. The PAC-3 (Patriot Advanced Capability) missile hit its target
twice in a row and was subsequently approved for low-rate initial production.
The JASSM (Joint Air-to-Surface Strike Missile) achieved its first powered
flight.
. Space: The Corporation launched 5 Atlas, 5 Proton, 5 Titan and 3 Athena
launch vehicles. The Corporation's Intersputnik and Space Imaging joint
ventures successfully placed their satellites in orbit. The Lockheed Martin-
built GE-4 and Terra satellites were placed in orbit and are operational. The
U.S. Navy Trident II D5 Fleet Ballistic Missile, built by Lockheed Martin,
successfully achieved its 87th consecutive successful launch in a test
program that began in December 1989.
. Aeronautics: The Corporation delivered 109 F-16 fighter aircraft and 30 C-
130J transport aircraft. It received orders for 6 F-22 fighter aircraft, 9 C-
130J transport aircraft, and 25 F-16 fighter aircraft while being selected
for 100 additional F-16s, 12 C-27J transport aircraft and 4 C-130J aircraft.
. Technology Services: Lockheed Martin, as part of a consortium with Serco and
British Nuclear Fuels Ltd., won the contract to manage the United Kingdom's
Atomic Weapons Establishment. The total value of the contract is
approximately $3.4 billion over 10 years.
. Lockheed Martin Global Telecommunications (LMGT): LMGT signed definitive
agreements with Liberty Media Group for Liberty Media's investment of $425
million in Astrolink, a wireless broadband venture scheduled to become the
first global, satellite-based broadband service provider in 2003.
###
<PAGE>
NEWS MEDIA CONTACT: James Fetig, 301/897-6352
INVESTOR RELATIONS CONTACT: James Ryan, 301/897-6584 or
Randa Middleton, 301/897-6455
Web site: www.lmco.com
------------
NOTE: Statements in this press release, including the statements relating
to projected future financial performance, are considered forward-looking
statements under the federal securities laws, including the Private
Securities Litigation Reform Act of 1995. Sometimes these statements will
contain words such as "believes," "expects," "intends," "plans," estimates,
"outlook," "forecast, " and other similar words. These statements are not
guarantees of our future performance and are subject to risks,
uncertainties and other important factors that could cause our actual
performance or achievements to be materially different from those we may
project.
As for the forward-looking statements that relate to future financial
results and other projections, actual results will be different due to the
inherent nature of projections and may be better or worse than projected.
Given these uncertainties, you should not place any reliance on these
forward-looking statements. These forward-looking statements also represent
our estimates and assumptions only as of the date that they were made. We
expressly disclaim a duty to provide updates to these forward-looking
statements, and the estimates and assumptions associated with them, after
the date of this press release to reflect events or circumstances or
changes in expectations or the occurrence of anticipated events.
In addition to the factors set forth in our filings with the Securities and
Exchange Commission (www.sec.gov), the following factors could affect the
-----------
forward-looking statements: the ability to achieve or quantify savings for
our customers or ourselves as a result of our reorganization efforts,
including the recently announced business area streamlining and staff
reductions, or in our global cost-cutting program; our ability to grow
earnings and generate cash flow in accordance with our beliefs;
difficulties during space launches; the ability to obtain or the timing of
obtaining future government awards; the availability of government funding
and customer requirements; economic conditions, competitive environment,
international business and political conditions, timing of awards and
contracts; timing and customer acceptance of product delivery and launches;
the outcome of contingencies, including completion of any acquisitions and
divestitures, litigation and environmental remediation, program
performance, and our ability to consummate the Comsat transaction. These
are only some of the numerous factors which may affect the forward-looking
statements in this press release.
<PAGE>
LOCKHEED MARTIN CORPORATION
Consolidated Results
(In millions, except for per share data and percentages)
<TABLE>
<CAPTION>
QUARTER ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
-------------------------------- -----------------------------------
1999 1998 % Change 1999 1998 % Change
---- ---- -------- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C>
Net Sales $6,982 $7,180 (3) % $25,530 $26,266 (3)%
Earnings before Interest and Taxes $701 $466 50 % $2,009 $2,522 (20)%
Interest Expense $226 $206 10 % $809 $861 (6)%
Pre-tax Earnings $475 $260 83 % $1,200 $1,661 (28)%
Income Taxes $182 $135 35 % $463 $660 (30)%
Effective Tax Rate 38% 52% N/M 39% 40% N/M
Earnings before Cumulative Effect of
Change in Accounting $293 $125 134 % $737 $1,001 (26)%
Cumulative Effect of Change in Accounting* - - N/M (355) - N/M
Net Earnings $293 $125 134 % $382 $1,001 (62)%
Basic Earnings Per Share:
Earnings before Cumulative Effect of
Change in Accounting $0.76 $0.33 130 % $1.93 $2.66 (27)%
Cumulative Effect of Change in Accounting* - - N/M ($0.93) - N/M
-------- ----------- -------- ------------
Earnings Per Share $0.76 $0.33 130 % $1.00 $2.66 (62)%
Average Basic Shares Outstanding 384.6 378.8 382.3 376.5
Diluted Earnings Per Share:
Earnings before Cumulative Effect of
Change in Accounting $0.76 $0.33 130 % $1.92 $2.63 (27)%
Cumulative Effect of Change in Accounting* - - N/M ($0.93) - N/M
-------- ----------- -------- ------------
Earnings Per Share $0.76 $0.33 130 % $0.99 $2.63 (62)%
Average Diluted Shares Outstanding 385.2 383.0 384.1 381.1
</TABLE>
* The Corporation adopted the American Institute of Certified Public
Accountants' Statement of Position (SOP) No. 98-5, "Reporting on the Costs of
Start-Up Activities," effective January 1, 1999.
<PAGE>
LOCKHEED MARTIN CORPORATION
Segment Results Including Nonrecurring and Unusual Items
(In millions, except for percentages)
<TABLE>
<CAPTION>
QUARTER ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
---------------------------------- --------------------------------------
1999 1998 % Change 1999 1998 % Change
---- ---- -------- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C>
Systems Integration
- -------------------
Net Sales $2,974 $3,193 (7) % $10,954 $10,895 1 %
Segment EBIT $255 $226 13 % $967 $949 2 %
Margins 8.6% 7.1% 8.8% 8.7%
Amortization of Goodwill and Contract Intangibles $77 $77 $304 $304
Space Systems
- -------------
Net Sales $1,480 $1,707 (13) % $5,825 $7,039 (17)%
Segment EBIT $206 $204 1 % $474 $954 (50)%
Margins 13.9% 12.0% 8.1% 13.6%
Amortization of Goodwill and Contract Intangibles $7 $7 $29 $29
Aeronautical Systems
- --------------------
Net Sales $1,519 $1,485 2 % $5,499 $5,459 1 %
Segment EBIT $96 $178 (46) % $247 $649 (62)%
Margins 6.3% 12.0% 4.5% 11.9%
Amortization of Goodwill and Contract Intangibles $20 $20 $80 $80
Technology Services
- -------------------
Net Sales $692 $527 31 % $2,261 $1,935 17 %
Segment EBIT $40 $33 21 % $137 $135 1 %
Margins 5.8% 6.3% 6.1% 7.0%
Amortization of Goodwill and Contract Intangibles $5 $4 $18 $18
Corporate and Other*
- --------------------
Net Sales $317 $268 18 % $991 $938 6 %
Segment EBIT $104 ($175) N/M $184 ($165) N/M
Margins N/M N/M N/M N/M
Amortization of Goodwill and Contract Intangibles $8 - $9 $5
</TABLE>
* 1999 and 1998 results include the operations of commercial information
technology and state and local government services lines of business. 1999
results include the operations of LM Global Telecommunications, Inc. 1998
results include the operations of CalComp Technology, Inc., which has
executed a timely non-bankruptcy shutdown of its operations in 1999.
<PAGE>
LOCKHEED MARTIN CORPORATION
Segment Results Excluding Nonrecurring and Unusual Items
(In millions, except for percentages)
<TABLE>
<CAPTION>
QUARTER ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------------ -------------------------------------
1999 1998 % Change 1999 1998 % Change
---- ---- -------- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C>
Systems Integration
- -------------------
Net Sales $2,974 $3,193 (7) % $10,954 $10,895 1 %
Segment EBIT $242 $222 9 % $954 $945 1 %
Margins 8.1% 7.0% 8.7% 8.7%
Amortization of Goodwill and Contract Intangibles $77 $77 $304 $304
Space Systems
- -------------
Net Sales $1,480 $1,707 (13) % $5,825 $7,039 (17)%
Segment EBIT $184 $204 (10) % $453 $954 (53)%
Margins 12.4% 12.0% 7.8% 13.6%
Amortization of Goodwill and Contract Intangibles $7 $7 $29 $29
Aeronautical Systems
- --------------------
Net Sales $1,519 $1,485 2 % $5,499 $5,459 1 %
Segment EBIT $96 $178 (46) % $247 $649 (62)%
Margins 6.3% 12.0% 4.5% 11.9%
Amortization of Goodwill and Contract Intangibles $20 $20 $80 $80
Technology Services
- -------------------
Net Sales $692 $527 31 % $2,261 $1,935 17 %
Segment EBIT $40 $33 21 % $137 $135 1 %
Margins 5.8% 6.3% 6.1% 7.0%
Amortization of Goodwill and Contract Intangibles $5 $4 $18 $18
Corporate and Other*
- --------------------
Net Sales $317 $268 18 % $991 $938 6 %
Segment EBIT $37 $27 N/M ($31) $1 N/M
Margins N/M N/M N/M N/M
Amortization of Goodwill and Contract Intangibles $8 - $9 $5
</TABLE>
* 1999 and 1998 results include the operations of commercial information
technology and state and local government services lines of business. 1999
results include the operations of LM Global Telecommunications, Inc. 1998
results include the operations of CalComp Technology, Inc., which has
executed a timely non-bankruptcy shutdown of its operations in 1999.
<PAGE>
LOCKHEED MARTIN CORPORATION
Reconciliation of Pro Forma Net Earnings
(In millions, except for per share amounts and percentages)
<TABLE>
<CAPTION>
QUARTER ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------- --------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Earnings - As Reported $293 $125 $382 $1,001
After Tax Gain on L3 Disposition ($27) - ($101) ($12)
After Tax Gain on Sales of Surplus Real Estate ($21) ($23) ($37) ($23)
After Tax Charge for Calcomp Shutdown - $183 - $183
After Tax Net Gain on Divestitures and Other ($18) - ($24) ($12)
Cumulative Effect of Change in Accounting - - $355 -
---------- ---------- --------- -----------
Pro Forma Net Earnings $227 $285 $575 $1,137
Diluted Earnings Per Share - As Reported $0.76 $0.33 $0.99 $2.63
After Tax Gain on L3 Disposition ($0.07) - ($0.26) ($0.03)
After Tax Gain on Sales of Surplus Real Estate ($0.05) ($0.06) ($0.10) ($0.06)
After Tax Charge for Calcomp Shutdown - $0.48 - $0.48
After Tax Net Gain on Divestitures and Other ($0.05) - ($0.06) ($0.03)
Cumulative Effect of Change in Accounting - - $0.93 -
---------- ---------- --------- -----------
Pro Forma Diluted Earnings Per Share $0.59 $0.75 $1.50 $2.99
</TABLE>
<PAGE>
LOCKHEED MARTIN CORPORATION
Other Financial Information
(In millions, except for per share amounts and percentages)
<TABLE>
<CAPTION>
QUARTER ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------- -----------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
EBIT to Sales Margin 10.0% 6.5% 7.9% 9.6%
Amortization of Goodwill and Contract Intangibles
Resulting from Prior Acquisitions $117 $108 $440 $436
Depreciation and Amortization $147 $153 $529 $569
EBITDA $965 $727 $2,978 $3,527
<CAPTION>
DECEMBER 31, DECEMBER 31,
1999* 1998
----------------- ------------------
<S> <C> <C>
Total Backlog $45,913 $45,345
- -------------
Systems Integration $15,220 $14,025
Space Systems $14,749 $15,829
Aeronautical Systems $9,003 $10,265
Technology Services $4,399 $3,503
Corporate and Other $2,542 $1,723
Total Debt $11,954 $10,886
- ----------
Long-term (including current maturities) $11,479 $9,843
Short-term $475 $1,043
Cash and Cash Equivalents $455 $285
Stockholders' Equity $6,361 $6,137
Total Debt-to-Capital 65% 64%
Total Debt-to-Capital (net of invested cash) 64% 63%
</TABLE>
* Preliminary and Unaudited
<PAGE>
LOCKHEED MARTIN CORPORATION
Consolidated Condensed Balance Sheet
Preliminary and Unaudited
(In millions)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1999 1998
---- ----
<S> <C> <C>
Assets
Cash and cash equivalents $ 455 $ 285
Accounts Receivable 4,348 4,178
Inventories 4,051 4,293
Other current assets 1,622 1,855
------------- --------------
Total current assets 10,476 10,611
Property, plant and equipment 3,634 3,513
Goodwill and other intangible assets 10,421 10,939
Other noncurrent assets 5,268 3,681
------------- --------------
Total assets $ 29,799 $ 28,744
============= ==============
Liabilities and Stockholders' Equity
Short-term borrowings $ 475 $ 1,043
Other accrued expenses 8,485 8,338
Current portion of long-term debt 46 886
------------- --------------
Total current liabilities 9,006 10,267
Long-term debt 11,433 8,957
Post-retirement and other noncurrent liabilities 2,999 3,383
Stockholders' equity 6,361 6,137
------------- --------------
Total liabilities and stockholders' equity $ 29,799 $ 28,744
============= ==============
</TABLE>
<PAGE>
LOCKHEED MARTIN CORPORATION
Consolidated Condensed Statement of Cash Flows
Preliminary and Unaudited
(In millions)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1999 1998
----- ----
<S> <C> <C>
Operating Activities
Earnings before cumulative effect of change in accounting $ 737 $ 1,001
Adjustments to reconcile earnings to net cash
provided by operating activities:
Cumulative effect of change in accounting (355) -
Depreciation and amortization 969 1,005
Changes in operating assets and liabilities (249) 25
---------- ----------
Net cash provided by operating activities 1,102 2,031
Investing Activities
Expenditures for property, plant & equipment (669) (697)
Consummation of Comsat Tender Offer (1,203) -
Other 209 242
---------- ----------
Net cash used for investing activities (1,663) (455)
Financing Activities
Net borrowings / (repayments) 1,059 (1,021)
Common stock dividends (345) (310)
Other 17 40
---------- ----------
Net cash provided by (used for) financing activities 731 (1,291)
Net increase in cash and cash equivalents 170 285
Cash and cash equivalents at beginning of period 285 -
---------- ----------
Cash and cash equivalents at end of period $ 455 $ 285
========== ==========
</TABLE>
<PAGE>
LOCKHEED MARTIN CORPORATION
Operating Data
<TABLE>
<CAPTION>
QUARTER ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
-------------------------- ------------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Deliveries
- ----------
F-16 23 41 109 150
C-130J 12 15 30 19
Launches
- --------
Atlas 2 2 5 6
Proton - 1 5 3
Athena - - 3 1
Titan II 1 - 2 1
Titan IV - - 3 2
</TABLE>
