What changed in this filing

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Item 1. Financial Statements

2024-04-23 compared with 2023-10-17 · 154 added, 269 removed, 511 unchanged (45% of the section changed)

3 unchanged sentences

in millions, except per share data)

Quarters Ended Nine Months Ended

September 24,

2023 September 25,

2022 September 24,

2023 September 25,

Quarters Ended

2024 March 26,

Products $ 14,196 $ 12,526

7 unchanged sentences

Gross profit 1,993 2,046

Other (expense) income, net ( 6 ) 39 30 70

Other income (expense), net 36 ( 9 )

Operating profit 2,029 2,037

Interest expense ( 255 ) ( 202 )

Non-service FAS pension income (expense) 111 111 332 ( 1,080 )

Other non-operating income (expense), net 37 ( 26 ) 69 ( 64 )

Non-service FAS pension income 16 110

Other non-operating income, net 45 49

Earnings before income taxes 1,835 1,994

8 unchanged sentences

Consolidated Statements of Comprehensive Income

Quarters Ended Nine Months Ended

September 24,

2023 September 25,

2022 September 24,

2023 September 25,

Quarters Ended

2024 March 26,

Net earnings $ 1,545 $ 1,689

1 unchanged sentence

Postretirement benefit plans

Net actuarial gain recognized due to plan remeasurements, net of tax of $ 44 million and $ 505 million in 2022

— 162 — 1,860

Amortization of actuarial losses and prior service credits, net of tax of $ 10 million and $ 30 million in 2023 and $ 1 million and $ 27 million in 2022

( 37 ) ( 2 ) ( 111 ) 93

Pension settlement charge, net of tax of $ 314 million in 2022

Other, net, net of tax of $ 5 million and $ 4 million in 2023 and $ 6 million and $ 12 million in 2022

Amortization of actuarial losses and prior service credits, net of tax of $ 5 million in 2024 and $ 10 million in 2023

Other, net, net of tax of $ 0 million in 2024 and $ 4 million in 2023

( 27 ) ( 26 )

Other comprehensive income, net of tax ( 67 ) 34 ( 123 ) 2,872

Other comprehensive (loss), net of tax ( 8 ) ( 63 )

Comprehensive income $ 1,537 $ 1,626

3 unchanged sentences

(in millions, except par value)

September 24,

2024 December 31,

34 unchanged sentences

Consolidated Statements of Cash Flows

Nine Months Ended

September 24,

2023 September 25,

Quarters Ended

2024 March 26,

Operating activities

4 unchanged sentences

Deferred income taxes ( 77 ) ( 117 )

Pension settlement charge — 1,470

Changes in assets and liabilities

14 unchanged sentences

Issuance of long-term debt, net of related costs 1,980 —

Repayments of long-term debt ( 115 ) ( 2,250 )

Repurchases of common stock ( 1,000 ) ( 500 )

1 unchanged sentence

Other, net ( 115 ) ( 128 )

Net cash used for financing activities ( 3,560 ) ( 6,067 )

Net cash provided by (used for) financing activities 85 ( 1,412 )

Net change in cash and cash equivalents 1,348 ( 107 )

4 unchanged sentences

Consolidated Statements of Equity

For the Quarters Ended September 24, 2023 and September 25, 2022

Stock Additional

2 unchanged sentences

Comprehensive

Balance at June 25, 2023 $ 251 $ — $ 17,068 $ ( 8,079 ) $ 9,240

Net earnings — — 1,684 — 1,684

Other comprehensive income, net of tax — — — ( 67 ) ( 67 )

Dividends declared — — 11 — 11

Repurchases of common stock ( 4 ) ( 49 ) ( 1,697 ) — ( 1,750 )

Stock-based awards, ESOP activity and other — 156 — — 156

Balance at September 24, 2023 $ 247 $ 107 $ 17,066 $ ( 8,146 ) $ 9,274

Balance at June 26, 2022 $ 264 $ — $ 19,336 $ ( 8,168 ) $ 11,432

Net earnings — — 1,778 — 1,778

Other comprehensive income, net of tax — — — 34 34

Dividends declared — — 7 — 7

Repurchases of common stock ( 3 ) ( 148 ) ( 1,282 ) — ( 1,433 )

Stock-based awards, ESOP activity and other — 148 — — 148

Balance at September 25, 2022 $ 261 $ — $ 19,839 $ ( 8,134 ) $ 11,966

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Lockheed Martin Corporation

Consolidated Statements of Equity

For the Nine Months Ended September 24, 2023 and September 25, 2022

Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

Balance at December 31, 2023 $ 240 $ — $ 15,398 $ ( 8,803 ) $ 6,835

5 unchanged sentences

Stock-based awards, ESOP activity and other

1 356 — — 357

Balance at September 24, 2023 $ 247 $ 107 $ 17,066 $ ( 8,146 ) $ 9,274

Balance at March 31, 2024 $ 239 $ — $ 15,222 $ ( 8,811 ) $ 6,650

Balance at December 31, 2022 $ 254 $ 92 $ 16,943 $ ( 8,023 ) $ 9,266

5 unchanged sentences

Stock-based awards, ESOP activity and other

1 359 — — 360

Balance at September 25, 2022 $ 261 $ — $ 19,839 $ ( 8,134 ) $ 11,966

Balance at March 26, 2023 $ 254 $ — $ 17,478 $ ( 8,086 ) $ 9,646

The accompanying notes are an integral part of these unaudited consolidated financial statements.

19 unchanged sentences

We eliminate intercompany balances and transactions in consolidation.

Effective January 1, 2023, we no longer consider amortization expense related to purchased intangible assets when evaluating the operating performance of our business segments.

As a result, intangible asset amortization expense, which was previously included in segment operating profit, is now reported in unallocated corporate expense within total consolidated operating profit.

This change has no impact on our consolidated operating results.

Management believes this updated presentation better aligns with how the business is viewed and managed and will provide better insights into business segment performance.

This change has been applied to the amounts in this Form 10-Q, including amounts for 2022.

See “Note 3 - Information on Business Segments” for further information regarding the impact of this change on our current and prior period segment operating profit.

We close our books and records on the last Sunday of the interim calendar quarter, which was on September 24 for the third quarter of 2023 and September 25 for the third quarter of 2022 to align our financial closing with our business processes.

We close our books and records on the last Sunday of the interim calendar quarter, which was on March 31 for the first quarter of 2024 and March 26 for the first quarter of 2023, to align our financial closing with our business processes.

The consolidated financial statements and tables of financial information included herein are labeled based on that convention.

3 unchanged sentences

These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023 (2023 Form 10-K).

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

NOTE 2 - EARNINGS PER COMMON SHARE

The weighted average number of shares outstanding used to compute earnings per common share were as follows (in millions):

Quarters Ended Nine Months Ended

September 24,

2023 September 25,

2022 September 24,

2023 September 25,

Quarters Ended

2024 March 26,

Weighted average common shares outstanding for basic computations 240.7 254.7

Weighted average dilutive effect of equity awards

0.9 1.0 0.9 0.9

Weighted average common shares outstanding for diluted computations

250.2 265.1 253.1 266.9

We compute basic and diluted earnings per common share by dividing net earnings by the respective weighted average number of common shares outstanding for the periods presented.

Our calculation of diluted earnings per common share also includes the dilutive effects for the assumed vesting of outstanding restricted stock units (RSUs) and performance stock units (PSUs) based on the treasury stock method.

There were no significant anti-dilutive equity awards during the quarters and nine months ended September 24, 2023 and September 25, 2022.

There were no significant anti-dilutive equity awards during the quarters ended March 31, 2024 and March 26, 2023.

Basic and diluted weighted average common shares outstanding decreased in 2024 compared to 2023 due to share repurchases.

See “Note 9 - Stockholders’ Equity” for more information.

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

NOTE 3 - INFORMATION ON BUSINESS SEGMENTS

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Business segment operating profit includes our share of earnings or losses from equity method investees as the operating activities of the equity method investees are closely aligned with the operations of our business segments.

Summary Operating Results

As discussed in “Note 1 - Basis of Presentation”, effective January 1, 2023, we no longer consider amortization expense related to purchased intangible assets when evaluating the operating performance of our business segments.

As a result, intangible asset amortization expense, which was previously included in segment operating profit, is now reported in unallocated items within total consolidated operating profit.

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

This change has been applied to the amounts below, including the amounts for 2022.

Sales and operating profit for each of our business segments were as follows (in millions):

Quarters Ended Nine Months Ended

September 24,

2023 September 25,

2022 September 24,

2023 September 25,

Summary operating results for each of our business segments were as follows (in millions):

Quarters Ended

2024 March 26,

Aeronautics $ 6,845 $ 6,269

19 unchanged sentences

Rotary and Mission Systems 586 489

Space 97 102 275 284

Total intersegment sales $ 965 $ 774

2 unchanged sentences

Government under the applicable U.S.

Government cost accounting standards (CAS) or federal acquisition regulations (FAR), and other items not considered part of management’s evaluation of segment operating performance such as a portion of management and administration costs, legal fees and settlements, environmental costs, stock-based compensation expense, changes in the fair value of assets and liabilities for deferred compensation plans, retiree benefits, significant severance charges, significant asset impairments, gains or losses from divestitures, intangible asset amortization expense, and other miscellaneous corporate activities.

Government cost accounting standards (CAS) or federal acquisition regulations (FAR), and other items not considered part of management’s evaluation of segment operating performance such as a portion of management and administration costs, legal fees and settlements, stock-based compensation expense, changes in the fair value of assets and liabilities for deferred compensation plans, retiree benefits, significant severance charges, significant asset impairments, gains or

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

losses from divestitures, intangible asset amortization expense, and other miscellaneous corporate activities.

Excluded items are included in the reconciling item “Unallocated items” between operating profit from our business segments and our consolidated operating profit.

13 unchanged sentences

Net sales by products and services, contract type, customer, and geographic region were as follows (in millions):

Quarter Ended September 24, 2023

Aeronautics MFC RMS Space Total

Products $ 5,538 $ 2,609 $ 3,249 $ 2,618 $ 14,014

Services 1,179 330 872 483 2,864

Total net sales $ 6,717 $ 2,939 $ 4,121 $ 3,101 $ 16,878

Net sales by contract type

Fixed-price $ 4,495 $ 2,017 $ 2,602 $ 796 $ 9,910

Cost-reimbursable 2,222 922 1,519 2,305 6,968

Total net sales $ 6,717 $ 2,939 $ 4,121 $ 3,101 $ 16,878

Net sales by customer

Government $ 4,547 $ 2,061 $ 2,796 $ 3,055 $ 12,459

International (a)

2,170 875 1,254 24 4,323

commercial and other — 3 71 22 96

Total net sales $ 6,717 $ 2,939 $ 4,121 $ 3,101 $ 16,878

Net sales by geographic region

United States $ 4,547 $ 2,064 $ 2,867 $ 3,077 $ 12,555

Europe 1,190 197 269 1 1,657

Asia Pacific 693 155 601 22 1,471

Middle East 220 474 185 1 880

Other 67 49 199 — 315

Total net sales $ 6,717 $ 2,939 $ 4,121 $ 3,101 $ 16,878

Nine Months Ended September 24, 2023

Aeronautics MFC RMS Space Total

Products $ 16,339 $ 7,110 $ 9,082 $ 7,767 $ 40,298

Services 3,522 972 2,446 1,459 8,399

Total net sales $ 19,861 $ 8,082 $ 11,528 $ 9,226 $ 48,697

Net sales by contract type

Fixed-price $ 13,463 $ 5,498 $ 7,261 $ 2,359 $ 28,581

Cost-reimbursable 6,398 2,584 4,267 6,867 20,116

Total net sales $ 19,861 $ 8,082 $ 11,528 $ 9,226 $ 48,697

Net sales by customer

Government $ 13,285 $ 5,553 $ 7,973 $ 9,084 $ 35,895

International (a)

6,453 2,521 3,349 110 12,433

commercial and other 123 8 206 32 369

Total net sales $ 19,861 $ 8,082 $ 11,528 $ 9,226 $ 48,697

Net sales by geographic region

United States $ 13,408 $ 5,561 $ 8,179 $ 9,116 $ 36,264

Europe 3,466 582 706 48 4,802

Asia Pacific 2,058 472 1,593 60 4,183

Middle East 671 1,340 526 2 2,539

Other 258 127 524 — 909

Total net sales $ 19,861 $ 8,082 $ 11,528 $ 9,226 $ 48,697

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

Quarter Ended September 25, 2022

Quarters Ended March 31, 2024

Aeronautics MFC RMS Space Total

19 unchanged sentences

Total net sales $ 6,845 $ 2,993 $ 4,088 $ 3,269 $ 17,195

Nine Months Ended September 25, 2022

Quarter Ended March 26, 2023

Aeronautics MFC RMS Space Total

24 unchanged sentences

Our Aeronautics business segment includes our largest program, the F-35 Lightning II, an international multi-role, multi-variant, stealth fighter aircraft.

Net sales for the F-35 program represented approximately 26 % of our total consolidated net sales for both the quarter and nine months ended September 24, 2023 and 29 % and 27 % of our total consolidated net sales for the quarter and nine months ended September 25, 2022.

Net sales for the F-35 program represented approximately 25 % of our total consolidated net sales for the quarter ended March 31, 2024 and 26 % of our total consolidated net sales for the quarter ended March 26, 2023.

Total assets for each of our business segments were as follows (in millions):

September 24,

2024 December 31,

5 unchanged sentences

Corporate assets (a)

13,364 10,698

Total assets $ 54,963 $ 52,456

(a) Corporate assets primarily include cash and cash equivalents, deferred income taxes, assets for the portion of environmental costs that are probable of future recovery, property, plant and equipment used in our corporate operations, assets held in a trust for deferred compensation plans, and other marketable investments.

NOTE 4 - CONTRACT ASSETS AND LIABILITIES

2 unchanged sentences

Contract assets and contract liabilities were as follows (in millions):

September 24,

2024 December 31,

1 unchanged sentence

Contract liabilities 8,745 9,190

Contract assets increased $ 1.3 billion during the nine months ended September 24, 2023, due to the recognition of revenue related to the satisfaction or partial satisfaction of performance obligations during the nine months ended September 24, 2023 for which we have not yet billed our customers (primarily on the F-35 program at Aeronautics).

There were no significant credit or impairment losses related to our contract assets during the quarters and nine months ended September 24, 2023 and September 25, 2022.

Contract liabilities decreased $ 552 million during the nine months ended September 24, 2023, primarily due to revenue recognized in excess of payments received on these performance obligations.

During the quarter and nine months ended September 24, 2023, we recognized $ 916 million and $ 4.2 billion of our contract liabilities at December 31, 2022 as revenue.

During the quarter and nine months ended September 25, 2022, we recognized $ 742 million and $ 4.3 billion of our contract liabilities at December 31, 2021 as revenue.

Contract assets increased $ 867 million during the quarter ended March 31, 2024, due to the recognition of revenue related to the satisfaction or partial satisfaction of performance obligations during the quarter ended March 31, 2024 for which we have not yet billed our customers.

There were no significant credit or impairment losses related to our contract assets during the quarters ended March 31, 2024 and March 26, 2023.

Contract liabilities decreased $ 445 million during the quarter ended March 31, 2024, primarily due to revenue recognized in excess of payments received on these performance obligations.

During the quarter ended March 31, 2024, we recognized $ 2.4 billion of our contract liabilities at December 31, 2023 as revenue.

During the quarter ended March 26, 2023, we recognized $ 2.2 billion of our contract liabilities at December 31, 2022 as revenue.

Lockheed Martin Corporation

2 unchanged sentences

Inventories consisted of the following (in millions):

September 24,

2024 December 31,

7 unchanged sentences

All other pre-contract costs, including start-up costs, are expensed as incurred.

As of September 24, 2023 and December 31, 2022, $ 955 million and $ 791 million of pre-contract costs were included in inventories.

The increase in pre-contract costs as of September 24, 2023 is primarily driven by our Aeronautics business segment (primarily F-35 program and classified contracts).

As of March 31, 2024 and December 31, 2023, $ 1.1 billion and $ 989 million of pre-contract costs (primarily the F-35 program and classified contracts at our Aeronautics business segment) were included in inventories.

Lockheed Martin Corporation

1 unchanged sentence

NOTE 6 - POSTRETIREMENT BENEFIT PLANS

FAS income (expense)

The pretax FAS income (expense) related to our qualified defined benefit pension plans and retiree medical and life insurance plans consisted of the following (in millions):

Quarters Ended Nine Months Ended

September 24,

2023 September 25,

2022 September 24,

2023 September 25,

The pretax FAS income related to our qualified defined benefit pension plans and retiree medical and life insurance plans consisted of the following (in millions):

Quarters Ended

2024 March 26,

Qualified defined benefit pension plans

5 unchanged sentences

Amortization of prior service credits 37 87

Pension settlement charge — — — ( 1,470 )

Non-service FAS pension income (expense) 111 111 332 ( 1,080 )

Total FAS pension income (expense) $ 94 $ 91 $ 283 $ ( 1,148 )

Non-service FAS pension income 16 110

Total FAS pension income $ 1 $ 94

Retiree medical and life insurance plans

7 unchanged sentences

Total FAS retiree medical and life income $ 18 $ 13

We record the service cost component of FAS income (expense) for our qualified defined benefit pension plans and retiree medical and life insurance plans in the cost of sales accounts;

the non-service components of our FAS income (expense) for our qualified defined benefit pension plans in the non-service FAS pension income (expense) account;

and the non-service components of our FAS income (expense) for our retiree medical and life insurance plans as part of the other non-operating income (expense), net account on our consolidated statements of earnings.

The amortization of net actuarial losses or gains and prior service credits or costs in the table above, along with similar costs related to our other postretirement benefit plans ($ 3 million and $ 10 million for the quarter and nine months ended September 24, 2023 and $ 30 million and $ 41 million for the quarter and nine months ended September 25, 2022) were reclassified from accumulated other comprehensive loss (AOCL) and recorded as a component of FAS income (expense) for the periods presented.

These costs totaled $( 47 ) million ($( 37 ) million, net of tax) and $( 141 ) million ($( 111 ) million, net of tax) during the quarter and nine months ended September 24, 2023, and $( 3 ) million ($( 2 ) million, net of tax) and $ 120 million ($ 93 million, net of tax) during the quarter and nine months ended September 25, 2022.

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

Purchase of Group Annuity Contracts and Pension Remeasurement

The nine months ended September 25, 2022 reflect a noncash, non-operating pension settlement charge of $ 1.5 billion ($ 1.2 billion, or $ 4.33 per share, after-tax) recognized in connection with the transfer of $ 4.3 billion of our gross defined benefit pension obligations and related plan assets to an insurance company on June 24, 2022.

We record the service cost component of FAS income for our qualified defined benefit pension plans and retiree medical and life insurance plans in the cost of sales accounts;

the non-service components of our FAS income for our qualified defined benefit pension plans in the non-service FAS pension income account;

and the non-service components of our FAS income for our retiree medical and life insurance plans as part of the other non-operating income, net account on our consolidated statements of earnings.

The amortization of net actuarial losses or gains and prior service credits or costs in the table above, along with similar costs related to our other postretirement benefit plans ($ 4 million for the quarter ended March 31, 2024 and $ 3 million for the quarter ended March 26, 2023) were reclassified from accumulated other comprehensive loss (AOCL) and recorded as a component of FAS income for the periods presented.

These costs totaled $ 24 million, ($ 19 million, net of tax) during the quarter ended March 31, 2024, and $( 47 ) million ($( 37 ) million, net of tax) during the quarter ended March 26, 2023.

Funding Requirements

The required funding of our qualified defined benefit pension plans is determined in accordance with the Employee Retirement Income Security Act of 1974 (ERISA), as amended, along with consideration of CAS and Internal Revenue Code rules.

We made no contributions to our qualified defined benefit pension plans during the quarters and nine months ended September 24, 2023 and September 25, 2022.

We made no contributions to our qualified defined benefit pension plans during the quarters ended March 31, 2024 and March 26, 2023.

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

NOTE 7 - LEGAL PROCEEDINGS AND CONTINGENCIES

23 unchanged sentences

Government also alleges that Derco’s claims to SSSI, SSSI’s claims to the Navy, and SSSI’s yearly Certificates of Final Indirect Costs from 2006 through 2012 were false and that SSSI submitted inaccurate cost or pricing data in violation of the Truth in Negotiations Act for a sole-sourced, follow-on “bridge” contract.

Government’s complaints assert

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

common law claims for breach of contract and unjust enrichment.

Government’s complaints assert common law claims for breach of contract and unjust enrichment.

On November 29, 2021, the District Court granted the U.S.

Government’s motion for partial summary judgment, finding that the Derco-SSSI agreement was a CPPC contract.

On October 17, 2023, the District Court ruled on the parties’ cross motions for summary judgment, granting some motions and denying others.

Trial on the U.S.

Government’s remaining claims is scheduled for May 6, 2024.

We believe that we have legal and factual defenses to the U.S.

4 unchanged sentences

Government prevails on the remaining issues in this matter and proves damages at or near $ 52 million and is successful in having such damages trebled, the outcome could have an adverse effect on our results of operations in the period in which a liability is recognized and on our cash flows for the period in which any damages are paid.

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

Lockheed Martin v.

23 unchanged sentences

Government contracts, in our cost of sales at the time the liability is established or adjusted.

At September 24, 2023 and December 31, 2022, the aggregate amount of liabilities recorded relative to environmental matters was $ 690 million and $ 696 million, most of which are recorded in other noncurrent liabilities on our consolidated balance sheets.

We have recorded assets for the portion of environmental costs that are probable of future recovery totaling $ 613 million and $ 618 million at September 24, 2023 and December 31, 2022, most of which are recorded in other noncurrent assets on our consolidated balance sheets.

At March 31, 2024 and December 31, 2023, the aggregate amount of liabilities recorded relative to environmental matters was $ 677 million and $ 680 million, most of which are recorded in other noncurrent liabilities on our consolidated balance sheets.

We have recorded assets for the portion of environmental costs that are probable of future recovery totaling $ 611 million and $ 613 million at March 31, 2024 and December 31, 2023, most of which are recorded in other noncurrent assets on our consolidated balance sheets.

Environmental remediation activities usually span many years, which makes estimating liabilities a matter of judgment because of uncertainties with respect to assessing the extent of the contamination as well as such factors as changing remediation technologies and changing regulatory environmental standards.

1 unchanged sentence

We perform quarterly reviews of the status of our environmental remediation sites and the related liabilities and receivables.

Additionally, in our quarterly reviews, we consider these and other factors in estimating the timing and amount of any future costs that may be required

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

for remediation activities, and we record a liability when it is probable that a loss has occurred or will occur for a particular site and the loss can be reasonably estimated.

Additionally, in our quarterly reviews, we consider these and other factors in estimating the timing and amount of any future costs that may be required for remediation activities, and we record a liability when it is probable that a loss has occurred or will occur for a particular site and the loss can be reasonably estimated.

The amount of liability recorded is based on our estimate of the costs to be incurred for remediation for that site.

3 unchanged sentences

We also pursue claims for recovery of costs incurred or for contribution to site remediation costs against other PRPs, including the U.S.

Government, and are conducting remediation activities under various consent decrees, orders, and agreements relating to soil, groundwater, sediment, or surface water contamination at certain sites of former or current operations.

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

Under agreements related to certain sites in California, New York, United States Virgin Islands and Washington, the U.S.

Government and/or a private party reimburses us an amount equal to a percentage, specific to each site, of expenditures for certain remediation activities in their capacity as PRPs under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA).

In addition to the proceedings and potential proceedings discussed above, potential new regulations of perchlorate and hexavalent chromium at the federal and state level could adversely affect us.

In particular, the U.S.

Environmental Protection Agency (EPA) is considering whether to regulate hexavalent chromium at the federal level, and as a result of a court decision, must regulate perchlorate at the federal level.

The California State Water Resources Control Board (SWRCB) continues to reevaluate its existing drinking water standard of 6 parts per billion (ppb) for perchlorate.

The California SWRCB has also proposed to regulate hexavalent chromium at 10 ppb, which we currently do not expect would materially increase our cleanup costs in California.

If substantially lower standards are adopted for perchlorate or for hexavalent chromium, we expect a material increase in our estimates for environmental liabilities and the related assets for the portion of the increased costs that are probable of future recovery in the pricing of our products and services for the U.S.

In addition to the proceedings and potential proceedings discussed above, potential new regulations concerning perchlorate and hexavalent chromium at the federal and state level could increase our cleanup costs.

If substantially lower cleanup standards are adopted for perchlorate or for hexavalent chromium, we expect a material increase in both our estimates for environmental liabilities and the related assets for the portion of costs that are probable of future recovery.

The amount that would be allocable to our non-U.S.

1 unchanged sentence

Government contracts would be expensed, which may have a material effect on our earnings in any particular interim reporting period.

We also are evaluating the potential impact of existing and contemplated legal requirements addressing a class of chemicals known generally as per- and polyfluoroalkyl substances (PFAS).

PFAS have been used ubiquitously, such as in fire-fighting foams, manufacturing processes, and stain- and stick-resistant products (e.g., Teflon, stain-resistant fabrics).

Because we have used products and processes over the years containing some of those compounds, they likely exist as contaminants at many of our environmental remediation sites.

Governmental authorities have announced plans, and in some instances have begun, to regulate certain of these compounds at extremely low concentrations in drinking water, which could lead to increased cleanup costs at many of our environmental remediation sites.

We also are evaluating the potential impact of new, existing, and contemplated requirements addressing a class of chemicals known generally as per- and polyfluoroalkyl substances (PFAS).

PFAS are common and appear in products such as fire-fighting foams and stain- and stick-resistant products (e.g., Teflon, stain-resistant fabrics) and have been used in manufacturing processes.

Regulations requiring very low PFAS contaminant levels in drinking water could eventually lead to increased cleanup costs at a number of our environmental remediation sites.

Letters of Credit, Surety Bonds and Third-Party Guarantees

1 unchanged sentence

Letters of credit and surety bonds generally are available for draw down in the event we do not perform.

We had total outstanding letters of credit and surety bonds aggregating $ 2.9 billion at both September 24, 2023 and December 31, 2022.

We had total outstanding letters of credit and surety bonds aggregating $ 2.7 billion and $ 2.9 billion at March 31, 2024 and December 31, 2023.

Additionally, we may guarantee the contractual performance of third parties such as joint venture partners.

At September 24, 2023 and December 31, 2022, third-party guarantees totaled $ 962 million and $ 904 million, of which approximately 73 % and 71 % related to guarantees of contractual performance of joint ventures to which we currently are or previously were a party.

At March 31, 2024 and December 31, 2023, third-party guarantees totaled $ 364 million and $ 1.0 billion, of which approximately 29 % and 75 % related to guarantees of contractual performance of joint ventures to which we currently are or previously were a party.

These amounts represent our estimate of the maximum amounts we would expect to incur upon the contractual non-performance of the joint venture, joint venture partners or divested businesses.

2 unchanged sentences

In determining our exposures, we evaluate the reputation, performance on contractual obligations, technical capabilities and credit quality of our current and former joint venture partners and the transferee under novation agreements all of which include a guarantee as required by the FAR.

At September 24, 2023 and December 31, 2022,

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

there were no material amounts recorded in our financial statements related to third-party guarantees or novation agreements.

At March 31, 2024 and December 31, 2023, there were no material amounts recorded in our financial statements related to third-party guarantees or novation agreements.

Other Contingencies

11 unchanged sentences

We record estimated warranty costs in the period in which the related products are delivered.

The warranty liability is generally based on the number of months of warranty coverage remaining for the products delivered and the average historical monthly warranty payments.

The warranty liability is generally based on the number of months of warranty coverage remaining for the products delivered and the average historical

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

monthly warranty payments.

Warranty obligations incurred in connection with long-term production contracts are accounted for within the contract estimates at completion.

1 unchanged sentence

Assets and liabilities measured and recorded at fair value on a recurring basis consisted of the following (in millions):

September 24, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3

16 unchanged sentences

We designate foreign currency hedges as cash flow hedges.

We also are exposed to the

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

impact of interest rate changes primarily through our borrowing activities.

We also are exposed to the impact of interest rate changes primarily through our borrowing activities.

For fixed rate borrowings, we may use variable interest rate swaps, effectively converting fixed rate borrowings to variable rate borrowings in order to hedge changes in the fair value of the debt.

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We also may enter into derivative instruments that are not designated as hedges and do not qualify for hedge accounting, which are intended to minimize certain economic exposures.

The aggregate notional amount of our outstanding interest rate swaps was $ 1.3 billion at both September 24, 2023 and December 31, 2022.

The aggregate notional amount of our outstanding foreign currency hedges was $ 6.6 billion and $ 7.3 billion at September 24, 2023 and December 31, 2022.

The fair values of our outstanding interest rate swaps and foreign currency hedges at September 24, 2023 and December 31, 2022 were not significant.

Derivative instruments did not have a material impact on net earnings and comprehensive income during the quarters and nine months ended September 24, 2023 and September 25, 2022.

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

The aggregate notional amount of our outstanding interest rate swaps was $ 1.3 billion at both March 31, 2024 and December 31, 2023.

The aggregate notional amount of our outstanding foreign currency hedges was $ 6.2 billion and $ 6.5 billion at March 31, 2024 and December 31, 2023.

The fair values of our outstanding interest rate swaps and foreign currency hedges at March 31, 2024 and December 31, 2023 were not significant.

Derivative instruments did not have a material impact on net earnings and comprehensive income during the quarters ended March 31, 2024 and March 26, 2023.

The impact of derivative instruments on our consolidated statements of cash flows is included in net cash provided by operating activities.

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The carrying amounts for cash and cash equivalents, receivables and accounts payable approximated their fair values.

The estimated fair value of our outstanding debt was $ 17.1 billion and $ 16.0 billion at September 24, 2023 and December 31, 2022.

The outstanding principal amount of debt, including short-term and long-term debt, was $ 18.7 billion and $ 16.8 billion at September 24, 2023 and December 31, 2022, excluding $ 1.3 billion of unamortized discounts and issuance costs at both September 24, 2023 and December 31, 2022.

The estimated fair value of our outstanding debt was $ 19.9 billion and $ 18.5 billion at March 31, 2024 and December 31, 2023.

The outstanding principal amount of debt, including short-term and long-term debt, was $ 20.7 billion and $ 18.7 billion at March 31, 2024 and December 31, 2023, excluding $ 1.3 billion of unamortized discounts and issuance costs at both March 31, 2024 and December 31, 2023.

The estimated fair values of our outstanding debt were determined based on the present value of future cash flows using model-derived valuations that use observable inputs such as interest rates and credit spreads (Level 2).

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Repurchases of Common Stock

During the nine months ended September 24, 2023, we repurchased 6.7 million shares of our common stock for $ 3.0 billion pursuant to accelerated share repurchase (ASR) agreements and open market purchases.

We also retired an additional 1.5 million shares received for no additional consideration in the first quarter of 2023 upon final settlement of an ASR agreement executed in the fourth quarter of 2022.

The total remaining authorization for future common stock repurchases under our share repurchase program was $ 7.0 billion as of September 24, 2023.

In October 2023, subsequent to our third quarter, our Board of Directors authorized an increase of $ 6.0 billion to our share repurchase program, increasing our total authorization of the current program to $ 13 billion for future purchases.

During the quarter ended March 31, 2024, we repurchased 2.3 million shares of our common stock for $ 1.0 billion in open market purchases.

The total remaining authorization for future common stock repurchases under our share repurchase program was $ 9.0 billion as of March 31, 2024.

As we repurchase our common shares, we reduce common stock for the $ 1 of par value of the shares repurchased, with the excess purchase price over par value recorded as a reduction of additional paid-in capital.

If additional paid-in capital is reduced to zero, we record the remainder of the excess purchase price over par value as a reduction of retained earnings.

We declared cash dividends totaling $ 2.3 billion ($ 9.00 per share) and $ 2.2 billion ($ 8.40 per share) during the nine months ended September 24, 2023 and September 25, 2022.

On October 6, 2023, subsequent to our third quarter, we authorized a fourth quarter 2023 dividend payment of $ 3.15 per share, an increase of $ 0.15 per share over our third quarter 2023 dividend of $ 3.00 per share, which we declared in the second quarter of 2023.

We declared cash dividends totaling $ 763 million ($ 3.15 per share) during the quarter ended March 31, 2024.

The total amount of dividends declared may differ from the total amount of dividends paid during a period due to the timing of dividend-equivalents paid on RSUs and PSUs.

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Amounts reclassified from AOCL

Amortization of net actuarial losses (b)

Amortization of net prior service credits (b)

Amortization of net actuarial losses (a)

Amortization of net prior service credits (a)

( 28 ) — ( 28 )

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Total reclassified from AOCL 19 14 33

Total other comprehensive (loss) income ( 111 ) ( 12 ) ( 123 )

Balance at September 24, 2023 $ ( 7,977 ) $ ( 169 ) $ ( 8,146 )

Total other comprehensive income (loss) 19 ( 27 ) ( 8 )

Balance at March 31, 2024 $ ( 8,685 ) $ ( 126 ) $ ( 8,811 )

Balance at December 31, 2022 $ ( 7,866 ) $ ( 157 ) $ ( 8,023 )

Other comprehensive income (loss) before reclassifications (a)

1,860 ( 254 ) 1,606

Other comprehensive income (loss) before reclassifications — ( 29 ) ( 29 )

Amounts reclassified from AOCL

Pension settlement charge (a)

1,156 — 1,156

Amortization of net actuarial losses (b)

Amortization of net prior service credits (b)

Amortization of net actuarial losses (a)

Amortization of net prior service credits (a)

( 66 ) — ( 66 )

Other — 17 17

Total reclassified from AOCL ( 37 ) 3 ( 34 )

Total other comprehensive income (loss) ( 37 ) ( 26 ) ( 63 )

Balance at September 25, 2022 $ ( 7,855 ) $ ( 279 ) $ ( 8,134 )

(a) Changes in AOCL before reclassifications related to our postretirement benefit plans represent the net actuarial gains from the interim remeasurement of certain defined benefit pension plans required as a result of the purchase of group annuity contracts to transfer $ 4.3 billion of our gross defined benefit pension obligations and related plan assets to an insurance company on June 24, 2022.

See “Note 6 - Postretirement Benefit Plans.” Also as a result, during the quarter ended June 26, 2022, we recognized a noncash, non-operating pension settlement charge of $ 1.5 billion ($ 1.2 billion, or $ 4.33 per share, after-tax).

(b) These amounts include $( 37 ) million and $( 2 ) million, net of tax, for the quarters ended September 24, 2023 and September 25, 2022, which are comprised of the amortization of net actuarial losses of $ 30 million and $ 65 million for the quarters ended September 24, 2023 and September 25, 2022, and net prior service credits of $ 67 million in both the quarters ended September 24, 2023 and September 25, 2022.

Balance at March 26, 2023 $ ( 7,903 ) $ ( 183 ) $ ( 8,086 )

(a) Reclassifications from AOCL related to postretirement benefit plans were recorded as a component of FAS income for each period presented.

See “Note 6 - Postretirement Benefit Plans”.

NOTE 10 - OTHER

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Profit booking rates may increase during the performance of the contract if we successfully retire risks related to technical, schedule and cost aspects of the contract, which decreases the estimated total costs to complete the contract or may increase the variable consideration we expect to receive on the contract.

Conversely, our profit booking rates may decrease if the

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

estimated total costs to complete the contract increase or our estimates of variable consideration we expect to receive decrease.

Conversely, our profit booking rates may decrease if the estimated total costs to complete the contract increase or our estimates of variable consideration we expect to receive decrease.

All of the estimates are subject to change during the performance of the contract and may affect the profit booking rate.

When estimates of total costs to be incurred on a contract exceed total estimates of the transaction price, a provision for the entire loss is determined at the contract level and is recorded in the period in which the loss is evident, which we refer to as a reach-forward loss.

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

Comparability of our segment sales, operating profit and operating margin may be impacted favorably or unfavorably by changes in profit booking rates on our contracts.

Increases in the profit booking rates, typically referred to as favorable profit adjustments, usually relate to revisions in the estimated total costs to fulfill the performance obligations that reflect improved conditions on a particular contract.

Conversely, conditions on a particular contract may deteriorate, resulting in an increase in the estimated total costs to fulfill the performance obligations and a reduction in the profit booking rate and are typically referred to as unfavorable profit adjustments.

Increases or decreases in profit booking rates are recognized in the period they are determined and reflect the inception-to-date effect of such changes.

Segment operating profit and margin may also be impacted favorably or unfavorably by other items, which may or may not impact sales.

Favorable items may include the positive resolution of contractual matters, cost recoveries on severance and restructuring, insurance recoveries and gains on sales of assets.

Unfavorable items may include the adverse resolution of contractual matters;

Increases in the profit booking rates, typically referred to as favorable profit booking rate adjustments, usually relate to revisions in the estimated total costs to fulfill the performance obligations that reflect improved conditions on a particular contract.

Increases or decreases in profit booking rates are recognized in the current period they are determined and reflect the inception-to-date effect of such changes.

Segment operating profit and margin can be impacted favorably or unfavorably by, for example, certain items listed below, which may or may not impact sales.

Favorable items include the positive resolution of contractual matters, cost recoveries on severance and restructuring, insurance recoveries and gains on sales of assets.

Unfavorable items include the adverse resolution of contractual matters;

supply chain disruptions;

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and losses on sales of certain assets.

Our consolidated net profit booking rate adjustments increased sales by $ 231 million and $ 1.0 billion during the quarter and nine months ended September 24, 2023, and $ 515 million and $ 1.4 billion during the quarter and nine months ended September 25, 2022.

These adjustments increased segment operating profit by approximately $ 335 million ($ 265 million, or $ 1.06 per share, after tax) and $ 1.1 billion ($ 881 million, or $ 3.48 per share, after tax) during the quarter and nine months ended September 24, 2023, and $ 455 million ($ 359 million, or $ 1.35 per share, after tax) and $ 1.3 billion ($ 1.0 billion, or $ 3.89 per share, after tax) during the quarter and nine months ended September 25, 2022.

Our consolidated net profit booking rate adjustments increased sales by $ 272 million during the quarter ended March 31, 2024 and $ 433 million during the quarter ended March 26, 2023.

These adjustments increased segment operating profit by approximately $ 195 million ($ 154 million, or $ 0.64 per share, after tax) during the quarter ended March 31, 2024, and $ 415 million ($ 328 million, or $ 1.28 per share, after tax) during the quarter ended March 26, 2023.

The impact to 2024 segment operating profit includes a reach-forward loss of $ 100 million recognized on a classified program at our MFC business segment described below.

We have various development programs for new and upgraded products, services, and related technologies which have complex design and technical challenges.

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We have experienced performance issues on a classified fixed-price incentive fee contract that involves highly complex design and systems integration at our Aeronautics business segment and have periodically recognized reach-forward losses.

As of September 24, 2023, cumulative losses remained at approximately $ 270 million.

As of March 31, 2024, we recognized additional losses of $ 20 million related to technical challenges that have resulted in schedule delays and higher than anticipated costs bringing cumulative losses to approximately $ 290 million.

We will continue to monitor the technical requirements and our performance, the remaining work and any future changes in scope or schedule, and estimated costs to complete the program and may have to record additional losses in future periods if we experience further performance issues, increases in scope, or cost growth, which could be material to our financial results.

In addition, we and our industry team will incur advanced procurement costs (also referred to as pre-contract costs) in order to enhance our ability to achieve the schedule and certain milestones.

In addition, we and our industry team will continue to incur advanced procurement costs (also referred to as pre-contract costs) in order to enhance our ability to achieve the schedule and certain milestones.

We will monitor the recoverability of pre-contract costs, which could be impacted by the customer’s decision regarding future phases of the program.

We are responsible for a program to design, develop and construct a ground-based radar at our RMS business segment.

The program previously experienced performance issues for which we have periodically recognized reach-forward losses.

During the first quarter of 2024, we delivered and the customer accepted the radar, which retired the

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

We are responsible for a program to design, develop and construct a ground-based radar at our RMS business segment.

The program has experienced performance issues for which we have periodically recognized reach-forward losses.

As of September 24, 2023, cumulative losses remained at approximately $ 280 million.

We will continue to monitor our performance, any future changes in scope, and estimated costs to complete the program and may have to record additional losses in future periods if we experience further performance issues, increases in scope, or cost growth.

However, based on the losses previously recorded and our current estimate of the sales and costs to complete the program, at this time we do not anticipate that additional losses, if any, would be material to our financial results or financial condition.

technical risk on the production scope at less than anticipated cost.

As a result, we reduced the cumulative losses on the program by $ 20 million to approximately $ 260 million as of March 31, 2024 and determined that additional losses will not be incurred as the production scope of work is winding down.

We have contracted with the Canadian Government for the Canadian Maritime Helicopter Program (CMHP) at our RMS business segment that provides for design, development, and production of CH-148 aircraft (the Original Equipment contract), which is a military variant of the S-92 helicopter, and for logistical support to the fleet (the In Service Support contract) over an extended time period.

We are currently in discussions with the Canadian Government to potentially restructure certain contractual terms and conditions that may be beneficial to both parties.

The program has experienced performance issues, including delays in the final aircraft deliveries from the original contract requirement, and the Royal Canadian Air Force’s flight hours have been significantly less than originally anticipated, which has impacted program revenues and the recovery of our costs under this program.

We have incurred significant costs and recognized the related sales, of which about $ 970 million are currently included in contract assets on the balance sheet which could become at risk for future recovery.

Such assets are recovered based on flight hours.

Future sales and recovery of costs under the program are highly dependent upon achieving a certain number of flight hours, which are not entirely in our control and dependent on aircraft availability and performance, the availability of Canadian government resources, and potential restructured contract terms and conditions to better align with the current needs of the Canadian government and allow for cost recovery.

As of March 31, 2024, cumulative losses remained at approximately $ 100 million.

Future performance issues, lower than forecast flight hours, or changes in our estimates due to the outcome of any restructuring discussions may further affect our ability to recover our costs, including recovery of the contract assets recognized on the balance sheet and our assessment of the reach-forward loss, which could be material to our operating results.

We also have a number of contracts with Türkish industry for the Türkish Utility Helicopter Program (TUHP), which anticipates co-production with Türkish industry for production of T70 helicopters for use in Türkiye, as well as the related provision of Türkish goods and services under buy-back or offset obligations, to include the future sales of helicopters built in Türkiye for sale globally.

In 2020, the U.S.

Government imposed certain sanctions on Türkish entities and persons that have affected our ability to perform under the TUHP contracts and we have provided force majeure notices under the affected contracts.

As of March 31, 2024, cumulative losses related to development work for the program remained insignificant and the program remains in a contract liability position on the balance sheet.

The TUHP contracts may be negotiated to be restructured or terminated, either in whole or in part and as a result, we could be at risk of recording significant reach-forward losses in future periods.

Additionally, we could elect to pursue other relief or remedies, which could result in a further reduction in sales, the imposition of penalties or assessment of damages, and increased unrecoverable costs, which could be material to our financial results.

Our MFC business segment was previously awarded a competitively bid classified contract, which includes a cost-reimbursable base contract for the initial phase of the program and multiple fixed price options for additional phases.

The options for additional phases may be exercised over the next several years and if performed we expect they would each be at a loss.

During the first quarter of 2024, we updated our assessment of the likelihood that the options may be exercised and concluded it was probable that an option would be exercised based on progress made on the program and discussions with the customer.

Accordingly, in the first quarter of 2024 we recognized a reach forward loss of approximately $ 100 million, bringing the cumulative losses recognized on the program to approximately $ 150 million, including charges for precontract costs recognized in prior periods.

We will continue to assess the likelihood that additional options will be exercised, utilizing factors such as our performance, future requirements of the program, discussions with the customer and suppliers, customer funding, experience with other customer programs, among other factors.

We will be required to recognize additional losses for the remaining options if they become probable of being exercised.

The potential total loss across the additional options is up to approximately $ 1.3 billion.

The ultimate amount of additional loss recognized, if any, will depend on how many of the additional options are exercised or become probable of being exercised.

Backlog (i.e., unfulfilled or remaining performance obligations) represents the sales we expect to recognize for our products and services for which control has not yet transferred to the customer.

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The estimated consideration is determined at the outset of the contract and is continuously reviewed throughout the contract period.

In determining the estimated consideration, we consider the risks related to the technical, schedule and cost impacts to complete the contract and an estimate of any variable consideration.

In determining the estimated consideration, we consider the risks related to the technical, schedule and cost

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

impacts to complete the contract and an estimate of any variable consideration.

Periodically, we review these risks and may increase or decrease backlog accordingly.

As the risks on such contracts are successfully retired, the estimated consideration from customers may be reduced, resulting in a reduction of backlog without a corresponding recognition of sales.

As of September 24, 2023, our ending backlog was $ 156.0 billion.

As of March 31, 2024, our ending backlog was $ 159.4 billion.

We expect to recognize approximately 38 % of our backlog over the next 12 months and approximately 62 % over the next 24 months as revenue with the remainder recognized thereafter.

Our effective income tax rates were 13.8 % and 15.1 % for the quarter and nine months ended September 24, 2023 and 15.3 % and 14.9 % for the quarter and nine months ended September 25, 2022.

The rate for the third quarter of 2023 was lower than the third quarter of 2022 primarily due to additional research and development tax credits for prior years.

The rates for all periods benefited from research and development tax credits, tax deductions for foreign derived intangible income and dividends paid to our defined contribution plans with an employee stock ownership plan feature.

As of December 31, 2022, our liabilities associated with uncertain tax positions were $ 1.6 billion.

For the nine months ended September 24, 2023, our liabilities associated with uncertain tax positions increased to $ 2.3 billion with a corresponding increase to net deferred tax assets primarily resulting from the Tax Cuts and Jobs Act of 2017’s elimination of the option for taxpayers to deduct research and development expenditures immediately in the year incurred and instead requiring taxpayers to amortize such expenditures over five years.

Our effective income tax rates were 15.8 % and 15.3 % for the quarters ended March 31, 2024 and March 26, 2023.

The rates for all periods benefited from research and development tax credits, tax deductions for foreign derived intangible income, dividends paid to our defined contribution plans with an employee stock ownership plan feature and employee equity awards.

We make investments in companies that we believe are advancing or developing new technologies applicable to our business.

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Most of these investments are in equity securities without readily determinable fair values (privately held securities), which are measured initially at cost and are then adjusted to fair value only if there is an observable price change or reduced for impairment, if applicable.

The carrying amounts of the investments were $ 602 million and $ 589 million at September 24, 2023 and December 31, 2022.

Due to changes in fair value and/or sales of investments, we recorded net losses of $ 13 million ($ 10 million, or $ 0.04 per share, after tax) and $ 24 million ($ 18 million, or $ 0.07 per share, after-tax) during the quarter and nine months ended September 24, 2023 and net losses of $ 26 million ($ 20 million, or $ 0.07 per share, after-tax) and $ 66 million ($ 50 million, or $ 0.19 per share, after-tax) during the quarter and nine months ended September 25, 2022 .

These losses are reflected in the other non-operating income (expense), net account on our consolidated statements of earnings.

The carrying amounts of the investments were $ 597 million and $ 581 million at March 31, 2024 and December 31, 2023.

Due to changes in fair value and/or sales of investments, we recorded net gains of $ 5 million ($ 4 million, or $ 0.02 per share, after-tax) during the quarter ended March 31, 2024 and net gains of $ 29 million ($ 22 million, or $ 0.09 per share, after-tax) during the quarter ended March 26, 2023.

These gains are reflected in the other non-operating income, net account on our consolidated statements of earnings.

Debt Issuance

On May 25, 2023, we issued a total of $ 2.0 billion of senior unsecured notes, consisting of $ 500 million aggregate principal amount of 4.45 % Notes due May 15, 2028 (the “2028 Notes”), $ 850 million aggregate principal amount of 4.75 % Notes due February 15, 2034 (the “2034 Notes”) and $ 650 million aggregate principal amount of 5.20 % Notes due

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

February 15, 2055 (the “2055 Notes” and, together with the 2028 Notes and 2034 Notes, the “Notes”) in a registered public offering.

Net proceeds of $ 1,975 million were received from the offering after deducting pricing discounts and debt issuance costs, which are being amortized and recorded as interest expense over the term of the Notes.

On January 29, 2024, we issued a total of $ 2.0 billion of senior unsecured notes, consisting of $ 650 million aggregate principal amount of 4.50 % Notes due 2029 (the “2029 Notes”), $ 600 million aggregate principal amount of 4.80 % Notes due 2034 (the “2034 Notes”) and $ 750 million aggregate principal amount of 5.20 % Notes due 2064 (the “2064 Notes” and, together with the 2029 Notes and 2034 Notes, the “Notes”).

Net proceeds of $ 1.98 billion were received from the offering after deducting pricing discounts and debt issuance costs, which are being amortized and recorded as interest expense over the term of the Notes.

We will pay interest on the Notes semi-annually in arrears on February 15 and August 15 of each year with the first payment to be made on August 15, 2024.

We may, at our option, redeem the Notes of any series in whole or in part at any time and from time to time at a redemption price equal to the greater of 100 % of the principal amount of the Notes to be redeemed or an applicable make-whole amount, plus accrued and unpaid interest to the date of redemption.

The Notes rank equally in right of payment with all of our existing unsecured and unsubordinated indebtedness.

Revolving Credit Facility

At September 24, 2023, we had a $ 3.0 billion Revolving Credit Facility with various banks, with the option to increase the commitments under the Revolving Credit Facility by an additional amount of up to $ 500 million (for an aggregate amount of up to $ 3.5 billion).

Effective August 24, 2023, we extended the expiration date of the Revolving Credit Agreement from August 24, 2027 to August 24, 2028.

The Revolving Credit Agreement is available for any of our lawful corporate purposes, including supporting commercial paper borrowings.

Borrowings under the Revolving Credit Agreement are unsecured and bear interest at rates set forth in the Revolving Credit Agreement.

The Revolving Credit Agreement contains customary representations, warranties and covenants, including covenants restricting ours and certain of our subsidiaries’ ability to encumber assets and our ability to merge or consolidate with another entity.

There were no borrowings under the Revolving Credit Agreement at September 24, 2023.

Report of Independent Registered Public Accounting Firm

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Results of Review of Interim Financial Statements

We have reviewed the accompanying consolidated balance sheet of Lockheed Martin Corporation (the Company) as of September 24, 2023 , the related consolidated statements of earnings, comprehensive income and equity for the quarters and nine months ended September 24, 2023 and September 25, 2022, and consolidated statements of cash flows for the nine months ended September 24, 2023 and September 25, 2022, and the related notes (collectively referred to as the “consolidated interim financial statements”) .

We have reviewed the accompanying consolidated balance sheet of Lockheed Martin Corporation (the Company) as of March 31, 2024, the related consolidated statements of earnings, comprehensive income, cash flows and equity for the quarters ended March 31, 2024 and March 26, 2023, and the related notes (collectively referred to as the “consolidated interim financial statements”) .

Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial statements for them to be in conformity with U.S.

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Tysons, Virginia

October 17, 2023

April 23, 2024

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements