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Item 1. Financial Statements

2025-04-22 compared with 2024-10-22 · 225 added, 387 removed, 412 unchanged (60% of the section changed)

3 unchanged sentences

in millions, except per share data)

Quarters Ended Nine Months Ended

September 29,

2024 September 24,

2023 September 29,

2024 September 24,

Quarters Ended

2025 March 31,

Products $ 14,936 $ 14,196

Services 3,027 2,999

Total net sales 17,104 16,878 52,421 48,697

Cost of sales

Total sales 17,963 17,195

Operating costs and expenses

Products ( 13,284 ) ( 12,884 )

Services ( 2,640 ) ( 2,603 )

Impairment and severance charges — — ( 87 ) —

Other unallocated, net 284 285

Total cost of sales ( 14,987 ) ( 14,830 ) ( 46,181 ) ( 42,513 )

Total operating costs and expenses ( 15,640 ) ( 15,202 )

Gross profit 2,323 1,993

Other income (expense), net 23 ( 6 ) 77 30

Other income, net 49 36

Operating profit 2,372 2,029

Interest expense ( 268 ) ( 255 )

Non-service FAS pension income 16 111 47 332

Non-service FAS pension (expense) income ( 98 ) 16

Other non-operating income, net 30 45

9 unchanged sentences

Consolidated Statements of Comprehensive Income

Quarters Ended Nine Months Ended

September 29,

2024 September 24,

2023 September 29,

2024 September 24,

Quarters Ended

2025 March 31,

Net earnings $ 1,712 $ 1,545

Other comprehensive income, net of tax

Other comprehensive income (loss), net of tax

Postretirement benefit plans

Amortization of actuarial losses and prior service credits, net of tax expense of $ 6 million and $ 16 million in 2024 and $ 10 million and $ 30 million in 2023

19 ( 37 ) 57 ( 111 )

Other, net, net of tax benefits of $ 3 million and expense of $ 5 million in 2024 and expense of $ 5 million and $ 4 million in 2023

57 ( 30 ) 53 ( 12 )

Amortization of net actuarial losses and prior service costs (credits), net of tax of $ 17 million in 2025 and $ 5 million in 2024

Other, net, net of tax of $ 6 million in 2025 and $ 0 million in 2024

Other comprehensive income (loss), net of tax 129 ( 8 )

4 unchanged sentences

(in millions, except par value)

September 29,

2025 December 31,

34 unchanged sentences

Consolidated Statements of Cash Flows

Nine Months Ended

September 29,

2024 September 24,

Quarters Ended

2025 March 31,

Operating activities

4 unchanged sentences

Deferred income taxes ( 34 ) ( 77 )

Impairment and severance charges 87 —

Changes in assets and liabilities

14 unchanged sentences

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

Repayments of long-term debt ( 168 ) ( 115 )

Repurchases of common stock ( 750 ) ( 1,000 )

1 unchanged sentence

Other, net ( 113 ) ( 115 )

Net cash used for financing activities ( 3,286 ) ( 3,560 )

Net cash (used for) provided by financing activities ( 1,659 ) 85

Net change in cash and cash equivalents ( 680 ) 1,348

4 unchanged sentences

Consolidated Statements of Equity

For the Quarters Ended September 29, 2024 and September 24, 2023

Stock Additional

2 unchanged sentences

Comprehensive

Balance at June 30, 2024 $ 237 $ — $ 14,707 $ ( 8,769 ) $ 6,175

Net earnings — — 1,623 — 1,623

Other comprehensive income, net of tax — — — 76 76

Dividends declared — — 4 — 4

Repurchases of common stock ( 2 ) ( 171 ) ( 677 ) — ( 850 )

Stock-based awards, ESOP activity and other 1 171 — — 172

Balance at September 29, 2024 $ 236 $ — $ 15,657 $ ( 8,693 ) $ 7,200

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

Net earnings — — 1,684 — 1,684

Other comprehensive loss, 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

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 29, 2024 and September 24, 2023

Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

Balance at December 31, 2024 $ 234 $ — $ 14,551 $ ( 8,452 ) $ 6,333

1 unchanged sentence

Other comprehensive income, net of tax — — — 129 129

— — — 110 110

Dividends declared — — ( 778 ) — ( 778 )

1 unchanged sentence

Stock-based awards, ESOP activity and other

2 417 — — 419

Balance at September 29 2024 $ 236 $ — $ 15,657 $ ( 8,693 ) $ 7,200

Balance at March 30, 2025 $ 233 $ — $ 14,773 $ ( 8,323 ) $ 6,683

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

4 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

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

10 unchanged sentences

Our actual results may differ materially from these estimates.

Significant estimates inherent in the preparation of our consolidated financial statements include, but are not limited to, accounting for sales and cost recognition;

Estimates inherent in the preparation of our consolidated financial statements include, but are not limited to, accounting for sales and cost recognition;

postretirement benefit plans;

6 unchanged sentences

We eliminate intercompany balances and transactions in consolidation.

We close our books and records on the last Sunday of each interim calendar quarter, which was on September 29 for the third quarter of 2024 and September 24 for the third quarter of 2023, to align our financial closing with our business processes.

We close our books and records on the last Sunday of each interim calendar quarter, which was on March 30 for the first quarter of 2025 and March 31 for the first quarter of 2024, 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.

6 unchanged sentences

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 29,

2024 September 24,

2023 September 29,

2024 September 24,

Quarters Ended

2025 March 31,

Weighted average common shares outstanding for basic computations 234.4 240.7

Weighted average dilutive effect of equity awards

1.1 0.9 0.9 0.9

Weighted average common shares outstanding for diluted computations

238.6 250.2 239.9 253.1

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 29, 2024 and September 24, 2023.

There were no significant anti-dilutive equity awards during the quarters ended March 30, 2025 and March 31, 2024.

Basic and diluted weighted average common shares outstanding decreased in 2025 compared to 2024 due to share repurchases.

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

NOTE 3 - INFORMATION ON BUSINESS SEGMENTS

Our operations are organized into four business segments, which also comprise our reportable segments:

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

NOTE 3 - INFORMATION ON BUSINESS SEGMENTS

We operate in four business segments:

Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS) and Space.

We organize our business segments based on the nature of products and services offered.

Selected Financial Data by Business Segment

Net sales and operating profit of our business segments exclude intersegment sales, cost of sales and profit as these activities are eliminated in consolidation and thus are not included in management’s evaluation of performance of each segment.

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.

We generally organize our business segments based on the nature of products and services offered.

Our chief operating decision maker (CODM) consists of the Chairman, President and Chief Executive Officer and the Chief Operating Officer.

The CODM is responsible for allocating resources and assessing the performance of our consolidated enterprise and business segments.

The profitability measure the CODM uses to allocate resources and assess segment performance is segment operating profit (and related margin rate, calculated as segment operating profit divided by sales), which is compared to historical and forecasted amounts on a regular basis.

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

Quarters Ended Nine Months Ended

September 29,

2024 September 24,

2023 September 29,

2024 September 24,

Quarters Ended

2025 March 31,

Aeronautics $ 7,057 $ 6,845

2 unchanged sentences

Space 3,205 3,269

Total net sales $ 17,104 $ 16,878 $ 52,421 $ 48,697

Operating profit

Total sales $ 17,963 $ 17,195

Operating costs and expenses

Aeronautics $ 6,337 $ 6,170

2 unchanged sentences

Space 2,821 2,966

Total operating costs and expenses $ 15,924 $ 15,487

Operating profit (a)

Aeronautics $ 720 $ 679

Missiles and Fire Control 465 311

Rotary and Mission Systems 521 430

Space 379 325

Total business segment operating profit 2,085 1,745

1 unchanged sentence

FAS/CAS pension operating adjustment 379 406

Impairment and severance charges (a)

Intangible asset amortization expense ( 64 ) ( 61 )

6 unchanged sentences

Rotary and Mission Systems 564 586

Space 94 97 300 275

Total intersegment sales $ 905 $ 965

(a) Impairment and severance charges of $ 87 million ($ 69 million, or $ 0.29 per share, after-tax) include trademark and fixed asset impairments as well as severance c osts recorded in the second quarter of 2024.

See “Note 10 - Other” below for additional information.

(a) Operating profit by segment includes certain immaterial items, such as other income (primarily equity earnings) that are not presented separately in the table.

Accordingly, the difference between sales less operating costs and expenses may not equal operating profit by segment.

Segment results exclude intersegment transactions as these activities are eliminated in consolidation and are not considered in assessing the performance of each segment.

As described below, segment operating profit also excludes other transactions that are not part of management’s evaluation of segment operating performance, which are included in “Unallocated items” to reconcile total segment operating profit to consolidated amounts.

Business segment operating profit

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

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.

Unallocated Items

Business segment operating profit excludes the FAS/CAS pension operating adjustment discussed below, a portion of corporate costs not considered allowable or allocable to contracts with the U.S.

Business segment operating profit excludes the FAS/CAS pension operating adjustment described below, a portion of corporate costs not considered allowable or allocable to contracts with the U.S.

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, 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.

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

See “Note 10 - Other” for a discussion related to certain factors that may impact the comparability of net sales and operating profit of our business segments.

Collectively these items are included in “Unallocated items” to reconcile total segment to consolidated operating profit.

See “Note 10 - Other” for a discussion related to certain factors that may impact the comparability of sales and operating profit of our business segments.

FAS/CAS Pension Operating Adjustment

Our business segments’ results of operations include pension expense only as calculated under CAS, which we refer to as CAS pension cost.

Our business segment results of operations include pension expense as calculated under CAS, which we refer to as CAS pension cost.

We recover CAS pension and other postretirement benefit plan cost through the pricing of our products and services on U.S.

Government contracts and, therefore, recognize CAS pension cost in each of our business segments’ net sales and cost of sales.

Our consolidated financial statements must present pension and other postretirement benefit plan income calculated in accordance with Financial Accounting Standards (FAS) requirements under U.S.

The operating portion of the total FAS/CAS pension adjustment represents the difference between the service cost component of FAS pension income (expense) and total CAS pension cost.

The non-service FAS pension income components are included in non-service FAS pension income in our consolidated statements of earnings.

As a result, to the extent that CAS pension cost exceeds the service cost component of FAS pension income (expense), we have a favorable FAS/CAS pension operating adjustment.

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

Disaggregation of Net Sales

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

Quarter Ended September 29, 2024

Aeronautics MFC RMS Space Total

Products $ 5,550 $ 2,811 $ 3,554 $ 2,557 $ 14,472

Services 937 364 813 518 2,632

Total net sales $ 6,487 $ 3,175 $ 4,367 $ 3,075 $ 17,104

Net sales by contract type

Fixed-price $ 4,276 $ 2,211 $ 2,691 $ 865 $ 10,043

Cost-reimbursable 2,211 964 1,676 2,210 7,061

Total net sales $ 6,487 $ 3,175 $ 4,367 $ 3,075 $ 17,104

Net sales by customer

Government $ 4,465 $ 2,272 $ 2,867 $ 3,081 $ 12,685

International (a)

1,973 901 1,403 61 4,338

commercial and other 49 2 97 ( 67 ) 81

Total net sales $ 6,487 $ 3,175 $ 4,367 $ 3,075 $ 17,104

Net sales by geographic region

United States $ 4,514 $ 2,274 $ 2,964 $ 3,014 $ 12,766

Europe 1,047 334 309 18 1,708

Asia Pacific 612 216 632 43 1,503

Middle East 206 333 190 — 729

Other 108 18 272 — 398

Total net sales $ 6,487 $ 3,175 $ 4,367 $ 3,075 $ 17,104

Nine Months Ended September 29, 2024

Aeronautics MFC RMS Space Total

Products $ 17,113 $ 8,217 $ 10,500 $ 7,947 $ 43,777

Services 3,496 1,053 2,503 1,592 8,644

Total net sales $ 20,609 $ 9,270 $ 13,003 $ 9,539 $ 52,421

Net sales by contract type

Fixed-price $ 13,805 $ 6,331 $ 7,980 $ 2,690 $ 30,806

Cost-reimbursable 6,804 2,939 5,023 6,849 21,615

Total net sales $ 20,609 $ 9,270 $ 13,003 $ 9,539 $ 52,421

Net sales by customer

Government $ 14,072 $ 6,680 $ 8,706 $ 9,350 $ 38,808

International (a)

6,422 2,581 4,035 174 13,212

commercial and other 115 9 262 15 401

Total net sales $ 20,609 $ 9,270 $ 13,003 $ 9,539 $ 52,421

Net sales by geographic region

United States $ 14,187 $ 6,689 $ 8,968 $ 9,365 $ 39,209

Europe 3,528 788 860 55 5,231

Asia Pacific 1,933 583 1,922 114 4,552

Middle East 603 1,153 552 5 2,313

Other 358 57 701 — 1,116

Total net sales $ 20,609 $ 9,270 $ 13,003 $ 9,539 $ 52,421

Government contracts and, therefore, recognize CAS pension cost in each business segments’ sales and operating costs and expenses.

Our consolidated financial statements must present pension and other postretirement benefit plan (expense) income calculated in accordance with Financial Accounting Standards (FAS) requirements under U.S.

The FAS/CAS pension operating adjustment represents the difference between CAS pension cost included in segment operating income and the service cost component of FAS pension (expense) income included in consolidated operating profit.

To the extent that CAS pension cost exceeds the service cost component of FAS pension (expense) income we have a favorable FAS/CAS pension operating adjustment.

The non-service FAS pension (expense) income components are included in non-service FAS pension (expense) income on our consolidated statements of earnings.

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

Quarter Ended September 24, 2023

Disaggregation of Sales

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

Quarter Ended March 30, 2025

Aeronautics MFC RMS Space Total

1 unchanged sentence

Services 1,311 356 832 528 3,027

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

Net sales by contract type

Total sales $ 7,057 $ 3,373 $ 4,328 $ 3,205 $ 17,963

Sales by contract type

Fixed-price $ 4,713 $ 2,440 $ 2,660 $ 942 $ 10,755

Cost-reimbursable 2,344 933 1,668 2,263 7,208

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

Net sales by customer

Total sales $ 7,057 $ 3,373 $ 4,328 $ 3,205 $ 17,963

Sales by customer

Government $ 4,642 $ 2,391 $ 2,787 $ 3,129 $ 12,949

2 unchanged sentences

commercial and other 10 4 73 5 92

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

Net sales by geographic region

Total sales $ 7,057 $ 3,373 $ 4,328 $ 3,205 $ 17,963

Sales by geographic region

United States $ 4,652 $ 2,395 $ 2,860 $ 3,134 $ 13,041

3 unchanged sentences

Other 170 17 319 — 506

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

Nine Months Ended September 24, 2023

Total sales $ 7,057 $ 3,373 $ 4,328 $ 3,205 $ 17,963

Quarter Ended March 31, 2024

Aeronautics MFC RMS Space Total

1 unchanged sentence

Services 1,253 329 847 570 2,999

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

Net sales by contract type

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

Sales by contract type

Fixed-price $ 4,584 $ 1,996 $ 2,477 $ 900 $ 9,957

Cost-reimbursable 2,261 997 1,611 2,369 7,238

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

Net sales by customer

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

Sales by customer

Government $ 4,666 $ 2,167 $ 2,840 $ 3,162 $ 12,835

2 unchanged sentences

commercial and other 27 2 86 39 154

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

Net sales by geographic region

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

Sales by geographic region

United States $ 4,693 $ 2,169 $ 2,926 $ 3,201 $ 12,989

3 unchanged sentences

Other 102 22 191 — 315

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

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

(a) International sales include foreign military sales (FMS) contracted through the U.S.

3 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 22 % and 24 % of our total consolidated net sales for the quarter and nine months ended September 29, 2024 and 26 % of our total consolidated net sales for both the quarter and nine months ended September 24, 2023.

Sales for the F-35 program represented approximately 25 % of our total consolidated sales for the quarters ended both March 30, 2025 and March 31, 2024.

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

September 29,

2025 December 31,

5 unchanged sentences

Corporate assets (a)

11,583 12,029

Total assets $ 56,669 $ 55,617

(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 investments in early-stage companies.

NOTE 4 - CONTRACT ASSETS AND LIABILITIES

2 unchanged sentences

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

September 29,

2025 December 31,

1 unchanged sentence

Contract liabilities 9,375 9,795

Contract assets increased $ 1.0 billion during the nine months ended September 29, 2024, due to the recognition of revenue related to the satisfaction or partial satisfaction of performance obligations during the nine months ended September 29, 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 and nine months ended September 29, 2024 and September 24, 2023.

Contract liabilities decreased $ 139 million during the nine months ended September 29, 2024, primarily due to revenue recognized in excess of payments received on performance obligations.

During the quarter and nine months ended September 29, 2024, we recognized $ 866 million and $ 4.9 billion of our contract liabilities at December 31, 2023 as revenue.

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.

Contract assets are primarily driven by the recognition of revenue related to the satisfaction or partial satisfaction of performance obligations for which we have not yet billed our customers.

During the quarter ended March 30, 2025, contract assets increased $ 1.7 billion primarily due to the F-35 program at Aeronautics and the Black Hawk program at RMS.

There were no significant credit or impairment losses related to our contract assets during the quarters ended March 30, 2025 and March 31, 2024.

Contract liabilities decreased $ 420 million during the quarter ended March 30, 2025, primarily due to revenue recognized in excess of payments received on performance obligations.

During the quarter ended March 30, 2025, we recognized $ 3.2 billion of our contract liabilities at December 31, 2024 as revenue.

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

Lockheed Martin Corporation

2 unchanged sentences

Inventories consisted of the following (in millions):

September 29,

2025 December 31,

3 unchanged sentences

Total inventories $ 3,599 $ 3,474

Costs incurred to fulfill a contract in advance of the contract being awarded are included in inventories as work-in-process if we determine that those costs relate directly to a contract or to an anticipated contract that we can specifically identify and determine that contract award is probable, the costs generate or enhance resources that will be used in satisfying performance obligations, and the costs are recoverable (referred to as pre-contract costs).

These advanced procurement costs are generally incurred in order to enhance our ability to achieve schedule and certain customer milestones.

Pre-contract costs that are initially capitalized in inventory are generally recognized as cost of sales consistent with the transfer of products and services to the customer upon the receipt of the anticipated contract.

Costs incurred to fulfill a contract in advance of the contract being awarded are included in inventories as work-in-process if we determine that those costs relate directly to a contract or to an anticipated contract that we can specifically identify and determine that the contract award is probable, the costs generate or enhance resources that will be used in satisfying performance obligations, and the costs are recoverable (referred to as pre-contract costs).

These advance procurement costs are generally incurred in order to enhance our ability to achieve schedule and certain customer milestones.

Pre-contract costs that are initially capitalized in inventory are eventually generally recognized as operating costs consistent with the transfer of products and services to the customer upon the receipt of the anticipated contract.

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

As of September 29, 2024 and December 31, 2023, $ 1.9 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.

The increase in pre-contract costs as of September 29, 2024 is primarily driven by the F-35 program, specifically delays in receiving additional contractual authorization and funding for the Lots 18-19 contract.

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

As of March 30, 2025 and December 31, 2024, $ 1.6 billion and $ 1.5 billion of pre-contract costs (primarily F-35 and classified programs at Aeronautics) were included in work-in-process inventories.

NOTE 6 - POSTRETIREMENT BENEFIT PLANS

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 Nine Months Ended

September 29,

2024 September 24,

2023 September 29,

2024 September 24,

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

Quarters Ended

2025 March 31,

Qualified defined benefit pension plans

4 unchanged sentences

Amortization of actuarial losses ( 78 ) ( 65 )

Amortization of prior service credits 36 87 110 261

Non-service FAS pension income 16 111 47 332

Total FAS pension income $ 1 $ 94 $ 2 $ 283

Retiree medical and life insurance plans

Service cost $ ( 2 ) $ ( 1 ) $ ( 4 ) $ ( 4 )

Non-operating:

Interest cost ( 15 ) ( 17 ) ( 47 ) ( 51 )

Expected return on plan assets 27 25 81 77

Amortization of actuarial gains 8 7 26 23

Amortization of prior service costs ( 1 ) ( 2 ) ( 3 ) ( 7 )

Non-service FAS retiree medical and life income 19 13 57 42

Total FAS retiree medical and life income $ 17 $ 12 $ 53 $ 38

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 were reclassified from accumulated other comprehensive loss (AOCL) and recorded as a component of FAS income for the periods presented.

These costs totaled $ 25 million ($ 19 million, net of tax) and $ 73 million ($ 57 million, net of tax) during the quarter and nine months ended September 29, 2024, and $( 47 ) million ($( 37 ) million, net of tax) and $( 141 ) million ($( 111 ) million, net of tax) during the quarter and nine months ended September 24, 2023.

Funding Requirements

Amortization of prior service (costs) credits ( 12 ) 37

Non-service FAS pension (expense) income ( 98 ) 16

Total FAS pension (expense) income $ ( 111 ) $ 1

We record the service cost component of FAS (expense) income for our qualified defined benefit pension plans in consolidated operating profit and the non-service components in non-service FAS pension (expense) income on our consolidated statements of earnings.

Total FAS income for our other postretirement benefit plans was not material during the quarter ended March 30, 2025 and March 31, 2024 and is part of other non-operating income, net on our consolidated statements of earnings.

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 29, 2024 and September 24, 2023.

We made no contributions to our qualified defined benefit pension plans during the quarters ended March 30, 2025 and March 31, 2024.

Lockheed Martin Corporation

7 unchanged sentences

Our assessment of these factors may change over time as individual proceedings or claims progress.

Although we cannot predict the outcome of legal or other proceedings with certainty, where there is at least a reasonable possibility that a loss may have been incurred, GAAP requires us to disclose an estimate of the reasonably possible loss or range of loss or make a statement that such an estimate cannot be made.

Although we cannot predict the outcome of legal or other proceedings with certainty, where there is at least a reasonable possibility that a loss may be incurred, GAAP requires us to disclose an estimate of the reasonably possible loss or range of loss or make a statement that such an estimate cannot be made.

We follow a thorough process in which we seek to estimate the reasonably possible loss or range of loss, and only if we are unable to make such an estimate do we conclude and disclose that an estimate cannot be made.

14 unchanged sentences

Environmental Matters

We are involved in proceedings and potential proceedings relating to soil, sediment, surface water, and groundwater contamination, disposal of hazardous substances, and other environmental matters at several of our current or former facilities, facilities for which we may have contractual responsibility, and at third-party sites where we have been designated as a potentially responsible party (PRP).

A substantial portion of environmental costs will be included in our net sales and cost of sales in future periods pursuant to U.S.

Government regulations.

At the time a liability is recorded for future environmental costs, we record assets for estimated future recovery considered probable through the pricing of products and services to agencies of the U.S.

Government, regardless of the contract form (e.g., cost-reimbursable, fixed-price).

We continually evaluate the recoverability of our assets for the portion of environmental costs that are probable of future recovery by assessing, among other factors, U.S.

Government regulations, our U.S.

Government business base and contract mix, and our history of receiving reimbursement of such costs.

We include the portions of those

We are involved in proceedings and potential proceedings relating to soil, sediment, surface water, and groundwater contamination, disposal of hazardous substances, and other environmental matters at several of our current or former facilities, other facilities for which we may have contractual responsibility, and at third-party sites where we have been designated as a potentially responsible party (PRP).

These proceedings could result in fines, penalties, cost reimbursements or contributions, compensatory or treble damages or non-monetary sanctions or relief.

Based on our estimates, at March 30, 2025 and December 31, 2024, the aggregate amount of liabilities recorded relative to environmental remediation matters was $ 672 million and $ 677 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 $ 614 million and $ 619 million at March 30, 2025 and December 31, 2024, most of which are recorded in other noncurrent assets on our consolidated balance sheets.

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

environmental costs expected to be allocated to our non-U.S.

Government contracts, or determined not to be recoverable under U.S.

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

At September 29, 2024 and December 31, 2023, the aggregate amount of liabilities recorded relative to environmental matters was $ 697 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 $ 628 million and $ 613 million at September 29, 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.

We are monitoring or investigating a number of former and present operating facilities for potential future remediation.

We are monitoring or investigating a number of former and presently operating facilities for potential future remediation.

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 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.

We do not discount the recorded liabilities, as the amount and timing of future cash payments are not fixed or cannot be reliably determined.

We cannot reasonably determine the extent of our financial exposure in all cases as, although a loss may be probable or reasonably possible, in some cases it is not possible at this time to estimate the reasonably possible loss or range of loss.

Additionally, in our quarterly reviews, we consider various factors in estimating the timing and amount of any future costs that may be required for remediation activities, as we cannot reasonably determine the extent of our financial exposure in all cases.

We project costs and recovery of costs over approximately 20 years.

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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 $ 2.7 billion and $ 2.9 billion at September 29, 2024 and December 31, 2023.

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

We had total outstanding letters of credit and surety bonds aggregating $ 2.6 billion and $ 2.7 billion at March 30, 2025 and December 31, 2024.

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

At September 29, 2024 and December 31, 2023, third-party guarantees totaled $ 313 million and $ 1.0 billion, of which approximately 21 % and 75 % related to guarantees of contractual performance of joint ventures to which we currently are or previously were a party.

At March 30, 2025 and December 31, 2024, third-party guarantees totaled $ 112 million and $ 351 million, of which approximately 84 % and 30 % 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.

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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 29, 2024 and December 31, 2023, there were no material amounts recorded in our financial statements related to third-party guarantees or novation agreements.

At March 30, 2025 and December 31, 2024, there were no material amounts recorded in our financial statements related to third-party guarantees or novation agreements.

Other Contingencies

On April 22, 2024, the Armed Services Board of Contract Appeals (ASBCA) sustained our claim associated with a contract to modernize and install new engines in C-5 Galaxy aircraft.

The ASBCA ruled that we are entitled to $ 132 million for impacts due to excessive “over and above” work performed under the contract plus interest on the amount since the date of our claim in October 2018.

On August 27, 2024, the Department of Justice filed a notice of appeal of the ASBCA’s decision with the U.S.

Court of Appeals for the Federal Circuit.

On the anticipated basis of the Government’s appeal, we have recognized approximately $ 85 million of sales and operating profit during the quarter ended September 29, 2024, which we believe is probable of collection and subject to change based on developments during the pending appeal process in Federal Circuit Court and as interest accrues.

Independent of this matter and as a U.S.

Government contractor, we are subject to various audits and investigations by the U.S.

Government to determine whether our operations are being conducted in accordance with applicable regulatory requirements.

Government investigations of us, whether relating to Government contracts or conducted for other reasons, could result in administrative, civil, or criminal liabilities, including repayments, fines or penalties being imposed upon us, suspension, proposed debarment, debarment from eligibility for future U.S.

Government contracting, or suspension of export privileges.

Suspension or debarment could have a material adverse effect on us because of our dependence on contracts with the U.S.

Government investigations of us, whether relating to U.S.

Government contracts or conducted for other reasons, could result in civil or criminal penalties and administrative sanctions, including reductions of the value of contracts, contract modifications or terminations, forfeiture of profits, suspension of payments, repayments, fines or penalties being imposed upon us, suspension, proposed debarment, debarment from eligibility for future U.S.

Government contracting, or

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

suspension of export privileges.

Reductions of the value of contracts, contract modifications or terminations, forfeiture of profits, suspension of payments, repayments, fines and penalties could have a material impact on financial condition and results of operations in any particular reporting period, and suspension or debarment could have a material adverse effect on us because of our dependence on contracts with the U.S.

Government investigations often take years to complete and many result in no adverse action against us.

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

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

NOTE 8 - FAIR VALUE MEASUREMENTS

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

September 29, 2024 December 31, 2023

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

March 30, 2025 December 31, 2024

Total Level 1 Level 2 Total Level 1 Level 2

Mutual funds $ 1,021 $ 1,021 $ — $ 1,072 $ 1,072 $ —

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The fair values of derivative instruments, which consist of foreign currency forward contracts, including embedded derivatives, and interest rate swap contracts, are primarily determined based on the present value of future cash flows using model-derived valuations that use observable inputs such as interest rates, credit spreads and foreign currency exchange rates.

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

Investments that have quoted market prices in active markets (Level 1) are recorded at fair value and reflected in other securities while certain investments are categorized as Level 3 when valuations using observable inputs are unavailable.

See “Note 10 - Other - Investments” for more information.

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

These investments are primarily in early-stage companies and may be in the form of common or preferred stock, warrants, convertible debt securities, investments in funds or equity method investments.

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

The carrying amounts of the investments were $ 573 million and $ 600 million at March 30, 2025 and December 31, 2024.

Due to adjustments in valuation and/or sales of investments, we recorded net gains that were immaterial for the quarters ended both March 30, 2025 and March 31, 2024.

We use derivative instruments principally to reduce our exposure to market risks from changes in foreign currency exchange rates and interest rates.

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We enter into foreign currency hedges such as forward and option contracts that change in value as foreign currency exchange rates change.

Our most significant foreign currency exposures relate to the British pound sterling, the euro, the Canadian dollar, the Australian dollar, the Norwegian kroner and the Polish zloty.

Our most significant foreign currency exposures relate to the British pound sterling, the euro, the

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

Canadian dollar, the Australian dollar, the Norwegian kroner and the Polish zloty.

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

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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 29, 2024 and December 31, 2023.

The aggregate notional amount of our outstanding foreign currency hedges was $ 6.3 billion and $ 6.5 billion at September 29, 2024 and December 31, 2023.

The fair values of our outstanding interest rate swaps and foreign currency hedges at September 29, 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 and nine months ended September 29, 2024 and September 24, 2023.

The aggregate notional amount of our outstanding interest rate swaps was $ 1.3 billion at both March 30, 2025 and December 31, 2024.

The aggregate notional amount of our outstanding foreign currency hedges was $ 7.7 billion and $ 7.5 billion at March 30, 2025 and December 31, 2024.

The fair values of our outstanding interest rate swaps and foreign currency hedges at March 30, 2025 and December 31, 2024 were not significant.

Derivative instruments did not have a material impact on net earnings and comprehensive income during the quarters ended March 30, 2025 and March 31, 2024.

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

Substantially all of our derivatives are designated for hedge accounting.

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

In addition to the financial instruments listed in the table above, we hold other financial instruments, including cash and cash equivalents, receivables, accounts payable and debt.

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 $ 20.4 billion and $ 18.5 billion at September 29, 2024 and December 31, 2023.

The outstanding principal amount of debt, including short-term and long-term debt, was $ 20.6 billion and $ 18.7 billion at September 29, 2024 and December 31, 2023, excluding approximately $ 1.3 billion of unamortized discounts and issuance costs at both September 29, 2024 and December 31, 2023.

The estimated fair value of our outstanding debt was $ 20.2 billion at both March 30, 2025 and December 31, 2024.

The outstanding principal amount of debt, including short-term and long-term debt, was $ 21.6 billion at both March 30, 2025 and December 31, 2024, excluding $ 1.3 billion of unamortized discounts and issuance costs at both March 30, 2025 and December 31, 2024.

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 29, 2024, we repurchased 5.7 million shares of our common stock in open market purchases for $ 2.7 billion.

The total remaining authorization for future common stock repurchases under our share repurchase program was $ 7.3 billion as of September 29, 2024.

In October 2024, subsequent to our third quarter, our Board of Directors authorized an increase of $ 3.0 billion to our share repurchase program, increasing our total authorization of the current program to $ 10.3 billion for future purchases.

During the quarter ended March 30, 2025, we repurchased 1.7 million shares of our common stock in open market purchases for $ 750 million.

The total remaining authorization for future common stock repurchases under our share repurchase program was $ 8.6 billion as of March 30, 2025.

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 paid cash dividends of $ 2.3 billion ($ 9.45 per share) during the nine months ended September 29, 2024.

In October 2024, subsequent to our third quarter, we authorized a fourth quarter 2024 dividend payment of $ 3.30 per share, an increase of $ 0.15 per share over our third quarter 2024 dividend of $ 3.15 per share.

We paid cash dividends of $ 796 million ($ 3.30 per share) during the quarter ended March 30, 2025.

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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Balance at December 31, 2024 $ ( 8,288 ) $ ( 164 ) $ ( 8,452 )

Other comprehensive income (loss) before reclassifications — 23 23

Other comprehensive income before reclassifications — 58 58

Amounts reclassified from AOCL

Amortization of net actuarial losses (a)

Amortization of net prior service credits (a)

( 84 ) — ( 84 )

Other — 30 30

Amortization of net prior service costs (a)

Total reclassified from AOCL 64 7 71

Total other comprehensive income (loss) 57 53 110

Balance at September 29, 2024 $ ( 8,647 ) $ ( 46 ) $ ( 8,693 )

Total other comprehensive income 64 65 129

Balance at March 30, 2025 $ ( 8,224 ) $ ( 99 ) $ ( 8,323 )

Balance at December 31, 2023 $ ( 8,704 ) $ ( 99 ) $ ( 8,803 )

Other comprehensive income (loss) before reclassifications — ( 41 ) ( 41 )

Other comprehensive (loss) before reclassifications — ( 41 ) ( 41 )

Amounts reclassified from AOCL

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

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

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

These amounts include $ 19 million and $( 37 ) million, net of tax, for the quarters ended September 29, 2024 and September 24, 2023, which are comprised of the amortization of net actuarial losses of $ 47 million and $ 30 million for the quarters ended September 29, 2024 and September 24, 2023, and the amortization of net prior service credits of $ 28 million and $ 67 million for the quarters ended September 29, 2024 and September 24, 2023.

See “Note 6 - Postretirement Benefit Plans”.

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

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

NOTE 10 - OTHER

Contract Estimates

Significant estimates and assumptions are made in estimating contract sales, costs, and profit.

We estimate profit as the difference between estimated revenues and total estimated costs to complete the contract.

We generate sales from long-term contracts for the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services.

Substantially all of our sales are recognized over time using the percentage-of-completion cost-to-cost measure of progress.

Under the percentage-of-completion cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs to complete the product or service.

Certain sales are recognized at a point in time, which typically occurs upon customer acceptance or receipt of the product or service.

Significant judgments and assumptions are made in estimating contract sales, costs, and profit.

We estimate profit as the difference between total estimated sales and total estimated costs to complete the contract and recognize that profit as costs are incurred (over time sales recognition) or when the customer accepts the product or service (point in time sales recognition).

Contract sales may include estimates of variable consideration, including cost or performance incentives (such as award and incentive fees), un-priced change orders, requests for equitable adjustment (REAs), and contract claims.

Variable consideration is included in total estimated sales to the extent it is probable that a significant reversal in the amount of cumulative sales recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

We estimate variable consideration as the most likely amount to which we expect to be entitled.

Contract costs include significant estimates related to labor, subcontractors, materials, overhead, general and administrative expenses, and costs to fulfill our industrial cooperation agreements, sometimes referred to as offset or localization agreements, required under certain contracts with international customers.

Significant estimates related to costs include the complexity and scope of the work to be performed, labor productivity and availability, labor rates including terms of collective bargaining arrangements, execution by our subcontractors, the availability and cost of materials including any impact from changing costs or inflation, the length of time to complete the performance obligation,

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

overhead and general and administrative cost rates, and estimated useful lives of components and assets, among others.

In particular, fixed-price development programs involve significant management judgment, as development contracts by nature have elements that have not been done before and thus, are highly subject to future unexpected changes in estimates as described below.

At the outset of a long-term contract, we identify and monitor risks to the achievement of the technical, schedule and cost aspects of the contract, as well as our ability to earn variable consideration, and assess the effects of those risks on our estimates of sales and total costs to complete the contract.

The estimates consider the technical requirements (e.g., a newly developed product versus a mature product), the schedule and associated tasks (e.g., the number and type of milestone events) and costs (e.g., material, labor, subcontractor, overhead, general and administrative and the estimated costs to fulfill our industrial cooperation agreements, sometimes referred to as offset or localization agreements, required under certain contracts with international customers).

The initial profit booking rate of each contract considers risks surrounding the ability to achieve the technical requirements, schedule and costs in the initial estimated total costs to complete the contract.

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 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

We review our estimates related to sales, cost, and profit for each contract at least annually or when a change in circumstances warrants a modification to a previous estimate.

For significant contracts, we review our estimates more frequently.

As part of this process, management reviews information including, but not limited to, any outstanding key contract matters, progress towards completion and the related program schedule, identified risks and opportunities, and the related changes in estimates of revenues and costs.

Profit booking rates may increase during the performance of the contract if we successfully retire risks related to earning variable consideration and/or the 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, which we refer to as favorable profit booking rate adjustments.

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, which we refer to as unfavorable profit booking rate adjustments.

We recognize changes in estimated contract sales or costs and the resulting changes in contract profit on a cumulative basis.

Cumulative profit booking rate adjustments represent the cumulative effect of the changes on current and prior periods;

sales and operating margins in future periods are recognized as if the revised estimates had been used since contract inception.

Profit booking rate adjustments can have a significant effect on our financial statements and affect the comparability of our segment sales, operating profit and operating margin.

Segment operating profit and margin can also be impacted favorably or unfavorably by, for example, certain items such as the positive resolution of contractual matters, cost recoveries on severance and restructuring, insurance recoveries and gains on sales of assets, as well as unfavorable items including the adverse resolution of contractual matters, supply chain disruptions, restructuring charges (except for significant severance actions, which are excluded from segment operating results), reserves for disputes, certain asset impairments, and losses on sales of certain assets.

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.

The following table presents the effect of profit booking rate adjustments on our financial results (in millions):

Quarters Ended

2025 March 31,

Sales $ 496 $ 272

Segment operating profit 480 195

% of segment operating profit 23 % 11 %

Net earnings 379 154

Diluted earnings per share 1.61 0.64

During the quarter ended March 30, 2025, we recorded $ 185 million of adjustments resulting from favorable performance upon completion on certain commercial civil space programs at Space and a classified program at Aeronautics.

During the quarter ended March 31, 2024, we recognized a reach-forward loss of $ 100 million on a classified program at our MFC business segment.

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

This development work is inherently uncertain and subject to significant

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

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.

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 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.

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 booking rate adjustments.

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;

restructuring charges (except for significant severance actions, which are excluded from segment operating results);

reserves for disputes;

certain asset impairments;

and losses on sales of certain assets.

Our consolidated net profit booking rate adjustments increased sales by $ 358 million and $ 1.0 billion during the quarter and nine months ended September 29, 2024 and $ 231 million and $ 1.0 billion during the quarter and nine months ended September 24, 2023.

These adjustments increased segment operating profit by approximately $ 375 million ($ 296 million, or $ 1.24 per share, after tax) and $ 990 million ($ 782 million, or $ 3.26 per share, after tax) during the quarter and nine months ended September 29, 2024, and $ 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.

During the quarter ended September 29, 2024, we recognized losses of $ 80 million on a classified program at our Aeronautics business segment described below, resulting in total losses of $ 145 million on this classified program for the nine months ended September 29, 2024.

Additionally, consolidated net profit booking rate adjustments during the nine months ended September 29, 2024 include a reach-forward loss of $ 100 million recognized in the first quarter of 2024 on a classified program at our MFC business segment described below.

During the nine months ended September 24, 2023, we recognized a favorable profit adjustment of $ 65 million on an international surveillance and control program due to the positive resolution of a contractual matter, and a reach-forward loss of $ 100 million on the Canadian Maritime Helicopter Program (CMHP) as a result of increased costs and lower than planned revenues described below.

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

This development work is inherently uncertain and subject to significant variability in estimates of the cost and time required to complete the work by us and our suppliers.

variability in estimates of the cost and time required to complete the work by us and our suppliers.

Many of these programs have cost-type contracting arrangements (e.g.

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In such cases, the associated financial risks are primarily in reduced fees, lower profit rates, or program cancellation if cost, schedule, or technical performance issues arise.

However, some of our existing development programs are contracted on a fixed-price basis or include cost-type contracting for the development phase with fixed-price production options and our customers still continue to implement procurement strategies such as these that shift risk to contractors.

However, some of our existing development programs are contracted on a fixed-price basis or include cost-type contracting for the development phase with fixed-price production options and our customers continue to implement procurement strategies such as these that shift risk to contractors.

Competitively bid programs with fixed-price development work or fixed-price production options increase the risk of a reach-forward loss upon contract award and during the period of contract performance.

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Our development programs are ongoing, and while we believe the cost and fee estimates incorporated in the financial statements are appropriate, the technical complexity of these programs and fixed-price contract structure creates financial risk as estimated completion costs may exceed the current contract value, which could trigger earnings charges, termination provisions, or other financially significant exposures.

These programs have risk for reach-forward losses if our estimated costs exceed our estimated contract revenues, and such losses could be significant to our financial results, cash flows, or financial condition in any period that they are recognized.

Any such losses are recorded in the period in which the loss is evident.

These programs have risk for reach-forward losses if our estimated costs exceed our estimated contract revenues, and such losses could be significant to our financial condition and operating results in any period that they are recognized.

Any such losses are recognized in the period in which the loss is evident.

We have experienced performance issues on an existing classified program at our Aeronautics business segment.

The initial phase is on a fixed-price incentive fee contract with options for additional phases.

Phases within the program involve highly complex design and systems integration and we have periodically recognized reach-forward losses.

As of March 30, 2025, cumulative losses recognized to date on this program remained at approximately $ 825 million.

We will continue to proactively manage the technical requirements and our performance, the remaining work and any future changes in scope or schedule, and estimated costs to complete the program, including future phases.

We may need to record additional losses in future periods if we experience further performance issues, increases in scope, or cost growth.

Any such losses could be material to our financial results.

We and our industry team will continue to incur advanced procurement costs (also referred to as pre-contract costs) to enhance our ability to achieve the schedule and certain milestones which could be significant.

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

Our MFC business segment has been performing under 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.

We previously disclosed that the options may be exercised over the next several years and if performed expect they would each be at a loss.

During the first quarter of 2024, we concluded it was probable that the first option would be exercised and recognized a reach-forward loss of approximately $ 100 million.

During the fourth quarter of 2024, we again assessed the likelihood that additional options may be exercised and concluded then that it is probable that all options will be exercised based on performance to date, future requirements of the program, discussions with the customer and suppliers, and anticipated customer funding, among other factors, resulting in the recognition of additional reach-forward losses of approximately $ 1.31 billion.

As of March 30, 2025, cumulative losses recognized on the program remained at approximately $ 1.46 billion in total, of which, $ 1.33 billion remained accrued in other current liabilities in our consolidated balance sheet.

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.

During 2024, we entered into a modification to the In Service Support contract to better align contract scope with the Canadian government’s need and we continue to engage in discussions with the Canadian government to potentially restructure certain contractual terms and conditions that may be beneficial to both parties.

Under the contract terms as modified, future sales and recovery of costs, including about $ 935 million of contract assets on the balance sheet, are dependent upon the Royal Canadian Air Force’s flight hours and program costs and performance as well as the outcome of any restructuring discussions.

However, any restructuring discussions may be prolonged or unsuccessful and are dependent upon Canadian government resources and priorities and other factors outside of our control, such as trade relations with the United States.

As of March 30, 2025, cumulative losses remained at approximately $ 100 million.

Future performance issues or changes in our estimates may 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, and potential damages, which could be material to our operating results.

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

We have experienced performance issues on a classified fixed-price incentive fee contract at our Aeronautics business segment.

Phases within the contract involve highly complex design and systems integration and we have periodically recognized reach-forward losses.

During the third quarter of 2024, we recognized losses of $ 80 million due to higher than anticipated costs to achieve program objectives, bringing total losses for the nine months ended September 29, 2024, to $ 145 million.

With the additional $ 80 million of losses in the third quarter, cumulative losses increased to approximately $ 415 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 we 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.

Additionally, we will continue to assess the likelihood of losses for future phases.

We will be required to recognize additional losses for such phases if they are probable and such loss becomes evident.

Last, we and our industry team will continue to incur advanced procurement costs (also referred to as pre-contract costs) 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 have contracted with the Canadian government for the 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.

The last of the 28 CH-148 aircraft is scheduled to be delivered in 2025.

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 future flight hours, which are not entirely within our control and are dependent upon aircraft availability and performance and the availability of Canadian government resources.

During the third quarter of 2024, we entered into a modification to the In Service Support contract to better align contract scope with the Canadian government’s needs.

This modification mitigates, but does not eliminate the risk related to future sales and recovery of our costs.

We continue to engage in discussions with the Canadian government to potentially restructure certain contractual terms and conditions that may be beneficial to both parties.

However, any restructuring discussions may be prolonged or unsuccessful and are dependent upon Canadian government resources and priorities and other factors outside of our control.

Under the contract terms as modified, future sales and recovery of costs are dependent upon the Royal Canadian Air Force’s flight hours and program costs and performance.

As of September 29, 2024, cumulative losses remained at approximately $ 100 million.

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.

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

We have provided force majeure notices under the affected contracts, and have partially stopped work on TUHP effective October 5, 2024.

We are currently in discussions regarding the path forward for the program in light of the continued impact of the sanctions on our ability to perform under the TUHP contracts and our decision to partially stop work.

As of September 29, 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.

We have provided force majeure notices under the affected contracts and partially stopped work on TUHP effective October 5, 2024.

We have been in discussions with our customer regarding the path forward for the program in light of the continued impact of the sanctions on our ability to perform under the TUHP contracts and our decision to partially stop work.

However we have been unable to reach an agreement to date and our customer has asserted that we do not have the contractual right to stop work and that our decision to stop work may lead to a termination for default and assessment of penalties and damages.

As of March 30, 2025, 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 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.

During the second and

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

third quarters of 2024, there were no significant changes to the previously recognized losses.

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, and 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 and performance on those options.

Additionally, if we are unable to reach an agreement in the near term, we or our customer 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, including the drawdown by the customer of letters of credit and performance bonds, and increased unrecoverable costs, which could be material to our financial results and cash flows.

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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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 29, 2024, our ending backlog was $ 165.7 billion.

We expect to recognize approximately 35 % of our backlog over the next 12 months and approximately 59 % over the next 24 months as revenue with the remainder recognized thereafter.

Our effective income tax rates were 15.4 % and 15.6 % for the quarter and nine months ended September 29, 2024 and 13.8 % and 15.1 % for the quarter and nine months ended September 24, 2023.

The rate for the third quarter 2024 was higher than the rate for the third quarter 2023 primarily due to additional research and development tax credits that were claimed for years prior to 2023 reflected in the 2023 rate.

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.

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

These investments are primarily in early-stage companies and may be in the form of common or preferred stock, warrants, convertible debt securities, investments in funds or equity method investments.

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 $ 603 million and $ 581 million at September 29, 2024 and December 31, 2023.

Due to changes in fair value and/or sales of investments, we recorded net losses of $ 19 million ($ 14 million, or $ 0.06 per share, after-tax) and $ 5 million ($ 4 million, or $ 0.02 per share, after-tax) during the quarter and nine months ended September 29, 2024 and 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.

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

Revolving Credit Facility

At September 29, 2024, 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 23, 2024, we amended the agreement for the Revolving Credit Facility (the “Revolving Credit Agreement”) to extend the expiration date of the Revolving Credit Agreement from August 24, 2028 to August 24, 2029 and removed the existing financial maintenance covenant.

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.

There were no borrowings under the Revolving Credit Agreement at September 29, 2024.

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

Debt Issuance

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 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.

Impairment and Severance Charges

During the second quarter of 2024, we recorded charges totaling $ 87 million ($ 69 million, or $ 0.29 per share, after-tax) for trademark and fixed asset impairments as well as severance costs resulting from the strategic review of our Sikorsky business during the second quarter of 2024 due, in part, to the impacts of the U.S.

Army announcement to cancel the Future Attack Reconnaissance Aircraft (FARA) program at the conclusion of fiscal year 2024, for which our Sikorsky business was competing.

Sale of Commercial Engine Solutions

On September 9, 2024, we completed the sale of our Commercial Engine Solutions (CES) business, which was part of our Aeronautics business segment.

We received $ 170 million in cash from the sale.

Gains recognized from the sale in the quarter ended September 29, 2024 were not significant.

The final gain is subject to certain post-closing adjustments, including final working capital, indemnification, and tax adjustments, which we expect to complete in 2025.

This sale did not represent a strategic shift and the impacts to our consolidated results of operation, financial position, and cash were not significant.

Accordingly, the operating results and cash flows for the CES business up to the divestiture date have not been reclassified to discontinued operations.

As of March 30, 2025, our ending backlog was $ 173.0 billion.

We expect to recognize approximately 38 % of our backlog over the next 12 months and a total of approximately 64 % over the next 24 months as revenue with the remainder recognized thereafter.

Our effective income tax rates were 15.9 % and 15.8 % for the quarters ended March 30, 2025 and March 31, 2024.

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.

NOTE 11 - RECENT ACCOUNTING PRONOUNCEMENTS

In March 2024, the SEC issued a final rule under SEC Release Nos.

33-11275 and 34-99678, The Enhancement and Standardization of Climate-Related Disclosures for Investors, that will require us to provide climate-related disclosures in our annual reports and registration statements beginning with our annual report for the year ending December 31, 2025.

The rule requires disclosure of material climate-related risks, our governance and risk management of climate-related risks and any material climate-related targets or goals, greenhouse gas emissions as well as disclosure of the financial statement effects, such as costs and losses resulting from severe weather events and other natural conditions.

In April 2024, the SEC released an order staying this final rule pending judicial review of all the petitions challenging the rule.

We are in the process of analyzing the impact of the rules on our disclosures.

In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually.

Additionally, it requires a public entity to disclose the title and position of the Chief Operating Decision Maker (CODM).

The ASU does not change how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to determine its reportable segments.

The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

A public entity should apply the amendments in this ASU retrospectively to all prior periods presented in the financial statements.

We expect this ASU to impact only our disclosures with no impacts to our results of operations, cash flows and financial condition.

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.

This ASU requires entities to disclose certain expenses, including purchases of inventory, employee compensation, depreciation, and intangible asset amortization, by caption.

Additionally, entities must provide a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively.

The amendments are effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted.

The ASU will impact only our disclosures and not our financial condition or results of operations.

We are currently evaluating when we will adopt the ASU.

In December 2023, the FASB issued ASU No.

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Improvements to Income Tax Disclosures, which focuses on the rate reconciliation and income taxes paid.

2023-09 requires a public business entity (PBE) to disclose, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold.

In addition, all entities are required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received.

For PBEs, the new standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

An entity may apply the amendments in this ASU prospectively by providing the revised disclosures for the period ending December 31, 2025 and continuing to provide the pre-ASU disclosures for the prior periods, or may apply the amendments retrospectively by providing the revised disclosures for all periods presented.

We expect this ASU to impact only our disclosures with no impacts to our results of operations, cash flows, and financial condition.

2023-09 requires public business entities to disclose, on an annual basis, specific categories in the effective tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold.

In addition, ASU 2023-09 requires companies to disclose additional information about income taxes paid.

The new standard is effective for annual periods beginning after

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

December 15, 2024, and may be applied prospectively or retrospectively.

We will adopt this ASU prospectively for the period ending December 31, 2025, and it will impact only our disclosures, with no impacts to our financial condition or results of operations.

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 29, 2024, the related consolidated statements of earnings, comprehensive income and equity for the quarters and nine months ended September 29, 2024 and September 24, 2023, and consolidated statements of cash flows for the nine months ended September 29, 2024 and September 24, 2023, 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 30, 2025, the related consolidated statements of earnings, comprehensive income, cash flows and equity for the quarters ended March 30, 2025 and March 31, 2024, 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 22, 2024

April 22, 2025

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