Item 1. Financial Statements
ITEM 1. Financial Statements
Lockheed Martin Corporation
Consolidated Statements of Earnings
(unaudited; in millions, except per share data)
Quarters Ended
March 30,
2025 March 31,
2024
Sales
Products $ 14,936 $ 14,196
Services 3,027 2,999
Total sales 17,963 17,195
Operating costs and expenses
Products ( 13,284 ) ( 12,884 )
Services ( 2,640 ) ( 2,603 )
Other unallocated, net 284 285
Total operating costs and expenses ( 15,640 ) ( 15,202 )
Gross profit 2,323 1,993
Other income, net 49 36
Operating profit 2,372 2,029
Interest expense ( 268 ) ( 255 )
Non-service FAS pension (expense) income ( 98 ) 16
Other non-operating income, net 30 45
Earnings before income taxes 2,036 1,835
Income tax expense ( 324 ) ( 290 )
Net earnings $ 1,712 $ 1,545
Earnings per common share
Basic $ 7.30 $ 6.42
Diluted $ 7.28 $ 6.39
Cash dividends paid per common share $ 3.30 $ 3.15
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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Lockheed Martin Corporation
Consolidated Statements of Comprehensive Income
(unaudited; in millions)
Quarters Ended
March 30,
2025 March 31,
2024
Net earnings $ 1,712 $ 1,545
Other comprehensive income (loss), net of tax
Postretirement benefit plans
Amortization of net actuarial losses and prior service costs (credits), net of tax of $ 17 million in 2025 and $ 5 million in 2024
64 19
Other, net, net of tax of $ 6 million in 2025 and $ 0 million in 2024
65 ( 27 )
Other comprehensive income (loss), net of tax 129 ( 8 )
Comprehensive income $ 1,841 $ 1,537
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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Lockheed Martin Corporation
Consolidated Balance Sheets
(in millions, except par value)
March 30,
2025 December 31,
2024
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 1,803 $ 2,483
Receivables, net 2,024 2,351
Contract assets 14,677 12,957
Inventories 3,599 3,474
Other current assets 698 584
Total current assets 22,801 21,849
Property, plant and equipment, net 8,713 8,726
Goodwill 11,076 11,067
Intangible assets, net 1,952 2,015
Deferred income taxes 3,568 3,557
Other noncurrent assets 8,559 8,403
Total assets $ 56,669 $ 55,617
Liabilities and equity
Current liabilities
Accounts payable $ 3,821 $ 2,222
Salaries, benefits and payroll taxes 2,391 3,125
Contract liabilities 9,375 9,795
Current maturities of long-term debt 1,643 643
Other current liabilities 3,957 3,635
Total current liabilities 21,187 19,420
Long-term debt, net 18,661 19,627
Accrued pension liabilities 4,815 4,791
Other noncurrent liabilities 5,323 5,446
Total liabilities 49,986 49,284
Stockholders’ equity
Common stock, $ 1 par value per share
233 234
Additional paid-in capital — —
Retained earnings 14,773 14,551
Accumulated other comprehensive loss ( 8,323 ) ( 8,452 )
Total stockholders’ equity 6,683 6,333
Total liabilities and equity $ 56,669 $ 55,617
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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Lockheed Martin Corporation
Consolidated Statements of Cash Flows
(unaudited; in millions)
Quarters Ended
March 30,
2025 March 31,
2024
Operating activities
Net earnings $ 1,712 $ 1,545
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation and amortization 397 351
Stock-based compensation 60 61
Deferred income taxes ( 34 ) ( 77 )
Changes in assets and liabilities
Receivables, net 327 ( 125 )
Contract assets ( 1,720 ) ( 867 )
Inventories ( 125 ) ( 146 )
Accounts payable 1,680 1,301
Contract liabilities ( 420 ) ( 445 )
Income taxes 339 341
Qualified defined benefit pension plans 111 ( 1 )
Other, net ( 918 ) ( 303 )
Net cash provided by operating activities 1,409 1,635
Investing activities
Capital expenditures ( 454 ) ( 378 )
Other, net 24 6
Net cash (used for) investing activities ( 430 ) ( 372 )
Financing activities
Issuance of long-term debt, net of related costs — 1,980
Repurchases of common stock ( 750 ) ( 1,000 )
Dividends paid ( 796 ) ( 780 )
Other, net ( 113 ) ( 115 )
Net cash (used for) provided by financing activities ( 1,659 ) 85
Net change in cash and cash equivalents ( 680 ) 1,348
Cash and cash equivalents at beginning of period 2,483 1,442
Cash and cash equivalents at end of period $ 1,803 $ 2,790
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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Lockheed Martin Corporation
Consolidated Statements of Equity
(unaudited; in millions)
Common
Stock Additional
Paid-in
Capital Retained
Earnings Accumulated
Other
Comprehensive
Loss Total
Equity
Balance at December 31, 2024 $ 234 $ — $ 14,551 $ ( 8,452 ) $ 6,333
Net earnings — — 1,712 — 1,712
Other comprehensive income, net of tax — — — 129 129
Dividends declared — — ( 778 ) — ( 778 )
Repurchases of common stock ( 2 ) ( 36 ) ( 712 ) — ( 750 )
Stock-based awards, ESOP activity and other
1 36 — — 37
Balance at March 30, 2025 $ 233 $ — $ 14,773 $ ( 8,323 ) $ 6,683
Balance at December 31, 2023 $ 240 $ — $ 15,398 $ ( 8,803 ) $ 6,835
Net earnings — — 1,545 — 1,545
Other comprehensive loss, net of tax — — — ( 8 ) ( 8 )
Dividends declared — — ( 763 ) — ( 763 )
Repurchases of common stock ( 2 ) ( 40 ) ( 958 ) — ( 1,000 )
Stock-based awards, ESOP activity and other
1 40 — — 41
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.
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Lockheed Martin Corporation
Notes to Consolidated Financial Statements (unaudited)
NOTE 1 - BASIS OF PRESENTATION
We prepared these consolidated financial statements in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information, the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission (SEC) Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements.
In the opinion of management, these consolidated financial statements reflect all adjustments that are of a normal recurring nature necessary for a fair presentation of our results of operations, financial condition, and cash flows for the interim periods presented. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base these estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Our actual results may differ materially from these estimates. 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; environmental liabilities and assets for the portion of environmental costs that are probable of future recovery; evaluation of goodwill, intangible assets, investments and other assets for impairment; income taxes including deferred tax assets; fair value measurements; and contingencies. The consolidated financial statements include the accounts of subsidiaries we control and variable interest entities if we are the primary beneficiary. 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 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. This practice only affects interim periods; our fiscal year ends on December 31.
The results of operations for the interim periods presented are not necessarily indicative of results to be expected for the full year or future periods. Unless otherwise noted, we present all per share amounts cited in these consolidated financial statements on a “per diluted share” basis. 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, 2024 (2024 Form 10-K).
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
March 30,
2025 March 31,
2024
Weighted average common shares outstanding for basic computations 234.4 240.7
Weighted average dilutive effect of equity awards
0.9 0.9
Weighted average common shares outstanding for diluted computations
235.3 241.6
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 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:
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Lockheed Martin Corporation
Notes to Consolidated Financial Statements (unaudited) (continued)
Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS) and Space. 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
March 30,
2025 March 31,
2024
Sales
Aeronautics $ 7,057 $ 6,845
Missiles and Fire Control 3,373 2,993
Rotary and Mission Systems 4,328 4,088
Space 3,205 3,269
Total sales $ 17,963 $ 17,195
Operating costs and expenses
Aeronautics $ 6,337 $ 6,170
Missiles and Fire Control 2,908 2,686
Rotary and Mission Systems 3,858 3,665
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
Unallocated items
FAS/CAS pension operating adjustment 379 406
Intangible asset amortization expense ( 64 ) ( 61 )
Other, net
( 28 ) ( 61 )
Total unallocated items 287 284
Total consolidated operating profit $ 2,372 $ 2,029
Intersegment sales
Aeronautics $ 89 $ 70
Missiles and Fire Control 169 202
Rotary and Mission Systems 564 586
Space 83 107
Total intersegment sales $ 905 $ 965
(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
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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 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. 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 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 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. GAAP. 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.
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Lockheed Martin Corporation
Notes to Consolidated Financial Statements (unaudited) (continued)
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
Sales
Products $ 5,746 $ 3,017 $ 3,496 $ 2,677 $ 14,936
Services 1,311 356 832 528 3,027
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 sales $ 7,057 $ 3,373 $ 4,328 $ 3,205 $ 17,963
Sales by customer
U.S. Government $ 4,642 $ 2,391 $ 2,787 $ 3,129 $ 12,949
International (a)
2,405 978 1,468 71 4,922
U.S. commercial and other 10 4 73 5 92
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
Europe 1,247 395 304 22 1,968
Asia Pacific 840 224 633 47 1,744
Middle East 148 342 212 2 704
Other 170 17 319 — 506
Total sales $ 7,057 $ 3,373 $ 4,328 $ 3,205 $ 17,963
Quarter Ended March 31, 2024
Aeronautics MFC RMS Space Total
Sales
Products $ 5,592 $ 2,664 $ 3,241 $ 2,699 $ 14,196
Services 1,253 329 847 570 2,999
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 sales $ 6,845 $ 2,993 $ 4,088 $ 3,269 $ 17,195
Sales by customer
U.S. Government $ 4,666 $ 2,167 $ 2,840 $ 3,162 $ 12,835
International (a)
2,152 824 1,162 68 4,206
U.S. commercial and other 27 2 86 39 154
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
Europe 1,211 245 269 18 1,743
Asia Pacific 636 187 540 46 1,409
Middle East 203 370 162 4 739
Other 102 22 191 — 315
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. Government and direct commercial sales to international governments and other international customers.
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Lockheed Martin Corporation
Notes to Consolidated Financial Statements (unaudited) (continued)
Our Aeronautics business segment includes our largest program, the F-35 Lightning II, an international multi-role, multi-variant, stealth fighter aircraft. 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.
Assets
Total assets for each of our business segments were as follows (in millions):
March 30,
2025 December 31,
2024
Assets
Aeronautics $ 14,130 $ 13,223
Missiles and Fire Control 6,140 5,952
Rotary and Mission Systems 17,199 17,025
Space 7,617 7,388
Total business segment assets 45,086 43,588
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 other marketable investments.
NOTE 4 - CONTRACT ASSETS AND LIABILITIES
Contract assets include unbilled amounts typically resulting from sales under contracts when the percentage-of-completion cost-to-cost method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer. Contract liabilities include advance payments and billings in excess of revenue recognized. Contract assets and contract liabilities were as follows (in millions):
March 30,
2025 December 31,
2024
Contract assets $ 14,677 $ 12,957
Contract liabilities 9,375 9,795
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.
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Lockheed Martin Corporation
Notes to Consolidated Financial Statements (unaudited) (continued)
NOTE 5 - INVENTORIES
Inventories consisted of the following (in millions):
March 30,
2025 December 31,
2024
Materials, spares and supplies $ 679 $ 661
Work-in-process 2,720 2,617
Finished goods 200 196
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 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 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 (expense) income related to our qualified defined benefit pension plans consisted of the following (in millions):
Quarters Ended
March 30,
2025 March 31,
2024
Qualified defined benefit pension plans
Operating:
Service cost $ ( 13 ) $ ( 15 )
Non-operating:
Interest cost ( 368 ) ( 349 )
Expected return on plan assets 360 393
Amortization of actuarial losses ( 78 ) ( 65 )
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 ended March 30, 2025 and March 31, 2024.
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Lockheed Martin Corporation
Notes to Consolidated Financial Statements (unaudited) (continued)
NOTE 7 - LEGAL PROCEEDINGS AND CONTINGENCIES
Legal Proceedings
We are a party to litigation and other proceedings that arise in the ordinary course of our business, including matters arising under provisions relating to the protection of the environment, and are subject to contingencies related to certain businesses we previously owned. These types of matters could result in fines, penalties, cost reimbursements or contributions, compensatory or treble damages or non-monetary sanctions or relief. We believe the probability is remote that the outcome of each of these matters, including the legal proceedings described below, will have a material adverse effect on the company as a whole, notwithstanding that the unfavorable resolution of any matter may have a material effect on our net earnings and cash flows in the period in which it is recognized. Among the factors that we consider in this assessment are the nature of existing legal proceedings and claims, the asserted or possible damages or loss contingency (if estimable), the progress of the case, existing law and precedent, the opinions or views of legal counsel and other advisers, our experience in similar cases and the experience of other companies, the facts available to us at the time of assessment and how we intend to respond to the proceeding or claim. 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 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. Accordingly, unless otherwise indicated below in our discussion of legal proceedings, a reasonably possible loss or range of loss associated with any individual legal proceeding cannot be estimated.
Lockheed Martin v. Metropolitan Transportation Authority
On April 24, 2009, we filed a declaratory judgment action against the New York Metropolitan Transportation Authority and its Capital Construction Company (collectively, the MTA) asking the U.S. District Court for the Southern District of New York to find that the MTA is in material breach of our agreement based on the MTA’s failure to provide access to sites where work must be performed and the customer-furnished equipment necessary to complete the contract. The MTA filed an answer and counterclaim alleging that we breached the contract and subsequently terminated the contract for alleged default. The primary damages sought by the MTA are the costs to complete the contract and potential re-procurement costs. While we are unable to estimate the cost of another contractor to complete the contract and the costs of re-procurement, we note that our contract with the MTA had a total value of $ 323 million, of which $ 241 million was paid to us, and that the MTA is seeking damages of approximately $ 190 million. We dispute the MTA’s allegations and are defending against them. Additionally, following an investigation, our sureties on a performance bond related to this matter, who were represented by independent counsel, concluded that the MTA’s termination of the contract was improper. Finally, our declaratory judgment action was later amended to include claims for monetary damages against the MTA of approximately $ 95 million. This matter was taken under submission by the District Court in December 2014, after a five-week bench trial and the filing of post-trial pleadings by the parties. We continue to await a decision from the District Court. Although this matter relates to our former Information Systems & Global Solutions business (IS&GS), we retained responsibility for the litigation when we divested IS&GS in 2016.
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, 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.
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Lockheed Martin Corporation
Notes to Consolidated Financial Statements (unaudited) (continued)
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 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.
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. 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 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 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. Government contracts or that is determined not to be recoverable under U.S. 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 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
We have entered into standby letters of credit and surety bonds issued on our behalf by financial institutions, and we have directly issued guarantees to third parties primarily relating to advances received from customers and the guarantee of future performance on certain contracts. 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 $ 2.6 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 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. Generally, we also have cross-indemnities in place that may enable us to recover amounts that may be paid on behalf of a joint venture partner. Third-party guarantees do not include guarantees issued on behalf of subsidiaries and other consolidated entities.
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 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
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. 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
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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. U.S. Government investigations often take years to complete and many result in no adverse action against us. We also provide products and services to customers outside of the United States, which are subject to U.S. and foreign laws and regulations and foreign procurement policies and practices. Our compliance with local regulations or applicable U.S. Government regulations also may be audited or investigated.
Additionally, in the normal course of business, we provide warranties to our customers associated with certain product sales. 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. Warranty obligations incurred in connection with long-term production contracts are accounted for within the contract estimates at completion.
NOTE 8 - FAIR VALUE MEASUREMENTS
Assets and liabilities measured and recorded at fair value on a recurring basis consisted of the following (in millions):
March 30, 2025 December 31, 2024
Total Level 1 Level 2 Total Level 1 Level 2
Assets
Mutual funds $ 1,021 $ 1,021 $ — $ 1,072 $ 1,072 $ —
U.S. Government securities 81 — 81 116 — 116
Other securities 652 324 328 645 342 303
Derivatives 36 — 36 9 — 9
Liabilities
Derivatives 154 — 154 196 — 196
Substantially all assets measured at fair value, other than derivatives, represent assets held in a trust to fund certain of our non-qualified deferred compensation plans and are recorded in other noncurrent assets on our consolidated balance sheets. The fair values of mutual funds and certain other securities are determined by reference to the quoted market price per unit in active markets multiplied by the number of units held without consideration of transaction costs. The fair values of U.S. Government and certain other securities are determined using pricing models that use observable inputs (e.g., interest rates and yield curves observable at commonly quoted intervals), bids provided by brokers or dealers or quoted prices of securities with similar characteristics. 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 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. We transact business globally and are subject to risks associated with changing foreign currency exchange rates. We do not enter into or hold derivative instruments for speculative trading purposes. These contracts hedge forecasted foreign currency transactions in order to minimize fluctuations in our earnings and cash flows associated with changes in foreign currency exchange rates. We designate foreign currency hedges as cash flow hedges. 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
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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. 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. These swaps are designated as fair value hedges. For variable rate borrowings, we may use fixed interest rate swaps, effectively converting variable rate borrowings to fixed rate borrowings in order to minimize the impact of interest rate changes on earnings. These swaps are designated as cash flow hedges. 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 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.
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 $ 20.2 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).
NOTE 9 - STOCKHOLDERS’ EQUITY
Repurchases of Common Stock
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.
Dividends
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. These dividend-equivalents are accrued during the vesting period and are paid upon the vesting of the RSUs and PSUs, which primarily occurs in the first quarter each year.
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Notes to Consolidated Financial Statements (unaudited) (continued)
Accumulated Other Comprehensive Loss
Changes in the balance of AOCL, net of tax, consisted of the following (in millions):
Postretirement
Benefit Plans Other, net AOCL
Balance at December 31, 2024 $ ( 8,288 ) $ ( 164 ) $ ( 8,452 )
Other comprehensive income before reclassifications — 58 58
Amounts reclassified from AOCL
Amortization of net actuarial losses (a)
55 — 55
Amortization of net prior service costs (a)
9 — 9
Other — 7 7
Total reclassified from AOCL 64 7 71
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 (loss) before reclassifications — ( 41 ) ( 41 )
Amounts reclassified from AOCL
Amortization of net actuarial losses (a)
47 — 47
Amortization of net prior service credits (a)
( 28 ) — ( 28 )
Other — 14 14
Total reclassified from AOCL 19 14 33
Total other comprehensive income (loss) 19 ( 27 ) ( 8 )
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
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,
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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., labor, subcontractors, materials, overhead, general and administrative expenses, and offset or localization agreements). 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. 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
March 30,
2025 March 31,
2024
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
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Notes to Consolidated Financial Statements (unaudited) (continued)
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. cost-reimbursable or cost-plus-fee). 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 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. Due to the complex and often experimental nature of development programs, we may experience (and have experienced in the past) technical and quality issues during the development of new products or technologies for a variety of reasons. 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 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.
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Notes to Consolidated Financial Statements (unaudited) (continued)
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. 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, 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
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. It is converted into sales in future periods as work is performed or deliveries are made. For our cost-reimbursable and fixed-priced-incentive contracts, the estimated consideration we expect to receive pursuant to the terms of the contract may exceed the contractual award amount. 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. 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 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.
Income Taxes
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 November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 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. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which focuses on the rate reconciliation and income taxes paid. ASU No. 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
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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.
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Report of Independent Registered Public Accounting Firm
Board of Directors and Stockholders
Lockheed Martin Corporation
Results of Review of 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. generally accepted accounting principles.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2024, the related consolidated statements of earnings, comprehensive income, cash flows and equity for the year then ended, and the related notes (not presented herein); and in our report dated January 28, 2025, we expressed an unqualified audit opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2024, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
Basis for Review Results
These financial statements are the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the SEC and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
/s/ Ernst & Young LLP
Tysons, Virginia
April 22, 2025
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