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Item 1. Financial Statements

2025-07-22 compared with 2025-04-22 · 256 added, 107 removed, 530 unchanged (41% of the section changed)

3 unchanged sentences

in millions, except per share data)

Quarters Ended

2025 March 31,

Quarters Ended Six Months Ended

2025 June 30,

2024 June 29,

2025 June 30,

Products $ 15,149 $ 15,109 $ 30,085 $ 29,305

4 unchanged sentences

Services ( 3,130 ) ( 2,582 ) ( 5,770 ) ( 5,185 )

Impairment and other charges ( 66 ) ( 87 ) ( 66 ) ( 87 )

Other unallocated, net 244 197 528 482

16 unchanged sentences

Consolidated Statements of Comprehensive Income

Quarters Ended

2025 March 31,

Quarters Ended Six Months Ended

2025 June 30,

2024 June 29,

2025 June 30,

Net earnings $ 342 $ 1,641 $ 2,054 $ 3,186

Other comprehensive income (loss), net of tax

Other comprehensive income, 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

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

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

Amortization, net, net of tax of $ 18 million and $ 35 million in 2025 and $ 5 million and $ 10 million in 2024

Other, net, net of tax of $ 9 million and $ 15 million in 2025 and $ 8 million in 2024

102 23 167 ( 4 )

Other comprehensive income, net of tax 166 42 295 34

Comprehensive income $ 508 $ 1,683 $ 2,349 $ 3,220

22 unchanged sentences

Contract liabilities 9,861 9,795

Current maturities of long-term debt 1,643 643

Current maturities of long-term debt and commercial paper 3,118 643

Other current liabilities 4,961 3,635

14 unchanged sentences

Consolidated Statements of Cash Flows

Quarters Ended

2025 March 31,

Six Months Ended

2025 June 30,

Operating activities

4 unchanged sentences

Deferred income taxes ( 561 ) ( 145 )

Impairment and other charges 66 87

Program losses 1,615 165

Changes in assets and liabilities

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

Repayments of long-term debt ( 142 ) ( 168 )

Proceeds from commercial paper, net 1,449 —

Repurchases of common stock ( 1,250 ) ( 1,850 )

1 unchanged sentence

Other, net ( 145 ) ( 116 )

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

Net cash (used for) financing activities ( 1,655 ) ( 1,686 )

Net change in cash and cash equivalents ( 1,190 ) 1,081

4 unchanged sentences

Consolidated Statements of Equity

For the Quarters Ended June 29, 2025 and June 30, 2024

Stock Additional

2 unchanged sentences

Comprehensive

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

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

Net earnings — — 342 — 342

3 unchanged sentences

Stock-based awards, ESOP activity and other — 189 — — 189

Balance at June 29, 2025 $ 232 $ — $ 13,259 $ ( 8,157 ) $ 5,334

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

Net earnings — — 1,641 — 1,641

Other comprehensive income, net of tax — — — 42 42

Dividends declared — — ( 1,514 ) — ( 1,514 )

Repurchases of common stock ( 2 ) ( 206 ) ( 642 ) — ( 850 )

Stock-based awards, ESOP activity and other — 206 — — 206

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

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

Lockheed Martin Corporation

Consolidated Statements of Equity

For the Six Months Ended June 29, 2025 and June 30, 2024

Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

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

Net earnings — — 2,054 — 2,054

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

Other comprehensive income, net of tax — — — 295 295

Dividends declared — — ( 2,324 ) — ( 2,324 )

1 unchanged sentence

Stock-based awards, ESOP activity and other

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

1 225 — — 226

Balance at June 29, 2025 $ 232 $ — $ 13,259 $ ( 8,157 ) $ 5,334

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

Net earnings — — 3,186 — 3,186

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

Dividends declared — — ( 2,277 ) — ( 2,277 )

Repurchases of common stock ( 4 ) ( 246 ) ( 1,600 ) — ( 1,850 )

Stock-based awards, ESOP activity and other

1 246 — — 247

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

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

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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.

On June 26, 2025, we paid $ 360 million, in cash, to close our acquisition of Amentum’s Rapid Solutions business (Rapid Solutions).

The acquisition of Rapid Solutions is expected to enhance our Space business segment′s capabilities, particularly in radar and payload technology, and support our customers′ evolving needs for domain awareness and real- time missions.

The purchase price was allocated to the estimated fair value of net tangible and intangible assets acquired, with any excess purchase price recorded as goodwill.

As a result, we recorded goodwill of $ 195 million at our Space business segment.

The final determination of the fair values of certain assets and liabilities will be completed within the measurement period of up to one year from the acquisition date.

Rapid Solutions operates within our Space business segment and the financial results of Rapid Solutions have been included within our operating results in the period post-acquisition.

We close our books and records on the last Sunday of each interim calendar quarter, which was on June 29 for the second quarter of 2025 and June 30 for the second 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.

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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).

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

NOTE 2 - EARNINGS PER COMMON SHARE

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

Quarters Ended

2025 March 31,

Quarters Ended Six Months Ended

2025 June 30,

2024 June 29,

2025 June 30,

Weighted average common shares outstanding for basic computations 233.5 238.9 234.0 239.8

Weighted average dilutive effect of equity awards

0.8 0.7 0.8 0.8

Weighted average common shares outstanding for diluted computations

234.3 239.6 234.8 240.6

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.

There were no significant anti-dilutive equity awards during the quarters and six months ended June 29, 2025 and June 30, 2024.

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

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

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

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

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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.

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

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

Quarters Ended

2025 March 31,

Quarters Ended Six Months Ended

2025 June 30,

2024 June 29,

2025 June 30,

Aeronautics $ 7,420 $ 7,277 $ 14,477 $ 14,122

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Total operating costs and expenses $ 17,599 $ 16,102 $ 33,523 $ 31,589

Operating profit (a)

Operating profit (loss) (a)

Aeronautics $ ( 98 ) $ 751 $ 622 $ 1,430

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FAS/CAS pension operating adjustment 379 406 758 812

Impairment and other charges

( 66 ) ( 87 ) ( 66 ) ( 87 )

Intangible asset amortization expense ( 63 ) ( 61 ) ( 127 ) ( 122 )

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Rotary and Mission Systems 632 574 1,198 1,160

Space 84 99 167 206

Total intersegment sales $ 1,044 $ 944 $ 1,949 $ 1,909

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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

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.

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

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

Quarter Ended March 30, 2025

Quarter Ended June 29, 2025

Aeronautics MFC RMS Space Total

19 unchanged sentences

Total sales $ 7,420 $ 3,433 $ 3,995 $ 3,307 $ 18,155

Quarter Ended March 31, 2024

Six Months Ended June 29, 2025

Aeronautics MFC RMS Space Total

19 unchanged sentences

Total sales $ 14,477 $ 6,806 $ 8,323 $ 6,512 $ 36,118

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

Quarter Ended June 30, 2024

Aeronautics MFC RMS Space Total

Products $ 5,971 $ 2,742 $ 3,705 $ 2,691 $ 15,109

Services 1,306 360 843 504 3,013

Total sales $ 7,277 $ 3,102 $ 4,548 $ 3,195 $ 18,122

Sales by contract type

Fixed-price $ 4,945 $ 2,124 $ 2,812 $ 925 $ 10,806

Cost-reimbursable 2,332 978 1,736 2,270 7,316

Total sales $ 7,277 $ 3,102 $ 4,548 $ 3,195 $ 18,122

Sales by customer

Government $ 4,941 $ 2,241 $ 2,999 $ 3,107 $ 13,288

International (a)

2,297 856 1,470 45 4,668

commercial and other 39 5 79 43 166

Total sales $ 7,277 $ 3,102 $ 4,548 $ 3,195 $ 18,122

Sales by geographic region

United States $ 4,980 $ 2,246 $ 3,078 $ 3,150 $ 13,454

Europe 1,270 209 282 19 1,780

Asia Pacific 685 180 750 25 1,640

Middle East 194 450 200 1 845

Other 148 17 238 — 403

Total sales $ 7,277 $ 3,102 $ 4,548 $ 3,195 $ 18,122

Six Months Ended June 30, 2024

Aeronautics MFC RMS Space Total

Products $ 11,563 $ 5,406 $ 6,946 $ 5,390 $ 29,305

Services 2,559 689 1,690 1,074 6,012

Total sales $ 14,122 $ 6,095 $ 8,636 $ 6,464 $ 35,317

Sales by contract type

Fixed-price $ 9,529 $ 4,120 $ 5,289 $ 1,825 $ 20,763

Cost-reimbursable 4,593 1,975 3,347 4,639 14,554

Total sales $ 14,122 $ 6,095 $ 8,636 $ 6,464 $ 35,317

Sales by customer

Government $ 9,607 $ 4,408 $ 5,839 $ 6,269 $ 26,123

International (a)

4,449 1,680 2,632 113 8,874

commercial and other 66 7 165 82 320

Total sales $ 14,122 $ 6,095 $ 8,636 $ 6,464 $ 35,317

Sales by geographic region

United States $ 9,673 $ 4,415 $ 6,004 $ 6,351 $ 26,443

Europe 2,481 454 551 37 3,523

Asia Pacific 1,321 367 1,290 71 3,049

Middle East 397 820 362 5 1,584

Other 250 39 429 — 718

Total sales $ 14,122 $ 6,095 $ 8,636 $ 6,464 $ 35,317

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

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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.

Sales for the F-35 program represented approximately 28 % and 27 % of our total consolidated sales for the quarter and six months ended June 29, 2025 and 26 % and 25 % of our total consolidated sales for the quarter and six months ended June 30, 2024.

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

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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.

During the six months ended June 29, 2025, contract assets increased $ 1.9 billion primarily due to the F-35 program at Aeronautics.

There were no significant credit or impairment losses related to our contract assets during the quarters and six months ended June 29, 2025 and June 30, 2024.

Contract liabilities increased $ 66 million during the six months ended June 29, 2025, primarily due to payments received in excess of revenue recognized on performance obligations.

During the quarter and six months ended June 29, 2025, we recognized $ 1.3 billion and $ 4.5 billion of our contract liabilities at December 31, 2024 as revenue.

During the quarter and six months ended June 30, 2024, we recognized $ 1.7 billion and $ 4.1 billion of our contract liabilities at December 31, 2023 as revenue.

Lockheed Martin Corporation

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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.

As of both June 29, 2025 and December 31, 2024, $ 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

2025 March 31,

Quarters Ended Six Months Ended

2025 June 30,

2024 June 29,

2025 June 30,

Qualified defined benefit pension plans

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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.

Total FAS income for our other postretirement benefit plans was not material during the quarters and six months ended June 29, 2025 and June 30, 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.

We made no contributions to our qualified defined benefit pension plans during the quarters and six months ended June 29, 2025 and June 30, 2024.

Lockheed Martin Corporation

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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.

Based on our estimates, at June 29, 2025 and December 31, 2024, the aggregate amount of liabilities recorded relative to environmental remediation matters was $ 669 million and $ 677 million, respectively, most of which are recorded in other noncurrent liabilities on our consolidated balance sheets.

We have recorded assets for the portion of environmental costs that are probable of future recovery totaling $ 611 million and $ 619 million at June 29, 2025 and

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

December 31, 2024, respectively, most of which are recorded in other noncurrent assets on our consolidated balance sheets.

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

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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.

If regulations require substantially more stringent clean-up levels of 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.

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

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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 $ 2.6 billion and $ 2.7 billion at March 30, 2025 and December 31, 2024.

We had total outstanding letters of credit and surety bonds aggregating $ 2.6 billion and $ 2.7 billion at June 29, 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.

At June 29, 2025 and December 31, 2024, third-party guarantees totaled $ 105 million and $ 351 million, of which approximately 83 % 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.

2 unchanged sentences

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

At 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.

At June 29, 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

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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

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

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

suspension of export privileges.

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 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.

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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

June 29, 2025 December 31, 2024

Total Level 1 Level 2 Total Level 1 Level 2

11 unchanged sentences

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.

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 to fair value only if there is an observable price change or reduced for impairment, if applicable.

The carrying amounts of the investments were $ 601 million and $ 600 million at June 29, 2025 and December 31, 2024.

Due to adjustments in valuation and/or sales of investments, we recorded net gains of $ 19 million ($ 14 million, or $ 0.06 per share, after tax) and $ 20 million ($ 15 million, or $ 0.06 per share, after tax) during the quarter and six months ended June 29, 2025.

We recorded net gains of $ 9 million ($ 7 million, or $ 0.03 per share, after-tax) and $ 14 million ($ 11 million, or $ 0.04 per share, after-tax) during the quarter and six months ended June 30, 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 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

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

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

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 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 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 aggregate notional amount of our outstanding interest rate swaps was $ 1.3 billion at June 29, 2025 and December 31, 2024.

The aggregate notional amount of our outstanding foreign currency hedges was $ 7.9 billion and $ 7.5 billion at June 29, 2025 and December 31, 2024.

The fair values of our outstanding interest rate swaps and foreign currency hedges at June 29, 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 and six months ended June 29, 2025 and June 30, 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.

In addition to the financial instruments listed in the table above, we hold other financial instruments, including cash and cash equivalents, receivables, accounts payable, commercial paper 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 value of our outstanding debt and commercial paper was $ 21.6 billion and $ 20.2 billion at June 29, 2025 and December 31, 2024.

The outstanding principal amount of debt and commercial paper, including short-term and long-term debt, was $ 22.9 billion and $ 21.6 billion at June 29, 2025 and December 31, 2024, excluding $ 1.2 billion and $ 1.3 billion of unamortized discounts and issuance costs at June 29, 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).

1 unchanged sentence

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.

During the six months ended June 29, 2025, we repurchased 2.7 million shares of our common stock in open market purchases for $ 1.3 billion.

The total remaining authorization for future common stock repurchases under our share repurchase program was $ 8.1 billion as of June 29, 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 $ 796 million ($ 3.30 per share) during the quarter ended March 30, 2025.

We paid cash dividends of $ 1.6 billion ($ 6.60 per share) during the six months ended June 29, 2025.

Additionally, we declared a third quarter 2025 dividend totaling approximately $ 770 million ($ 3.30 per share), which will be paid in September 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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Amortization of net prior service costs (a)

Other — 25 25

Total reclassified from AOCL 128 25 153

Total other comprehensive income 128 167 295

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

Balance at June 29, 2025 $ ( 8,160 ) $ 3 $ ( 8,157 )

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

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Total other comprehensive income (loss) 38 ( 4 ) 34

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

Balance at June 30, 2024 $ ( 8,666 ) $ ( 103 ) $ ( 8,769 )

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

These amounts include $ 64 million and $ 19 million, net of tax, for the quarters ended June 29, 2025 and June 30, 2024, which are comprised of the amortization of net actuarial losses of $ 55 million and $ 47 million, and the amortization of net prior service costs (credits) of $ 9 million and $( 28 ) million, for the quarters ended June 29, 2025 and June 30, 2024.

See “Note 6 - Postretirement Benefit Plans”.

NOTE 10 - OTHER

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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,

Significant estimates related to

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.

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, 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.

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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,

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

Quarters Ended Six Months Ended

2025 June 30,

2024 June 29,

2025 June 30,

Sales $ ( 361 ) $ 383 $ 142 $ 655

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Diluted earnings per share ( 3.53 ) 1.39 ( 1.90 ) 2.02

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

During the quarter ended June 29, 2025, we recorded losses of $ 950 million on an ongoing classified program at our Aeronautics business segment, and $ 570 million on Canadian Maritime Helicopter Program (CMHP) and $ 95 million on Türkish Utility Helicopter Program (TUHP) at our RMS business segment.

During the six months ended June 29, 2025, in

Lockheed Martin Corporation

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.

addition to the losses above, we recorded $ 125 million of adjustments resulting from favorable performance upon completion on certain commercial civil space programs at Space and an $ 80 million favorable adjustment upon completion of a classified program at Aeronautics.

During the six months ended June 30, 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 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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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 have experienced significant performance issues on an existing classified program at our Aeronautics business segment.

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

Phases within the program involve highly complex design and systems integration and we had previously recognized reach-forward losses amounting to $ 730 million on the initial phase and $ 95 million on the additional phases.

Challenges and performance issues continued into 2025 and had a greater impact on schedule and costs than previously estimated.

As a result, Aeronautics performed a comprehensive review of its design, integration, test, and other processes to achieve the technical requirements of the program, which was completed in the second quarter of 2025.

Based on this review and ongoing discussions with the customer and suppliers, Aeronautics made significant changes to its processes and testing approach, resulting in significant updates to the program’s schedule and cost estimates.

As a result, during the second quarter of 2025, we recognized additional reach-forward losses on the initial phase of $ 690 million and on additional phases of $ 260 million.

The drivers that gave rise to the growth recognized on the initial phase and downstream impacts on estimates of cost and profitability in additional phases include:

(1) observed software development performance degradation and integration findings;

(2) learnings in recent software and build experience on other programs;

(3) significant changes in test plan;

(4) safety-critical and other necessary design and engineering changes;

and (5) complete schedule realignment.

As of June 29, 2025, cumulative losses recognized to date on this program were approximately $ 1.4 billion on the initial phase and $ 355 million on the additional phases.

As of June 29, 2025, $ 583 million remained accrued in other current liabilities in our consolidated balance sheet.

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.

Any such losses could be material to our financial results in any period that they are recognized.

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.

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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)

losses of approximately $ 1.31 billion.

As of June 29, 2025, cumulative losses recognized on the program remained at approximately $ 1.46 billion in total, of which, $ 1.30 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.

The program 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.

While we continue to be in discussions with the Canadian government to potentially restructure certain contractual terms and conditions that may be beneficial to both parties, and entered into a contract modification in 2024 to better align contract scope with the Canadian government’s need, which resulted in a reduction in our contract assets in the fourth quarter of 2024 and first quarter of 2025, any restructuring discussions may be prolonged or unsuccessful, and could result in a contract termination, and are dependent upon Canadian government resources and priorities and other factors outside of our control, such as trade relations with the United States.

Communications with the customer during the second quarter of 2025 led to subsequent decisions made by us to focus on providing additional mission capabilities, enhanced logistical support, fleet life extension, and revised expectations regarding flight hours.

Based on the ongoing discussions with the customer and decisions made by management, we revised our cost and sales estimates for this program.

As a result, during the second quarter of 2025 we recognized additional losses of $ 570 million on the program.

As of June 29, 2025, cumulative losses recognized on the program were approximately $ 670 million and approximately $ 680 million of contract assets remained on the balance sheet.

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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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.

We have been in discussions with our prime contract 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, including recent discussions of a potential mutually agreeable framework to restructure the program, including changing the scope of work.

Our customer has asserted that it is entitled to penalties and damages, 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 additional penalties and damages.

In light of the status of the continuing discussions with our prime contract customer and the current status of the TUHP program, we recognized a loss of $ 95 million in the second quarter of 2025.

As of June 29, 2025, cumulative losses recognized to date on the program were approximately $ 130 million and the program remains in a contract liability position on the balance sheet.

Additionally, if we are unable to finalize an agreement on mutually agreeable terms, 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 in any period that they are recognized.

Commercial Paper

We have agreements in place with financial institutions to provide for the issuance of commercial paper.

The outstanding balance of commercial paper can fluctuate daily and the amount outstanding during the period may be greater or less than the amount reported at the end of the period.

As of June 29, 2025, we had $ 1.4 billion of commercial paper borrowings with a weighted-average rate of 4.55 %.

As of December 31, 2024 we had no commercial paper borrowings outstanding.

All of our commercial paper borrowings had maturities of up to three months or less from the date of issuance.

We may, as conditions warrant, continue to issue commercial paper backed by our revolving credit facility to manage the timing of cash flows.

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

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

As of June 29, 2025, our ending backlog was $ 166.5 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.

Impairment and Other Charges

During the second quarter of 2025, we recorded charges totaling $ 66 million ($ 52 million, or $ 0.22 per share, after-tax) primarily for the write-off of fixed assets resulting from the U.S.

Air Force’s Next Generation Air Dominance (NGAD) competition and down-select decision.

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.

Our effective income tax rates were 18.0 % and 16.3 % for the quarter and six months ended June 29, 2025 and 15.8 % for both the quarter and six months ended June 30, 2024.

The higher effective income tax rates for the quarter and six months ended June 29, 2025 were primarily attributable to increased interest expense on our uncertain tax position partially offset by changes in pre-tax earnings due to program losses previously described.

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

In our Annual Report on Form 10-K for the year ended December 31, 2018, we described our adoption of Accounting Standards Codification (ASC) 606 for certain manufacturing contracts.

In connection with that change and the associated changes to the income recognition rules enacted in the 2017 Tax Cuts and Jobs Act, we correspondingly changed our method of accounting for U.S.

federal income tax purposes with the Internal Revenue Service (IRS).

As part of the IRS Compliance Assurance Process (CAP) program, the IRS initially approved that accounting method change for 2018 and 2019 without any adjustments, stating in writing that our new tax accounting method was an acceptable method that clearly reflected income.

After an additional review of the accounting method change in subsequent years, the IRS issued to us a Revenue Agent’s Report (RAR) for 2018-2019 on May 20, 2025 with an accompanying Notice of Proposed Adjustment (NOPA) for 2018-2020 in relation to our accounting method change (the Proposed Adjustments).

The Proposed Adjustments, which seek approximately $ 4.6 billion of additional federal income tax (excluding interest), are based on the premise that we must recognize revenue as performance obligations on a contract are satisfied and as advance payments are received but must defer costs until delivery of the finished product.

The Proposed Adjustments create a mismatch between revenue and costs, effectively disallow recognition of cost of goods sold for impacted contracts, and result in gross receipts taxation for each year at issue.

We strongly disagree with the IRS’s claims and are pursuing applicable administrative remedies with the IRS Independent Office of Appeals and, if necessary, judicial remedies if an acceptable administrative resolution cannot be reached.

We do not expect resolution of this matter within twelve months and cannot predict with certainty the timing of such resolution.

We believe our reserves for tax contingencies are adequate;

however, if this matter is resolved unfavorably, there could be a material impact on our profitability and future cash flows.

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

As of December 31, 2024, our liabilities associated with uncertain tax positions were not material.

As of the quarter ended June 29, 2025, our liabilities associated with uncertain tax positions increased to $ 512 million with a corresponding increase to net deferred tax assets primarily attributable to the Proposed Adjustments.

As of the quarter ended June 29, 2025, interest and penalties related to uncertain tax positions, which are included in income tax expense, increased to $ 129 million with $ 103 million representing the cumulative amount related to the Proposed Adjustments.

NOTE 11 - RECENT ACCOUNTING PRONOUNCEMENTS

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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.

The new standard is effective for annual periods beginning after 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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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”) .

We have reviewed the accompanying consolidated balance sheet of Lockheed Martin Corporation (the Company) as of June 29, 2025, the related consolidated statements of earnings, comprehensive income and equity for the quarters and six months ended June 29, 2025 and June 30, 2024, and consolidated statements of cash flows for the six months ended June 29, 2025 and June 30, 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

April 22, 2025

July 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