LOCKHEED MARTIN CORP 10-Q

ITEM 1. Financial Statements Lockheed Martin Corporation Consolidated Statements of Earnings (unaudited; in millions, except per share data) Quarters Ended Nine Months Ended September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 Sales Products $ 15,311 $ 14,472 $ 45,396 $ 43,777 Services 3,298 2,632 9,331 8,644 Total sales 18,609 17,104 54,727 52,421 Operating costs and expenses Products ( 13,708 ) ( 12,964 ) ( 41,461 ) ( 39,368 ) Services ( 2,871 ) ( 2,272 ) ( 8,641 ) ( 7,457 ) Impairment and other charges — — ( 66 ) ( 87 ) Other unallocated, net 210 249 738 731 Total operating costs and expenses ( 16,369 ) ( 14,987 ) ( 49,430 ) ( 46,181 ) Gross profit 2,240 2,117 5,297 6,240 Other income, net 40 23 103 77 Operating profit 2,280 2,140 5,400 6,317 Interest expense ( 286 ) ( 256 ) ( 828 ) ( 772 ) Non-service FAS pension (expense) income ( 99 ) 16 ( 296 ) 47 Other non-operating income, net 43 18 115 109 Earnings before income taxes 1,938 1,918 4,391 5,701 Income tax expense ( 319 ) ( 295 ) ( 718 ) ( 892 ) Net earnings $ 1,619 $ 1,623 $ 3,673 $ 4,809 Earnings per common share Basic $ 6.98 $ 6.83 $ 15.74 $ 20.12 Diluted $ 6.95 $ 6.80 $ 15.69 $ 20.05 Cash dividends paid per common share $ 3.30 $ 3.15 $ 9.90 $ 9.45 The accompanying notes are an integral part of these unaudited consolidated financial statements. 3 Table of Contents Lockheed Martin Corporation Consolidated Statements of Comprehensive Income (unaudited; in millions) Quarters Ended Nine Months Ended September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 Net earnings $ 1,619 $ 1,623 $ 3,673 $ 4,809 Other comprehensive income, net of tax Postretirement benefit plans Amortization, net of tax of $ 16 million and $ 51 million in 2025 and $ 6 million and $ 16 million in 2024 65 19 193 57 Other, net of tax of $ 1 million and $ 17 million in 2025 and $ 3 million and $ 5 million in 2024 ( 10 ) 57 157 53 Other comprehensive income, net of tax 55 76 350 110 Comprehensive income $ 1,674 $ 1,699 $ 4,023 $ 4,919 The accompanying notes are an integral part of these unaudited consolidated financial statements. 4 Table of Contents Lockheed Martin Corporation Consolidated Balance Sheets (in millions, except par value) September 28, 2025 December 31, 2024 (unaudited) Assets Current assets Cash and cash equivalents $ 3,470 $ 2,483 Receivables, net 3,844 2,351 Contract assets 13,949 12,957 Inventories 3,749 3,474 Other current assets 924 584 Total current assets 25,936 21,849 Property, plant and equipment, net 8,722 8,726 Goodwill 11,313 11,067 Intangible assets, net 1,943 2,015 Deferred income taxes 3,413 3,557 Other noncurrent assets 8,949 8,403 Total assets $ 60,276 $ 55,617 Liabilities and equity Current liabilities Accounts payable $ 3,834 $ 2,222 Salaries, benefits and payroll taxes 3,065 3,125 Contract liabilities 10,259 9,795 Current maturities of long-term debt 1,669 643 Other current liabilities 4,147 3,635 Total current liabilities 22,974 19,420 Long-term debt, net 20,520 19,627 Accrued pension liabilities 4,861 4,791 Other noncurrent liabilities 5,740 5,446 Total liabilities 54,095 49,284 Stockholders’ equity Common stock, $ 1 par value per share 230 234 Additional paid-in capital — — Retained earnings 14,053 14,551 Accumulated other comprehensive loss ( 8,102 ) ( 8,452 ) Total stockholders’ equity 6,181 6,333 Total liabilities and equity $ 60,276 $ 55,617 The accompanying notes are an integral part of these unaudited consolidated financial statements. 5 Table of Contents Lockheed Martin Corporation Consolidated Statements of Cash Flows (unaudited; in millions) Nine Months Ended September 28, 2025 September 29, 2024 Operating activities Net earnings $ 3,673 $ 4,809 Adjustments to reconcile net earnings to net cash provided by operating activities Depreciation and amortization 1,224 1,100 Stock-based compensation 215 229 Deferred income taxes 72 ( 174 ) Impairment and other charges 66 87 Select program losses 1,615 248 Changes in assets and liabilities Receivables, net ( 1,493 ) ( 9 ) Contract assets ( 1,231 ) ( 1,136 ) Inventories ( 511 ) ( 155 ) Accounts payable 1,644 970 Contract liabilities 38 ( 139 ) Income taxes ( 100 ) 66 Qualified defined benefit pension plans 334 ( 2 ) Other, net ( 208 ) 55 Net cash provided by operating activities 5,338 5,949 Investing activities Capital expenditures ( 1,186 ) ( 1,103 ) Other, net ( 278 ) 149 Net cash (used for) investing activities ( 1,464 ) ( 954 ) Financing activities Issuance of long-term debt, net of related costs 1,985 1,980 Repayments of long-term debt ( 142 ) ( 168 ) Repurchases of common stock ( 2,250 ) ( 2,700 ) Dividends paid ( 2,332 ) ( 2,281 ) Other, net ( 148 ) ( 117 ) Net cash (used for) financing activities ( 2,887 ) ( 3,286 ) Net change in cash and cash equivalents 987 1,709 Cash and cash equivalents at beginning of period 2,483 1,442 Cash and cash equivalents at end of period $ 3,470 $ 3,151 The accompanying notes are an integral part of these unaudited consolidated financial statements. 6 Table of Contents Lockheed Martin Corporation Consolidated Statements of Equity For the Quarters Ended September 28, 2025 and September 29, 2024 (unaudited; in millions) Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Equity Balance at June 29, 2025 $ 232 $ — $ 13,259 $ ( 8,157 ) $ 5,334 Net earnings — — 1,619 — 1,619 Other comprehensive income, net of tax — — — 55 55 Dividends declared — — — — — Repurchases of common stock ( 2 ) ( 173 ) ( 825 ) — ( 1,000 ) Stock-based awards, ESOP activity and other — 173 — — 173 Balance at September 28, 2025 $ 230 $ — $ 14,053 $ ( 8,102 ) $ 6,181 Balance at June 30, 2024 $ 237 $ — $ 14,707 $ ( 8,769 ) $ 6,175 Net earnings — — 1,623 — 1,623 Other comprehensive income, net of tax — — — 76 76 Dividends declared — — 4 — 4 Repurchases of common stock ( 2 ) ( 171 ) ( 677 ) — ( 850 ) Stock-based awards, ESOP activity and other 1 171 — — 172 Balance at September 29, 2024 $ 236 $ — $ 15,657 $ ( 8,693 ) $ 7,200 The accompanying notes are an integral part of these unaudited consolidated financial statements. 7 Table of Contents Lockheed Martin Corporation Consolidated Statements of Equity For the Nine Months Ended September 28, 2025 and September 29, 2024 (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 — — 3,673 — 3,673 Other comprehensive income, net of tax — — — 350 350 Dividends declared — — ( 2,324 ) — ( 2,324 ) Repurchases of common stock ( 5 ) ( 398 ) ( 1,847 ) — ( 2,250 ) Stock-based awards, ESOP activity and other 1 398 — — 399 Balance at September 28, 2025 $ 230 $ — $ 14,053 $ ( 8,102 ) $ 6,181 Balance at December 31, 2023 $ 240 $ — $ 15,398 $ ( 8,803 ) $ 6,835 Net earnings — — 4,809 — 4,809 Other comprehensive income, net of tax — — — 110 110 Dividends declared — — ( 2,273 ) — ( 2,273 ) Repurchases of common stock ( 6 ) ( 417 ) ( 2,277 ) — ( 2,700 ) Stock-based awards, ESOP activity and other 2 417 — — 419 Balance at September 29, 2024 $ 236 $ — $ 15,657 $ ( 8,693 ) $ 7,200 The accompanying notes are an integral part of these unaudited consolidated financial statements. 8 Table of Contents 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, cost recognition and profit booking rates; 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. Additionally, certain prior year amounts in the consolidated statements of cash flows have been reclassified within operating activities to conform to the current year’s presentation. As previously disclosed, during the second quarter of 2025, we paid $ 360 million, in cash, for the acquisition of Amentum’s Rapid Solutions business (Rapid Solutions) and 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. We close our books and records on the last Sunday of each interim calendar quarter, which was on September 28 for the third quarter of 2025 and September 29 for the third 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 Nine Months Ended September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 Weighted average common shares outstanding for basic computations 231.9 237.5 233.3 239.0 Weighted average dilutive effect of equity awards 0.9 1.1 0.8 0.9 Weighted average common shares outstanding for diluted computations 232.8 238.6 234.1 239.9 We compute basic and diluted earnings per common share by dividing net earnings by the respective weighted average number of common shares outstanding for the periods presented. Our calculation of diluted earnings per 9 Table of Contents Lockheed Martin Corporation Notes to Consolidated Financial Statements (unaudited) (continued) common share also includes the dilutive effects for the assumed vesting of outstanding restricted stock units (RSUs) and performance stock units (PSUs) based on the treasury stock method. There were no significant anti-dilutive equity awards during the quarters and nine months ended September 28, 2025 and September 29, 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: 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. 10 Table of Contents 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 Nine Months Ended September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 Sales Aeronautics $ 7,256 $ 6,487 $ 21,733 $ 20,609 Missiles and Fire Control 3,624 3,175 10,430 9,270 Rotary and Mission Systems 4,373 4,367 12,696 13,003 Space 3,356 3,075 9,868 9,539 Total sales $ 18,609 $ 17,104 $ 54,727 $ 52,421 Operating costs and expenses Aeronautics $ 6,571 $ 5,835 $ 20,425 $ 18,531 Missiles and Fire Control 3,114 2,718 8,977 8,057 Rotary and Mission Systems 3,868 3,879 11,896 11,605 Space 3,026 2,804 8,804 8,632 Total operating costs and expenses $ 16,579 $ 15,236 $ 50,102 $ 46,825 Operating profit (a) Aeronautics $ 682 $ 659 $ 1,304 $ 2,089 Missiles and Fire Control 510 456 1,454 1,217 Rotary and Mission Systems 506 483 855 1,408 Space 331 272 1,072 943 Total business segment operating profit 2,029 1,870 4,685 5,657 Unallocated items FAS/CAS pension operating adjustment 380 406 1,138 1,218 Impairment and other charges — — ( 66 ) ( 87 ) Intangible asset amortization expense ( 70 ) ( 61 ) ( 197 ) ( 183 ) Other, net ( 59 ) ( 75 ) ( 160 ) ( 288 ) Total unallocated items 251 270 715 660 Total consolidated operating profit $ 2,280 $ 2,140 $ 5,400 $ 6,317 Intersegment sales Aeronautics $ 85 $ 125 $ 271 $ 262 Missiles and Fire Control 218 210 616 616 Rotary and Mission Systems 580 569 1,778 1,729 Space 77 94 244 300 Total intersegment sales $ 960 $ 998 $ 2,909 $ 2,907 (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 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. 11 Table of Contents Lockheed Martin Corporation Notes to Consolidated Financial Statements (unaudited) (continued) 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. 12 Table of Contents 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 September 28, 2025 Aeronautics MFC RMS Space Total Sales Products $ 5,807 $ 3,256 $ 3,509 $ 2,739 $ 15,311 Services 1,449 368 864 617 3,298 Total sales $ 7,256 $ 3,624 $ 4,373 $ 3,356 $ 18,609 Sales by contract type Fixed-price $ 4,758 $ 2,638 $ 2,733 $ 878 $ 11,007 Cost-reimbursable 2,498 986 1,640 2,478 7,602 Total sales $ 7,256 $ 3,624 $ 4,373 $ 3,356 $ 18,609 Sales by customer U.S. Government $ 4,681 $ 2,633 $ 2,764 $ 3,293 $ 13,371 International (a) 2,571 989 1,564 55 5,179 U.S. commercial and other 4 2 45 8 59 Total sales $ 7,256 $ 3,624 $ 4,373 $ 3,356 $ 18,609 Sales by geographic region United States $ 4,685 $ 2,635 $ 2,809 $ 3,301 $ 13,430 Europe 1,245 401 343 22 2,011 Asia Pacific 926 281 764 32 2,003 Middle East 138 295 199 1 633 Other 262 12 258 — 532 Total sales $ 7,256 $ 3,624 $ 4,373 $ 3,356 $ 18,609 Nine Months Ended September 28, 2025 Aeronautics MFC RMS Space Total Sales Products $ 17,513 $ 9,338 $ 10,337 $ 8,208 $ 45,396 Services 4,220 1,092 2,359 1,660 9,331 Total sales $ 21,733 $ 10,430 $ 12,696 $ 9,868 $ 54,727 Sales by contract type Fixed-price $ 14,383 $ 7,525 $ 7,688 $ 2,732 $ 32,328 Cost-reimbursable 7,350 2,905 5,008 7,136 22,399 Total sales $ 21,733 $ 10,430 $ 12,696 $ 9,868 $ 54,727 Sales by customer U.S. Government $ 13,969 $ 7,464 $ 8,409 $ 9,649 $ 39,491 International (a) 7,742 2,957 4,117 201 15,017 U.S. commercial and other 22 9 170 18 219 Total sales $ 21,733 $ 10,430 $ 12,696 $ 9,868 $ 54,727 Sales by geographic region United States $ 13,991 $ 7,473 $ 8,579 $ 9,667 $ 39,710 Europe 3,896 1,177 926 66 6,065 Asia Pacific 2,750 728 1,998 128 5,604 Middle East 445 1,012 630 7 2,094 Other 651 40 563 — 1,254 Total sales $ 21,733 $ 10,430 $ 12,696 $ 9,868 $ 54,727 13 Table of Contents Lockheed Martin Corporation Notes to Consolidated Financial Statements (unaudited) (continued) Quarter Ended September 29, 2024 Aeronautics MFC RMS Space Total Sales Products $ 5,550 $ 2,811 $ 3,554 $ 2,557 $ 14,472 Services 937 364 813 518 2,632 Total sales $ 6,487 $ 3,175 $ 4,367 $ 3,075 $ 17,104 Sales by contract type Fixed-price $ 4,276 $ 2,211 $ 2,691 $ 865 $ 10,043 Cost-reimbursable 2,211 964 1,676 2,210 7,061 Total sales $ 6,487 $ 3,175 $ 4,367 $ 3,075 $ 17,104 Sales by customer U.S. Government $ 4,465 $ 2,272 $ 2,867 $ 3,081 $ 12,685 International (a) 1,973 901 1,403 61 4,338 U.S. commercial and other 49 2 97 ( 67 ) 81 Total sales $ 6,487 $ 3,175 $ 4,367 $ 3,075 $ 17,104 Sales by geographic region United States $ 4,514 $ 2,274 $ 2,964 $ 3,014 $ 12,766 Europe 1,047 334 309 18 1,708 Asia Pacific 612 216 632 43 1,503 Middle East 206 333 190 — 729 Other 108 18 272 — 398 Total sales $ 6,487 $ 3,175 $ 4,367 $ 3,075 $ 17,104 Nine Months Ended September 29, 2024 Aeronautics MFC RMS Space Total Sales Products $ 17,113 $ 8,217 $ 10,500 $ 7,947 $ 43,777 Services 3,496 1,053 2,503 1,592 8,644 Total sales $ 20,609 $ 9,270 $ 13,003 $ 9,539 $ 52,421 Sales by contract type Fixed-price $ 13,805 $ 6,331 $ 7,980 $ 2,690 $ 30,806 Cost-reimbursable 6,804 2,939 5,023 6,849 21,615 Total sales $ 20,609 $ 9,270 $ 13,003 $ 9,539 $ 52,421 Sales by customer U.S. Government $ 14,072 $ 6,680 $ 8,706 $ 9,350 $ 38,808 International (a) 6,422 2,581 4,035 174 13,212 U.S. commercial and other 115 9 262 15 401 Total sales $ 20,609 $ 9,270 $ 13,003 $ 9,539 $ 52,421 Sales by geographic region United States $ 14,187 $ 6,689 $ 8,968 $ 9,365 $ 39,209 Europe 3,528 788 860 55 5,231 Asia Pacific 1,933 583 1,922 114 4,552 Middle East 603 1,153 552 5 2,313 Other 358 57 701 — 1,116 Total sales $ 20,609 $ 9,270 $ 13,003 $ 9,539 $ 52,421 (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. 14 Table of Contents 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 26 % of our total consolidated sales for both the quarter and nine months ended September 28, 2025 and 22 % and 24 % of our total consolidated sales for the quarter and nine months ended September 29, 2024. Assets Total assets for each of our business segments were as follows (in millions): September 28, 2025 December 31, 2024 Assets Aeronautics $ 14,726 $ 13,223 Missiles and Fire Control 6,899 5,952 Rotary and Mission Systems 16,972 17,025 Space 7,865 7,388 Total business segment assets 46,462 43,588 Corporate assets (a) 13,814 12,029 Total assets $ 60,276 $ 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): September 28, 2025 December 31, 2024 Contract assets $ 13,949 $ 12,957 Contract liabilities 10,259 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 nine months ended September 28, 2025, contract assets increased $ 1.0 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 nine months ended September 28, 2025 and September 29, 2024. Contract liabilities increased $ 464 million during the nine months ended September 28, 2025, primarily due to payments received in excess of revenue recognized on performance obligations (primarily for international F-35 at Aeronautics and Sikorsky at RMS). During the quarter and nine months ended September 28, 2025, we recognized $ 1.0 billion and $ 5.6 billion of our contract liabilities at December 31, 2024 as revenue. During the quarter and nine months ended September 29, 2024, we recognized $ 866 million and $ 4.9 billion of our contract liabilities at December 31, 2023 as revenue. 15 Table of Contents Lockheed Martin Corporation Notes to Consolidated Financial Statements (unaudited) (continued) NOTE 5 - INVENTORIES Inventories consisted of the following (in millions): September 28, 2025 December 31, 2024 Materials, spares and supplies $ 670 $ 661 Work-in-process 2,882 2,617 Finished goods 197 196 Total inventories $ 3,749 $ 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 September 28, 2025 and December 31, 2024, $ 1.7 billion and $ 1.5 billion of pre-contract costs (primarily F-35 and classified programs at Aeronautics and Sikorsky programs at RMS) 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 Nine Months Ended September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 Qualified defined benefit pension plans Operating: Service cost $ ( 12 ) $ ( 15 ) $ ( 38 ) $ ( 45 ) Non-operating: Interest cost ( 368 ) ( 349 ) ( 1,104 ) ( 1,048 ) Expected return on plan assets 359 393 1,079 1,179 Amortization of actuarial losses ( 78 ) ( 64 ) ( 235 ) ( 194 ) Amortization of prior service (costs) credits ( 12 ) 36 ( 36 ) 110 Non-service FAS pension (expense) income ( 99 ) 16 ( 296 ) 47 Total FAS pension (expense) income $ ( 111 ) $ 1 $ ( 334 ) $ 2 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 quarters and nine months ended September 28, 2025 and September 29, 2024 and is part of other non-operating income, net on our consolidated statements of earnings. The required funding of our qualified defined benefit pension plans is determined in accordance with the Employee Retirement Income Security Act of 1974 (ERISA), as amended, along with consideration of CAS and Internal Revenue Code rules. We made no contributions to our qualified defined benefit pension plans during the quarters and nine months ended September 28, 2025 and September 29, 2024. 16 Table of Contents 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. Securities-Related Actions On July 28, 2025, a putative class action was filed in United States District Court for the Southern District of New York against us and certain current and former members of our senior management. The shareholder plaintiff asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (Exchange Act), on behalf of persons and entities that purchased or otherwise acquired our securities between January 23, 2024 and July 21, 2025. Plaintiff seeks unspecified losses allegedly caused by alleged misstatements about certain programs in the Aeronautics and MFC business segments, certain international helicopter programs in the Sikorsky business, and certain asset impairments and tax matters, which were allegedly revealed to be false when we announced estimated losses relating to those programs and matters. In addition, based on allegations substantially similar to the above-described securities class action, on September 11, 2025, a shareholder derivative complaint was filed in the United States District Court for the District of Maryland against current and former members of our Board of Directors and senior management. We are named as a nominal defendant. The derivative complaint asserts claims under Sections 14(a), 20(a), and 10(b) of the Exchange Act, as well as claims for breach of fiduciary duty, abuse of control, gross mismanagement, corporate waste, unjust enrichment, and contribution. Based on the information available to date, we do not believe that these matters will have a material adverse effect on our results of operations, financial condition, or liquidity. 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- 17 Table of Contents Lockheed Martin Corporation Notes to Consolidated Financial Statements (unaudited) (continued) 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 September 28, 2025 and December 31, 2024, the aggregate amount of liabilities recorded relative to environmental remediation matters was $ 667 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 $ 610 million and $ 619 million at September 28, 2025 and 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. 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. 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. If regulations require substantially more stringent clean-up levels of perchlorate or hexavalent chromium or increased cleanup costs at our sites associated with PFAS, we expect a corresponding increase in both our estimates for environmental liabilities and the related assets for the portion of costs that are probable of future recovery. The portion of those costs that is not expected to be recoverable under U.S. Government contracts would be expensed in the quarter in which the liability becomes probable. Letters of Credit and Surety Bonds 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 $ 2.8 billion and $ 2.7 billion at September 28, 2025 and December 31, 2024. 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 18 Table of Contents Lockheed Martin Corporation Notes to Consolidated Financial Statements (unaudited) (continued) 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 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): September 28, 2025 December 31, 2024 Total Level 1 Level 2 Total Level 1 Level 2 Assets Mutual funds $ 1,115 $ 1,115 $ — $ 1,072 $ 1,072 $ — U.S. Government securities 85 — 85 116 — 116 Other securities 719 375 344 645 342 303 Derivatives 35 — 35 9 — 9 Liabilities Derivatives 134 — 134 196 — 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 to fair value only if there is an observable price change or reduced for impairment, if applicable. The carrying amounts of the investments were $ 599 million and $ 600 million at September 28, 2025 and December 31, 2024. Net gains or losses recorded due to adjustments in valuation and/or sales of investments were not material for the quarters and nine months ended September 28, 2025 and September 29, 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 19 Table of Contents Lockheed Martin Corporation Notes to Consolidated Financial Statements (unaudited) (continued) 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. 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 September 28, 2025 and December 31, 2024. The aggregate notional amount of our outstanding foreign currency hedges was $ 7.0 billion and $ 7.5 billion at September 28, 2025 and December 31, 2024. The fair values of our outstanding interest rate swaps and foreign currency hedges at September 28, 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 nine months ended September 28, 2025 and September 29, 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, 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 $ 22.5 billion and $ 20.2 billion at September 28, 2025 and December 31, 2024. The outstanding principal amount of debt, including short-term and long-term debt, was $ 23.4 billion and $ 21.6 billion at September 28, 2025 and December 31, 2024, excluding $ 1.2 billion and $ 1.3 billion of unamortized discounts and issuance costs at September 28, 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 nine months ended September 28, 2025, we repurchased 5.0 million shares of our common stock in open market purchases for $ 2.3 billion. The total remaining authorization for future common stock repurchases under our share repurchase program was $ 7.1 billion as of September 28, 2025. In October 2025, subsequent to our third quarter, our Board of Directors authorized an increase of $ 2.0 billion to our share repurchase program, increasing our total authorization of the current program to $ 9.1 billion for future purchases. 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. 20 Table of Contents Lockheed Martin Corporation Notes to Consolidated Financial Statements (unaudited) (continued) Dividends We paid cash dividends of $ 2.3 billion ($ 9.90 per share) during the nine months ended September 28, 2025. In October 2025, subsequent to our third quarter, we authorized a fourth quarter 2025 dividend payment of $ 3.45 per share, an increase of $ 0.15 per share over our third quarter 2025 dividend of $ 3.30 per share. 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. 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 — 116 116 Amounts reclassified from AOCL Amortization of net actuarial losses (a) 165 — 165 Amortization of net prior service costs (a) 28 — 28 Other — 41 41 Total reclassified from AOCL 193 41 234 Total other comprehensive income 193 157 350 Balance at September 28, 2025 $ ( 8,095 ) $ ( 7 ) $ ( 8,102 ) Balance at December 31, 2023 $ ( 8,704 ) $ ( 99 ) $ ( 8,803 ) Other comprehensive income before reclassifications — 23 23 Amounts reclassified from AOCL Amortization of net actuarial losses (a) 141 — 141 Amortization of net prior service credits (a) ( 84 ) — ( 84 ) Other — 30 30 Total reclassified from AOCL 57 30 87 Total other comprehensive income 57 53 110 Balance at September 29, 2024 $ ( 8,647 ) $ ( 46 ) $ ( 8,693 ) (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 $ 65 million and $ 19 million, net of tax, for the quarters ended September 28, 2025 and September 29, 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 $ 10 million and $( 28 ) million, for the quarters ended September 28, 2025 and September 29, 2024. See “Note 6 - Postretirement Benefit Plans”. 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 21 Table of Contents Lockheed Martin Corporation Notes to Consolidated Financial Statements (unaudited) (continued) 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, 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. 22 Table of Contents Lockheed Martin Corporation Notes to Consolidated Financial Statements (unaudited) (continued) The following table presents the effect of profit booking rate adjustments on our financial results (in millions, except per share data): Quarters Ended Nine Months Ended September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 Sales $ 371 $ 358 $ 681 $ 1,013 Segment operating profit 365 375 ( 200 ) 990 % of segment operating profit 18 % 20 % ( 4 ) % 18 % Net earnings 288 296 ( 158 ) 782 Diluted earnings per share 1.24 1.24 ( 0.67 ) 3.26 During the nine months ended September 28, 2025, we recorded losses of $ 950 million on an ongoing classified program at our Aeronautics business segment, $ 570 million on Canadian Maritime Helicopter Program (CMHP) and $ 95 million on Türkish Utility Helicopter Program (TUHP) at our RMS business segment (see discussions that follows within this footnote), and $ 105 million of unfavorable profit adjustments on C-130 programs at our Aeronautics business segment. In addition to these losses and unfavorable profit adjustments, we also recorded $ 130 million of favorable adjustments upon completion on certain commercial civil space programs at Space, and $ 80 million favorable adjustments upon completion of a classified program at Aeronautics. During the nine months ended September 29, 2024, we recognized reach-forward losses of $ 145 million on the same ongoing classified program at our Aeronautics business segment ($ 80 million was recognized during the quarter ended September 29, 2024) and 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. 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 results in any period that they are recognized. Any such losses are recognized in the period in which the loss is evident. Aeronautics Classified Program 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. Challenges and performance issues continued into 2025 and had a greater impact on schedule and costs than previously estimated. There were also new, unanticipated events that occurred in 2025 that impacted the program’s performance, as described below. As a result of performance issues with the program, 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. The events that occurred in 2025, and the comprehensive review completed in the second quarter of 2025, resulted in significant changes in the program’s processes and testing approach and led to an extension of the program’s schedule, which drove a substantial increase in cost estimates. As a result, during the second quarter of 2025, we recognized additional reach-forward losses of $ 950 million across both phases of the program. The primary drivers of the 23 Table of Contents Lockheed Martin Corporation Notes to Consolidated Financial Statements (unaudited) (continued) additional reach-forward losses recognized in the second quarter of 2025 included: (1) software development performance degradation and integration findings observed over a continued period; (2) learnings in recent software and build experience on another program specifically relevant to the program; (3) significant changes in test plan resulting from customer discussions and changes in test execution strategy; (4) safety-critical and other necessary design and engineering changes in response to certain observed performance degradation and a discrete event; and (5) complete schedule realignment, including as a result of items (1) through (4). As of September 28, 2025, cumulative losses recognized to date on this program remained at approximately $ 1.8 billion across both phases. As of September 28, 2025, $ 530 million of the losses remained accrued in other current liabilities in our consolidated balance sheet. We 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. Due to the nature of the highly complex design and systems integration on this program, we may need to record additional losses in future periods if performance issues, increases in scope, or increases in cost from prior estimates indicate that further losses are evident. Our estimates may change, in particular, as we conduct further development and testing on the program, which may lead to new findings or cause us to modify our expectations or understandings of the risks inherent in the program. 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. 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. MFC Classified 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 September 28, 2025, cumulative losses recognized on the program remained at approximately $ 1.46 billion in total, of which, $ 1.25 billion remained accrued in other current liabilities in our consolidated balance sheet. Canadian Maritime Helicopter Program Our RMS business segment has been performing the Canadian Maritime Helicopter Program (CMHP) under contracts with the Canadian government. 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. The program has experienced performance issues and we have been in discussions with the Canadian government to potentially restructure certain contractual terms and conditions that may be beneficial to both parties. We 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. 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 these discussions with the customer and decisions made by management, we revised our cost and sales estimates for this program and recognized additional losses of $ 570 million on the program during the second quarter of 2025. As of September 28, 2025, cumulative losses recognized on the program remained at approximately $ 670 million and approximately $ 655 million of contract assets remained on the balance sheet. The final aircraft under the program was delivered to Canada during the third quarter of 2025 and has been subsequently accepted. 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. These items in addition to 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 financial results in any period that they are recognized. 24 Table of Contents Lockheed Martin Corporation Notes to Consolidated Financial Statements (unaudited) (continued) Türkish Utility Helicopter Program 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 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 the potential to restructure the program, including changing the scope of work. However, any restructuring discussions may be unsuccessful or may result in changes in our estimates. 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 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 September 28, 2025, cumulative losses recognized to date on the program remained at approximately $ 130 million and the program remains in a contract liability position on the balance sheet. Additionally, if we are unable to reach an agreement on mutually agreeable terms, we or our customer could at any time 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. 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 September 28, 2025, our ending backlog was $ 179.1 billion. We expect to recognize approximately 36 % of our backlog over the next 12 months and a total of approximately 61 % over the next 24 months as revenue with the remainder recognized thereafter. 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. Debt Issuance and Commercial Paper On July 23, 2025, we issued a total of $ 2.0 billion of senior unsecured notes, consisting of $ 500 million aggregate principal amount of 4.15 % Notes due 2028 (2028 Notes), $ 750 million aggregate principal amount of 4.40 % Notes due 2030 (2030 Notes) and $ 750 million aggregate principal amount of 5.00 % Notes due 2035 (2028 Notes and, together with the 2030 Notes and 2035 Notes, the Notes). Net proceeds of $ 1,985 million were received from the offering after deducting pricing discounts and debt issuance costs, which are being amortized and recorded as interest expense over the term of the Notes. We will pay interest on the Notes semi-annually in arrears on February 15 and August 15 of each year with the first payment to be made on February 15, 2026. We may, at our option, redeem the Notes of any series in 25 Table of Contents Lockheed Martin Corporation Notes to Consolidated Financial Statements (unaudited) (continued) whole or in part at any time and from time to time at a redemption price equal to the greater of 100 % of the principal amount of the Notes to be redeemed or an applicable make-whole amount, plus accrued and unpaid interest to the date of redemption. The Notes rank equally in right of payment with all of our existing unsecured and unsubordinated indebtedness. Additionally, 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. There were no commercial paper borrowings outstanding at September 28, 2025 and December 31, 2024. All of our commercial paper borrowings had maturities less than three months from the date of issuance. We may, as conditions warrant, issue commercial paper backed by our revolving credit facility to manage the timing of cash flows. Revolving Credit Facility At September 28, 2025 , we had a $ 3.0 billion Revolving Credit Facility with various banks, with the option to increase the commitments under the Revolving Credit Facility by an additional amount of up to $ 500 million (for an aggregate amount of up to $ 3.5 billion), subject to the existing lender approval per the terms and conditions of the agreement. Effective August 28, 2025, we amended the agreement for the Revolving Credit Facility (Revolving Credit Agreement) to extend the expiration date of the Revolving Credit Agreement from August 24, 2029 to August 24, 2030. The Revolving Credit Agreement is available for any of our lawful corporate purposes, including supporting commercial paper borrowings. Borrowings under the Revolving Credit Agreement are unsecured and bear interest at rates set forth in the Revolving Credit Agreement. There were no borrowings under the Revolving Credit Agreement at September 28, 2025 . Income Taxes Our effective income tax rates were 16.5 % and 16.4 % for the quarter and nine months ended September 28, 2025 and 15.4 % and 15.6 % for the quarter and nine months ended September 29, 2024. The higher effective income tax rates for the quarter and nine months ended September 28, 2025 were attributable to the One Big Beautiful Bill Act (the Tax Act) primarily driven by lower tax deductions for foreign derived intangible income partially offset by the favorable resolution of certain federal income tax audit items with the Internal Revenue Service (IRS). The rates for all periods benefited from research and development tax credits, dividends paid to our defined contribution plans with an employee stock ownership plan feature, tax deductions for foreign derived intangible income and employee equity awards. On July 4, 2025, the President signed into law the Tax Act. Key provisions include the permanent reinstatement of immediate expensing for domestic research expenditures, the restoration of full expensing for qualified machinery, equipment and other short-lived assets, and several modifications to existing international tax provisions. The enactment of the Tax Act resulted in an increase of $ 132 million to income tax expense for the quarter ended September 28, 2025. We are still awaiting further IRS and Treasury guidance on the Tax Act, but based upon our interpretation of the recently enacted law, we estimate an increase of $ 175 million to income tax expense and a decrease of $ 600 million to cash taxes in 2025 as compared to prior year. As a result of the Tax Act, we expect to be subject to the corporate alternative minimum tax starting in 2025. 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 IRS. As part of the IRS Compliance Assurance Process (CAP) program, the IRS initially approved that tax 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 tax 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 tax accounting method change (the Proposed Adjustments). The Proposed Adjustments sought approximately $ 4.6 billion of additional federal income tax (excluding interest). We are in ongoing discussions with the IRS in an effort to resolve the matter. As of December 31, 2024, our liabilities associated with uncertain tax positions were not material. As of the quarter ended September 28, 2025, our liabilities associated with uncertain tax positions increased to $ 366 million, primarily attributable to the Proposed Adjustments partially offset by the favorable resolution of certain other federal income tax audit items with the IRS. As of the quarter ended September 28, 2025, interest and penalties related to uncertain tax 26 Table of Contents Lockheed Martin Corporation Notes to Consolidated Financial Statements (unaudited) (continued) positions, which are included in income tax expense, increased to $ 112 million with $ 109 million representing the cumulative amount related to the Proposed Adjustments. NOTE 11 - RECENT ACCOUNTING PRONOUNCEMENTS In September 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2025-06, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This guidance removes all references to project stages throughout ASC 350-40 and clarifies the threshold entities apply to begin capitalizing costs. Under the new standard, cost capitalization should only commence when an entity has committed to funding a software project and it is probable the project will be completed and the software will be used for its intended function. The amendments are effective for annual reporting periods beginning after December 15, 2027 and interim reporting periods within those annual reporting periods. Entities may apply the guidance using a prospective, retrospective or modified transition approach. Early adoption is permitted as of the beginning of an annual reporting period. We are currently determining the preferred transition approach and assessing the impact of the ASU on our disclosures and financial statements, including the timing of adoption. In November 2024, the 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 results of operations, financial condition or cash flows. 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 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. 27 Table of Contents 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 September 28, 2025, the related consolidated statements of earnings, comprehensive income and equity for the quarters and nine months ended September 28, 2025 and September 29, 2024, and consolidated statements of cash flows for the nine months ended September 28, 2025 and September 29, 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 October 21, 2025 28 Table of Contents