What changed in this filing

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Item 1. Business

2026-01-29 compared with 2025-01-28 · 59 added, 59 removed, 228 unchanged (34% of the section changed)

We are a global aerospace and defense company principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services.

We also provide a broad range of management, engineering, technical, scientific, logistics, system integration and cybersecurity services.

Our main areas of focus are in defense, space, intelligence, homeland security and information technology, including cybersecurity.

We serve both U.S.

and international customers with products and services that have defense, civil and commercial applications, with our principal customers being agencies of the U.S.

Our 21st Century Security ® vision is to accelerate the adoption of advanced networking and other leading-edge technologies into the American defense enterprise, while enhancing the performance and value of our platforms and products for our customers.

The aim of 21st Century Security is to integrate and continuously upgrade new and existing systems across all domains with advanced, open-architecture networking and operational technologies that make defense forces more agile, adaptive and unpredictable, enabling overmatch and strengthening deterrence today and into the future.

21st Century Security guides our strategy and investments.

As our growth pillars continue to evolve, we are focusing on advancing all-domain mission solutions through investments in digital technologies such as Artificial Intelligence (AI)/Machine Learning (ML), Autonomy and Crewed/Uncrewed Teaming, Generative Design and other technologies and capabilities enabling Combined Joint All-Domain Command and Control (CJADC2).

Innovations in these areas will expand capability, improve interoperability, increase demand for our multi-domain solutions and drive efficient conversion of backlog into growth across our portfolio.

We have well established programs across our business segments that continue to experience growth, including F-35 sustainment activity (Aeronautics);

increased Patriot Advanced Capability-3 (PAC-3) production rates and increased demand for High Mobility Artillery Rocket System (HIMARS ® ) and Guided Multiple Launch Rocket Systems (GMLRS) (Missiles and Fire Control);

radar surveillance systems and CH-53K King Stallion heavy lift helicopter (Rotary and Mission Systems);

and the modernization of and enhancements to the Trident II D5 Fleet Ballistic Missile (FBM) (Space).

Additionally, our teams continue to transform our products and rapidly innovate for the future, developing 6th generation air dominance technologies within Skunk Works ® , demonstrating autonomous capabilities with the X-62A (F-16) and optionally piloted BLACK HAWK ® , creating new Joint All-Domain Operating systems with Defense of Guam and AIR 6500 in Australia, establishing small-to-medium satellite capabilities to support proliferated space constellations and advancing hypersonic capabilities.

Finally, we are always in pursuit of new program awards to develop future platforms that enable us to continue to strengthen our national defense and advance deterrence and global security.

Keys to enabling success of our strategy include developing and investing in differentiating technologies, forging strategic partnerships, including with commercial companies, executing on our multi-year business transformation initiative to enhance our digital infrastructure and increase efficiencies and collaboration throughout our business and maintaining fiscal discipline.

Underpinning our ability to execute our strategy is our talent and culture.

We invest substantially in our people to ensure that our workforce has the technical skills necessary to succeed, and we expect to continue to invest internally in innovative technologies that address rapidly evolving mission requirements for our customers.

We also will continue to evaluate our portfolio and will make strategic acquisitions or divestitures, as appropriate, while deepening our connection to commercial industry through cooperative partnerships, joint ventures and equity investments.

We are a global aerospace and defense technology company that builds and sustains the solutions America and its allies need to deter conflict and advance national security and scientific exploration objectives.

Our four business areas – Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space – work as one company offering integrated solutions, at scale, across all warfighting domains.

Our defense, space, intelligence, homeland security, information technology, and cybersecurity capabilities serve U.S.

and international customers in defense, civil and commercial applications.

Our principal customers are agencies of the U.S.

Government and allies.

Recent regional conflicts have demonstrated the integral role Lockheed Martin products play in protecting people, and we are rapidly transforming our business to meet increased demand.

We are expanding production capacity to continue delivering at scale, and we are harnessing leading-edge technologies like artificial intelligence and autonomy, open-architecture systems, and advanced networking to make defense forces more agile, adaptive and unpredictable.

Our goal is to deliver overwhelming capability and value – quickly, at the needed quantities and with the greatest effectiveness – to enable overmatch and strengthen deterrence today and into the future.

We achieve this by developing and investing in differentiating technologies, forging strategic partnerships, including with commercial companies, executing on our multi-year business transformation initiative, maintaining fiscal discipline, and continuing to cultivate the greatest aerospace and defense workforce talent and culture in the world.

We invest substantially in our people to ensure that our people have the technical skills necessary to succeed, and we expect to continue to invest internally in innovative technologies that address rapidly evolving mission requirements for our customers.

We also will continue to evaluate our organizational structure and portfolio and will make strategic changes, acquisitions or divestitures, as appropriate, while deepening our connection to commercial industry through cooperative partnerships, joint ventures and equity investments.

Business Segments

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• F-22 Raptor – air dominance and multi-role fifth generation stealth fighter.

The F-35 program is our largest program, generating 26% of our total consolidated net sales, as well as 65% of Aeronautics’ net sales in 2024.

The F-35 program is our largest program, generating 27% of our total consolidated sales, as well as 67% of Aeronautics’ sales in 2025.

The F-35 program consists of multiple development, production and sustainment contracts.

Development is focused on modernization of F-35’s capability and addressing emerging threats.

Development is focused on modernizing F-35’s capability and addressing emerging threats.

Sustainment provides logistics and training support for the aircraft delivered to F-35 customers.

For additional information on the F-35 program, see “Status of the F‑35 Program” in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

See also Item 1A - Risk Factors for a discussion of risks related to the F-35 program.

Aircraft production is expected to continue well into the future given the U.S.

Government’s stated objective of procuring 2,456 aircraft for the U.S.

Air Force, U.S.

Marine Corps, and U.S.

We also have commitments from seven international partner countries and 12 FMS customers, who collectively during the year indicated their intent to purchase 72 additional aircraft beyond their existing programs of record.

The F-35 program is significant and complex, and we, our customers, and our and our customers’ suppliers continually review aircraft performance, schedule, cost and requirements.

Our current areas of focus include technology modernization, life-cycle cost containment, delivery schedule optimization, and aircraft readiness enhancements.

For additional information on the F-35 program, see Item 1A - Risk Factors for a discussion of risks related to the F-35 program.

In addition to the aircraft programs above, Aeronautics is involved in advanced development programs incorporating innovative design and rapid prototype applications.

Our Advanced Development Programs (ADP) organization, also known as Skunk Works ® , is focused on future systems, including unmanned and manned aerial systems and next generation capabilities for air dominance, hypersonics, intelligence, surveillance, reconnaissance, situational awareness and air mobility.

Our Advanced Development Programs (ADP) organization, also known as Skunk Works ® , is focused on future systems, including unmanned and manned aerial systems and next generation capabilities

for air dominance, hypersonics, intelligence, surveillance, reconnaissance, situational awareness and air mobility.

We continue to explore technology advancement and insertion into our existing aircraft.

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fire control systems;

mission operations support, readiness, engineering support and integration services;

ground vehicles;

and energy management solutions.

and mission operations support, readiness, engineering support and integration services.

MFC also has contracts with the U.S.

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Government and international customers designed to engage targets both within and outside of the Earth’s atmosphere.

• The Multiple Launch Rocket System (MLRS), Precision Strike Missile (PrSM), Joint Air-to-Surface Standoff Missile (JASSM), Long Range Anti-Ship Missile (LRASM), and Hellfire tactical and strike missile programs.

• The Multiple Launch Rocket System (MLRS), Precision Strike Missile (PrSM), Joint Air-to-Surface Standoff Missile (JASSM), Long Range Anti-Ship Missile (LRASM), Hellfire and Joint Air-to-Ground Missile (JAGM) tactical and strike missile programs.

MLRS is a highly mobile, automatic system that fires surface-to-surface rockets and missiles from the M270 and High Mobility Artillery Rocket System (HIMARS) platforms produced for the U.S.

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Navy, and international customers.

Hellfire is an air-to-ground missile used on rotary and fixed-wing aircraft, which is produced for the U.S.

Hellfire and JAGM are air-to-ground missile used on rotary and fixed-wing aircraft, which is produced for the U.S.

Army, Navy, Marine Corps and international customers.

• The Javelin program, which is a one-person portable and platform-employable anti-tank and multi-target precision weapon system.

Javelin was developed and is currently produced for the U.S.

Army and U.S.

Marine Corps by a joint venture between Lockheed Martin and RTX Corporation.

• The Apache fire control system, Sniper Advanced Targeting Pod (SNIPER ® ) and Infrared Search and Track (IRST21 ® ) sensors and global sustainment programs.

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Army to design, develop and build hypersonic strike weapons.

• The Javelin program, which is a one-person portable and platform-employable anti-tank and multi-target precision weapon system.

Javelin was developed and is currently produced for the U.S.

Army and U.S.

Marine Corps by a joint venture between Lockheed Martin and RTX Corporation.

Rotary and Mission Systems

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Government for various classified programs.

RMS’ major programs include:

RMS’ major lines of business include:

• Sikorsky helicopter programs such as those related to the Black Hawk, Seahawk ® and CH-53K King Stallion heavy lift helicopters, which are in service with U.S.

and foreign governments, the Combat Rescue Helicopter (CRH) utilized by the

Air Force, and the VH-92A helicopter for the U.S.

Marine One transport mission, Presidential helicopter, of which we made the final aircraft delivery under the program in 2024.

and foreign governments, and the Combat Rescue Helicopter (CRH) utilized by the U.S.

• Integrated warfare systems and sensors (IWSS) programs such as Aegis Combat System (Aegis) programs that serve as an air and missile defense system for the U.S.

Navy and international customers and are also a sea and land-based element of the U.S.

missile defense system, and the Littoral Combat Ship (LCS), Multi-Mission Surface Combatant (MMSC), and Canadian Surface Combatant (CSC) programs to provide surface combatant ships for the U.S.

missile defense system, and the Littoral Combat Ship (LCS), Multi-Mission Surface Combatant (MMSC), and River-Class Destroyer (RCD) (formerly known as Canadian Surface Combatant) programs to provide surface combatant ships for the U.S.

Navy and international customers that are designed to operate in shallow waters and the open ocean.

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Navy, and Australia's Joint Air Battle Management System (AIR 6500).

• Training and logistics solutions (TLS) programs such as those providing sustainment services and programs that provide simulators and associated training to U.S.

• Training, logistics and simulation (TLS) programs such as those providing sustainment services and programs that provide simulators and associated training to U.S.

military and foreign government customers.

Effective January 2026, the IWSS and C6ISR lines of business within RMS were restructured and renamed Sensors, Effectors & Mission Systems (SEMS) and Mission Integrated Command and Control (MIC2).

This includes realignment of various programs, such as Aegis and RCD moving from what was historically IWSS to MIC2, which more closely aligns with C6ISR.

SEMS and MIC2 will therefore incorporate an updated mix of existing program portfolios designed to accelerate mission‑focused solutions and enhance our customers’ experience.

Space is engaged in the research and design, development, engineering and production of satellites, space transportation systems, and strategic, advanced strike, and defensive systems.

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Space’s major programs include:

• The Next Generation Overhead Persistent Infrared (Next Gen OPIR) system, which provides the U.S.

Space Force with enhanced worldwide missile warning capabilities.

• The Trident II D5 Fleet Ballistic Missile (FBM), a program with the U.S.

Navy for the only submarine-launched intercontinental ballistic missile currently in production in the U.S.

• The Orion Multi-Purpose Crew Vehicle (Orion), a spacecraft for NASA utilizing new technology for human exploration missions beyond low earth orbit.

• The Next Generation Overhead Persistent Infrared (Next Gen OPIR) system, which provides the U.S.

Space Force with enhanced worldwide missile warning capabilities.

• Next Generation Interceptor (NGI), a program with the Missile Defense Agency (MDA) utilizing next generation propulsion and sensors to provide homeland missile defense.

• The Orion Multi-Purpose Crew Vehicle (Orion), NASA’s next generation exploration-class crewed vehicle for human exploration to the Moon and throughout the solar system.

• Global Positioning System (GPS) III, a program to modernize the GPS satellite system for the U.S.

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Navy to design, develop and build hypersonic strike weapons.

• The Transport Layer programs, small satellite capabilities to support proliferated space constellations and early warning communications for the Space Development Agency.

• The Transport and Tracking Layer programs, multiple tranches of small satellites to support the proliferated space architecture, with constellations of missile warning and communications satellites for the Space Development Agency.

Intellectual Property

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Other important materials and components, on which certain of our products rely, include aluminum, titanium, specialty steel, carbon fiber and advanced microelectronics, such as semiconductors.

We rely on other companies to provide materials, components and products and to perform a portion of the services that are provided to our customers under the terms of most of our contracts.

Although long-term agreements have historically helped enable a continued supply of these materials, supply chain challenges, supplier disputes, regulatory restrictions, and inflationary pressures have caused certain parts’ shortages, extended lead times and pricing escalations affecting certain sources of supply.

We rely on other companies to provide materials, components and products and to

perform a portion of the services that are provided to our customers under the terms of most of our contracts.

Although long-term agreements have historically helped enable a continued supply of these materials, supply chain challenges, supplier disputes, regulatory restrictions, and inflationary pressures have resulted in certain parts’ shortages, extended lead times and pricing escalations affecting certain sources of supply.

We are working with U.S.

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Due to the specialized nature of our business, our performance depends on identifying, attracting, developing, motivating and retaining a highly skilled workforce with the requisite skills and, in many cases, security clearances, in multiple areas, including engineering, science, manufacturing, information technology, cybersecurity, business development and strategy and management.

Our human capital management strategy, which we refer to as our people strategy, tightly aligns to our business needs and technology strategy and focused in 2024 on continuing to accelerate the transformation of our technology for workforce management through investments in upgraded systems and processes, increasing our ability to meet the quickly changing needs of our business, and maintaining a working environment and culture that is supportive of all employees and reflects our core value of “Respect Others.” We structure our people strategy and its implementation to comply with the laws and regulations to which we are subject as a federal government contractor.

Our human capital management strategy, which we refer to as our people strategy, tightly aligns to our business needs and technology strategy.

In 2025, it focused on continuing to accelerate the transformation of our workforce management technology through investments in upgraded systems and processes, increasing our ability to meet the quickly changing needs of our business, and maintaining a working environment and culture that is supportive of all employees and reflects our core value of “Respect Others.” We structure our people strategy and its implementation to comply with the laws and regulations to which we are subject as a federal government contractor.

As of December 31, 2025, we had a highly skilled workforce made up of approximately 123,000 employees, including approximately 72,000 engineers, scientists and information technology professionals.

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We strive to hire, develop and retain the top talent in the industry.

During 2024, we hired nearly 9,200 employees and we hired 3,900 college hires and interns during the 2023-24 academic year.

An integral part of our people strategy is early career hiring through college and intern pipelines, particularly in technical fields and critical skills areas.

We seek to access the broadest possible pool of talent to enable us to meet our hiring needs, and we work to expand Lockheed Martin’s brand awareness and positioning as a best place to work.

During 2025, we hired nearly 10,800 new employees into Lockheed Martin, nearly 1,500 of which were college hires.

In addition to the 10,800, we created internship opportunities for an additional 2,000 students.

Our early career strategy, to include partnerships with universities and college internship roles, is an integral part of developing the full breadth of our talent pipelines, particularly in technical fields and critical skills areas.

We seek to access the broadest possible pool of talent to enable us to meet our hiring needs.

Employee satisfaction is essential to attracting and retaining top talent, and we regularly conduct employee engagement surveys to gauge employee satisfaction and to understand the effectiveness of our people strategy and assess employees’ intent to stay.

We attract and reward our employees by providing market competitive compensation and benefits, including incentives and recognition plans that extend to non-represented employees of all levels in our organization and encourage excellence through our pay-for-performance philosophy.

We have a hybrid workforce model that enables flexible working arrangements for employees and teams who can meet our customer commitments remotely, which has helped recruit and retain talent.

In addition, we invest in the development of our employees through training, apprenticeship programs, security clearance sponsorship, leadership development plans and offering tuition assistance programs for continuing education or industry certifications.

We believe this employee development makes us more competitive and assists with leadership succession planning throughout the company.

We have a distributed workforce model that enables flexible working arrangements for employees and teams who can meet our customer commitments remotely, which has helped recruit and retain talent.

In addition, we invest in the development of our employees through training, apprenticeship programs, security clearance sponsorship, leadership development plans and tuition assistance for continuing education or industry certifications.

We believe this employee development makes us more competitive and assists with leadership succession planning.

In addition to efforts focused on recruitment and retention, we also monitor employee attrition across our employee population and take action based on the insights we gain from that monitoring process.

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Government procurement awards).

We often collaborate with our competitors through teaming arrangements in efforts to provide our customers with the best mix of capabilities to address specific requirements, such as our recently announced strategic teaming agreement with General Dynamics to produce solid rocket motors, enhancing security and resilience in a critical domestic supply chain.

We often collaborate with our competitors through teaming arrangements in efforts to provide our customers with the best mix of capabilities to address specific requirements.

Additionally, a company competing to be a prime contractor may, upon ultimate award of the contract to another competitor, serve as a subcontractor to the ultimate prime contracting company.

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defense contractors.

In some areas of our business, customer requirements are changing to encourage or facilitate expanded competition.

In some areas of our business, customer requirements and acquisition processes are changing to encourage or facilitate expanded competition.

Principal factors of competition include:

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Government and in limited cases certain other governments may terminate any of our government contracts and subcontracts either at their convenience or for default based on our performance.

If a contract is terminated for convenience, we generally are protected by provisions covering reimbursement for costs incurred on the contract and profit on those costs.

If a contract is terminated for convenience, we generally are protected by provisions covering reimbursement for costs incurred on the contract, up to termination, and profit on those costs.

If a contract is terminated for default, we generally are entitled to payment for our work that has been accepted by the U.S.

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Absent a successful appeal of such action, the unilateral definitization of the contract obligates us to perform under terms and conditions imposed by the U.S.

Government’s power to unilaterally definitize a contract can affect our ability to negotiate mutually agreeable contract terms and, if a contract is unilaterally imposed upon us, it may negatively affect our expected profit and cash flows on a program or impose burdensome terms.

Classified Contracts

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Government contracts.

However, under certain classified fixed-price development and production contracts, we are unable to insure risk of loss to government property because of the classified nature of the contracts and the inability to disclose classified information necessary for underwriting and claims to commercial insurers.

However, certain classified fixed-price development and production contracts carry higher performance risk, and we are unable to insure loss to government property because the classified nature of the contracts prevents the disclosure of information necessary for underwriting and claims to commercial insurers.

Our internal controls addressing the financial reporting of classified contracts are consistent with our internal controls for our non-classified contracts.

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Although the extent of our financial exposure cannot in all cases be reasonably estimated, the costs of environmental compliance have not had, and we do not expect that these costs will have, a material adverse effect on our financial condition or results of operations, primarily because substantially all of our environmental costs are allowable in establishing the price of our products and services under our contracts with the U.S.

For information regarding these matters, including current estimates of the amounts that we believe are required for remediation or cleanup to the extent that they are probable and estimable, see “Critical Accounting Policies – Environmental Matters” in Management’s Discussion and Analysis of Financial Condition and Results of Operations and “Note 14 – Legal Proceedings, Commitments and Contingencies” included in our Notes to Consolidated Financial Statements.

For information regarding these matters, including current estimates of the amounts that we believe are required for remediation or cleanup to the extent that they are probable and estimable, see “Note 14 – Legal Proceedings, Commitments and Contingencies” included in our Notes to Consolidated Financial Statements.

See also the discussion of environmental matters in Item 1A – Risk Factors.

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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-K

Item 1. Business