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Item 1. Financial Statements

2026-04-23 compared with 2025-10-21 · 173 added, 379 removed, 448 unchanged (55% of the section changed)

3 unchanged sentences

in millions, except per share data)

Quarters Ended Nine Months Ended

September 28,

2025 September 29,

2024 September 28,

2025 September 29,

Quarters Ended

2026 March 30,

Products $ 14,831 $ 14,936

4 unchanged sentences

Services ( 2,784 ) ( 2,640 )

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

Other unallocated, net 239 284

1 unchanged sentence

Gross profit 2,078 2,323

Other income, net 40 23 103 77

Other (expense) income, net ( 15 ) 49

Operating profit 2,063 2,372

Interest expense ( 269 ) ( 268 )

Non-service FAS pension (expense) income ( 99 ) 16 ( 296 ) 47

Non-service FAS pension expense

( 80 ) ( 98 )

Other non-operating income, net 60 30

5 unchanged sentences

Diluted $ 6.44 $ 7.28

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.

1 unchanged sentence

Consolidated Statements of Comprehensive Income

Quarters Ended Nine Months Ended

September 28,

2025 September 29,

2024 September 28,

2025 September 29,

Quarters Ended

2026 March 30,

Net earnings $ 1,488 $ 1,712

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

Other, net of tax of $ 1 million and $ 17 million in 2025 and $ 3 million and $ 5 million in 2024

( 10 ) 57 157 53

Retirement benefits

Amortization of net actuarial losses and prior service costs, net of tax of $ 16 million in 2026 and $ 17 million in 2025

Other, net of tax of $ 1 million in 2026 and $ 6 million in 2025

Other comprehensive income, net of tax 46 129

4 unchanged sentences

(in millions, except par value)

September 28,

2026 December 31,

34 unchanged sentences

Consolidated Statements of Cash Flows

Nine Months Ended

September 28,

2025 September 29,

Quarters Ended

2026 March 30,

Operating activities

4 unchanged sentences

Deferred income taxes 161 ( 34 )

Impairment and other charges 66 87

Select program losses 1,615 248

Qualified defined benefit pension plans 92 111

Changes in assets and liabilities

5 unchanged sentences

Income taxes 103 339

Qualified defined benefit pension plans 334 ( 2 )

Other, net ( 590 ) ( 918 )

5 unchanged sentences

Financing activities

Issuance of long-term debt, net of related costs 1,985 1,980

Repayments of long-term debt ( 1,000 ) —

9 unchanged sentences

Consolidated Statements of Equity

For the Quarters Ended September 28, 2025 and September 29, 2024

Stock Additional

2 unchanged sentences

Comprehensive

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.

Lockheed Martin Corporation

Consolidated Statements of Equity

For the Nine Months Ended September 28, 2025 and September 29, 2024

Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

Balance at December 31, 2025 $ 229 $ — $ 14,034 $ ( 7,542 ) $ 6,721

1 unchanged sentence

Other comprehensive income, net of tax — — — 46 46

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

Repurchases of common stock ( 5 ) ( 398 ) ( 1,847 ) — ( 2,250 )

Stock-based awards, ESOP activity and other

Dividends declared ($ 3.45 per share)

— — ( 799 ) — ( 799 )

Balance at September 28, 2025 $ 230 $ — $ 14,053 $ ( 8,102 ) $ 6,181

Stock-based awards, ESOP activity and other

Balance at March 29, 2026 $ 230 $ 32 $ 14,723 $ ( 7,496 ) $ 7,489

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

1 unchanged sentence

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

Dividends declared — — ( 2,273 ) — ( 2,273 )

Dividends declared ($ 3.30 per share)

— — ( 778 ) — ( 778 )

Repurchases of common stock ( 2 ) ( 36 ) ( 712 ) — ( 750 )

Stock-based awards, ESOP activity and other

2 417 — — 419

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

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

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

11 unchanged sentences

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;

retirement benefits;

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;

income taxes, including deferred income taxes;

fair value measurements;

2 unchanged sentences

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.

Additionally, as of March 29, 2026, we changed the presentation of capitalized software to be included in property, plant and equipment, net on our consolidated balance sheets.

Amounts for December 31, 2025 have been conformed to the current period’s presentation.

We close our books and records on the last Sunday of each interim calendar quarter, which was on March 29 for the first quarter of 2026 and March 30 for the first quarter of 2025, 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.

This practice only affects interim periods as 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.

3 unchanged sentences

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

Quarters Ended Nine Months Ended

September 28,

2025 September 29,

2024 September 28,

2025 September 29,

Quarters Ended

2026 March 30,

Weighted average common shares outstanding for basic computations 229.9 234.4

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

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.

Our calculation of diluted earnings per common share also includes the dilutive effects for the assumed vesting of outstanding restricted stock units (RSUs) and performance stock units (PSUs) based on the treasury stock method.

There were no significant anti-dilutive equity awards during the quarters ended March 29, 2026 and March 30, 2025.

Basic and diluted weighted average common shares outstanding decreased in 2026 compared to 2025 due to share repurchases in 2025, but none during the quarter ended March 29, 2026.

NOTE 3 - INFORMATION ON BUSINESS SEGMENTS

2 unchanged sentences

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.

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,

Quarters Ended

2026 March 30,

Aeronautics $ 6,953 $ 7,057

17 unchanged sentences

FAS/CAS pension operating adjustment 421 379

Impairment and other charges

— — ( 66 ) ( 87 )

Intangible asset amortization expense ( 50 ) ( 64 )

6 unchanged sentences

Rotary and Mission Systems 595 564

Space 77 94 244 300

Total intersegment sales $ 1,007 $ 905

4 unchanged sentences

Business segment operating profit includes our share of earnings or losses from equity method investees as the operating activities of the equity method investees are closely aligned with the operations of our business segments.

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

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.

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.

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

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.

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 stock-based compensation expense, changes in the fair value of assets and liabilities for deferred compensation plans, significant severance charges, significant asset impairments, intangible asset amortization expense, and other miscellaneous corporate activities.

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

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.

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

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

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

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

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

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

Government $ 4,681 $ 2,633 $ 2,764 $ 3,293 $ 13,371

International (a)

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

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

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

Our consolidated financial statements must present pension expense calculated in accordance with Financial Accounting Standards (FAS) requirements under U.S.

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

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

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

The total FAS/CAS pension adjustments, including the service and non-service cost components of FAS pension expense for our qualified defined benefit pension plans, were as follows (in millions):

Quarters Ended

2026 March 30,

Total FAS pension expense and CAS cost

FAS pension expense

$ ( 92 ) $ ( 111 )

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

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

Government $ 13,969 $ 7,464 $ 8,409 $ 9,649 $ 39,491

International (a)

CAS pension cost 433 392

Total FAS/CAS pension adjustment $ 341 $ 281

Service and non-service cost reconciliation

FAS pension service cost $ ( 12 ) $ ( 13 )

CAS pension cost 433 392

Total FAS/CAS pension operating adjustment 421 379

Non-service FAS pension expense

( 80 ) ( 98 )

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

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

Quarter Ended September 29, 2024

Total FAS/CAS pension adjustment $ 341 $ 281

Disaggregation of Sales

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

Quarter Ended March 29, 2026

Aeronautics MFC RMS Space Total

19 unchanged sentences

Total sales $ 6,953 $ 3,649 $ 3,991 $ 3,428 $ 18,021

Nine Months Ended September 29, 2024

Quarter Ended March 30, 2025

Aeronautics MFC RMS Space Total

21 unchanged sentences

Government and direct commercial sales to international governments and other international customers.

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.

Sales for the F-35 program represented approximately 27 % and 25 % of our total consolidated sales for the quarters ended March 29, 2026 and March 30, 2025.

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

September 28,

2026 December 31,

Aeronautics $ 15,396 $ 14,673

Missiles and Fire Control 6,899 5,952

Rotary and Mission Systems 16,972 17,025

MFC 7,501 6,304

RMS 16,480 16,576

Space 7,822 7,755

5 unchanged sentences

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,

2026 December 31,

1 unchanged sentence

Contract liabilities 10,735 11,440

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.

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

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

During the quarter ended March 29, 2026, contract assets increased $ 2.9 billion primarily due to the F-35 program at Aeronautics.

There were no significant credit or impairment losses related to our contract assets during the quarters ended March 29, 2026 and March 30, 2025.

Contract liabilities include advance payments and billings in excess of revenue recognized.

These liabilities decreased $ 705 million during the quarter ended March 29, 2026, primarily due to revenue recognized in excess of payments received on performance obligations (primarily for integrated air and missile defense programs at MFC).

During the quarter ended March 29, 2026, we recognized $ 3.0 billion of our contract liabilities at December 31, 2025 as revenue.

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

NOTE 5 - INVENTORIES

Inventories consisted of the following (in millions):

September 28,

2026 December 31,

7 unchanged sentences

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,

As of March 29, 2026 and December 31, 2025, $ 1.9 billion and $ 1.5 billion of pre-contract costs (primarily the F-35 program and classified contracts at Aeronautics and Sikorsky programs at RMS) were included in work-in-process inventories.

NOTE 6 - RETIREMENT BENEFITS

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

Quarters Ended

2026 March 30,

Qualified defined benefit pension plans

4 unchanged sentences

Amortization of actuarial losses ( 80 ) ( 78 )

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.

Amortization of prior service costs ( 7 ) ( 12 )

Non-service FAS pension expense

( 80 ) ( 98 )

Total FAS pension expense

$ ( 92 ) $ ( 111 )

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

Total FAS income for our other retirement benefit plans was not material during the quarters ended March 29, 2026 and March 30, 2025 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.

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

We made no contributions to our qualified defined benefit pension plans during the quarters ended March 29, 2026 and March 30, 2025.

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.

Accordingly, unless otherwise indicated below in our discussion of legal proceedings or environmental matters, a reasonably possible loss or range of loss associated with any individual proceeding or matter cannot be estimated.

Legal Proceedings

We are a party to litigation and other proceedings that arise in the ordinary course of our business, including matters arising under federal, state, local and foreign requirements 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 do not believe that 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.

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.

On July 28, 2025, a putative class action was filed—and subsequently amended on January 12, 2026—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 plaintiffs assert 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.

Plaintiffs seek unspecified losses allegedly caused by alleged misstatements about certain classified programs in the Aeronautics and MFC business segments and F-35 program, which were allegedly revealed to be false when we announced estimated losses relating to certain of those programs.

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.

12 unchanged sentences

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-

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

week bench trial and the filing of post-trial pleadings by the parties.

This matter was taken under submission by the District Court in December 2014, after a five-week bench trial and the filing of post-trial pleadings by the parties.

We continue to await a decision from the District Court.

3 unchanged sentences

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.

At March 29, 2026 and December 31, 2025, the aggregate amount of liabilities recorded for environmental remediation matters was $ 656 million and $ 659 million, most of which are recorded in other noncurrent liabilities on our consolidated balance sheets.

We have recorded assets for the portion of environmental costs that are probable of future recovery totaling $ 602 million and $ 605 million at March 29, 2026 and December 31, 2025, most of which are recorded in other noncurrent assets on our consolidated balance sheets.

We continue to pursue claims against other PRPs, including the U.S.

Government, for recovery of costs incurred or for contribution to site remediation costs, 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 certain of these agreements, the U.S.

Government and/or a private parties reimburse 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).

The timing and extent of remediation costs remain uncertain.

New site-specific information or changes in federal or state regulation could increase current liability and recoverable asset estimates.

We perform quarterly reviews of these liabilities and receivables, projecting costs, and recoveries over a period of approximately 20 years.

Letters of Credit and Surety Bonds

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Letters of credit and surety bonds generally are available for draw down in the event we do not perform.

We had total outstanding letters of credit and surety bonds aggregating $ 2.8 billion and $ 2.7 billion at September 28, 2025 and December 31, 2024.

We had total outstanding letters of credit and surety bonds aggregating $ 3.3 billion and $ 3.5 billion at March 29, 2026 and December 31, 2025.

Other Contingencies

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

Government contracts or conducted for other reasons, could

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

Government contracting, or suspension of export privileges.

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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

March 29, 2026 December 31, 2025

Total Level 1 Level 2 Total Level 1 Level 2

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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.

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 other investments.

Most 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 $ 736 million and $ 669 million at March 29, 2026 and December 31, 2025.

Net gains or losses recorded due to adjustments in valuation and/or sales of investments were not material for the quarters ended March 29, 2026 and March 30, 2025.

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

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We do not enter into or hold derivative instruments for speculative trading purposes.

These contracts hedge forecasted foreign currency transactions in order to minimize fluctuations in our earnings and cash flows

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

associated with changes in foreign currency exchange rates.

These contracts hedge forecasted foreign currency transactions in order to minimize fluctuations in our earnings and cash flows associated with changes in foreign currency exchange rates.

We designate foreign currency hedges as cash flow hedges.

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We also may enter into derivative instruments that are not designated as hedges and do not qualify for hedge accounting, which are intended to minimize certain economic exposures.

The aggregate notional amount of our outstanding interest rate swaps was $ 1.3 billion at both September 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 aggregate notional amount of our outstanding interest rate swaps was $ 1.3 billion at both March 29, 2026 and December 31, 2025.

The aggregate notional amount of our outstanding foreign currency hedges was $ 7.3 billion and $ 7.2 billion at March 29, 2026 and December 31, 2025.

The fair values of our outstanding interest rate swaps and foreign currency hedges at March 29, 2026 and December 31, 2025 were not significant.

Derivative instruments did not have a material impact on net earnings and comprehensive income during the quarters ended March 29, 2026 and March 30, 2025.

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

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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 value of our outstanding debt was $ 20.4 billion and $ 22.0 billion at March 29, 2026 and December 31, 2025.

The outstanding principal amount of debt, including short-term and long-term debt, was $ 21.9 billion and $ 22.9 billion at March 29, 2026 and December 31, 2025, excluding $ 1.2 billion of unamortized discounts and issuance costs at both March 29, 2026 and December 31, 2025.

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.

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

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.

We paid cash dividends of $ 816 million ($ 3.45 per share) during the quarter ended March 29, 2026.

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

Accumulated Other Comprehensive Loss (AOCL)

Changes in the balance of AOCL, net of tax, consisted of the following (in millions):

Postretirement

Benefit Plans Other, net AOCL

Benefits Other, net AOCL

Balance at December 31, 2025 $ ( 7,555 ) $ 13 $ ( 7,542 )

Other comprehensive income before reclassifications — 116 116

Other comprehensive loss before reclassifications — ( 23 ) ( 23 )

Amounts reclassified from AOCL

Amortization of net actuarial losses (a)

Amortization of net prior service costs (a)

Other — 41 41

Amortization of net actuarial losses and prior service costs (a)

Total reclassified from AOCL 62 7 69

Total other comprehensive income 62 ( 16 ) 46

Balance at September 28, 2025 $ ( 8,095 ) $ ( 7 ) $ ( 8,102 )

Balance at March 29, 2026 $ ( 7,493 ) $ ( 3 ) $ ( 7,496 )

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

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Amounts reclassified from AOCL

Amortization of net actuarial losses (a)

Amortization of net prior service credits (a)

( 84 ) — ( 84 )

Other — 30 30

Amortization of net actuarial losses and prior service costs (a)

Total reclassified from AOCL 64 7 71

Total other comprehensive income 64 65 129

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”.

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

(a) Reclassifications from AOCL related to retirement benefits were recorded as a component of FAS expense for each period presented.

NOTE 10 - OTHER

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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.

We recognize revenue as performance obligations are satisfied and the customer obtains control of the products and services.

For performance obligations to deliver products with continuous transfer of control to the customer, revenue is recognized based on the extent of progress towards completion of the performance obligation, generally using the percentage-of-completion cost-to-cost measure of progress for our contracts because it best depicts the transfer of control to the customer as we incur costs on our contracts.

For performance obligations in which control does not continuously transfer to the customer, we recognize revenue at the point in time in which each performance obligation is fully satisfied.

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

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).

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

We also estimate variable consideration as the most likely amount, 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.

Significant estimates related to costs include, but are not limited to, the complexity and scope of the work to be performed, labor productivity and availability, labor rates including terms of collective bargaining arrangements, execution by our subcontractors, the availability and cost of materials including any impact from changing costs or inflation, the length of time to complete the performance obligation, overhead and general and administrative cost rates, and estimated useful lives of components and assets, among others.

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

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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.

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.

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,

Quarters Ended

2026 March 30,

Sales $ 216 $ 496

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Diluted earnings per share 0.74 1.61

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.

During the quarter ended March 29, 2026, we recorded unfavorable profit adjustments of $ 125 million on the F-16 program as a result of production performance and development delays, $ 85 million on the C-130 program as a result of continued diminishing manufacturing source integration challenges and associated delivery delays, and $ 130 million of favorable profit adjustment on the F-35 program.

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

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

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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

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

additional reach-forward losses recognized in the second quarter of 2025 included:

The primary drivers of the 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;

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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.

As of March 29, 2026, cumulative losses recognized to date on this program remained at approximately $ 1.8 billion across both phases.

As of March 29, 2026, $ 450 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.

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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.

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

Based upon performance to date, future requirements of the program, discussions with the customer, and anticipated customer funding, among other factors, we continue to believe it is probable that all unexercised options will be exercised.

As we perform on the cost-reimbursable base contract and the options, we continue to evaluate our estimates of cost necessary to complete the scope on the contract.

Our estimates could change based on our performance, supplier negotiations and their performance, macroeconomic impacts, and discoveries made in the execution of these options or on the cost-reimbursable base contract.

As of March 29, 2026, cumulative losses recognized on the program remained at approximately $ 1.46 billion in total, of which, $ 1.12 billion remained accrued in other current liabilities in our consolidated balance sheet.

Any changes to our estimates or assumptions may result in additional losses and such losses could be material to our financial results in any period that they are recognized.

Canadian Maritime Helicopter Program

Our RMS business segment has been performing the Canadian Maritime Helicopter Program (CMHP) under contracts with the Canadian government.

Our RMS business segment has been performing the Canadian Maritime Helicopter Program (CMHP) under multiple 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.

The final aircraft under the program was delivered to Canada during the third quarter of 2025 and subsequently accepted.

The program has experienced performance issues and we have previously recorded losses on the program.

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

As of March 29, 2026, cumulative losses recognized on the program remained at approximately $ 670 million and approximately

$ 605 million of contract assets remained on the balance sheet.

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.

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.

As previously disclosed, sanctions imposed in 2020 by the U.S.

Government on Turkey’s defense procurement agency (SSB) and certain persons affected our ability to perform under our 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.

During the second quarter of 2025, we recognized a loss of $ 95 million in light of the status of restructuring discussions with our prime customer and the status of the TUHP.

In the fourth quarter of 2025, we finalized an agreement with our prime contract customer to terminate the existing TUHP contracts and establish new contracts for a reduced scope of work, which became effective in January 2026.

Our performance under the new contracts is subject to the receipt of U.S.

export authorizations and we have obtained an amendment to our manufacturing license agreement and are in the process of obtaining the remaining licenses needed to support our obligations under the new contracts.

If we are unsuccessful, our customer could drawdown on letters of credit, which could negatively affect our cash flows and our ability to recover our costs, and we could incur additional losses of up to approximately $ 115 million.

As of March 29, 2026, 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.

Backlog (i.e., unfulfilled or remaining performance obligations) represents the sales we expect to recognize for our products and services for which control has not yet transferred to the customer.

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As the risks on such contracts are successfully retired, the estimated consideration from customers may be reduced, resulting in a reduction of backlog without a corresponding recognition of sales.

As of September 28, 2025, our ending backlog was $ 179.1 billion.

As of March 29, 2026, our ending backlog was $ 186.4 billion.

We expect to recognize approximately 34 % of our backlog over the next 12 months and a total of approximately 58 % 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

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 .

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

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.

Our effective income tax rates were 16.1 % and 15.9 % for the quarters ended March 29, 2026 and March 30, 2025.

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

NOTE 11 - RECENT ACCOUNTING PRONOUNCEMENTS

In September 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No.

In September 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards 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.

This guidance removes all references to project stages throughout FASB Accounting Standards Codification (ASC) Subtopic 350-40, Internal-Use Software 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.

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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.

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 its adoption.

In November 2024, the FASB issued 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.

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.

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

In addition, 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 for interim reporting periods beginning after December 15, 2027, with early adoption permitted.

We are evaluating the impact of this ASU and expect the standard will only affect our disclosures and will not impact our results of operations or financial condition.

Report of Independent Registered Public Accounting Firm

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Results of Review of Interim Financial Statements

We have reviewed the accompanying consolidated balance sheet of Lockheed Martin Corporation (the Company) as of September 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”).

We have reviewed the accompanying consolidated balance sheet of Lockheed Martin Corporation (the Company) as of March 29, 2026, the related consolidated statements of earnings, comprehensive income, cash flows and equity for the three-month periods ended March 29, 2026 and March 30, 2025, and the related notes (collectively referred to as the “consolidated interim financial statements”).

Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial statements for them to be in conformity with U.S.

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Tysons, Virginia

October 21, 2025

April 23, 2026

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements