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Maryland
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52-1893632
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer Identification No.)
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6801 Rockledge Drive, Bethesda, Maryland
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20817
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(Address of principal executive offices)
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(Zip Code)
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Page
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ITEM 1.
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ITEM 2.
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ITEM 3.
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ITEM 4.
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ITEM 1.
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||
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ITEM 1A.
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||
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ITEM 2.
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ITEM 6.
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Quarters Ended
|
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Nine Months Ended
|
||||||||||||||||
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|
September 24,
2017 |
|
September 25,
2016 |
|
September 24,
2017 |
|
September 25,
2016 |
||||||||||||
Net sales
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Products
|
|
$
|
10,496
|
|
|
|
$
|
10,062
|
|
|
|
$
|
30,837
|
|
|
|
$
|
28,629
|
|
|
Services
|
|
1,673
|
|
|
|
1,489
|
|
|
|
5,074
|
|
|
|
4,867
|
|
|
||||
Total net sales
|
|
12,169
|
|
|
|
11,551
|
|
|
|
35,911
|
|
|
|
33,496
|
|
|
||||
Cost of sales
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Products
|
|
(9,481
|
)
|
|
|
(9,027
|
)
|
|
|
(27,919
|
)
|
|
|
(25,787
|
)
|
|
||||
Services
|
|
(1,513
|
)
|
|
|
(1,313
|
)
|
|
|
(4,547
|
)
|
|
|
(4,321
|
)
|
|
||||
Severance charges
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(80
|
)
|
|
||||
Other unallocated, net
|
|
176
|
|
|
|
173
|
|
|
|
484
|
|
|
|
401
|
|
|
||||
Total cost of sales
|
|
(10,818
|
)
|
|
|
(10,167
|
)
|
|
|
(31,982
|
)
|
|
|
(29,787
|
)
|
|
||||
Gross profit
|
|
1,351
|
|
|
|
1,384
|
|
|
|
3,929
|
|
|
|
3,709
|
|
|
||||
Other income, net
|
|
77
|
|
|
|
204
|
|
|
|
133
|
|
|
|
412
|
|
|
||||
Operating profit
|
|
1,428
|
|
|
|
1,588
|
|
|
|
4,062
|
|
|
|
4,121
|
|
|
||||
Interest expense
|
|
(162
|
)
|
|
|
(162
|
)
|
|
|
(477
|
)
|
|
|
(492
|
)
|
|
||||
Other non-operating (expense) income, net
|
|
(7
|
)
|
|
|
1
|
|
|
|
(8
|
)
|
|
|
2
|
|
|
||||
Earnings from continuing operations before income taxes
|
|
1,259
|
|
|
|
1,427
|
|
|
|
3,577
|
|
|
|
3,631
|
|
|
||||
Income tax expense
|
|
(320
|
)
|
|
|
(338
|
)
|
|
|
(933
|
)
|
|
|
(837
|
)
|
|
||||
Net earnings from continuing operations
|
|
939
|
|
|
|
1,089
|
|
|
|
2,644
|
|
|
|
2,794
|
|
|
||||
Net earnings from discontinued operations
|
|
—
|
|
|
|
1,306
|
|
|
|
—
|
|
|
|
1,520
|
|
|
||||
Net earnings
|
|
$
|
939
|
|
|
|
$
|
2,395
|
|
|
|
$
|
2,644
|
|
|
|
$
|
4,314
|
|
|
Earnings per common share
|
|
|
|
|
|
|
|
|
|
|
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|
||||||||
Basic
|
|
|
|
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|
|
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|
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|
||||||||
Continuing operations
|
|
$
|
3.27
|
|
|
|
$
|
3.64
|
|
|
|
$
|
9.16
|
|
|
|
$
|
9.25
|
|
|
Discontinued operations
|
|
—
|
|
|
|
4.38
|
|
|
|
—
|
|
|
|
5.03
|
|
|
||||
Basic earnings per common share
|
|
$
|
3.27
|
|
|
|
$
|
8.02
|
|
|
|
$
|
9.16
|
|
|
|
$
|
14.28
|
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
|
$
|
3.24
|
|
|
|
$
|
3.61
|
|
|
|
$
|
9.08
|
|
|
|
$
|
9.13
|
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|
Discontinued operations
|
|
—
|
|
|
|
4.32
|
|
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—
|
|
|
|
4.97
|
|
|
||||
Diluted earnings per common share
|
|
$
|
3.24
|
|
|
|
$
|
7.93
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|
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$
|
9.08
|
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|
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$
|
14.10
|
|
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Cash dividends paid per common share
|
|
$
|
1.82
|
|
|
|
$
|
1.65
|
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|
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$
|
5.46
|
|
|
|
$
|
4.95
|
|
|
|
|
Quarters Ended
|
|
Nine Months Ended
|
||||||||||||||||
|
|
September 24,
2017 |
|
September 25,
2016 |
|
September 24,
2017 |
|
September 25,
2016 |
||||||||||||
Net earnings
|
|
$
|
939
|
|
|
|
$
|
2,395
|
|
|
|
$
|
2,644
|
|
|
|
$
|
4,314
|
|
|
Other comprehensive income, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Postretirement benefit plans
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Amounts reclassified from accumulated other comprehensive loss
|
|
200
|
|
|
|
175
|
|
|
|
602
|
|
|
|
521
|
|
|
||||
Reclassification from divestiture of IS&GS
|
|
—
|
|
|
|
(134
|
)
|
|
|
—
|
|
|
|
(134
|
)
|
|
||||
Other comprehensive gain recognized during the period
|
|
—
|
|
|
|
—
|
|
|
|
3
|
|
|
|
—
|
|
|
||||
Other, net
|
|
77
|
|
|
|
72
|
|
|
|
137
|
|
|
|
66
|
|
|
||||
Other comprehensive income, net of tax
|
|
277
|
|
|
|
113
|
|
|
|
742
|
|
|
|
453
|
|
|
||||
Comprehensive income
|
|
$
|
1,216
|
|
|
|
$
|
2,508
|
|
|
|
$
|
3,386
|
|
|
|
$
|
4,767
|
|
|
|
|
September 24,
2017 |
|
December 31,
2016 |
||||||
|
|
(unaudited)
|
|
|
|
|||||
Assets
|
|
|
|
|
|
|
||||
Current assets
|
|
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
2,941
|
|
|
|
$
|
1,837
|
|
|
Receivables, net
|
|
9,021
|
|
|
|
8,202
|
|
|
||
Inventories, net
|
|
4,803
|
|
|
|
4,670
|
|
|
||
Other current assets
|
|
443
|
|
|
|
399
|
|
|
||
Total current assets
|
|
17,208
|
|
|
|
15,108
|
|
|
||
Property, plant and equipment, net
|
|
5,511
|
|
|
|
5,549
|
|
|
||
Goodwill
|
|
10,812
|
|
|
|
10,764
|
|
|
||
Intangible assets, net
|
|
3,877
|
|
|
|
4,093
|
|
|
||
Deferred income taxes
|
|
5,970
|
|
|
|
6,625
|
|
|
||
Other noncurrent assets
|
|
5,568
|
|
|
|
5,667
|
|
|
||
Total assets
|
|
$
|
48,946
|
|
|
|
$
|
47,806
|
|
|
Liabilities and equity
|
|
|
|
|
|
|
||||
Current liabilities
|
|
|
|
|
|
|
||||
Accounts payable
|
|
$
|
2,848
|
|
|
|
$
|
1,653
|
|
|
Customer advances and amounts in excess of costs incurred
|
|
6,195
|
|
|
|
6,776
|
|
|
||
Salaries, benefits and payroll taxes
|
|
1,895
|
|
|
|
1,764
|
|
|
||
Other current liabilities
|
|
2,146
|
|
|
|
2,349
|
|
|
||
Total current liabilities
|
|
13,084
|
|
|
|
12,542
|
|
|
||
Long-term debt, net
|
|
14,268
|
|
|
|
14,282
|
|
|
||
Accrued pension liabilities
|
|
13,998
|
|
|
|
13,855
|
|
|
||
Other postretirement benefit liabilities
|
|
858
|
|
|
|
862
|
|
|
||
Other noncurrent liabilities
|
|
4,563
|
|
|
|
4,659
|
|
|
||
Total liabilities
|
|
46,771
|
|
|
|
46,200
|
|
|
||
Stockholders’ equity
|
|
|
|
|
|
|
||||
Common stock, $1 par value per share
|
|
285
|
|
|
|
289
|
|
|
||
Additional paid-in capital
|
|
—
|
|
|
|
—
|
|
|
||
Retained earnings
|
|
13,173
|
|
|
|
13,324
|
|
|
||
Accumulated other comprehensive loss
|
|
(11,360
|
)
|
|
|
(12,102
|
)
|
|
||
Total stockholders’ equity
|
|
2,098
|
|
|
|
1,511
|
|
|
||
Noncontrolling interests in subsidiary
|
|
77
|
|
|
|
95
|
|
|
||
Total equity
|
|
2,175
|
|
|
|
1,606
|
|
|
||
Total liabilities and equity
|
|
$
|
48,946
|
|
|
|
$
|
47,806
|
|
|
|
|
Nine Months Ended
|
||||||||
|
|
September 24,
2017 |
|
September 25,
2016 |
||||||
Operating activities
|
|
|
|
|
|
|
||||
Net earnings
|
|
$
|
2,644
|
|
|
|
$
|
4,314
|
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities
|
|
|
|
|
|
|
||||
Depreciation and amortization
|
|
880
|
|
|
|
888
|
|
|
||
Stock-based compensation
|
|
133
|
|
|
|
124
|
|
|
||
Severance charges
|
|
—
|
|
|
|
99
|
|
|
||
Gain on divestiture of IS&GS business segment
|
|
—
|
|
|
|
(1,234
|
)
|
|
||
Gain on step acquisition of AWE
|
|
—
|
|
|
|
(104
|
)
|
|
||
Changes in assets and liabilities
|
|
|
|
|
|
|
||||
Receivables, net
|
|
(819
|
)
|
|
|
(1,537
|
)
|
|
||
Inventories, net
|
|
(133
|
)
|
|
|
(235
|
)
|
|
||
Accounts payable
|
|
1,229
|
|
|
|
1,033
|
|
|
||
Customer advances and amounts in excess of costs incurred
|
|
(581
|
)
|
|
|
57
|
|
|
||
Postretirement benefit plans
|
|
1,012
|
|
|
|
787
|
|
|
||
Income taxes
|
|
(202
|
)
|
|
|
37
|
|
|
||
Other, net
|
|
801
|
|
|
|
231
|
|
|
||
Net cash provided by operating activities
|
|
4,964
|
|
|
|
4,460
|
|
|
||
Investing activities
|
|
|
|
|
|
|
||||
Capital expenditures
|
|
(670
|
)
|
|
|
(627
|
)
|
|
||
Other, net
|
|
15
|
|
|
|
76
|
|
|
||
Net cash used for investing activities
|
|
(655
|
)
|
|
|
(551
|
)
|
|
||
Financing activities
|
|
|
|
|
|
|
||||
Special cash payment from divestiture of IS&GS business segment
|
|
—
|
|
|
|
1,800
|
|
|
||
Repurchases of common stock
|
|
(1,500
|
)
|
|
|
(1,280
|
)
|
|
||
Dividends paid
|
|
(1,591
|
)
|
|
|
(1,518
|
)
|
|
||
Repayments of long-term debt
|
|
—
|
|
|
|
(952
|
)
|
|
||
Proceeds from stock option exercises
|
|
62
|
|
|
|
75
|
|
|
||
Other, net
|
|
(176
|
)
|
|
|
(229
|
)
|
|
||
Net cash used for financing activities
|
|
(3,205
|
)
|
|
|
(2,104
|
)
|
|
||
Net change in cash and cash equivalents
|
|
1,104
|
|
|
|
1,805
|
|
|
||
Cash and cash equivalents at beginning of period
|
|
1,837
|
|
|
|
1,090
|
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
2,941
|
|
|
|
$
|
2,895
|
|
|
|
Common
Stock
|
Additional
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Loss
|
Total
Stockholders’
Equity
|
Noncontrolling
Interests in
Subsidiary
|
Total
Equity
|
|||||||||||||||||
Balance at December 31, 2016
|
$
|
289
|
|
$
|
—
|
|
$
|
13,324
|
|
$
|
(12,102
|
)
|
|
$
|
1,511
|
|
|
$
|
95
|
|
|
$
|
1,606
|
|
Net earnings
|
—
|
|
—
|
|
2,644
|
|
—
|
|
|
2,644
|
|
|
—
|
|
|
2,644
|
|
|||||||
Other comprehensive income, net of tax
|
—
|
|
—
|
|
—
|
|
742
|
|
|
742
|
|
|
—
|
|
|
742
|
|
|||||||
Repurchases of common stock
|
(5
|
)
|
(282
|
)
|
(1,213
|
)
|
—
|
|
|
(1,500
|
)
|
|
—
|
|
|
(1,500
|
)
|
|||||||
Dividends declared
|
—
|
|
—
|
|
(1,582
|
)
|
—
|
|
|
(1,582
|
)
|
|
—
|
|
|
(1,582
|
)
|
|||||||
Stock-based awards and ESOP activity
|
1
|
|
282
|
|
—
|
|
—
|
|
|
283
|
|
|
—
|
|
|
283
|
|
|||||||
Net decrease in noncontrolling interests in subsidiary
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
(18
|
)
|
|
(18
|
)
|
|||||||
Balance at September 24, 2017
|
$
|
285
|
|
$
|
—
|
|
$
|
13,173
|
|
$
|
(11,360
|
)
|
|
$
|
2,098
|
|
|
$
|
77
|
|
|
$
|
2,175
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Balance at December 31, 2015
|
$
|
303
|
|
$
|
—
|
|
$
|
14,238
|
|
$
|
(11,444
|
)
|
|
$
|
3,097
|
|
|
$
|
—
|
|
|
$
|
3,097
|
|
Net earnings
|
—
|
|
—
|
|
4,314
|
|
—
|
|
|
4,314
|
|
|
—
|
|
|
4,314
|
|
|||||||
Other comprehensive income, net of tax
|
—
|
|
—
|
|
—
|
|
453
|
|
|
453
|
|
|
—
|
|
|
453
|
|
|||||||
Shares tendered and retired in connection with divestiture of IS&GS business segment
|
(9
|
)
|
—
|
|
(2,488
|
)
|
—
|
|
|
(2,497
|
)
|
|
|
|
(2,497
|
)
|
||||||||
Repurchases of common stock
|
(6
|
)
|
(272
|
)
|
(1,002
|
)
|
—
|
|
|
(1,280
|
)
|
|
—
|
|
|
(1,280
|
)
|
|||||||
Dividends declared
|
—
|
|
—
|
|
(2,056
|
)
|
—
|
|
|
(2,056
|
)
|
|
—
|
|
|
(2,056
|
)
|
|||||||
Stock-based awards, ESOP activity and other
|
3
|
|
272
|
|
17
|
|
—
|
|
|
292
|
|
|
—
|
|
|
292
|
|
|||||||
Net increase in noncontrolling interests in subsid
iary
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
107
|
|
|
107
|
|
|||||||
Balance at September 25, 2016
|
$
|
291
|
|
$
|
—
|
|
$
|
13,023
|
|
$
|
(10,991
|
)
|
|
$
|
2,323
|
|
|
$
|
107
|
|
|
$
|
2,430
|
|
|
|
Quarters Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 24,
2017 |
|
September 25,
2016 |
|
September 24,
2017 |
|
September 25,
2016 |
||||||||
Weighted average common shares outstanding for basic computations
|
|
287.1
|
|
|
|
298.5
|
|
|
|
288.5
|
|
|
|
302.0
|
|
|
Weighted average dilutive effect of equity awards
|
|
2.9
|
|
|
|
3.6
|
|
|
|
2.8
|
|
|
|
3.9
|
|
|
Weighted average common shares outstanding for diluted computations
|
|
290.0
|
|
|
|
302.1
|
|
|
|
291.3
|
|
|
|
305.9
|
|
|
|
|
Quarter
Ended |
|
Nine Months
Ended |
||||||
Net sales
|
|
$
|
739
|
|
|
|
$
|
3,410
|
|
|
Cost of sales
|
|
(635
|
)
|
|
|
(2,953
|
)
|
|
||
Severance charges
|
|
—
|
|
|
|
(19
|
)
|
|
||
Gross profit
|
|
104
|
|
|
|
438
|
|
|
||
Other income, net
|
|
19
|
|
|
|
16
|
|
|
||
Operating profit
|
|
123
|
|
|
|
454
|
|
|
||
Earnings from discontinued operations before income taxes
|
|
123
|
|
|
|
454
|
|
|
||
Income tax expense
|
|
(51
|
)
|
|
|
(168
|
)
|
|
||
Net gain on divestiture of discontinued operations
|
|
1,234
|
|
|
|
1,234
|
|
|
||
Net earnings from discontinued operations
|
|
$
|
1,306
|
|
|
|
$
|
1,520
|
|
|
|
|
Quarters Ended
|
|
Nine Months Ended
|
||||||||||||||||
|
|
September 24,
2017 |
|
September 25,
2016 |
|
September 24,
2017 |
|
September 25,
2016 |
||||||||||||
Net sales
|
|
|
|
|
|
|
|
|
|
|||||||||||
Aeronautics
|
|
$
|
4,771
|
|
|
|
$
|
4,188
|
|
|
|
$
|
14,102
|
|
|
|
$
|
12,362
|
|
|
Missiles and Fire Control
|
|
1,793
|
|
|
|
1,737
|
|
|
|
4,919
|
|
|
|
4,851
|
|
|
||||
Rotary and Mission Systems
|
|
3,353
|
|
|
|
3,346
|
|
|
|
9,864
|
|
|
|
9,653
|
|
|
||||
Space Systems
|
|
2,252
|
|
|
|
2,280
|
|
|
|
7,026
|
|
|
|
6,630
|
|
|
||||
Total net sales
|
|
$
|
12,169
|
|
|
|
$
|
11,551
|
|
|
|
$
|
35,911
|
|
|
|
$
|
33,496
|
|
|
Operating profit
|
|
|
|
|
|
|
|
|
|
|||||||||||
Aeronautics
|
|
$
|
517
|
|
|
|
$
|
437
|
|
|
|
$
|
1,503
|
|
|
|
$
|
1,335
|
|
|
Missiles and Fire Control
|
|
270
|
|
|
|
289
|
|
|
|
757
|
|
|
|
763
|
|
|
||||
Rotary and Mission Systems
|
|
244
|
|
|
|
247
|
|
|
|
606
|
|
|
|
678
|
|
|
||||
Space Systems
(a)
|
|
218
|
|
|
|
450
|
|
|
|
762
|
|
|
|
1,034
|
|
|
||||
Total business segment operating profit
|
|
1,249
|
|
|
|
1,423
|
|
|
|
3,628
|
|
|
|
3,810
|
|
|
||||
Unallocated items
|
|
|
|
|
|
|
|
|
|
|||||||||||
FAS/CAS pension adjustment
|
|
|
|
|
|
|
|
|
|
|||||||||||
FAS pension expense
|
|
(342
|
)
|
|
|
(256
|
)
|
|
|
(1,030
|
)
|
|
|
(758
|
)
|
|
||||
Less: CAS pension cost
|
|
562
|
|
|
|
482
|
|
|
|
1,686
|
|
|
|
1,430
|
|
|
||||
FAS/CAS pension adjustment
|
|
220
|
|
|
|
226
|
|
|
|
656
|
|
|
|
672
|
|
|
||||
Stock-based compensation
|
|
(32
|
)
|
|
|
(28
|
)
|
|
|
(133
|
)
|
|
|
(124
|
)
|
|
||||
Severance charges
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(80
|
)
|
|
||||
Other, net
(b) (c)
|
|
(9
|
)
|
|
|
(33
|
)
|
|
|
(89
|
)
|
|
|
(157
|
)
|
|
||||
Total unallocated items
|
|
179
|
|
|
|
165
|
|
|
|
434
|
|
|
|
311
|
|
|
||||
Total consolidated operating profit
|
|
$
|
1,428
|
|
|
|
$
|
1,588
|
|
|
|
$
|
4,062
|
|
|
|
$
|
4,121
|
|
|
Intersegment sales
|
|
|
|
|
|
|
|
|
|
|||||||||||
Aeronautics
|
|
$
|
33
|
|
|
|
$
|
30
|
|
|
|
$
|
98
|
|
|
|
$
|
105
|
|
|
Missiles and Fire Control
|
|
104
|
|
|
|
81
|
|
|
|
253
|
|
|
|
225
|
|
|
||||
Rotary and Mission Systems
|
|
452
|
|
|
|
469
|
|
|
|
1,438
|
|
|
|
1,382
|
|
|
||||
Space Systems
|
|
31
|
|
|
|
21
|
|
|
|
76
|
|
|
|
90
|
|
|
||||
Total intersegment sales
|
|
$
|
620
|
|
|
|
$
|
601
|
|
|
|
$
|
1,865
|
|
|
|
$
|
1,802
|
|
|
(a)
|
On August 24, 2016, our ownership interest in the AWE joint venture increased from
33%
to
51%
and we were required to change our accounting for this investment from the equity method to consolidation. As a result of the increased ownership interest, we recognized a non-cash gain of
$127 million
at our Space Systems business segment, which increased net earnings from continuing operations by
$104 million
(
$0.34
per share) in the
quarter and nine months ended
September 25, 2016
. See “
Note 1 – Basis of Presentation
” for more information.
|
(b)
|
During the
nine months ended
September 24, 2017
, we recognized a
$64 million
charge, which represents our portion of a noncash asset impairment charge recorded by our equity method investee,
Advanced Military Maintenance, Repair and Overhaul Center LLC (AMMROC). See “
Note 10 – Other
” (under the caption “Equity Method Investee Impairment”) for more information.
|
(c)
|
Includes
$17 million
and
$82 million
of corporate overhead costs incurred during the
quarter and nine months ended
September 25, 2016
that were previously allocated to our former IS&GS business.
See “
Note 3 – Divestiture
” for more information.
|
|
|
September 24,
2017 |
|
December 31,
2016 |
||||||
Assets
|
|
|
|
|
|
|
||||
Aeronautics
|
|
$
|
7,918
|
|
|
|
$
|
7,896
|
|
|
Missiles and Fire Control
|
|
4,510
|
|
|
|
4,000
|
|
|
||
Rotary and Mission Systems
|
|
18,500
|
|
|
|
18,367
|
|
|
||
Space Systems
|
|
5,425
|
|
|
|
5,250
|
|
|
||
Total business segment assets
|
|
36,353
|
|
|
|
35,513
|
|
|
||
Corporate assets
(a)
|
|
12,593
|
|
|
|
12,293
|
|
|
||
Total assets
|
|
$
|
48,946
|
|
|
|
$
|
47,806
|
|
|
(a)
|
Corporate assets primarily include cash and cash equivalents, deferred income taxes, environmental receivables, and investments held in a separate trust to fund certain of our non-qualified deferred compensation plans.
|
|
|
September 24,
2017 |
|
December 31,
2016 |
||||||
Work-in-process, primarily related to long-term contracts and programs in progress
|
|
$
|
7,720
|
|
|
|
$
|
7,864
|
|
|
Spare parts, used aircraft and general stock materials
|
|
798
|
|
|
|
833
|
|
|
||
Other inventories
|
|
767
|
|
|
|
719
|
|
|
||
Total inventories
|
|
9,285
|
|
|
|
9,416
|
|
|
||
Less: customer advances and progress payments
|
|
(4,482
|
)
|
|
|
(4,746
|
)
|
|
||
Total inventories, net
|
|
$
|
4,803
|
|
|
|
$
|
4,670
|
|
|
|
|
Quarters Ended
|
|
Nine Months Ended
|
||||||||||||||||
|
|
September 24,
2017 |
|
September 25,
2016 |
|
September 24,
2017 |
|
September 25,
2016 |
||||||||||||
Qualified defined benefit pension plans
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Service cost
|
|
$
|
205
|
|
|
|
$
|
208
|
|
|
|
$
|
615
|
|
|
|
$
|
615
|
|
|
Interest cost
|
|
452
|
|
|
|
465
|
|
|
|
1,357
|
|
|
|
1,396
|
|
|
||||
Expected return on plan assets
|
|
(602
|
)
|
|
|
(667
|
)
|
|
|
(1,806
|
)
|
|
|
(2,000
|
)
|
|
||||
Recognized net actuarial losses
|
|
376
|
|
|
|
340
|
|
|
|
1,129
|
|
|
|
1,019
|
|
|
||||
Amortization of prior service credits
|
|
(89
|
)
|
|
|
(90
|
)
|
|
|
(265
|
)
|
|
|
(272
|
)
|
|
||||
Total net periodic benefit cost
|
|
$
|
342
|
|
|
|
$
|
256
|
|
|
|
$
|
1,030
|
|
|
|
$
|
758
|
|
|
Retiree medical and life insurance plans
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Service cost
|
|
$
|
5
|
|
|
|
$
|
6
|
|
|
|
$
|
15
|
|
|
|
$
|
18
|
|
|
Interest cost
|
|
25
|
|
|
|
30
|
|
|
|
76
|
|
|
|
89
|
|
|
||||
Expected return on plan assets
|
|
(31
|
)
|
|
|
(34
|
)
|
|
|
(95
|
)
|
|
|
(103
|
)
|
|
||||
Recognized net actuarial losses
|
|
4
|
|
|
|
8
|
|
|
|
14
|
|
|
|
25
|
|
|
||||
Amortization of prior service costs
|
|
4
|
|
|
|
5
|
|
|
|
11
|
|
|
|
16
|
|
|
||||
Total net periodic benefit cost
|
|
$
|
7
|
|
|
|
$
|
15
|
|
|
|
$
|
21
|
|
|
|
$
|
45
|
|
|
|
|
September 24, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Total
|
|
Level 1
|
|
Level 2
|
||||||||||||
Assets
|
|
|
|
|
|
|
|
|
||||||||||||||||
Equity securities
|
|
$
|
47
|
|
|
$
|
47
|
|
|
$
|
—
|
|
|
$
|
79
|
|
|
$
|
79
|
|
|
$
|
—
|
|
Mutual funds
|
|
858
|
|
|
858
|
|
|
—
|
|
|
856
|
|
|
856
|
|
|
—
|
|
||||||
U.S. Government securities
|
|
110
|
|
|
—
|
|
|
110
|
|
|
113
|
|
|
—
|
|
|
113
|
|
||||||
Other securities
|
|
176
|
|
|
—
|
|
|
176
|
|
|
151
|
|
|
—
|
|
|
151
|
|
||||||
Derivatives
|
|
28
|
|
|
—
|
|
|
28
|
|
|
27
|
|
|
—
|
|
|
27
|
|
||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivatives
|
|
105
|
|
|
—
|
|
|
105
|
|
|
85
|
|
|
—
|
|
|
85
|
|
||||||
Assets measured at NAV
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other commingled funds
|
|
18
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
Postretirement
Benefit Plans
|
|
Other, net
|
|
AOCL
|
||||||
Balance at December 31, 2016
|
|
$
|
(11,981
|
)
|
|
$
|
(121
|
)
|
|
$
|
(12,102
|
)
|
Other comprehensive income before reclassifications
|
|
3
|
|
|
123
|
|
|
126
|
|
|||
Amounts reclassified from AOCL
|
|
|
|
|
|
|
||||||
Recognition of net actuarial losses
(a)
|
|
774
|
|
|
—
|
|
|
774
|
|
|||
Amortization of net prior service credits
(a)
|
|
(172
|
)
|
|
—
|
|
|
(172
|
)
|
|||
Other
|
|
—
|
|
|
14
|
|
|
14
|
|
|||
Total reclassified from AOCL
|
|
602
|
|
|
14
|
|
|
616
|
|
|||
Total other comprehensive income
|
|
605
|
|
|
137
|
|
|
742
|
|
|||
Balance at September 24, 2017
|
|
$
|
(11,376
|
)
|
|
$
|
16
|
|
|
$
|
(11,360
|
)
|
|
|
|
|
|
|
|
||||||
Balance at December 31, 2015
|
|
$
|
(11,314
|
)
|
|
$
|
(130
|
)
|
|
$
|
(11,444
|
)
|
Other comprehensive loss before reclassifications
|
|
—
|
|
|
(46
|
)
|
|
(46
|
)
|
|||
Amounts reclassified from AOCL
|
|
|
|
|
|
|
||||||
Recognition of net actuarial losses
(a)
|
|
703
|
|
|
—
|
|
|
703
|
|
|||
Amortization of net prior service credits
(a)
|
|
(182
|
)
|
|
—
|
|
|
(182
|
)
|
|||
Recognition of net prior service credits from divestiture of IS&GS
(b)
|
|
(134
|
)
|
|
—
|
|
|
(134
|
)
|
|||
Other
|
|
—
|
|
|
112
|
|
|
112
|
|
|||
Total reclassified from AOCL
|
|
387
|
|
|
112
|
|
|
499
|
|
|||
Total other comprehensive income
|
|
387
|
|
|
66
|
|
|
453
|
|
|||
Balance at September 25, 2016
|
|
$
|
(10,927
|
)
|
|
$
|
(64
|
)
|
|
$
|
(10,991
|
)
|
(a)
|
Reclassifications from AOCL related to our postretirement benefit plans were recorded as a component of net periodic benefit cost for each period presented (see “
Note 6 – Postretirement Plans
”). These amounts include
$200 million
and
$175 million
, net of tax, for the quarters ended
September 24, 2017
and
September 25, 2016
, which are comprised of the recognition of net actuarial losses of
$258 million
and
$234 million
for the quarters ended
September 24, 2017
and
September 25, 2016
and the amortization of net prior service credits of
$(58) million
and
$(59) million
for the quarters ended
September 24, 2017
and
September 25, 2016
.
|
(b)
|
Associated with the divestiture of the IS&GS business and included in net gain on divestiture of discontinued operations.
|
|
|
2017 Financial Outlook
|
|
||
(in millions)
|
|
ASC 605
|
|
ASC 606
|
|
Net sales
|
|
$50,000 – $51,200
|
|
$49,000 – $50,200
|
|
Business segment operating profit
|
|
$5,040 – $5,160
|
|
$5,040 – $5,160
|
|
FAS/CAS pension adjustment
|
|
~880
|
|
~880
|
|
Property sale gain
(a)
|
|
~200
|
|
~200
|
|
Other, net
|
|
~(305)
|
|
~(305)
|
|
Consolidated operating profit
(a)
|
|
$5,815 – $5,935
|
|
$5,815 – $5,935
|
|
Cash from operations
|
|
≥ $6,200
|
|
≥ $6,200
|
|
(a)
|
In the fourth quarter of 2017, the corporation expects to recognize a previously deferred non-cash gain of approximately $200 million related to properties sold in 2015, which is expected to increase net earnings from continuing operations by $120 million ($0.40 per share).
|
|
|
Quarters Ended
|
|
Nine Months Ended
|
||||||||||||||||
|
|
September 24,
2017 |
|
September 25,
2016 |
|
September 24,
2017 |
|
September 25,
2016 |
||||||||||||
Net sales
|
|
$
|
12,169
|
|
|
|
$
|
11,551
|
|
|
|
$
|
35,911
|
|
|
|
$
|
33,496
|
|
|
Cost of sales
|
|
(10,818
|
)
|
|
|
(10,167
|
)
|
|
|
(31,982
|
)
|
|
|
(29,787
|
)
|
|
||||
Gross profit
|
|
1,351
|
|
|
|
1,384
|
|
|
|
3,929
|
|
|
|
3,709
|
|
|
||||
Other income, net
|
|
77
|
|
|
|
204
|
|
|
|
133
|
|
|
|
412
|
|
|
||||
Operating profit
|
|
1,428
|
|
|
|
1,588
|
|
|
|
4,062
|
|
|
|
4,121
|
|
|
||||
Interest expense
|
|
(162
|
)
|
|
|
(162
|
)
|
|
|
(477
|
)
|
|
|
(492
|
)
|
|
||||
Other non-operating (expense) income, net
|
|
(7
|
)
|
|
|
1
|
|
|
|
(8
|
)
|
|
|
2
|
|
|
||||
Earnings from continuing operations before income taxes
|
|
1,259
|
|
|
|
1,427
|
|
|
|
3,577
|
|
|
|
3,631
|
|
|
||||
Income tax expense
|
|
(320
|
)
|
|
|
(338
|
)
|
|
|
(933
|
)
|
|
|
(837
|
)
|
|
||||
Net earnings from continuing operations
|
|
939
|
|
|
|
1,089
|
|
|
|
2,644
|
|
|
|
2,794
|
|
|
||||
Net earnings from discontinued operations
|
|
—
|
|
|
|
1,306
|
|
|
|
—
|
|
|
|
1,520
|
|
|
||||
Net earnings
|
|
$
|
939
|
|
|
|
$
|
2,395
|
|
|
|
$
|
2,644
|
|
|
|
$
|
4,314
|
|
|
Diluted earnings per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
|
$
|
3.24
|
|
|
|
$
|
3.61
|
|
|
|
$
|
9.08
|
|
|
|
$
|
9.13
|
|
|
Discontinued operations
|
|
—
|
|
|
|
4.32
|
|
|
|
—
|
|
|
|
4.97
|
|
|
||||
Total diluted earnings per common share
|
|
$
|
3.24
|
|
|
|
$
|
7.93
|
|
|
|
$
|
9.08
|
|
|
|
$
|
14.10
|
|
|
|
|
Quarters Ended
|
|
Nine Months Ended
|
||||||||||||||||
|
|
September 24,
2017 |
|
September 25,
2016 |
|
September 24,
2017 |
|
September 25,
2016 |
||||||||||||
Products
|
|
$
|
10,496
|
|
|
|
$
|
10,062
|
|
|
|
$
|
30,837
|
|
|
|
$
|
28,629
|
|
|
% of total net sales
|
|
86.3
|
%
|
|
|
87.1
|
%
|
|
|
85.9
|
%
|
|
|
85.5
|
%
|
|
||||
Services
|
|
1,673
|
|
|
|
1,489
|
|
|
|
5,074
|
|
|
|
4,867
|
|
|
||||
% of total net sales
|
|
13.7
|
%
|
|
|
12.9
|
%
|
|
|
14.1
|
%
|
|
|
14.5
|
%
|
|
||||
Total net sales
|
|
$
|
12,169
|
|
|
|
$
|
11,551
|
|
|
|
$
|
35,911
|
|
|
|
$
|
33,496
|
|
|
|
|
Quarters Ended
|
|
Nine Months Ended
|
||||||||||||||||
|
|
September 24,
2017 |
|
September 25,
2016 |
|
September 24,
2017 |
|
September 25,
2016 |
||||||||||||
Cost of sales – products
|
|
$
|
(9,481
|
)
|
|
|
$
|
(9,027
|
)
|
|
|
$
|
(27,919
|
)
|
|
|
$
|
(25,787
|
)
|
|
% of product sales
|
|
90.3
|
%
|
|
|
89.7
|
%
|
|
|
90.5
|
%
|
|
|
90.1
|
%
|
|
||||
Cost of sales – services
|
|
(1,513
|
)
|
|
|
(1,313
|
)
|
|
|
(4,547
|
)
|
|
|
(4,321
|
)
|
|
||||
% of service sales
|
|
90.4
|
%
|
|
|
88.2
|
%
|
|
|
89.6
|
%
|
|
|
88.8
|
%
|
|
||||
Severance charges
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(80
|
)
|
|
||||
Other unallocated, net
|
|
176
|
|
|
|
173
|
|
|
|
484
|
|
|
|
401
|
|
|
||||
Total cost of sales
|
|
$
|
(10,818
|
)
|
|
|
$
|
(10,167
|
)
|
|
|
$
|
(31,982
|
)
|
|
|
$
|
(29,787
|
)
|
|
|
|
Quarters Ended
|
|
Nine Months Ended
|
||||||||||||||||
|
|
September 24,
2017 |
|
September 25,
2016 |
|
September 24,
2017 |
|
September 25,
2016 |
||||||||||||
Net sales
|
|
|
|
|
|
|
|
|
|
|||||||||||
Aeronautics
|
|
$
|
4,771
|
|
|
|
$
|
4,188
|
|
|
|
$
|
14,102
|
|
|
|
$
|
12,362
|
|
|
Missiles and Fire Control
|
|
1,793
|
|
|
|
1,737
|
|
|
|
4,919
|
|
|
|
4,851
|
|
|
||||
Rotary and Mission Systems
|
|
3,353
|
|
|
|
3,346
|
|
|
|
9,864
|
|
|
|
9,653
|
|
|
||||
Space Systems
|
|
2,252
|
|
|
|
2,280
|
|
|
|
7,026
|
|
|
|
6,630
|
|
|
||||
Total net sales
|
|
$
|
12,169
|
|
|
|
$
|
11,551
|
|
|
|
$
|
35,911
|
|
|
|
$
|
33,496
|
|
|
Operating profit
|
|
|
|
|
|
|
|
|
|
|||||||||||
Aeronautics
|
|
$
|
517
|
|
|
|
$
|
437
|
|
|
|
$
|
1,503
|
|
|
|
$
|
1,335
|
|
|
Missiles and Fire Control
|
|
270
|
|
|
|
289
|
|
|
|
757
|
|
|
|
763
|
|
|
||||
Rotary and Mission Systems
|
|
244
|
|
|
|
247
|
|
|
|
606
|
|
|
|
678
|
|
|
||||
Space Systems
(a)
|
|
218
|
|
|
|
450
|
|
|
|
762
|
|
|
|
1,034
|
|
|
||||
Total business segment operating profit
|
|
1,249
|
|
|
|
1,423
|
|
|
|
3,628
|
|
|
|
3,810
|
|
|
||||
Unallocated items
|
|
|
|
|
|
|
|
|
|
|||||||||||
FAS/CAS pension adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
FAS pension expense
|
|
(342
|
)
|
|
|
(256
|
)
|
|
|
(1,030
|
)
|
|
|
(758
|
)
|
|
||||
Less: CAS pension cost
|
|
562
|
|
|
|
482
|
|
|
|
1,686
|
|
|
|
1,430
|
|
|
||||
FAS/CAS pension adjustment
|
|
220
|
|
|
|
226
|
|
|
|
656
|
|
|
|
672
|
|
|
||||
Stock-based compensation
|
|
(32
|
)
|
|
|
(28
|
)
|
|
|
(133
|
)
|
|
|
(124
|
)
|
|
||||
Severance charges
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(80
|
)
|
|
||||
Other, net
(b) (c)
|
|
(9
|
)
|
|
|
(33
|
)
|
|
|
(89
|
)
|
|
|
(157
|
)
|
|
||||
Total unallocated items
|
|
179
|
|
|
|
165
|
|
|
|
434
|
|
|
|
311
|
|
|
||||
Total consolidated operating profit
|
|
$
|
1,428
|
|
|
|
$
|
1,588
|
|
|
|
$
|
4,062
|
|
|
|
$
|
4,121
|
|
|
(a)
|
On August 24, 2016, our ownership interest in the AWE joint venture increased from
33%
to
51%
and we were required to change our accounting for this investment from the equity method to consolidation. As a result of the increased ownership interest, we recognized a non-cash gain of
$127 million
at our Space Systems business segment, which increased net earnings from continuing operations by
$104 million
(
$0.34
per share) in the
quarter and nine months ended
September 25, 2016
. See “
Note 1 – Basis of Presentation
” included in our Notes to Consolidated Financial Statements for more information.
|
(b)
|
During the
nine months ended
September 24, 2017
, we recognized a
$64 million
charge, which represents our portion of a noncash asset impairment charge recorded by our equity method investee,
AMMROC. See “
Note 10 – Other
” (under the caption “Equity Method Investee Impairment”) included in our Notes to Consolidated Financial Statements for more information.
|
(c)
|
Includes
$17 million
and
$82 million
of corporate overhead costs incurred during the
quarter and nine months ended
September 25, 2016
that were previously allocated to our former IS&GS business.
See “
Note 3 – Divestiture
” included in our Notes to Consolidated Financial Statements for more information.
|
|
|
Quarters Ended
|
|
Nine Months Ended
|
||||||||||||||||
|
|
September 24,
2017 |
|
September 25,
2016 |
|
September 24,
2017 |
|
September 25,
2016 |
||||||||||||
Net sales
|
|
$
|
4,771
|
|
|
|
$
|
4,188
|
|
|
|
$
|
14,102
|
|
|
|
$
|
12,362
|
|
|
Operating profit
|
|
517
|
|
|
|
437
|
|
|
|
1,503
|
|
|
|
1,335
|
|
|
||||
Operating margin
|
|
10.8
|
%
|
|
|
10.4
|
%
|
|
|
10.7
|
%
|
|
|
10.8
|
%
|
|
|
|
Quarters Ended
|
|
Nine Months Ended
|
||||||||||||||||
|
|
September 24,
2017 |
|
September 25,
2016 |
|
September 24,
2017 |
|
September 25,
2016 |
||||||||||||
Net sales
|
|
$
|
1,793
|
|
|
|
$
|
1,737
|
|
|
|
$
|
4,919
|
|
|
|
$
|
4,851
|
|
|
Operating profit
|
|
270
|
|
|
|
289
|
|
|
|
757
|
|
|
|
763
|
|
|
||||
Operating margin
|
|
15.1
|
%
|
|
|
16.6
|
%
|
|
|
15.4
|
%
|
|
|
15.7
|
%
|
|
|
|
Quarters Ended
|
|
Nine Months Ended
|
||||||||||||||||
|
|
September 24,
2017 |
|
September 25,
2016 |
|
September 24,
2017 |
|
September 25,
2016 |
||||||||||||
Net sales
|
|
$
|
3,353
|
|
|
|
$
|
3,346
|
|
|
|
$
|
9,864
|
|
|
|
$
|
9,653
|
|
|
Operating profit
|
|
244
|
|
|
|
247
|
|
|
|
606
|
|
|
|
678
|
|
|
||||
Operating margin
|
|
7.3
|
%
|
|
|
7.4
|
%
|
|
|
6.1
|
%
|
|
|
7.0
|
%
|
|
|
|
Quarters Ended
|
|
Nine Months Ended
|
||||||||||||||||
|
|
September 24,
2017 |
|
September 25,
2016 |
|
September 24,
2017 |
|
September 25,
2016 |
||||||||||||
Net sales
|
|
$
|
2,252
|
|
|
|
$
|
2,280
|
|
|
|
$
|
7,026
|
|
|
|
$
|
6,630
|
|
|
Operating profit
|
|
218
|
|
|
|
450
|
|
|
|
762
|
|
|
|
1,034
|
|
|
||||
Operating margin
|
|
9.7
|
%
|
|
|
19.7
|
%
|
|
|
10.8
|
%
|
|
|
15.6
|
%
|
|
|
|
Nine Months Ended
|
||||||||
|
|
September 24,
2017 |
|
September 25,
2016 |
||||||
Cash and cash equivalents at beginning of year
|
|
$
|
1,837
|
|
|
|
$
|
1,090
|
|
|
Operating activities
|
|
|
|
|
|
|
||||
Net earnings
|
|
2,644
|
|
|
|
4,314
|
|
|
||
Non-cash adjustments
|
|
1,013
|
|
|
|
(227
|
)
|
|
||
Changes in working capital
|
|
(304
|
)
|
|
|
(682
|
)
|
|
||
Other, net
|
|
1,611
|
|
|
|
1,055
|
|
|
||
Net cash provided by operating activities
|
|
4,964
|
|
|
|
4,460
|
|
|
||
Net cash used for investing activities
|
|
(655
|
)
|
|
|
(551
|
)
|
|
||
Net cash used for financing activities
|
|
(3,205
|
)
|
|
|
(2,104
|
)
|
|
||
Net change in cash and cash equivalents
|
|
1,104
|
|
|
|
1,805
|
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
2,941
|
|
|
|
$
|
2,895
|
|
|
•
|
our
reliance on contracts with the U.S. Government, all of which are conditioned upon the availability of funding and can be terminated by the U.S. Government for convenience, and
our
ability to negotiate favorable contract terms;
|
•
|
budget uncertainty, any failure to further raise the debt ceiling, and the potential for a government shutdown; affordability initiatives; the implementation of automatic sequestration under the Budget Control Act of 2011 or Congressional actions intended to replace sequestration;
|
•
|
risks related to the development, production, sustainment, performance, schedule, cost and requirements of complex and technologically advanced programs including
our
largest, the F-35 program;
|
•
|
economic, industry, business and political conditions (domestic and international) including their effects on governmental policy;
|
•
|
our
success expanding into and doing business in adjacent markets and internationally; the differing risks posed by international sales, including those involving commercial relationships with unfamiliar customers and different cultures; that in some instances our ability to recover investments is dependent upon the successful operation of ventures that we do not control; and changes in foreign national priorities, and foreign government budgets;
|
•
|
the competitive environment for
our
products and services, including increased pricing pressures, competition from outside the aerospace and defense industry, and increased bid protests;
|
•
|
planned production rates for significant programs; compliance with stringent performance and reliability standards; materials availability;
|
•
|
the performance and financial viability of key suppliers, teammates, ventures, venture partners, subcontractors and customers;
|
•
|
the timing and customer acceptance of product deliveries;
|
•
|
our
ability to continue to innovate and develop new products and to attract and retain key personnel and transfer knowledge to new personnel; the impact of work stoppages or other labor disruptions;
|
•
|
the impact of cyber or other security threats or other disruptions to
our
businesses;
|
•
|
our
ability to implement and continue capitalization changes such as share repurchase activity and payment of dividends, pension funding as well as the pace and effect of any such capitalization changes;
|
•
|
our
ability to recover certain costs under U.S. Government contracts and changes in contract mix;
|
•
|
the accuracy of
our
estimates and projections and the potential impact of changes in U.S. or foreign tax laws;
|
•
|
movements in interest rates and other changes that may affect pension plan assumptions, equity, the level of the FAS/CAS adjustment and actual returns on pension plan assets;
|
•
|
realizing the anticipated benefits of acquisitions or divestitures, ventures, teaming arrangements or internal reorganizations, and
our
efforts to increase the efficiency of
our
operations and improve the affordability of
our
products and services;
|
•
|
the ability to realize synergies and other expected benefits of the Sikorsky acquisition; remediation of the material weakness in internal control over financial reporting related to Sikorsky;
|
•
|
risk of an impairment of goodwill, investments or other long-term assets, including the potential impairment of goodwill, intangible assets and inventory recorded as a result of the Sikorsky acquisition if Sikorsky does not perform as expected, has a deterioration of projected cash flows, negative changes in market factors, including oil and gas trends, or a significant increase in carrying value of the reporting unit;
|
•
|
risks related to the achievement of the intended benefits and tax treatment of the divestiture of
our
former IS&GS business;
|
•
|
the adequacy of
our
insurance and indemnities;
|
•
|
the effect of changes in (or the interpretation of): legislation, regulation or policy, including those applicable to procurement (including competition from fewer and larger prime contractors), cost allowability or recovery, accounting, taxation, or export; and
|
•
|
the outcome of legal proceedings, bid protests, environmental remediation efforts, government investigations or government allegations that we have failed to comply with law, other contingencies and U.S. Government identification of deficiencies in
our
business systems.
|
Period
(a)
|
|
Total Number
of Shares
Purchased
|
|
|
|
Average
Price Paid
Per Share
|
|
Total Number of
Shares
Purchased as
Part of Publicly
Announced Plans
or Programs (b) |
|
Amount
Available for
Future Share
Repurchases
Under the
Plans or
Programs (b) |
||||||
|
|
|
|
|
|
|
|
|
|
(in millions)
|
||||||
June 26, 2017 – July 30, 2017
|
|
779,459
|
|
|
|
|
$
|
285.34
|
|
|
779,459
|
|
|
$
|
2,282
|
|
July 31, 2017 – August 27, 2017
|
|
526,241
|
|
|
|
|
$
|
300.68
|
|
|
526,000
|
|
|
$
|
2,123
|
|
August 28, 2017 – September 24, 2017
|
|
393,706
|
|
|
|
|
$
|
303.61
|
|
|
393,400
|
|
|
$
|
2,004
|
|
Total
|
|
1,699,406
|
|
(c)
|
|
$
|
294.32
|
|
|
1,698,859
|
|
|
|
(a)
|
We close our books and records on the last Sunday of each month to align our financial closing with our business processes, except for the month of December, as our fiscal year ends on December 31. As a result, our fiscal months often differ from the calendar months. For example,
September 24, 2017
was the last day of our
September 2017
fiscal month.
|
(b)
|
In October 2010, our Board of Directors approved a share repurchase program pursuant to which we are authorized to repurchase our common stock in privately negotiated transactions or in the open market at prices per share not exceeding the then-current market prices. From time to time, our Board of Directors authorizes increases to our share repurchase program. The total remaining authorization for future common share repurchases under our share repurchase program was
$2.0 billion
as of
September 24, 2017
. On September 28, 2017, subsequent to the end of our third quarter, our Board of Directors authorized a
$2.0 billion
increase to the program, which is not reflected in the table above as it occurred after the end of the fiscal quarter. Under the program, management has discretion to determine the dollar amount of shares to be repurchased and the timing of any repurchases in compliance with applicable law and regulation. This includes purchases pursuant to Rule 10b5-1 plans. The program does not have an expiration date.
|
(c)
|
During the quarter ended
September 24, 2017
, the total number of shares purchased included
547
shares that were transferred to us by employees in satisfaction of tax withholding obligations associated with the vesting of restricted stock units and performance stock units. These purchases were made pursuant to a separate authorization by our Board of Directors and are not included within the program.
|
Exhibit No.
|
|
Description
|
|
|
|
4.1
|
|
|
|
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
10.3
|
|
|
|
|
|
12
|
|
|
|
|
|
15
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
Lockheed Martin Corporation
|
|
|
(Registrant)
|
|
|
|
Date: October 26, 2017
|
|
By: /s/ Brian P. Colan
|
|
|
Brian P. Colan
|
|
|
Vice President and Controller
|
|
|
(Duly Authorized Officer and Chief Accounting Officer)
|
Annual Cash Retainer*
|
$145,000 per year through September 30, 2017; $155,000 per year effective October 1, 2017
|
Annual Equity Retainer
|
$145,000 for 2017; $155,000 effective January 1, 2018, payable under the Lockheed Martin Corporation 2009 Directors Equity Plan**
|
Audit Committee Chairman Retainer*
|
$25,000 per year through September 30, 2017; $30,000 per year effective October 1, 2017
|
Management Development and Compensation Committee Chairman Retainer*
|
$20,000 per year through September 30, 2017; $30,000 per year effective October 1, 2017
|
Other Committee Chairman Retainers*
|
$15,000 per year through September 30, 2017; $20,000 per year effective October 1, 2017
|
Lead Director Retainer*
|
$25,000 per year through September 30, 2017; $35,000 per year effective October 1, 2017
|
Travel Accident Insurance
|
$1,000,000
|
Deferred Compensation Plan
|
Deferral plan for cash retainer
|
Director Education
|
Reimbursed for costs and expenses
|
Stock Ownership Guidelines
|
Ownership in common stock or stock units with a value equivalent to five times the annual cash retainer within five years of joining the Board
|
1.
|
A new defined term is hereby added to Article II of the Plan (immediately following the existing defined term “
Director
”), reading as follows:
|
2.
|
Section 3.2 of the Plan is amended and restated in its entirety to read as follows:
|
3.
|
Section 4.4 of the Plan is amended and restated in its entirety to read as follows:
|
|
|
Nine Months
Ended |
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
September 24,
|
|
Years Ended December 31,
|
|||||||||||||||||||||
|
|
2017
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
||||||||
Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Earnings from continuing operations before income taxes
|
|
$
|
3,577
|
|
|
|
$
|
4,886
|
|
|
$
|
4,299
|
|
|
$
|
4,677
|
|
|
$
|
3,715
|
|
|
$
|
3,388
|
|
Interest expense
|
|
477
|
|
|
|
663
|
|
|
443
|
|
|
340
|
|
|
350
|
|
|
383
|
|
||||||
Undistributed losses (earnings) from equity investees, net
|
|
5
|
|
|
|
(173
|
)
|
|
(83
|
)
|
|
(91
|
)
|
|
(91
|
)
|
|
20
|
|
||||||
Portion of rents representative of the interest factor
|
|
14
|
|
|
|
31
|
|
|
36
|
|
|
41
|
|
|
48
|
|
|
48
|
|
||||||
Earnings from continuing operations before income taxes, as adjusted
|
|
$
|
4,073
|
|
|
|
$
|
5,407
|
|
|
$
|
4,695
|
|
|
$
|
4,967
|
|
|
$
|
4,022
|
|
|
$
|
3,839
|
|
Fixed Charges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense
|
|
$
|
477
|
|
|
|
$
|
663
|
|
|
$
|
443
|
|
|
$
|
340
|
|
|
$
|
350
|
|
|
$
|
383
|
|
Portion of rents representative of the interest factor
|
|
14
|
|
|
|
31
|
|
|
36
|
|
|
41
|
|
|
48
|
|
|
48
|
|
||||||
Total fixed charges
|
|
$
|
491
|
|
|
|
$
|
694
|
|
|
$
|
479
|
|
|
$
|
381
|
|
|
$
|
398
|
|
|
$
|
431
|
|
Ratio of Earnings to Fixed Charges
|
|
8.3
|
|
|
|
7.8
|
|
|
9.8
|
|
|
13.0
|
|
|
10.1
|
|
|
8.9
|
|
•
|
33-63155 on Form S-8, dated October 3, 1995;
|
•
|
33-58083 on Form S-8 (Post-Effective Amendment No. 1), dated January 22, 1997;
|
•
|
333-20117 and 333-20139 on Form S-8, each dated January 22, 1997;
|
•
|
333-27309 on Form S-8, dated May 16, 1997;
|
•
|
333-37069 on Form S-8, dated October 2, 1997;
|
•
|
333-40997 on Form S-8, dated November 25, 1997;
|
•
|
333-58069 on Form S-8, dated June 30, 1998;
|
•
|
333-92197 on Form S-8, dated December 6, 1999;
|
•
|
333-92363 on Form S-8, dated December 8, 1999;
|
•
|
333-78279 on Form S-8 (Post-Effective Amendments No. 2 and 3), each dated August 3, 2000;
|
•
|
333-56926 on Form S-8, dated March 12, 2001;
|
•
|
333-105118 on Form S-8, dated May 9, 2003;
|
•
|
333-113769, 333-113770, 333-113771, 333-113772, and 333-113773 on Form S-8, each dated March 19, 2004;
|
•
|
333-115357 on Form S-8, dated May 10, 2004;
|
•
|
333-127084 on Form S-8, dated August 1, 2005;
|
•
|
333-146963 on Form S-8, dated October 26, 2007;
|
•
|
333-155687 on Form S-8, dated November 25, 2008;
|
•
|
333-162716 on Form S-8, dated October 28, 2009;
|
•
|
333-155684 on Form S-8 (Post-Effective Amendment No. 1), dated August 23, 2011;
|
•
|
333-176440 on Form S-8, dated August 23, 2011;
|
•
|
333-188118 on Form S-8, dated April 25, 2013;
|
•
|
333-195466 on Form S-8, dated April 24, 2014 and July 23, 2014 (Post-Effective Amendment No.1);
|
•
|
333-219373 on Form S-3, dated July 20, 2017
|
•
|
333-219374 on Form S-3, dated July 20, 2017; and
|
•
|
333-220431 on Form S-4, dated September 27, 2017.
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Lockheed Martin Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
/s/ Marillyn A. Hewson
|
|
|
|
Marillyn A. Hewson
|
|
|
|
Chief Executive Officer
|
|
Date: October 26, 2017
|
|
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Lockheed Martin Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
/s/ Bruce L. Tanner
|
|
|
|
Bruce L. Tanner
|
|
|
|
Chief Financial Officer
|
|
Date: October 26, 2017
|
|
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.
|
|
|
|
/s/ Marillyn A. Hewson
|
|
|
|
|
Marillyn A. Hewson
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
/s/ Bruce L. Tanner
|
|
|
|
|
Bruce L. Tanner
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
|
|
Date: October 26, 2017
|
|
|
|
|