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Last updated on April 19, 2014 at 1:20 EDT

Lockheed Martin Reports Fourth Quarter And Full Year 2012 Results

January 24, 2013

BETHESDA, Md., Jan. 24, 2013 /PRNewswire/ — Lockheed Martin Corporation (NYSE: LMT) today reported fourth quarter 2012 net sales of $12.1 billion compared to $12.2 billion in the fourth quarter of 2011. Net earnings from continuing operations in the fourth quarter of 2012 were $569 million, or $1.73 per diluted share, compared to $698 million, or $2.14 per diluted share, in the fourth quarter of 2011. Cash used for operations in the fourth quarter of 2012 was ($1.3) billion after discretionary pension contributions of $2.5 billion, compared to cash from operations of $1.1 billion after discretionary pension contributions of $1.0 billion in the fourth quarter of 2011.

Fourth quarter 2012 net earnings from continuing operations included a non-cash FAS/CAS pension adjustment of $208 million, which reduced net earnings by $128 million, or $0.39 per diluted share; an increase in income tax expense from reduced U.S. manufacturing deductions primarily due to the Corporation’s discretionary pension contributions in the fourth quarter of 2012, which reduced net earnings by $59 million, or $0.18 per diluted share; and a special charge of $25 million related to workforce reductions at the Corporation’s Aeronautics business segment, which reduced net earnings by $16 million, or $0.05 per diluted share. Fourth quarter 2011 net earnings from continuing operations included a non-cash FAS/CAS pension adjustment of $230 million, which reduced net earnings by $142 million, or $0.43 per diluted share, and $46 million of premiums paid for the early retirement of debt in the fourth quarter of 2011, which reduced net earnings by $28 million, or $0.09 per diluted share.

Net sales for 2012 were $47.2 billion compared to $46.5 billion in 2011. Net earnings from continuing operations in 2012 were $2.75 billion, or $8.36 per diluted share, compared to $2.67 billion, or $7.85 per diluted share, during 2011. Cash from operations for 2012 was $1.6 billion after pension contributions of $3.6 billion, which included $2.5 billion of discretionary contributions in the fourth quarter, compared to cash from operations for 2011 of $4.3 billion after pension contributions of $2.3 billion in 2011, which included $1.0 billion of discretionary contributions in the fourth quarter.

Net earnings from continuing operations for 2012 included a non-cash FAS/CAS pension adjustment of $830 million, which reduced net earnings by $513 million, or $1.56 per diluted share; an increase in income tax expense from reduced U.S. manufacturing deductions primarily due to the Corporation’s discretionary pension contributions in the fourth quarter of 2012, which reduced net earnings by $59 million, or $0.18 per diluted share; and special charges of $48 million related to workforce reductions at the Corporation’s Aeronautics and former Electronic Systems business segments, which reduced net earnings by $31 million, or $0.09 per diluted share. Net earnings from continuing operations in 2011 included a non-cash FAS/CAS pension adjustment of $922 million, which reduced net earnings by $569 million, or $1.68 per diluted share, $48 million of premiums paid for the early retirement of debt in the fourth quarter of 2011, which reduced net earnings by $30 million, or $0.09 per diluted share, and a reduction to income tax expense of $89 million, or $0.26 per diluted share, related to the U.S. Congressional Joint Committee on Taxation completing its review of Internal Revenue Service resolution of adjustments for the years 2003 through 2008.

“Our dedicated team, broad portfolio, focus on program execution and proactive cost reduction efforts resulted in record performance and backlog in 2012,” said Lockheed Martin Chief Executive Officer and President Marillyn Hewson. “While we still face the uncertainty of sequestration, we remain focused on delivering innovative solutions, meeting our commitments to customers and returning value to our shareholders.”

Summary Financial Results

The following table presents the Corporation’s summary financial results prepared in accordance with generally accepted accounting principles (GAAP):

                                                                                                     (in millions, except per share data)              Quarters Ended Dec. 31,             Years Ended Dec. 31,
                                                                                                                                                       -----------------------             --------------------
                                                                                                                                                 2012                                2011                                       2012                   2011
                                                                                                                                                 ----                                ----                                       ----                   ----
    Net sales                                                                                                                                                          $12,099                                    $12,211                                     $47,182                           $46,499
                                                                                                                                                                       =======                                    =======                                     =======                           =======

    Business segment operating profit                                                                                                                                   $1,339                                     $1,404                                      $5,583                            $5,281
    Unallocated expenses, net1, 2                                                                                                                                         (253)                                      (298)                                     (1,101)                           (1,125)
    Special items - severance charges(3)                                                                                                                                   (25)                                         -                                         (48)                             (136)
                                                                                                                                                                           ---                                        ---                                         ---                              ----
    Consolidated operating profit(2)                                                                                                                                    $1,061                                     $1,106                                      $4,434                            $4,020
                                                                                                                                                                        ======                                     ======                                      ======                            ======

    Net earnings (loss) from
    Continuing operations                                                                                                                                                 $569                                       $698                                      $2,745                            $2,667
    Discontinued operations4                                                                                                                                                 -                                        (15)                                          -                               (12)
                                                                                                                                                                           ---                                        ---                                         ---                               ---
    Net earnings                                                                                                                                                          $569                                       $683                                      $2,745                            $2,655
                                                                                                                                                                          ====                                       ====                                      ======                            ======

    Diluted earnings (loss) per share from
    Continuing operations                                                                                                                                                $1.73                                      $2.14                                       $8.36                             $7.85
    Discontinued operations4                                                                                                                                                 -                                       (.05)                                          -                              (.04)
                                                                                                                                                                           ---                                       ----                                         ---                              ----
    Diluted earnings per share                                                                                                                                           $1.73                                      $2.09                                       $8.36                             $7.81
                                                                                                                                                                         =====                                      =====                                       =====                             =====

    Cash from operations5                                                                                                                                              $(1,315)                                    $1,088                                      $1,561                            $4,253
                                                                                                                                                                       =======                                     ======                                      ======                            ======

                                                                                                      (1)   Includes non-cash FAS/CAS pension adjustment, which represents the difference between pension expense
                                                                                                      calculated in accordance with GAAP and pension costs calculated and funded in accordance with U.S. Government Cost
                                                                                                      Accounting Standards (CAS).

                                                                                                      2   Gains and losses on investments used to fund the Corporation's deferred compensation plan liabilities have been
                                                                                                      reclassified from "other non-operating (expense) income, net" to "unallocated expenses, net" for all periods
                                                                                                      presented in order to align the classification of changes in the market value of investments held for the plan
                                                                                                      with changes in the value of the corresponding plan liabilities.  Net gains on these investments were $4 million
                                                                                                      and $67 million for the quarter and year ended Dec. 31, 2012, respectively, and $24 million and $40 million for
                                                                                                      the quarter and year ended Dec. 31, 2011, respectively.  For additional information on the reclassification, refer
                                                                                                      to the tables attached to this earnings release, which display the quarterly and annual impact for 2012 and 2011.

                                                                                                      (3)   Severance charges for 2012 consist of amounts associated with the elimination of certain positions at the
                                                                                                      Aeronautics business segment in the fourth quarter and the former Electronic Systems business segment in the third
                                                                                                      quarter.  For 2011, severance charges consisted of amounts related to the elimination of certain positions at
                                                                                                      various business segments and Corporate Headquarters.  Severance charges for initiatives that are not significant
                                                                                                      are included in business segment operating profit.

                                                                                                      4   Discontinued operations in 2011 include the operating results of Savi Technology, Inc. and also Pacific
                                                                                                      Architects and Engineers, Inc. through the date of its sale on April 4, 2011.  Amounts related to discontinued
                                                                                                      operations in 2012 were not significant and, accordingly, were included in consolidated operating profit.

                                                                                                      5   The Corporation made contributions to its pension trust of $2.5 billion and $3.6 billion during the quarter and
                                                                                                      year ended Dec. 31, 2012, respectively.  During the quarter and year ended Dec. 31, 2011, the Corporation made
                                                                                                      contributions to its pension trust of $1.0 billion and $2.3 billion, respectively.
                                                                                                     -------------------------------------------------------------------------------------------------------------------

2013 Financial Outlook

The following table and other sections of this press release contain forward-looking statements, which are based on the Corporation’s current expectations. Actual results may differ materially from those projected. It is the Corporation’s practice not to incorporate adjustments into its financial outlook for proposed acquisitions, divestitures, joint ventures, changes in tax laws, or special items until such transactions have been consummated or enacted. Refer to the “Disclosure Regarding Forward-Looking Statements” section contained in this press release.

The Corporation’s outlook for 2013 is premised on the assumption that sequestration does not occur, that the U.S. Government continues to support and fund the Corporation’s programs, which is consistent with the continuing resolution funding measure through March 2013, and that Congress approves defense budget legislation for government fiscal year 2013 at a level consistent with the President’s proposed defense budget for the second half of the U.S. Government’s fiscal year 2013.

     (in millions, except per share data)
     Net sales                                                                                                            $44,500 - $46,000
                                                                                                                          =================

     Business segment operating profit                                                                                      $5,175 - $5,325
     Unallocated expenses, net(1)                                                                                 ~ (825)
                                                                                                                   ------
     Consolidated operating profit                                                                                          $4,350 - $4,500
                                                                                                                            ===============

      Diluted earnings per share from continuing
      operations(2)                                                                                $8.80 - $9.10
                                                                                                   =============

     Cash from operations(3)                                                                                     >= $4,000
                                                                                                                 =========

      (1)   Includes non-cash FAS/CAS pension adjustment of ($485) million, which was calculated
      using a 4.0 percent discount rate, an expected long-term rate of return on plan assets of
      8.0 percent, and anticipated cash contributions of approximately $1.5 billion in 2013.

      (2)   On Jan. 2, 2013, the President signed legislation that retroactively extended the
      research and development (R&D) tax credit for two years, from Jan. 1, 2012 through Dec. 31,
      2013.  The Corporation expects to recognize a total benefit of approximately $75 million, or
      $0.23 per diluted share, related to this R&D tax credit in 2013.  Of this total, the
      Corporation expects to recognize approximately $45 million, or $0.14 per diluted share,
      during the first quarter of 2013, which reflects the entire benefit of the R&D tax credit
      attributable to 2012 plus the benefit of the R&D tax credit attributable to the first
      quarter of 2013.  The Corporation will record the remainder of the R&D tax credit benefit
      over subsequent quarters in 2013.

      (3)   Includes anticipated contributions of $1.5 billion to the Corporation's pension trust,
      which it also anticipates recovering as CAS costs in 2013.
      --------------------------------------------------------------------------------------------

Cash Deployment Activities

The Corporation deployed cash in 2012 by:

  • making contributions to its pension trust of $2.5 billion in the fourth quarter and $3.6 billion during the year;
  • paying cash dividends of $373 million in the fourth quarter, after increasing the quarterly dividend in the fourth quarter by 15 percent, and $1.4 billion during the year;
  • repurchasing 3.1 million shares for $286 million in the fourth quarter and 11.3 million shares for $1.0 billion during the year; and
  • making capital expenditures of $428 million in the fourth quarter and $942 million during the year.

On Dec. 14, 2012, the Corporation issued $1.3 billion of senior unsecured notes (New Notes) with a fixed interest rate of 4.07% maturing in Dec. 2042 in exchange for outstanding notes totaling $1.2 billion with interest rates ranging from 5.50% to 8.50% maturing in 2023 to 2040. In connection with the exchange, the Corporation paid a premium of $393 million, of which $225 million was paid in cash and $168 million was in the form of New Notes. The premium will be amortized as additional interest expense over the term of the New Notes.

Segment Results

Effective Dec. 31, 2012, the Corporation operates in five business segments: Aeronautics; Information Systems & Global Solutions (IS&GS); Missiles and Fire Control (MFC); Mission Systems and Training (MST); and Space Systems. This structure reflects the reorganization of the Corporation’s former Electronic Systems business segment into the new MFC and MST business segments in order to streamline its operations and enhance customer alignment. In connection with this reorganization, the former Electronic Systems corporate management layer was eliminated, and the former Global Training and Logistics business was split between the two new business segments. In addition, the business reporting relationships for Sandia Corporation, which manages the Sandia National Laboratories for the U.S. Government, and the U.K. Atomic Weapons Establishment (AWE) joint venture were transferred from the former Electronic Systems business segment to the Space Systems business segment. The amounts, discussion, and presentation of the Corporation’s business segments as set forth in this release reflect this reorganization.

Operating profit for the business segments includes equity earnings or losses from investees because the operating activities of the investees are closely aligned with the operations of those segments. The Corporation’s equity investments primarily include United Launch Alliance (ULA), United Space Alliance (USA), and AWE, all of which are part of Space Systems.

The following table presents summary financial results of the five business segments and reconciles these amounts to the Corporation’s consolidated financial results.

     (in millions) Quarters Ended Dec. 31,
                                                     Years Ended Dec. 31,
                                                     --------------------
                                            2012          2011                     2012 2011
                                            ----          ----                     ---- ----
     Net sales
     Aeronautics                                  $4,141                   $3,855            $14,953  $14,362
     Information Systems & Global Solutions        2,201                    2,548              8,846    9,381
     Missiles and Fire Control                     1,897                    1,826              7,457    7,463
     Mission Systems and Training                  1,860                    1,858              7,579    7,132
     Space Systems                                 2,000                    2,124              8,347    8,161
                                                   -----                    -----              -----    -----
     Net sales                                   $12,099                  $12,211            $47,182  $46,499
                                                 =======                  =======            =======  =======

     Operating profit
     Aeronautics                                    $445                     $461             $1,699   $1,630
     Information Systems & Global Solutions          203                      254                808      874
     Missiles and Fire Control                       272                      231              1,256    1,069
     Mission Systems and Training                    187                      171                737      645
     Space Systems                                   232                      287              1,083    1,063
                                                     ---                      ---              -----    -----
     Business segment operating profit             1,339                    1,404              5,583    5,281
     Unallocated expenses, net                      (253)                    (298)            (1,101)  (1,125)
     Special items - severance charges               (25)                       -                (48)    (136)
                                                     ---                      ---                ---     ----
     Consolidated operating profit                $1,061                   $1,106             $4,434   $4,020
                                                  ======                   ======             ======   ======

In the discussion of comparative segment results, changes in net sales and operating profit generally are expressed in terms of volume. Changes in volume refer to increases or decreases in sales resulting from varying production activity levels, deliveries, or service levels on individual contracts. Volume changes typically include a corresponding change in segment operating profit based on the current profit booking rate for a particular contract.

In addition, comparability of the Corporation’s segment operating profit may be impacted by changes in estimated profit booking rates on the Corporation’s contracts accounted for using the percentage-of-completion method of accounting. Increases in the estimated profit booking rates, typically referred to as risk retirements, usually relate to revisions in the total estimated costs at completion that reflect improved conditions on a particular contract. Conversely, conditions on a particular contract may deteriorate resulting in an increase in the estimated costs at completion and a reduction of the estimated profit booking rate. Increases or decreases in estimated profit booking rates are recognized in the current period and reflect the inception-to-date effect of such changes. Segment operating profit may also be impacted, favorably or unfavorably, by other matters such as the resolution of contractual matters, reserves for disputes, asset impairments, and insurance recoveries, among others. Segment operating profit and items such as risk retirements, reductions of profit booking rates, or other matters are presented net of state income taxes.

The Corporation’s consolidated net adjustments not related to volume, including net profit rate adjustments and other matters, represented approximately 27 percent and 34 percent of total segment operating profit for the quarter and year ended Dec. 31, 2012, respectively, and approximately 29 percent and 30 percent of total segment operating profit for the quarter and year ended Dec. 31, 2011.

Aeronautics

     (in millions) Quarters Ended Dec. 31, Years Ended Dec. 31,
                   ----------------------- --------------------
                       2012           2011         2012            2011
                       ----           ----         ----            ----
     Net sales              $4,141        $3,855                $14,953  $14,362
     Operating profit         $445          $461                 $1,699   $1,630
     Operating margins        10.7%         12.0%                  11.4%    11.3%

Aeronautics’ net sales for the quarter ended Dec. 31, 2012 increased $286 million, or 7 percent, compared to the same period in 2011. The increase was attributable to higher net sales of approximately $165 million from C-5 programs due to higher aircraft deliveries (two C-5M aircraft delivered in the fourth quarter of 2012 compared to none during the same 2011 period); and about $130 million from C-130 programs primarily due to higher aircraft deliveries (nine C-130J aircraft delivered in the fourth quarter of 2012 compared to seven during the same 2011 period). Partially offsetting the increases were lower net sales of approximately $20 million from F-16 programs as lower volume on sustainment activities due to the completion of modification programs for certain international customers more than offset increased F-16 aircraft deliveries (eight F-16 aircraft delivered in the fourth quarter of 2012 compared to five during the same 2011 period). Net sales from F-35 contracts and the F-22 program were comparable to the same period in 2011.

Aeronautics’ operating profit for the quarter ended Dec. 31, 2012 decreased $16 million, or 3 percent, compared to the same period in 2011. The decrease was attributable to lower operating profit as a result of lower risk retirements of approximately $50 million on F-16 programs and about $20 million on C-5 programs. Partially offsetting the decreases was higher operating profit of approximately $30 million on various other Aeronautics programs, including other sustainment activities, primarily due to increased risk retirements; about $10 million on C-130 programs primarily due to increased aircraft deliveries; and approximately $10 million from the completion of purchased intangible asset amortization on certain F-16 contracts. Operating profit was comparable to the same period in 2011 for F-35 contracts and the F-22 program. Adjustments not related to volume, including net profit booking rate adjustments described above, were approximately $35 million lower for the quarter ended Dec. 31, 2012 compared to the same period in 2011.

Aeronautics’ net sales for the year ended Dec. 31, 2012 increased $591 million, or 4 percent, compared to the same period in 2011. The increase was attributable to higher net sales of approximately $745 million from F-35 Low Rate Initial Production (LRIP) contracts principally due to increased production volume; about $285 million from F-16 programs primarily due to higher aircraft deliveries (37 F-16 aircraft delivered in 2012 compared to 22 during the same 2011 period) partially offset by lower volume on sustainment activities due to the completion of modification programs for certain international customers; and approximately $140 million from C-5 programs due to higher aircraft deliveries (four C-5M aircraft delivered in 2012 compared to two during the same 2011 period). Partially offsetting the increases were lower net sales of approximately $365 million from decreased production volume and lower risk retirements on the F-22 program as final aircraft deliveries were completed in the second quarter of 2012; approximately $110 million from the F-35 development contract primarily due to the inception-to-date effect of reducing the profit booking rate in the second quarter of 2012 and to a lesser extent lower volume; and about $95 million from a decrease in volume on other sustainment activities partially offset by various other Aeronautics programs due to higher volume. Net sales for C-130 programs were comparable to the same period in 2011 as a decline in sustainment activities largely was offset by increased aircraft deliveries.

Aeronautics’ operating profit for the year ended Dec. 31, 2012 increased $69 million, or 4 percent, compared to the same period in 2011. The increase was attributable to higher operating profit of approximately $105 million from C-130 programs due to an increase in risk retirements; about $50 million from F-16 programs due to higher aircraft deliveries partially offset by a decline in risk retirements; approximately $50 million from F-35 LRIP contracts due to increased production volume and risk retirements; and about $50 million from the completion of purchased intangible asset amortization on certain F-16 contracts. Partially offsetting the increases was lower operating profit of about $90 million from the F-35 development contract primarily due to the inception-to-date effect of reducing the profit booking rate in the second quarter of 2012; approximately $50 million from decreased production volume and risk retirements on the F-22 program partially offset by a resolution of a contractual matter in the second quarter of 2012; and approximately $45 million primarily due to a decrease in risk retirements on other sustainment activities partially offset by various other Aeronautics programs due to increased risk retirements and volume. Operating profit for C-5 programs was comparable to the same period in 2011. Adjustments not related to volume, including net profit booking rate adjustments and other matters described above, were approximately $30 million lower for the year ended Dec. 31, 2012 compared to the same period in 2011.

Information Systems & Global Solutions

     (in millions) Quarters Ended Dec. 31, Years Ended Dec. 31,
                   ----------------------- --------------------
                       2012           2011         2012           2011
                       ----           ----         ----           ----
     Net sales              $2,201        $2,548                $8,846  $9,381
     Operating profit         $203          $254                  $808    $874
     Operating margins         9.2%         10.0%                  9.1%    9.3%

The IS&GS business segment has been impacted by the continuing downturn in the federal information technology budgets and the impact of the continuing resolution that was effective on Oct. 1, 2012, the start of the U.S. Government’s fiscal year.

IS&GS’ net sales for the quarter ended Dec. 31, 2012 decreased $347 million, or 14 percent, compared to the same period in 2011. The decrease was attributable to lower net sales of approximately $225 million due to lower volume on numerous programs (primarily Warfighter Information Network-Tactical (WIN-T); Information Technology Agency Enterprise Transport Management; Command, Control, Battle Management and Communications (C2BMC); and Hanford Mission Support contract (Hanford)); and about $120 million due to the substantial completion of certain programs during 2011 (primarily Outsourcing Desktop Initiative for NASA (ODIN); Airborne Maritime Fixed Station Joint Tactical Radio System (JTRS); and U.K. Census).

IS&GS’ operating profit for the quarter ended Dec. 31, 2012 decreased $51 million, or 20 percent, compared to the same period in 2011. The decrease was attributable to lower operating profit of approximately $40 million due to the favorable impact of the ODIN contract completion in the fourth quarter of 2011; and about $20 million due to an increase in reserves for performance issues related to an international airborne surveillance system in fourth quarter of 2012. Partially offsetting the decreases was an increase in operating profit due to higher risk retirements of approximately $10 million from the HR Access program. Adjustments not related to volume, including net profit booking rate adjustments and other matters described above, were approximately $15 million lower for the quarter ended Dec. 31, 2012 compared to the same period in 2011.

IS&GS’ net sales for the year ended Dec. 31, 2012 decreased $535 million, or 6 percent, compared to the same period in 2011. The decrease was attributable to lower net sales of approximately $485 million due to the substantial completion of various programs during 2011 (primarily JTRS; ODIN; and U.K. Census); and about $255 million due to lower volume on numerous other programs (primarily Hanford; WIN-T; C2BMC; and Transportation Worker Identification Credential (TWIC)). Partially offsetting the decreases were higher net sales of approximately $140 million from QTC, which was acquired early in the fourth quarter of 2011; and about $65 million from increased activity on numerous other programs, primarily federal cyber security programs and Persistent Threat Detection System (PTDS) operational support.

IS&GS’ operating profit for the year ended Dec. 31, 2012 decreased $66 million, or 8 percent, compared to the same period in 2011. The decrease was attributable to lower operating profit of approximately $50 million due to the favorable impact of the ODIN contract completion in 2011; about $25 million due to an increase in reserves for performance issues related to an international airborne surveillance system in 2012; and approximately $20 million due to lower volume on certain programs (primarily C2BMC and WIN-T). Partially offsetting the decreases was an increase in operating profit due to higher risk retirements of approximately $15 million from the TWIC program; and about $10 million due to increased activity on numerous other programs, primarily federal cyber security programs and PTDS operational support. Operating profit for the JTRS program was comparable as a decrease in volume was offset by a decrease in reserves. Adjustments not related to volume, including net profit booking rate adjustments and other matters described above, were approximately $20 million higher for the year ended Dec. 31, 2012 compared to the same period in 2011.

Missiles and Fire Control

     (in millions) Quarters Ended Dec. 31, Years Ended Dec. 31,
                   ----------------------- --------------------
                       2012           2011         2012           2011
                       ----           ----         ----           ----
     Net sales              $1,897        $1,826                $7,457  $7,463
     Operating profit         $272          $231                $1,256  $1,069
     Operating margins        14.3%         12.7%                 16.8%   14.3%

MFC’s net sales for the quarter ended Dec. 31, 2012 increased $71 million, or 4 percent, compared to the same period in 2011. The increase was attributable to higher net sales of approximately $100 million due to higher volume for air and missile defense programs (primarily Terminal High Altitude Area Defense (THAAD) and Patriot Advanced Capability-3 (PAC-3)) partially offset by lower net sales of about $25 million from tactical missile programs (Joint Air-to-Surface Standoff Missile) due to volume.

MFC’s operating profit for the quarter ended Dec. 31, 2012 increased $41 million, or 18 percent, compared to the same period in 2011. The increase was attributable to higher operating profit of approximately $35 million for air and missile defense programs (primarily PAC-3 and THAAD) due to increased risk retirements and volume; and approximately $10 million from tactical missile programs as a result of higher risk retirements. Partially offsetting the increases was lower operating profit of approximately $15 million due to decreased risk retirements from fire control systems programs (primarily Apache; Sniper(®); and LANTIRN(®)). Adjustments not related to volume, including net profit booking rate adjustments described above, were approximately $15 million higher for the quarter ended Dec. 31, 2012, compared to the same period in 2011.

MFC’s net sales for the year ended Dec. 31, 2012 were comparable to the same period in 2011. Net sales decreased approximately $130 million due to lower volume and risk retirements on various services programs, and about $60 million due to lower volume from fire control systems programs (primarily Sniper(®); LANTIRN(®); and Apache). The decreases largely were offset by higher net sales of approximately $95 million due to higher volume from tactical missile programs (primarily Javelin and Hellfire) and approximately $80 million for air and missile defense programs (primarily PAC-3 and THAAD).

MFC’s operating profit for the year ended Dec. 31, 2012 increased $187 million, or 17 percent, compared to the same period in 2011. The increase was attributable to higher risk retirements and volume of about $95 million from tactical missile programs (primarily Javelin and Hellfire); increased risk retirements and volume of approximately $60 million for air and missile defense programs (primarily THAAD and PAC-3); and about $45 million from a resolution of contractual matters. Partially offsetting these increases was lower risk retirements and volume on various programs, including $25 million for services programs. Adjustments not related to volume, including net profit booking rate adjustments and other matters described above, were approximately $145 million higher for the year ended Dec. 31, 2012 compared to the same period in 2011.

Mission Systems and Training

     (in millions) Quarters Ended Dec. 31, Years Ended Dec. 31,
                   ----------------------- --------------------
                       2012           2011         2012           2011
                       ----           ----         ----           ----
     Net sales              $1,860       $1,858                 $7,579  $7,132
     Operating profit         $187         $171                   $737    $645
     Operating margins        10.1%         9.2%                   9.7%    9.0%

MST’s net sales for the quarter ended Dec. 31, 2012 were comparable to the same period in 2011. An increase of approximately $35 million from training and logistics solutions, primarily due to net sales from Sim Industries, which was acquired in the fourth quarter of 2011, largely was offset by a decrease of approximately $25 million from various undersea systems programs due to lower volume.

MST’s operating profit for the quarter ended Dec. 31, 2012 increased $16 million, or 9 percent, compared to the same period in 2011. The increase primarily was attributable to reserves of approximately $55 million for contract cost matters on certain ship and aviation system programs recorded in the fourth quarter of 2011 (including the terminated presidential helicopter program); and about $25 million from various other programs due to higher volume and risk retirements. The increases partially were offset by lower operating profit of about $40 million on certain ship and aviation system programs reflecting the favorable resolution of contractual matters for a certain platform integration program matter in 2011; approximately $15 million for undersea systems programs primarily due to lower volume; and about $10 million for integrated warfare systems and sensors programs due to lower volume and risk retirements. Adjustments not related to volume, including net profit booking rate adjustments and other matters described above, were approximately the same for the quarter ended Dec. 31, 2012, compared to the same period in 2011.

MST’s net sales for the year ended Dec. 31, 2012 increased $447 million, or 6 percent, compared to the same period in 2011. The increase in net sales for 2012 was attributable to higher volume and risk retirements of approximately $395 million from ship and aviation system programs (primarily PTDS; Littoral Combat Ship (LCS); Vertical Launching System (VLS); and MH-60); about $115 million for training and logistics solutions programs primarily due to net sales from Sim Industries, which was acquired in the fourth quarter of 2011; and approximately $30 million as a result of increased volume on integrated warfare systems and sensors programs (primarily Aegis). Partially offsetting the increases were lower net sales of approximately $70 million from undersea systems programs due to lower volume on an international combat system program and towed array systems; and about $25 million due to lower volume on various other programs.

MST’s operating profit for the year ended Dec. 31, 2012 increased $92 million, or 14 percent, compared to the same period in 2011. The increase was attributable to higher operating profit of approximately $175 million from ship and aviation system programs, which reflects higher volume and risk retirements on certain programs (primarily VLS; PTDS; MH-60; and LCS) and reserves of about $55 million for contract cost matters on ship and aviation system programs recorded in the fourth quarter of 2011 (including the terminated presidential helicopter program). Partially offsetting the increase was lower operating profit of approximately $40 million from undersea systems programs due to reduced profit booking rates on certain programs and lower volume on an international combat system program and towed array systems; and about $40 million due to lower volume on various other programs. Adjustments not related to volume, including net profit booking rate adjustments and other matters described above, were approximately $150 million higher for the year ended Dec. 31, 2012, compared to the same period in 2011.

Space Systems

     (in millions) Quarters Ended Dec. 31, Years Ended Dec. 31,
                   ----------------------- --------------------
                       2012           2011         2012           2011
                       ----           ----         ----           ----
     Net sales              $2,000        $2,124                $8,347  $8,161
     Operating profit         $232          $287                $1,083  $1,063
     Operating margins        11.6%         13.5%                 13.0%   13.0%

Space Systems’ net sales for the quarter ended Dec. 31, 2012 decreased $124 million, or 6 percent, compared to the same period in 2011. The decrease was principally attributable to lower net sales of approximately $120 million from certain government satellite programs (primarily Space Based Infrared System (SBIRS) and Mobile User Objective System (MUOS)) due to lower volume and a decline in risk retirements.

Space Systems’ operating profit for the quarter ended Dec. 31, 2012 decreased $55 million, or 19 percent, compared to the same period in 2011. The decrease was attributable to lower operating profit of approximately $25 million from certain government satellite programs due to a decline in risk retirements and lower volume; and about $25 million from lower equity earnings primarily at USA due to the wind-down of the Space Shuttle program. Adjustments not related to volume, including net profit booking rate adjustments described above, were approximately $15 million lower for the quarter ended Dec. 31, 2012 compared to the same period in 2011.

Space Systems’ net sales for the year ended Dec. 31, 2012 increased $186 million, or 2 percent, compared to the same period in 2011. The increase was attributable to higher net sales of approximately $150 million due to increased commercial satellite deliveries (two commercial satellites delivered in 2012 compared to one during 2011); about $125 million from the Orion Multi-Purpose Crew Vehicle (Orion) program due to higher volume and an increase in risk retirements; and approximately $70 million from increased volume on various strategic and defensive missile programs. Partially offsetting the increases were lower net sales of approximately $105 million from certain government satellite programs (primarily SBIRS and MUOS) as a result of decreased volume and a decline in risk retirements; and about $55 million from the NASA External Tank program, which ended in connection with the completion of the Space Shuttle program in 2011.

Space Systems’ operating profit for the year ended Dec. 31, 2012 increased $20 million, or 2 percent, compared to the same period in 2011. The increase was attributable to higher operating profit of approximately $60 million from commercial satellite programs due to increased deliveries and reserves recorded in 2011; and about $40 million from the Orion program due to higher risk retirements and increased volume. Partially offsetting the increases was lower operating profit of approximately $45 million from lower volume and risk retirements on certain government satellite programs (primarily SBIRS); about $20 million from lower volume on the NASA External Tank program, which ended in connection with the completion of the Space Shuttle program in 2011; and approximately $20 million from lower equity earnings as a decline in launch related activities at ULA partially was offset by the resolution of contract cost matters associated with the wind-down of USA. Adjustments not related to volume, including net profit booking rate adjustments described above, were approximately $15 million higher for the year ended Dec. 31, 2012 compared to the same period in 2011.

Total equity earnings recognized by Space Systems for ULA, USA, and AWE represented approximately $55 million, or 24 percent, and about $265 million, or 24 percent, of this segment’s operating profit for the quarter and year ended Dec. 31, 2012, respectively. During the quarter and year ended Dec. 31, 2011, total equity earnings recognized by Space Systems for ULA, USA, and AWE represented approximately $80 million, or 28 percent, and about $285 million, or 27 percent, respectively, of this segment’s operating profit.

Income Taxes

The Corporation’s effective income tax rates from continuing operations were 40.6 percent and 32.6 percent during the quarter and year ended Dec. 31, 2012, respectively, and 27.7 percent and 26.5 percent during the quarter and year ended Dec. 31, 2011, respectively. The rates for all periods benefited from tax deductions for dividends related to certain of the Corporation’s defined contribution plans with an employee stock ownership plan feature. The rates for all periods benefited from tax deductions for U.S. manufacturing activities, except the fourth quarter of 2012.

The $2.5 billion discretionary pension contributions during the quarter ended Dec. 31, 2012 increased fourth quarter and 2012 income tax expense by $59 million, or $0.18 per diluted share, due to the reduced U.S. manufacturing deduction, the majority of which the Corporation expects to recover over the next two years. This impact, combined with a higher than typical recognition of the U.S. manufacturing deduction in the fourth quarter of 2011, increased the Corporation’s effective income tax rate by over 9 percentage points quarter over quarter. Other factors contributed to the higher effective income tax rate in the fourth quarter of 2012 as well, including the recognition of R&D tax credits in the fourth quarter of 2011 while no such credits were recognized in the fourth quarter of 2012.

The U.S. Congressional Joint Committee on Taxation completed its review of Internal Revenue Service resolution of adjustments for the tax years 2003 through 2008 in 2011, resulting in an approximately 3 percentage point reduction in the 2011 effective income tax rate. Other factors contributed to the higher effective income tax rate for 2012 as well, including the reduced U.S. manufacturing deduction for 2012 referenced above and the recognition of R&D tax credits in 2011 while no such credits were recognized in 2012.

About Lockheed Martin

Headquartered in Bethesda, Md., Lockheed Martin is a global security and aerospace company that employs about 120,000 people worldwide and is principally engaged in the research, design, development, manufacture, integration, and sustainment of advanced technology systems, products, and services. The Corporation’s net sales for 2012 were $47.2 billion.

Web site: www.lockheedmartin.com

Conference Call Information

Conference call: Lockheed Martin will webcast the earnings conference call (listen-only mode) at 3:00 p.m. E.T. on Jan. 24, 2013. A live audio broadcast, including relevant charts, will be available on the Investor Relations page of the Corporation’s web site at: http://www.lockheedmartin.com/investor.

Disclosure Regarding Forward-Looking Statements

Statements in this release that are “forward-looking statements” are based on Lockheed Martin’s current expectations and assumptions. Forward-looking statements in this release include estimates of future sales, earnings, and cash flows. These statements are not guarantees of future performance and are subject to risks and uncertainties. Actual results could differ materially due to factors such as:

  • the availability of funding for the Corporation’s products and services both domestically and internationally due to general economic conditions, performance, cost, or other factors;
  • changes in domestic and international customer priorities and requirements (including declining budgets resulting from general economic conditions, affordability initiatives, the potential for deferral or termination of awards, automatic sequestration under the Budget Control Act of 2011 or Congressional actions intended to avoid sequestration);
  • quantity revisions to the F-35 program;
  • the accuracy of the Corporation’s estimates and assumptions including those as to schedule, cost, technical and performance issues under its contracts, cash flow, actual returns (or losses) on pension plan assets, movements in interest rates, and other changes that may affect pension plan assumptions;
  • the effect of capitalization changes (such as share repurchase activity, accelerated pension funding, stock option exercises, or debt levels);
  • difficulties in developing and producing operationally advanced technology systems, cyber security, other security threats, information technology failures, natural disasters, public health crises or other disruptions;
  • the timing and customer acceptance of product deliveries;
  • materials availability and the performance of key suppliers, teammates, joint venture partners, subcontractors, and customers;
  • charges from any future impairment reviews that may result in the recognition of losses and a reduction in the book value of goodwill or other long-term assets;
  • the future effect of legislation, rulemaking, and changes in accounting, tax, defense procurement, changes in policy, interpretations, or challenges to the allowability and recovery of costs incurred under government cost accounting standards (including potential costs associated with sequestration or other budgetary cuts to avoid sequestration, such as severance payments made to employees and facility closure expenses), export policy, changes in contracting policy and contract mix;
  • the future impact of acquisitions or divestitures, joint ventures, teaming arrangements, or internal reorganizations;
  • compliance with law and regulation and the outcome of legal proceedings and other contingencies (including lawsuits, government investigations or audits, and the cost of completing environmental remediation efforts);
  • the competitive environment for the Corporation’s products and services, export policies, and potential for delays in procurement due to bid protests;
  • the ability to attract and retain key personnel and suppliers (including the potential for disruption associated with sequestration and related employee severance or supplier termination costs) and to provide for the orderly transition of management as the Corporation reduces the size of its workforce; and
  • economic, business and political conditions domestically and internationally and the Corporation’s increased reliance on securing international and adjacent business.

These are only some of the factors that may affect the forward-looking statements contained in this press release. For further information regarding risks and uncertainties associated with Lockheed Martin’s business, please refer to the Corporation’s U.S. Securities and Exchange Commission filings, including the “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Risk Factors,” and “Legal Proceedings” sections of the Corporation’s Annual Report on Form 10-K for the year ended Dec. 31, 2011 and 2012 Quarterly Reports on Form 10-Q, which may be obtained at the Corporation’s website: http://www.lockheedmartin.com.

It is the Corporation’s policy to update or reconfirm its financial projections only by issuing a press release. The Corporation generally plans to provide a forward-looking outlook as part of its quarterly earnings release but reserves the right to provide an outlook at different intervals or to revise its practice in future periods. All information in this release is as of Jan. 23, 2013. Lockheed Martin undertakes no duty to update any forward-looking statement to reflect subsequent events, actual results, or changes in the Corporation’s expectations. The Corporation also disclaims any duty to comment upon or correct information that may be contained in reports published by investment analysts or others.

    Lockheed Martin Corporation
    Consolidated Statements of Earnings
    (unaudited; in millions, except per share data)

                                                                                                                                                              Quarters Ended Dec. 31,                            Years Ended Dec. 31,
                                                                                                                                                              -----------------------                            --------------------

                                                                                                                                                                                       2012                                              2011                                              2012                                              2011
                                                                                                                                                                                       ----                                              ----                                              ----                                              ----

    Net sales                                                                                                                                                                       $12,099                                           $12,211                                           $47,182                                           $46,499

    Cost of sales 1, 2                                                                                                                                                              (11,104)                                          (11,199)                                          (42,986)                                          (42,755)
                                                                                                                                                                                    -------                                           -------                                           -------                                           -------

    Gross profit                                                                                                                                                                        995                                             1,012                                             4,196                                             3,744

    Other income, net                                                                                                                                                                    66                                                94                                               238                                               276
                                                                                                                                                                                        ---                                               ---                                               ---                                               ---

    Operating profit                                                                                                                                                                  1,061                                             1,106                                             4,434                                             4,020

    Interest expense                                                                                                                                                                    (94)                                              (96)                                             (383)                                             (354)

    Other non-operating (expense) income, net (1)                                                                                                                                        (9)                                              (44)                                               21                                               (35)
                                                                                                                                                                                        ---                                               ---                                               ---                                               ---

    Earnings from continuing operations before income taxes                                                                                                                             958                                               966                                             4,072                                             3,631

    Income tax expense                                                                                                                                                                 (389)                                             (268)                                           (1,327)                                             (964)
                                                                                                                                                                                       ----                                              ----                                            ------                                              ----

    Net earnings from continuing operations                                                                                                                                             569                                               698                                             2,745                                             2,667

    Net loss from discontinued operations (3)                                                                                                                                             -                                               (15)                                                -                                               (12)
                                                                                                                                                                                        ---                                               ---                                               ---                                               ---

    Net earnings                                                                                                                                                                       $569                                              $683                                            $2,745                                            $2,655
                                                                                                                                                                                       ====                                              ====                                            ======                                            ======

       Effective tax rate                                                                                                                                                              40.6%                                             27.7%                                             32.6%                                             26.5%
                                                                                                                                                                                       ====                                              ====                                              ====                                              ====

    Earnings (loss) per common share
       Basic
    Continuing operations                                                                                                                                                             $1.76                                             $2.16                                             $8.48                                             $7.94
    Discontinued operations                                                                                                                                                               -                                             (0.04)                                                -                                             (0.04)
                                                                                                                                                                                        ---                                             -----                                               ---                                             -----
       Basic earnings per common share                                                                                                                                                $1.76                                             $2.12                                             $8.48                                             $7.90
                                                                                                                                                                                      =====                                             =====                                             =====                                             =====

       Diluted
    Continuing operations                                                                                                                                                             $1.73                                             $2.14                                             $8.36                                             $7.85
    Discontinued operations                                                                                                                                                               -                                             (0.05)                                                -                                             (0.04)
                                                                                                                                                                                        ---                                             -----                                               ---                                             -----
       Diluted earnings per common share                                                                                                                                              $1.73                                             $2.09                                             $8.36                                             $7.81
                                                                                                                                                                                      =====                                             =====                                             =====                                             =====

    Weighted average shares outstanding
       Basic                                                                                                                                                                          322.7                                             322.5                                             323.7                                             335.9
       Diluted                                                                                                                                                                        328.0                                             326.7                                             328.4                                             339.9

    Common shares reported in stockholders' equity at end of period                                                                                                                                                                                                                         321                                               321

    1 Gains and losses on investments used to fund the Corporation's deferred compensation plan liabilities have been reclassified from "other non-operating (expense) income, net" to "unallocated expenses, net" within "cost of sales" for all periods presented in order to align the classification of changes in the market value
     of investments held for the plan with changes in the value of the corresponding plan liabilities.  Net gains on these investments were $4 million and $67 million for the quarter and year ended Dec. 31, 2012, respectively, and $24 million and $40 million for the quarter and year ended Dec. 31, 2011, respectively.
    2 Severance charges for 2012 consist of amounts associated with the elimination of certain positions at Aeronautics business segment in the fourth quarter, a charge of $25 million, and the former Electronic Systems business segment in the third quarter, a charge of $23 million.  For 2011, severance charges consisted of
     amounts related to the elimination of certain positions at various business segments and Corporate Headquarters, a charge of $136 million.  Severance charges for initiatives that are not significant are included in business segment operating profit.
    3 Discontinued operations in 2011 include the operating results of Savi Technology, Inc. and also Pacific Architects and Engineers, Inc. through the date of its sale on April 4, 2011.  Amounts related to discontinued operations in 2012 were not significant and, accordingly, were included in consolidated operating profit.
    Lockheed Martin Corporation
    Business Segment Net Sales, Operating Profit, and Operating Margins (1)
    (unaudited; in millions)

                                                                                                                              Quarters Ended Dec. 31,                                                                                                   Years Ended Dec. 31,
                                                                                                                              -----------------------                                                                                                   --------------------

                                                                                                                                                         2012                                                 2011                         % Change                     2012                                                 2011                                            % Change
                                                                                                                                                         ----                                                 ----                         --------                     ----                                                 ----                                            --------
    Net sales (1)
      Aeronautics                                                                                                                                      $4,141                                               $3,855                                7%                                                          $14,953                                              $14,362                   4%
      Information Systems & Global Solutions                                                                                                            2,201                                                2,548                             (14)%                                                            8,846                                                9,381                 (6)%
      Missiles and Fire Control                                                                                                                         1,897                                                1,826                                4%                                                            7,457                                                7,463                   -  %
      Mission Systems and Training                                                                                                                      1,860                                                1,858                                -  %                                                          7,579                                                7,132                   6%
      Space Systems                                                                                                                                     2,000                                                2,124                              (6)%                                                            8,347                                                8,161                   2%
                                                                                                                                                        -----                                                -----                                                                                              -----                                                -----
         Total net sales                                                                                                                              $12,099                                              $12,211                              (1)%                                                          $47,182                                              $46,499                   1%
                                                                                                                                                      =======                                              =======                                                                                            =======                                              =======

    Operating profit (1)
      Aeronautics                                                                                                                                        $445                                                 $461                              (3)%                                                           $1,699                                               $1,630                   4%
      Information Systems & Global Solutions                                                                                                              203                                                  254                             (20)%                                                              808                                                  874                 (8)%
      Missiles and Fire Control                                                                                                                           272                                                  231                               18%                                                            1,256                                                1,069                  17%
      Mission Systems and Training                                                                                                                        187                                                  171                                9%                                                              737                                                  645                  14%
      Space Systems                                                                                                                                       232                                                  287                             (19)%                                                            1,083                                                1,063                   2%
                                                                                                                                                          ---                                                  ---                                                                                              -----                                                -----
         Total business segment operating profit                                                                                                        1,339                                                1,404                              (5)%                                                            5,583                                                5,281                   6%
    Unallocated expenses, net:
      Non-cash FAS/CAS pension adjustment:
         FAS pension expense                                                                                                                             (485)                                                (455)                                                                                            (1,941)                                              (1,821)
         Less:  CAS expense                                                                                                                               277                                                  225                                                                                              1,111                                                  899
                                                                                                                                                          ---                                                  ---                                                                                              -----                                                  ---
      Non-cash FAS/CAS pension adjustment                                                                                                                (208)                                                (230)                                                                                              (830)                                                (922)
      Special items - severance charges (2)                                                                                                               (25)                                                   -                                                                                                (48)                                                (136)
      Stock-based compensation                                                                                                                            (38)                                                 (41)                                                                                              (167)                                                (157)
      Other, net (3)                                                                                                                                       (7)                                                 (27)                                                                                              (104)                                                 (46)
                                                                                                                                                          ---                                                  ---                                                                                               ----                                                  ---
    Total unallocated expenses, net                                                                                                                      (278)                                                (298)                             (7)%                                                           (1,149)                                              (1,261)                (9)%
                                                                                                                                                         ----                                                 ----                                                                                             ------                                               ------
         Total consolidated operating profit                                                                                                           $1,061                                               $1,106                              (4)%                                                           $4,434                                               $4,020                  10%
                                                                                                                                                       ======                                               ======                                                                                             ======                                               ======

    Operating margins (1)
      Aeronautics                                                                                                                                        10.7%                                                12.0%                                                                                              11.4%                                                11.3%
      Information Systems & Global Solutions                                                                                                              9.2%                                                10.0%                                                                                               9.1%                                                 9.3%
      Missiles and Fire Control                                                                                                                          14.3%                                                12.7%                                                                                              16.8%                                                14.3%
      Mission Systems and Training                                                                                                                       10.1%                                                 9.2%                                                                                               9.7%                                                 9.0%
      Space Systems                                                                                                                                      11.6%                                                13.5%                                                                                              13.0%                                                13.0%
         Total business segment operating margins                                                                                                        11.1%                                                11.5%                                                                                              11.8%                                                11.4%

         Total consolidated operating margins                                                                                                             8.8%                                                 9.1%                                                                                               9.4%                                                 8.6%

    1  Effective Dec. 31, 2012, the Corporation reorganized its former Electronic Systems business segment into two business segments:  Missiles and Fire Control and Mission Systems and Training.  In connection with this reorganization, the former Electronic Systems corporate management layer was eliminated, and the former Global Training and Logistics business was split
     between the two new business segments.  In addition, the business reporting relationships for Sandia Corporation, which manages the Sandia National Laboratories for the U.S. Government, and the U.K. Atomic Weapons Establishment joint venture were transferred from the former Electronic Systems business segment to the Space Systems business segment.  As a result, the
     business segment net sales and operating profit have been adjusted to reflect this reorganization for all periods presented.
    2  Severance charges for 2012 consist of amounts associated with the elimination of certain positions at Aeronautics business segment in the fourth quarter and the former Electronic Systems business segment in the third quarter.  For 2011, severance charges consisted of amounts related to the elimination of certain positions at various business segments and Corporate
     Headquarters.  Severance charges for initiatives that are not significant are included in business segment operating profit.
    3  Gains and losses on investments used to fund the Corporation's deferred compensation plan liabilities have been reclassified from "other non-operating (expense) income, net" to "unallocated expenses, net" within "cost of sales" for all periods presented in order to align the classification of changes in the market value of investments held for the plan with changes in
     the value of the corresponding plan liabilities.  Net gains on these investments were $4 million and $67 million for the quarter and year ended Dec. 31, 2012, respectively, and $24 million and $40 million for the quarter and year ended Dec. 31, 2011, respectively.
    Lockheed Martin Corporation
    Consolidated Balance Sheets
    (unaudited; in millions, except
     par value)

                                        Dec. 31,         Dec. 31,
                                                   2012             2011
                                                   ----             ----
    Assets
    Current assets
      Cash and cash equivalents                  $1,898           $3,582
      Receivables, net                            6,563            6,064
      Inventories, net                            2,937            2,481
      Deferred income taxes                       1,269            1,339
      Other current assets                        1,188              628
                                                  -----              ---
        Total current assets                     13,855           14,094

    Property, plant, and equipment,
     net                                          4,675            4,611
    Goodwill                                     10,370           10,148
    Deferred income taxes                         4,809            4,388
    Other noncurrent assets                       4,948            4,667
                                                  -----            -----
          Total assets                          $38,657          $37,908
                                                =======          =======

    Liabilities and stockholders'
     equity
    Current liabilities
      Accounts payable                           $2,038           $2,269
      Customer advances and amounts in
       excess of costs incurred                   6,503            6,399
      Salaries, benefits, and payroll
       taxes                                      1,649            1,664
      Current portion of long-term debt             150                -
      Other current liabilities                   1,815            1,798
                                                  -----            -----
          Total current liabilities              12,155           12,130

    Long-term debt, net                           6,158            6,460
    Accrued pension liabilities                  15,278           13,502
    Other postretirement benefit
     liabilities                                  1,220            1,274
    Other noncurrent liabilities                  3,807            3,541
                                                  -----            -----
          Total liabilities                      38,618           36,907

    Stockholders' equity
      Common stock, $1 par value per
       share                                        321              321
      Additional paid-in capital                      -                -
      Retained earnings                          13,211           11,937
      Accumulated other comprehensive
       loss                                     (13,493)         (11,257)
                                                -------          -------
          Total stockholders' equity                 39            1,001
                                                    ---            -----
          Total liabilities and
           stockholders' equity                 $38,657          $37,908
                                                =======          =======
    Lockheed Martin Corporation
    Consolidated Statements of Cash
     Flows
    (unaudited; in millions)

                                              Years Ended Dec. 31,
                                              --------------------
                                                    2012                      2011
                                                    ----                      ----

    Operating activities
    Net earnings                                  $2,745                    $2,655
    Adjustments to reconcile net
     earnings to net cash provided by
     operating activities:
      Depreciation and
       amortization                                  988                     1,008
      Stock-based
       compensation                                  167                       157
      Deferred income taxes                          930                        (2)
      Severance charges                               48                       136
      Reduction in tax
       expense from
       resolution of certain
       tax matters                                     -                       (89)
      Net adjustments
       related to
       discontinued
       operations                                      -                       (16)
      Changes in operating assets and
       liabilities:
          Receivables, net                          (460)                     (363)
          Inventories, net                          (422)                      (74)
          Accounts payable                          (236)                      609
          Customer advances and
           amounts in excess of
           costs incurred                             57                       502
          Postretirement benefit
           plans                                  (1,883)                     (393)
          Income taxes                              (535)                      304
      Other, net                                     162                      (181)
                                                     ---                      ----
          Net cash provided by
           operating activities
           (1)                                     1,561                     4,253
                                                   -----                     -----

    Investing activities
    Capital expenditures                            (942)                     (987)
    Acquisitions of
     businesses /
     investments in
     affiliates                                     (304)                     (649)
    Net cash provided by
     short-term
     investment
     transactions                                      -                       510
    Other, net                                        24                       313
                                                     ---                       ---
          Net cash used for
           investing activities                   (1,222)                     (813)
                                                  ------                      ----

    Financing activities
    Repurchases of common
     stock                                          (990)                   (2,465)
    Proceeds from stock
     option exercises                                440                       116
    Dividends paid                                (1,352)                   (1,095)
    Premium paid on debt
     exchange                                       (225)                        -
    Issuance of long-term
     debt, net of related
     costs                                             -                     1,980
    Repayments of long-
     term debt                                         -                      (632)
    Other, net                                       104                       (23)
                                                     ---                       ---
          Net cash used for
           financing activities                   (2,023)                   (2,119)
                                                  ------                    ------

    Net change in cash and
     cash equivalents                             (1,684)                    1,321
    Cash and cash
     equivalents at
     beginning of year                             3,582                     2,261
                                                   -----                     -----
    Cash and cash
     equivalents at end of
     year                                         $1,898                    $3,582
                                                  ======                    ======

    1  The Corporation made contributions to its pension trust of $2.5 billion and $3.6 billion during
     the
    quarter and year ended Dec. 31, 2012, respectively.  During the quarter and year ended Dec. 31,
    2011, the Corporation made contributions to its pension trust of $1.0 billion and $2.3 billion,
     respectively.
    Lockheed Martin Corporation
    Consolidated Statement of Stockholders' Equity
    (unaudited; in millions)

                                                                                                                                                                                                                                                 Accumulated
                                                                                                                                                    Additional                                                                                      Other                                              Total
                                                                                                        Common                                     Paid-In                                    Retained                                        Comprehensive                                      Stockholders'
                                                                                                         Stock                                     Capital                                    Earnings                                             Loss                                             Equity
                                                                                                         -----                                     -------                                    --------                                             ----                                             ------

    Balance at Dec. 31, 2011                                                                                           $321                              $          -                                      $11,937                                                $(11,257)                                    $1,001

    Net earnings                                                                                                          -                                         -                                        2,745                                                       -                                      2,745

    Other comprehensive loss, net of tax (1)                                                                              -                                         -                                            -                                                  (2,236)                                    (2,236)

    Repurchases of common stock (2)                                                                                     (11)                                     (889)                                        (108)                                                      -                                     (1,008)

    Dividends declared (3)                                                                                                -                                         -                                       (1,363)                                                      -                                     (1,363)

    Stock-based awards and ESOP activity                                                                                 11                                       889                                            -                                                       -                                        900

    Balance at Dec. 31, 2012                                                                                           $321                              $          -                                      $13,211                                                $(13,493)                                       $39

    (1)  At Dec. 31, 2012, the Corporation recognized a non-cash, after-tax reduction to stockholders' equity of $3.2 billion, as a result of the year-end remeasurement of its postretirement benefit plans.  Partially offsetting this reduction was an $858 million recognition of
     previously deferred amounts.  The decrease primarily was due to a lower discount rate at Dec. 31, 2012 of 4.00% as compared to 4.75% at Dec. 31, 2011.
    (2)  The Corporation repurchased 3.1 million shares of its common stock for $286 million during the quarter ended Dec. 31, 2012.  For the year ended Dec. 31, 2012, the Corporation repurchased 11.3 million shares for $1.0 billion, of which 0.2 million shares purchased for $18 million
     were settled and paid in January of 2013.  The Corporation's Board of Directors has approved a share repurchase program, authorizing an amount available for share repurchases of $6.5 billion.  As of Dec. 31, 2012, the Corporation had repurchased a total of 54.3 million shares of its
     common stock under its share repurchase program for $4.2 billion, and had remaining authorization of $2.3 billion for future share repurchases.
    (3)  Includes dividends of $1.00 per share declared during each of the quarters ended March 25, 2012, June 24, 2012, Sept. 30, 2012, and a fourth quarter dividend of $1.15 per share declared during the quarter ended Sept. 30, 2012. Additionally includes dividend equivalent cash
     payments for unvested RSUs that are paid only upon vesting.
    Lockheed Martin
     Corporation
     Operating
     Data
    (unaudited; in millions, except
     aircraft deliveries)

    Backlog                                Dec. 31,            Dec. 31,
                                                     2012                2011
                                                     ----                ----

    Aeronautics                                   $30,100             $30,500
     Information
     Systems
     &
     Global
     Solutions                                      8,700               9,300
     Missiles
     and
     Fire
     Control                                       14,700              14,400
    Mission
     Systems
     and
     Training                                      10,700              10,500
    Space
     Systems                                       18,100              16,000
      Total
       backlog                                    $82,300             $80,700
                                                  =======             =======

                                     Quarters Ended Dec.   Years Ended Dec.
                                              31,                 31,
                                    --------------------  -----------------

     Aircraft
     Deliveries                                      2012                2011 2012 2011
                                                     ----                ---- ---- ----

    F-16                                                8                   5   37   22
    F-22                                                -                   6    8   14
    F-35                                               13                   2   30    9
    C-130J                                              9                   7   34   33
    C-5M                                                2                   -    4    2
    Lockheed Martin Corporation
    Business Segment Net Sales, Operating Profit, and Operating Margins
    As Reported and Adjusted to Reflect Reorganization of Electronic Systems (1)
    (unaudited; in millions)

                                                                                                                                             Quarter Ended March 25, 2012                                                                         Quarter Ended June 24, 2012                                        Quarter Ended Sept. 30, 2012
                                                                                                                                             ----------------------------                                                                         ---------------------------                                        ----------------------------
                                                                                                                                               As Reported                                         Reclassification                                          As Adjusted                                           As Reported                                         Reclassification                                          As Adjusted                                           As Reported                                         Reclassification                                      As Adjusted
                                                                                                                                               -----------                                         ----------------                                          -----------                                           -----------                                         ----------------                                          -----------                                           -----------                                         ----------------                                      -----------
    Net sales (1)
      Aeronautics                                                                                                                                                 $3,706                                $                      -                                                $3,706                                                $3,408                                $                      -                                                $3,408                                                $3,698                                $                      -                                      $3,698
      Information Systems & Global Solutions                                                                                                                       2,090                                                       -                                                 2,090                                                 2,263                                                       -                                                 2,263                                                 2,292                                                       -                                       2,292
      Electronic Systems                                                                                                                                           3,609                                                  (3,609)                                                    -                                                 3,866                                                  (3,866)                                                    -                                                 3,818                                                  (3,818)                                          -
      Missiles and Fire Control                                                                                                                                        -                                                   1,766                                                 1,766                                                     -                                                   1,843                                                 1,843                                                     -                                                   1,951                                       1,951
      Mission Systems and Training                                                                                                                                     -                                                   1,838                                                 1,838                                                     -                                                   2,019                                                 2,019                                                     -                                                   1,862                                       1,862
      Space Systems                                                                                                                                                1,888                                                       5                                                 1,893                                                 2,384                                                       4                                                 2,388                                                 2,061                                                       5                                       2,066
         Total net sales                                                                                                                                         $11,293                                $                      -                                               $11,293                                               $11,921                                $                      -                                               $11,921                                               $11,869                                $                      -                                     $11,869
                                                                                                                                                                 =======                                ========================                                               =======                                               =======                                ========================                                               =======                                               =======                                ========================                                     =======

    Operating profit (1)
      Aeronautics                                                                                                                                                   $385                                $                      -                                                  $385                                                  $454                                $                      -                                                  $454                                                  $415                                $                      -                                        $415
      Information Systems & Global Solutions                                                                                                                         188                                                       -                                                   188                                                   208                                                       -                                                   208                                                   209                                                       -                                         209
      Electronic Systems                                                                                                                                             541                                                    (541)                                                    -                                                   526                                                    (526)                                                    -                                                   509                                                    (509)                                          -
      Missiles and Fire Control                                                                                                                                        -                                                     371                                                   371                                                     -                                                     313                                                   313                                                     -                                                     300                                         300
      Mission Systems and Training                                                                                                                                     -                                                     157                                                   157                                                     -                                                     195                                                   195                                                     -                                                     198                                         198
      Space Systems                                                                                                                                                  226                                                      13                                                   239                                                   282                                                      18                                                   300                                                   301                                                      11                                         312
         Total business segment operating profit                                                                                                                   1,340                                                       -                                                 1,340                                                 1,470                                                       -                                                 1,470                                                 1,434                                                       -                                       1,434
      Unallocated expenses, net (2)                                                                                                                                 (328)                                                     32                                                  (296)                                                 (270)                                                     (8)                                                 (278)                                                 (336)                                                     39                                        (297)
                                                                                                                                                                    ----                                                     ---                                                  ----                                                  ----                                                     ---                                                  ----                                                  ----                                                     ---                                        ----
         Total consolidated operating profit                                                                                                                      $1,012                                                     $32                                                $1,044                                                $1,200                                                     $(8)                                               $1,192                                                $1,098                                                     $39                                      $1,137
                                                                                                                                                                  ======                                                     ===                                                ======                                                ======                                                     ===                                                ======                                                ======                                                     ===                                      ======

    Operating margins (1)
      Aeronautics                                                                                                                                                   10.4%                                                      -  %                                               10.4%                                                 13.3%                                                      -  %                                               13.3%                                                 11.2%                                                      -  %                                     11.2%
      Information Systems & Global Solutions                                                                                                                         9.0%                                                      -  %                                                9.0%                                                  9.2%                                                      -  %                                                9.2%                                                  9.1%                                                      -  %                                      9.1%
      Electronic Systems                                                                                                                                            15.0%                                                 (15.0)%                                                    -  %                                               13.6%                                                 (13.6)%                                                    -  %                                               13.3%                                                 (13.3)%                                          -  %
      Missiles and Fire Control                                                                                                                                        -  %                                                 21.0%                                                 21.0%                                                    -  %                                                 17.0%                                                 17.0%                                                    -  %                                                 15.4%                                       15.4%
      Mission Systems and Training                                                                                                                                     -  %                                                  8.5%                                                  8.5%                                                    -  %                                                  9.7%                                                  9.7%                                                    -  %                                                 10.6%                                       10.6%
      Space Systems                                                                                                                                                 12.0%                                                    0.6%                                                 12.6%                                                 11.8%                                                    0.8%                                                 12.6%                                                 14.6%                                                    0.5%                                       15.1%
         Total business segment operating margins                                                                                                                   11.9%                                                      -  %                                               11.9%                                                 12.3%                                                      -  %                                               12.3%                                                 12.1%                                                      -  %                                     12.1%

         Total consolidated operating margins                                                                                                                        9.0%                                                    0.2%                                                  9.2%                                                 10.1%                                                  (0.1)%                                                 10.0%                                                  9.3%                                                    0.3%                                        9.6%

                                                                                                                                         Three Months Ended March 25, 2012                                                                 Six Months Ended June 24, 2012                                  Nine Months Ended Sept. 30, 2012
                                                                                                                                         ---------------------------------                                                                 ------------------------------                                  --------------------------------
                                                                                                                                               As Reported                                         Reclassification                                          As Adjusted                                           As Reported                                         Reclassification                                          As Adjusted                                           As Reported                                         Reclassification                                      As Adjusted
                                                                                                                                               -----------                                         ----------------                                          -----------                                           -----------                                         ----------------                                          -----------                                           -----------                                         ----------------                                      -----------
    Net sales (1)
      Aeronautics                                                                                                                                                 $3,706                                $                      -                                                $3,706                                                $7,114                                $                      -                                                $7,114                                               $10,812                                $                      -                                     $10,812
      Information Systems & Global Solutions                                                                                                                       2,090                                                       -                                                 2,090                                                 4,353                                                       -                                                 4,353                                                 6,645                                                       -                                       6,645
      Electronic Systems                                                                                                                                           3,609                                                  (3,609)                                                    -                                                 7,475                                                  (7,475)                                                    -                                                11,293                                                 (11,293)                                          -
      Missiles and Fire Control                                                                                                                                        -                                                   1,766                                                 1,766                                                     -                                                   3,609                                                 3,609                                                     -                                                   5,560                                       5,560
      Mission Systems and Training                                                                                                                                     -                                                   1,838                                                 1,838                                                     -                                                   3,857                                                 3,857                                                     -                                                   5,719                                       5,719
      Space Systems                                                                                                                                                1,888                                                       5                                                 1,893                                                 4,272                                                       9                                                 4,281                                                 6,333                                                      14                                       6,347
         Total net sales                                                                                                                                         $11,293                                $                      -                                               $11,293                                               $23,214                                $                      -                                               $23,214                                               $35,083                                $                      -                                     $35,083
                                                                                                                                                                 =======                                ========================                                               =======                                               =======                                ========================                                               =======                                               =======                                ========================                                     =======

    Operating profit (1)
      Aeronautics                                                                                                                                                   $385                                $                      -                                                  $385                                                  $839                                $                      -                                                  $839                                                $1,254                                $                      -                                      $1,254
      Information Systems & Global Solutions                                                                                                                         188                                                       -                                                   188                                                   396                                                       -                                                   396                                                   605                                                       -                                         605
      Electronic Systems                                                                                                                                             541                                                    (541)                                                    -                                                 1,067                                                  (1,067)                                                    -                                                 1,576                                                  (1,576)                                          -
      Missiles and Fire Control                                                                                                                                        -                                                     371                                                   371                                                     -                                                     684                                                   684                                                     -                                                     984                                         984
      Mission Systems and Training                                                                                                                                     -                                                     157                                                   157                                                     -                                                     352                                                   352                                                     -                                                     550                                         550
      Space Systems                                                                                                                                                  226                                                      13                                                   239                                                   508                                                      31                                                   539                                                   809                                                      42                                         851
         Total business segment operating profit                                                                                                                   1,340                                                       -                                                 1,340                                                 2,810                                                       -                                                 2,810                                                 4,244                                                       -                                       4,244
      Unallocated expenses, net (2)                                                                                                                                 (328)                                                     32                                                  (296)                                                 (598)                                                     24                                                  (574)                                                 (934)                                                     63                                        (871)
                                                                                                                                                                    ----                                                     ---                                                  ----                                                  ----                                                     ---                                                  ----                                                  ----                                                     ---                                        ----
         Total consolidated operating profit                                                                                                                      $1,012                                                     $32                                                $1,044                                                $2,212                                                     $24                                                $2,236                                                $3,310                                                     $63                                      $3,373
                                                                                                                                                                  ======                                                     ===                                                ======                                                ======                                                     ===                                                ======                                                ======                                                     ===                                      ======

    Operating margins (1)
      Aeronautics                                                                                                                                                   10.4%                                                      -  %                                               10.4%                                                 11.8%                                                      -  %                                               11.8%                                                 11.6%                                                      -  %                                     11.6%
      Information Systems & Global Solutions                                                                                                                         9.0%                                                      -  %                                                9.0%                                                  9.1%                                                      -  %                                                9.1%                                                  9.1%                                                      -  %                                      9.1%
      Electronic Systems                                                                                                                                            15.0%                                                 (15.0)%                                                    -  %                                               14.3%                                                 (14.3)%                                                    -  %                                               14.0%                                                 (14.0)%                                          -  %
      Missiles and Fire Control                                                                                                                                        -  %                                                 21.0%                                                 21.0%                                                    -  %                                                 19.0%                                                 19.0%                                                    -  %                                                 17.7%                                       17.7%
      Mission Systems and Training                                                                                                                                     -  %                                                  8.5%                                                  8.5%                                                    -  %                                                  9.1%                                                  9.1%                                                    -  %                                                  9.6%                                        9.6%
      Space Systems                                                                                                                                                 12.0%                                                    0.6%                                                 12.6%                                                 11.9%                                                    0.7%                                                 12.6%                                                 12.8%                                                    0.6%                                       13.4%
         Total business segment operating margins                                                                                                                   11.9%                                                      -  %                                               11.9%                                                 12.1%                                                      -  %                                               12.1%                                                 12.1%                                                      -  %                                     12.1%

         Total consolidated operating margins                                                                                                                        9.0%                                                    0.2%                                                  9.2%                                                  9.5%                                                    0.1%                                                  9.6%                                                  9.4%                                                    0.2%                                        9.6%

    1  Effective Dec. 31, 2012, the Corporation reorganized its former Electronic Systems business segment into two business segments:  Missiles and Fire Control and Mission Systems and Training.  In connection with this reorganization, the former Electronic Systems corporate management layer was eliminated, and the former Global Training and Logistics business was split between the two new business segments.  In addition, the business reporting relationships for Sandia Corporation, which manages the Sandia National Laboratories for the U.S. Government, and the U.K.
     Atomic Weapons Establishment joint venture were transferred from the former Electronic Systems business segment to the Space Systems business segment.  As a result, the business segment net sales and operating profit have been adjusted to reflect this reorganization for all periods presented.
    (2)  Gains and losses on investments used to fund the Corporation's deferred compensation plan liabilities have been reclassified from "other non-operating income (expense), net" to "unallocated expenses, net" within "cost of sales" for all periods presented in order to align the classification of changes in the market value of investments held for the plan with changes in the value of the corresponding plan liabilities.  Net gains on these investments were $4 million and $67 million for the quarter and year ended Dec. 31, 2012, respectively, and $24 million and $40
     million for the quarter and year ended Dec. 31, 2011, respectively.

    Lockheed Martin Corporation
    Business Segment Net Sales, Operating Profit, and Operating Margins
    As Reported and Adjusted to Reflect Reorganization of Electronic Systems (1)
    (unaudited; in millions)

                                                                                                                                             Quarter Ended March 27, 2011                                                                       Quarter Ended June 26, 2011                                        Quarter Ended Sept. 25, 2011                                                                       Quarter Ended Dec. 31, 2011
                                                                                                                                             ----------------------------                                                                       ---------------------------                                        ----------------------------                                                                       ---------------------------
                                                                                                                                              As Reported                                         Reclassification                                         As Adjusted                                          As Reported                                         Reclassification                                         As Adjusted                                          As Reported                                         Reclassification                                         As Adjusted                                          As Reported                                         Reclassification                            As Adjusted
                                                                                                                                              -----------                                         ----------------                                         -----------                                          -----------                                         ----------------                                         -----------                                          -----------                                         ----------------                                         -----------                                          -----------                                         ----------------                            -----------
    Net sales (1)
      Aeronautics                                                                                                                                                $3,152                                  $                    -                                               $3,152                                               $3,390                                  $                    -                                               $3,390                                               $3,965                                  $                    -                                               $3,965                                               $3,855                                  $                    -                            $3,855
      Information Systems & Global Solutions                                                                                                                      2,149                                                       -                                                2,149                                                2,361                                                       -                                                2,361                                                2,323                                                       -                                                2,323                                                2,548                                                       -                             2,548
      Electronic Systems                                                                                                                                          3,482                                                  (3,482)                                                   -                                                3,780                                                  (3,780)                                                   -                                                3,663                                                  (3,663)                                                   -                                                3,697                                                  (3,697)                                -
      Missiles and Fire Control                                                                                                                                       -                                                   1,762                                                1,762                                                    -                                                   1,983                                                1,983                                                    -                                                   1,892                                                1,892                                                    -                                                   1,826                             1,826
      Mission Systems and Training                                                                                                                                    -                                                   1,715                                                1,715                                                    -                                                   1,793                                                1,793                                                    -                                                   1,766                                                1,766                                                    -                                                   1,858                             1,858
      Space Systems                                                                                                                                               1,843                                                       5                                                1,848                                                2,012                                                       4                                                2,016                                                2,168                                                       5                                                2,173                                                2,111                                                      13                             2,124
         Total net sales                                                                                                                                        $10,626                                  $                    -                                              $10,626                                              $11,543                                  $                    -                                              $11,543                                              $12,119                                  $                    -                                              $12,119                                              $12,211                                  $                    -                           $12,211
                                                                                                                                                                =======                                  ======================                                              =======                                              =======                                  ======================                                              =======                                              =======                                  ======================                                              =======                                              =======                                  ======================                           =======

    Operating profit (1)
      Aeronautics                                                                                                                                                  $328                                  $                    -                                                 $328                                                 $397                                  $                    -                                                 $397                                                 $444                                  $                    -                                                 $444                                                 $461                                  $                    -                              $461
      Information Systems & Global Solutions                                                                                                                        194                                                       -                                                  194                                                  213                                                       -                                                  213                                                  213                                                       -                                                  213                                                  254                                                       -                               254
      Electronic Systems                                                                                                                                            432                                                    (432)                                                   -                                                  478                                                    (478)                                                   -                                                  447                                                    (447)                                                   -                                                  431                                                    (431)                                -
      Missiles and Fire Control                                                                                                                                       -                                                     284                                                  284                                                    -                                                     278                                                  278                                                    -                                                     276                                                  276                                                    -                                                     231                               231
      Mission Systems and Training                                                                                                                                    -                                                     136                                                  136                                                    -                                                     183                                                  183                                                    -                                                     155                                                  155                                                    -                                                     171                               171
      Space Systems                                                                                                                                                 217                                                      12                                                  229                                                  263                                                      17                                                  280                                                  251                                                      16                                                  267                                                  258                                                      29                               287
         Total business segment operating profit                                                                                                                  1,171                                                       -                                                1,171                                                1,351                                                       -                                                1,351                                                1,355                                                       -                                                1,355                                                1,404                                                       -                             1,404
      Unallocated expenses, net (2)                                                                                                                                (307)                                                     16                                                 (291)                                                (358)                                                      6                                                 (352)                                                (314)                                                     (6)                                                (320)                                                (322)                                                     24                              (298)
                                                                                                                                                                   ----                                                     ---                                                 ----                                                 ----                                                     ---                                                 ----                                                 ----                                                     ---                                                 ----                                                 ----                                                     ---                              ----
         Total consolidated operating profit                                                                                                                       $864                                                     $16                                                 $880                                                 $993                                                      $6                                                 $999                                               $1,041                                                     $(6)                                              $1,035                                               $1,082                                                     $24                            $1,106
                                                                                                                                                                   ====                                                     ===                                                 ====                                                 ====                                                     ===                                                 ====                                               ======                                                     ===                                               ======                                               ======                                                     ===                            ======

    Operating margins (1)
      Aeronautics                                                                                                                                                  10.4%                                                      -  %                                              10.4%                                                11.7%                                                      -  %                                              11.7%                                                11.2%                                                      -  %                                              11.2%                                                12.0%                                                      -  %                           12.0%
      Information Systems & Global Solutions                                                                                                                        9.0%                                                      -  %                                               9.0%                                                 9.0%                                                      -  %                                               9.0%                                                 9.2%                                                      -  %                                               9.2%                                                10.0%                                                      -  %                           10.0%
      Electronic Systems                                                                                                                                           12.4%                                                 (12.4)%                                                   -  %                                              12.6%                                                 (12.6)%                                                   -  %                                              12.2%                                                 (12.2)%                                                   -  %                                              11.7%                                                 (11.7)%                                -  %
      Missiles and Fire Control                                                                                                                                       -  %                                                 16.1%                                                16.1%                                                   -  %                                                 14.0%                                                14.0%                                                   -  %                                                 14.6%                                                14.6%                                                   -  %                                                 12.7%                             12.7%
      Mission Systems and Training                                                                                                                                    -  %                                                  7.9%                                                 7.9%                                                   -  %                                                 10.2%                                                10.2%                                                   -  %                                                  8.8%                                                 8.8%                                                   -  %                                                  9.2%                              9.2%
      Space Systems                                                                                                                                                11.8%                                                    0.6%                                                12.4%                                                13.1%                                                    0.8%                                                13.9%                                                11.6%                                                    0.7%                                                12.3%                                                12.2%                                                    1.3%                             13.5%
         Total business segment operating margins                                                                                                                  11.0%                                                      -  %                                              11.0%                                                11.7%                                                      -  %                                              11.7%                                                11.2%                                                      -  %                                              11.2%                                                11.5%                                                      -  %                           11.5%

         Total consolidated operating margins                                                                                                                       8.1%                                                    0.2%                                                 8.3%                                                 8.6%                                                    0.1%                                                 8.7%                                                 8.6%                                                  (0.1)%                                                 8.5%                                                 8.9%                                                    0.2%                              9.1%

                                                                                                                                        Three Months Ended March 27, 2011                                                                 Six Months Ended June 26, 2011                                 Nine Months Ended Sept. 25, 2011                                                                    Year Ended Dec. 31, 2011
                                                                                                                                        ---------------------------------                                                                 ------------------------------                                 --------------------------------                                                                    ------------------------
                                                                                                                                              As Reported                                         Reclassification                                         As Adjusted                                          As Reported                                         Reclassification                                         As Adjusted                                          As Reported                                         Reclassification                                         As Adjusted                                          As Reported                                         Reclassification                            As Adjusted
                                                                                                                                              -----------                                         ----------------                                         -----------                                          -----------                                         ----------------                                         -----------                                          -----------                                         ----------------                                         -----------                                          -----------                                         ----------------                            -----------
    Net sales (1)
      Aeronautics                                                                                                                                                $3,152                                  $                    -                                               $3,152                                               $6,542                                  $                    -                                               $6,542                                              $10,507                                  $                    -                                              $10,507                                              $14,362                                  $                    -                           $14,362
      Information Systems & Global Solutions                                                                                                                      2,149                                                       -                                                2,149                                                4,510                                                       -                                                4,510                                                6,833                                                       -                                                6,833                                                9,381                                                       -                             9,381
      Electronic Systems                                                                                                                                          3,482                                                  (3,482)                                                   -                                                7,262                                                  (7,262)                                                   -                                               10,925                                                 (10,925)                                                   -                                               14,622                                                 (14,622)                                -
      Missiles and Fire Control                                                                                                                                       -                                                   1,762                                                1,762                                                    -                                                   3,745                                                3,745                                                    -                                                   5,637                                                5,637                                                    -                                                   7,463                             7,463
      Mission Systems and Training                                                                                                                                    -                                                   1,715                                                1,715                                                    -                                                   3,508                                                3,508                                                    -                                                   5,274                                                5,274                                                    -                                                   7,132                             7,132
      Space Systems                                                                                                                                               1,843                                                       5                                                1,848                                                3,855                                                       9                                                3,864                                                6,023                                                      14                                                6,037                                                8,134                                                      27                             8,161
         Total net sales                                                                                                                                        $10,626                                  $                    -                                              $10,626                                              $22,169                                  $                    -                                              $22,169                                              $34,288                                  $                    -                                              $34,288                                              $46,499                                  $                    -                           $46,499
                                                                                                                                                                =======                                  ======================                                              =======                                              =======                                  ======================                                              =======                                              =======                                  ======================                                              =======                                              =======                                  ======================                           =======

    Operating profit (1)
      Aeronautics                                                                                                                                                  $328                                  $                    -                                                 $328                                                 $725                                                       -                                                 $725                                               $1,169                                  $                    -                                               $1,169                                               $1,630                                  $                    -                            $1,630
      Information Systems & Global Solutions                                                                                                                        194                                                       -                                                  194                                                  407                                                       -                                                  407                                                  620                                                       -                                                  620                                                  874                                                       -                               874
      Electronic Systems                                                                                                                                            432                                                    (432)                                                   -                                                  910                                                    (910)                                                   -                                                1,357                                                  (1,357)                                                   -                                                1,788                                                  (1,788)                                -
      Missiles and Fire Control                                                                                                                                       -                                                     284                                                  284                                                    -                                                     562                                                  562                                                    -                                                     838                                                  838                                                    -                                                   1,069                             1,069
      Mission Systems and Training                                                                                                                                    -                                                     136                                                  136                                                    -                                                     319                                                  319                                                    -                                                     474                                                  474                                                    -                                                     645                               645
      Space Systems                                                                                                                                                 217                                                      12                                                  229                                                  480                                                      29                                                  509                                                  731                                                      45                                                  776                                                  989                                                      74                             1,063
         Total business segment operating profit                                                                                                                  1,171                                                       -                                                1,171                                                2,522                                                       -                                                2,522                                                3,877                                                       -                                                3,877                                                5,281                                                       -                             5,281
      Unallocated expenses, net (2)                                                                                                                                (307)                                                     16                                                 (291)                                                (665)                                                     22                                                 (643)                                                (979)                                                     16                                                 (963)                                              (1,301)                                                     40                            (1,261)
                                                                                                                                                                   ----                                                     ---                                                 ----                                                 ----                                                     ---                                                 ----                                                 ----                                                     ---                                                 ----                                               ------                                                     ---                            ------
         Total consolidated operating profit                                                                                                                       $864                                                     $16                                                 $880                                               $1,857                                                     $22                                               $1,879                                               $2,898                                                     $16                                               $2,914                                               $3,980                                                     $40                            $4,020
                                                                                                                                                                   ====                                                     ===                                                 ====                                               ======                                                     ===                                               ======                                               ======                                                     ===                                               ======                                               ======                                                     ===                            ======

    Operating margins (1)
      Aeronautics                                                                                                                                                  10.4%                                                      -  %                                              10.4%                                                11.1%                                                      -  %                                              11.1%                                                11.1%                                                      -  %                                              11.1%                                                11.3%                                                      -  %                           11.3%
      Information Systems & Global Solutions                                                                                                                        9.0%                                                      -  %                                               9.0%                                                 9.0%                                                      -  %                                               9.0%                                                 9.1%                                                      -  %                                               9.1%                                                 9.3%                                                      -  %                            9.3%
      Electronic Systems                                                                                                                                           12.4%                                                 (12.4)%                                                   -  %                                              12.5%                                                 (12.5)%                                                   -  %                                              12.4%                                                 (12.4)%                                                   -  %                                              12.2%                                                 (12.2)%                                -  %
      Missiles and Fire Control                                                                                                                                       -  %                                                 16.1%                                                16.1%                                                   -  %                                                 15.0%                                                15.0%                                                   -  %                                                 14.9%                                                14.9%                                                   -  %                                                 14.3%                             14.3%
      Mission Systems and Training                                                                                                                                    -  %                                                  7.9%                                                 7.9%                                                   -  %                                                  9.1%                                                 9.1%                                                   -  %                                                  9.0%                                                 9.0%                                                   -  %                                                  9.0%                              9.0%
      Space Systems                                                                                                                                                11.8%                                                    0.6%                                                12.4%                                                12.5%                                                    0.7%                                                13.2%                                                12.1%                                                    0.8%                                                12.9%                                                12.2%                                                    0.8%                             13.0%
         Total business segment operating margins                                                                                                                  11.0%                                                      -  %                                              11.0%                                                11.4%                                                      -  %                                              11.4%                                                11.3%                                                      -  %                                              11.3%                                                11.4%                                                      -  %                           11.4%

         Total consolidated operating margins                                                                                                                       8.1%                                                    0.2%                                                 8.3%                                                 8.4%                                                    0.1%                                                 8.5%                                                 8.5%                                                      -  %                                               8.5%                                                 8.6%                                                      -  %                            8.6%

    1  Effective Dec. 31, 2012, the Corporation reorganized its former Electronic Systems business segment into two business segments:  Missiles and Fire Control and Mission Systems and Training.  In connection with this reorganization, the former Electronic Systems corporate management layer was eliminated, and the former Global Training and Logistics business was split between the two new business segments.  In addition, the business reporting relationships for Sandia Corporation, which manages the Sandia National Laboratories for the U.S. Government, and the U.K. Atomic Weapons Establishment joint venture were transferred from the former Electronic Systems business segment to the Space Systems business segment.
     As a result, the business segment net sales and operating profit have been adjusted to reflect this reorganization for all periods presented.
    2  Gains and losses on investments used to fund the Corporation's deferred compensation plan liabilities have been reclassified from "other non-operating income (expense), net" to "unallocated expenses, net" within "cost of sales" for all periods presented in order to align the classification of changes in the market value of investments held for the plan with changes in the value of the corresponding plan liabilities.  Net gains on these investments were $4 million and $67 million for the quarter and year ended Dec. 31, 2012, respectively, and $24 million and $40 million for the quarter and year ended Dec. 31, 2011, respectively.

    Lockheed Martin Corporation
    Consolidated Statements of Earnings
    As Reported and Adjusted for Gains and Losses on Investments (1)
    (unaudited; in millions)

                                                                                                                                              Quarter Ended March 25, 2012                                                                         Quarter Ended June 24, 2012                                         Quarter Ended Sept. 30, 2012
                                                                                                                                              ----------------------------                                                                         ---------------------------                                         ----------------------------
                                                                                                                                                As Reported                                         Reclassification                                          As Adjusted                                            As Reported                                         Reclassification                                         As Adjusted                                            As Reported                                         Reclassification                      As Adjusted
                                                                                                                                                -----------                                         ----------------                                          -----------                                            -----------                                         ----------------                                         -----------                                            -----------                                         ----------------                      -----------

    Net sales                                                                                                                                                      $11,293                             $                        -                                                $11,293                                                $11,921                             $                        -                                               $11,921                                                $11,869                             $                        -                     $11,869

    Cost of sales                                                                                                                                                  (10,316)                                                    32                                                (10,284)                                               (10,741)                                                    (8)                                              (10,749)                                               (10,888)                                                    39                     (10,849)
                                                                                                                                                                   -------                                                    ---                                                -------                                                -------                                                    ---                                               -------                                                -------                                                    ---                     -------

    Gross profit                                                                                                                                                       977                                                     32                                                  1,009                                                  1,180                                                     (8)                                                1,172                                                    981                                                     39                       1,020

    Other income, net                                                                                                                                                   35                                                      -                                                     35                                                     20                                                      -                                                    20                                                    117                                                      -                         117
                                                                                                                                                                       ---                                                    ---                                                    ---                                                    ---                                                    ---                                                   ---                                                    ---                                                    ---                         ---

    Operating profit                                                                                                                                                 1,012                                                     32                                                  1,044                                                  1,200                                                     (8)                                                1,192                                                  1,098                                                     39                       1,137

    Interest expense                                                                                                                                                   (96)                                                     -                                                    (96)                                                   (96)                                                     -                                                   (96)                                                   (97)                                                     -                         (97)

    Other non-operating income, net                                                                                                                                     35                                                    (32)                                                     3                                                     13                                                      8                                                    21                                                     45                                                    (39)                          6
                                                                                                                                                                       ---                                                    ---                                                    ---                                                    ---                                                    ---                                                   ---                                                    ---                                                    ---                         ---

    Earnings from continuing operations before income taxes                                                                                                            951                                                      -                                                    951                                                  1,117                                                      -                                                 1,117                                                  1,046                                                      -                       1,046

    Income tax expense                                                                                                                                                (283)                                                     -                                                   (283)                                                  (336)                                                     -                                                  (336)                                                  (319)                                                     -                        (319)
                                                                                                                                                                      ----                                                    ---                                                   ----                                                   ----                                                    ---                                                  ----                                                   ----                                                    ---                        ----

    Net earnings                                                                                                                                                      $668                             $                        -                                                   $668                                                   $781                             $                        -                                                  $781                                                   $727                             $                        -                        $727
                                                                                                                                                                      ====                             ==========================                                                   ====                                                   ====                             ==========================                                                  ====                                                   ====                             ==========================                        ====

                                                                                                                                         Three Months Ended March 25, 2012                                                                   Six Months Ended June 24, 2012                                  Nine Months Ended Sept. 30, 2012
                                                                                                                                         ---------------------------------                                                                   ------------------------------                                  --------------------------------
                                                                                                                                                As Reported                                         Reclassification                                          As Adjusted                                            As Reported                                         Reclassification                                         As Adjusted                                            As Reported                                         Reclassification                      As Adjusted
                                                                                                                                                -----------                                         ----------------                                          -----------                                            -----------                                         ----------------                                         -----------                                            -----------                                         ----------------                      -----------

    Net sales                                                                                                                                                      $11,293                             $                        -                                                $11,293                                                $23,214                             $                        -                                               $23,214                                                $35,083                             $                        -                     $35,083

    Cost of sales                                                                                                                                                  (10,316)                                                    32                                                (10,284)                                               (21,057)                                                    24                                               (21,033)                                               (31,945)                                                    63                     (31,882)
                                                                                                                                                                   -------                                                    ---                                                -------                                                -------                                                    ---                                               -------                                                -------                                                    ---                     -------

    Gross profit                                                                                                                                                       977                                                     32                                                  1,009                                                  2,157                                                     24                                                 2,181                                                  3,138                                                     63                       3,201

    Other income, net                                                                                                                                                   35                                                      -                                                     35                                                     55                                                      -                                                    55                                                    172                                                      -                         172
                                                                                                                                                                       ---                                                    ---                                                    ---                                                    ---                                                    ---                                                   ---                                                    ---                                                    ---                         ---

    Operating profit                                                                                                                                                 1,012                                                     32                                                  1,044                                                  2,212                                                     24                                                 2,236                                                  3,310                                                     63                       3,373

    Interest expense                                                                                                                                                   (96)                                                     -                                                    (96)                                                  (192)                                                     -                                                  (192)                                                  (289)                                                     -                        (289)

    Other non-operating income, net                                                                                                                                     35                                                    (32)                                                     3                                                     48                                                    (24)                                                   24                                                     93                                                    (63)                         30
                                                                                                                                                                       ---                                                    ---                                                    ---                                                    ---                                                    ---                                                   ---                                                    ---                                                    ---                         ---

    Earnings from continuing operations before income taxes                                                                                                            951                                                      -                                                    951                                                  2,068                                                      -                                                 2,068                                                  3,114                                                      -                       3,114

    Income tax expense                                                                                                                                                (283)                                                     -                                                   (283)                                                  (619)                                                     -                                                  (619)                                                  (938)                                                     -                        (938)
                                                                                                                                                                      ----                                                    ---                                                   ----                                                   ----                                                    ---                                                  ----                                                   ----                                                    ---                        ----

    Net earnings                                                                                                                                                      $668                             $                        -                                                   $668                                                 $1,449                             $                        -                                                $1,449                                                 $2,176                             $                        -                      $2,176
                                                                                                                                                                      ====                             ==========================                                                   ====                                                 ======                             ==========================                                                ======                                                 ======                             ==========================                      ======

    1 Gains and losses on investments used to fund the Corporation's deferred compensation plan liabilities have been reclassified from "other non-operating income, net" to "unallocated expenses, net" within "cost of sales" for all periods presented in order to align the classification of changes in the market value of investments held for the plan with changes in the value of the corresponding plan liabilities. Net gains on these investments were $4 million and $67 million for the quarter and year ended Dec. 31, 2012, respectively, and $24 million and $40
     million for the quarter and year ended Dec. 31, 2011, respectively.

    Lockheed Martin Corporation
    Consolidated Statements of Earnings
    As Reported and Adjusted for Gains and Losses on Investments (1)
    (unaudited; in millions)

                                                                                                                                              Quarter Ended March 27, 2011                                                                         Quarter Ended June 26, 2011                                         Quarter Ended Sept. 25, 2011                                                                         Quarter Ended Dec. 31, 2011
                                                                                                                                              ----------------------------                                                                         ---------------------------                                         ----------------------------                                                                         ---------------------------
                                                                                                                                                As Reported                                         Reclassification                                          As Adjusted                                            As Reported                                         Reclassification                                          As Adjusted                                            As Reported                                         Reclassification                                          As Adjusted                                            As Reported                                         Reclassification                                          As Adjusted
                                                                                                                                                -----------                                         ----------------                                          -----------                                            -----------                                         ----------------                                          -----------                                            -----------                                         ----------------                                          -----------                                            -----------                                         ----------------                                          -----------

    Net sales                                                                                                                                                      $10,626                             $                        -                                                $10,626                                                $11,543                             $                        -                                                $11,543                                                $12,119                             $                        -                                                $12,119                                                $12,211                             $                        -                                                $12,211

    Cost of sales                                                                                                                                                   (9,812)                                                    16                                                 (9,796)                                               (10,637)                                                     6                                                (10,631)                                               (11,123)                                                    (6)                                               (11,129)                                               (11,223)                                                    24                                                (11,199)
                                                                                                                                                                    ------                                                    ---                                                 ------                                                -------                                                    ---                                                -------                                                -------                                                    ---                                                -------                                                -------                                                    ---                                                -------

    Gross profit                                                                                                                                                       814                                                     16                                                    830                                                    906                                                      6                                                    912                                                    996                                                     (6)                                                   990                                                    988                                                     24                                                  1,012

    Other income, net                                                                                                                                                   50                                                      -                                                     50                                                     87                                                      -                                                     87                                                     45                                                      -                                                     45                                                     94                                                      -                                                     94
                                                                                                                                                                       ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---

    Operating profit                                                                                                                                                   864                                                     16                                                    880                                                    993                                                      6                                                    999                                                  1,041                                                     (6)                                                 1,035                                                  1,082                                                     24                                                  1,106

    Interest expense                                                                                                                                                   (85)                                                     -                                                    (85)                                                   (84)                                                     -                                                    (84)                                                   (89)                                                     -                                                    (89)                                                   (96)                                                     -                                                    (96)

    Other non-operating income (expense), net                                                                                                                           19                                                    (16)                                                     3                                                      9                                                     (6)                                                     3                                                     (3)                                                     6                                                      3                                                    (20)                                                   (24)                                                   (44)
                                                                                                                                                                       ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---

    Earnings from continuing operations before income taxes                                                                                                            798                                                      -                                                    798                                                    918                                                      -                                                    918                                                    949                                                      -                                                    949                                                    966                                                      -                                                    966

    Income tax expense                                                                                                                                                (242)                                                     -                                                   (242)                                                  (170)                                                     -                                                   (170)                                                  (284)                                                     -                                                   (284)                                                  (268)                                                     -                                                   (268)
                                                                                                                                                                      ----                                                    ---                                                   ----                                                   ----                                                    ---                                                   ----                                                   ----                                                    ---                                                   ----                                                   ----                                                    ---                                                   ----

    Net earnings from continuing operations                                                                                                                            556                                                      -                                                    556                                                    748                                                      -                                                    748                                                    665                                                      -                                                    665                                                    698                                                      -                                                    698

    Net loss (earnings) from discontinued operations                                                                                                                   (26)                                                     -                                                    (26)                                                    (6)                                                     -                                                     (6)                                                    35                                                      -                                                     35                                                    (15)                                                     -                                                    (15)
                                                                                                                                                                       ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---

    Net earnings                                                                                                                                                      $530                             $                        -                                                   $530                                                   $742                             $                        -                                                   $742                                                   $700                             $                        -                                                   $700                                                   $683                             $                        -                                                   $683
                                                                                                                                                                      ====                             ==========================                                                   ====                                                   ====                             ==========================                                                   ====                                                   ====                             ==========================                                                   ====                                                   ====                             ==========================                                                   ====

                                                                                                                                         Three Months Ended March 27, 2011                                                                   Six Months Ended June 26, 2011                                  Nine Months Ended Sept. 25, 2011                                                                      Year Ended Dec. 31, 2011
                                                                                                                                         ---------------------------------                                                                   ------------------------------                                  --------------------------------                                                                      ------------------------
                                                                                                                                                As Reported                                         Reclassification                                          As Adjusted                                            As Reported                                         Reclassification                                          As Adjusted                                            As Reported                                         Reclassification                                          As Adjusted                                            As Reported                                         Reclassification                                          As Adjusted
                                                                                                                                                -----------                                         ----------------                                          -----------                                            -----------                                         ----------------                                          -----------                                            -----------                                         ----------------                                          -----------                                            -----------                                         ----------------                                          -----------

    Net sales                                                                                                                                                      $10,626                             $                        -                                                $10,626                                                $22,169                             $                        -                                                $22,169                                                $34,288                             $                        -                                                $34,288                                                $46,499                             $                        -                                                $46,499

    Cost of sales                                                                                                                                                   (9,812)                                                    16                                                 (9,796)                                               (20,449)                                                    22                                                (20,427)                                               (31,572)                                                    16                                                (31,556)                                               (42,795)                                                    40                                                (42,755)
                                                                                                                                                                    ------                                                    ---                                                 ------                                                -------                                                    ---                                                -------                                                -------                                                    ---                                                -------                                                -------                                                    ---                                                -------

    Gross profit                                                                                                                                                       814                                                     16                                                    830                                                  1,720                                                     22                                                  1,742                                                  2,716                                                     16                                                  2,732                                                  3,704                                                     40                                                  3,744

    Other income, net                                                                                                                                                   50                                                      -                                                     50                                                    137                                                      -                                                    137                                                    182                                                      -                                                    182                                                    276                                                      -                                                    276
                                                                                                                                                                       ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---

    Operating profit                                                                                                                                                   864                                                     16                                                    880                                                  1,857                                                     22                                                  1,879                                                  2,898                                                     16                                                  2,914                                                  3,980                                                     40                                                  4,020

    Interest expense                                                                                                                                                   (85)                                                     -                                                    (85)                                                  (169)                                                     -                                                   (169)                                                  (258)                                                     -                                                   (258)                                                  (354)                                                     -                                                   (354)

    Other non-operating income (expense), net                                                                                                                           19                                                    (16)                                                     3                                                     28                                                    (22)                                                     6                                                     25                                                    (16)                                                     9                                                      5                                                    (40)                                                   (35)
                                                                                                                                                                       ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---

    Earnings from continuing operations before income taxes                                                                                                            798                                                      -                                                    798                                                  1,716                                                      -                                                  1,716                                                  2,665                                                      -                                                  2,665                                                  3,631                                                      -                                                  3,631

    Income tax expense                                                                                                                                                (242)                                                     -                                                   (242)                                                  (412)                                                     -                                                   (412)                                                  (696)                                                     -                                                   (696)                                                  (964)                                                     -                                                   (964)
                                                                                                                                                                      ----                                                    ---                                                   ----                                                   ----                                                    ---                                                   ----                                                   ----                                                    ---                                                   ----                                                   ----                                                    ---                                                   ----

    Net earnings from continuing operations                                                                                                                            556                                                      -                                                    556                                                  1,304                                                      -                                                  1,304                                                  1,969                                                      -                                                  1,969                                                  2,667                                                      -                                                  2,667

    Net loss (earnings) from discontinued operations                                                                                                                   (26)                                                     -                                                    (26)                                                   (32)                                                     -                                                    (32)                                                     3                                                      -                                                      3                                                    (12)                                                     -                                                    (12)
                                                                                                                                                                       ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---                                                    ---

    Net earnings                                                                                                                                                      $530                             $                        -                                                   $530                                                 $1,272                             $                        -                                                 $1,272                                                 $1,972                             $                        -                                                 $1,972                                                 $2,655                             $                        -                                                 $2,655
                                                                                                                                                                      ====                             ==========================                                                   ====                                                 ======                             ==========================                                                 ======                                                 ======                             ==========================                                                 ======                                                 ======                             ==========================                                                 ======

    (1)  Gains and losses on investments used to fund the Corporation's deferred compensation plan liabilities have been reclassified from "other non-operating income (expense), net" to "unallocated expenses, net" within "cost of sales" for all periods presented in order to align the classification of changes in the market value of investments held for the plan with changes in the value of the corresponding plan liabilities.  Net gains on these investments were $4 million and $67 million for the quarter and year ended Dec. 31, 2012, respectively, and $24 million and $40 million for the quarter and year ended Dec. 31, 2011, respectively.
    Lockheed Martin Corporation
    Backlog - Reorganization of Electronic Systems
    (unaudited; in millions)

                                                   March 27,         June 26,         Sept. 25,         Dec. 31,         March 25,         June 24,         Sept. 30,         Dec. 31,
                                                                2011             2011              2011             2011              2012             2012              2012             2012
                                                                ----             ----              ----             ----              ----             ----              ----             ----
    Backlog:
    --------

       Aeronautics                                           $31,300          $29,900           $27,800          $30,500           $28,200          $26,900           $26,600          $30,100
       Information Systems & Global Solutions                  9,100            8,600             8,300            9,300             8,700            8,300             8,200            8,700
       Missiles and Fire Control                              12,100           11,800            11,500           14,400            13,400           13,500            14,500           14,700
       Mission Systems and Training                           10,500           10,400            10,200           10,500            10,900           11,000            10,800           10,700
       Space Systems                                          17,000           16,500            15,200           16,000            15,400           15,800            15,500           18,100
                                                              ------           ------            ------           ------            ------           ------            ------           ------
          Total backlog                                      $80,000          $77,200           $73,000          $80,700           $76,600          $75,500           $75,600          $82,300
                                                             =======          =======           =======          =======           =======          =======           =======          =======

SOURCE Lockheed Martin


Source: PR Newswire