Form 8-K

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of Earliest Event Reported) – June 27, 2003

 


 

LOCKHEED MARTIN CORPORATION

(Exact name of registrant as specified in its charter)

 

Maryland

(State or other jurisdiction of Incorporation)

 

1-11437

(Commission File Number)

 

52-1893632

(IRS Employer

Identification No.)

 

6801 Rockledge Drive, Bethesda, Maryland

(Address of principal executive offices)

 

20817

(Zip Code)

 

(301) 897-6000

(Registrant’s telephone number, including area code)

 


 

Not Applicable

(Former name or address, if changed since last report)

 



Item 5. Other Events

 

We are filing this Form 8-K to report the formation of Integrated Systems and Solutions (ISS), a new business segment. ISS was formed by combining two existing Lockheed Martin operating companies – Mission Systems (which was previously reported in the Systems Integration business segment) and Management & Data Systems (which was previously reported in the Space Systems business segment), along with our Advanced Concepts organization. This new business segment will leverage our existing and emerging capabilities to address customers’ growing needs for integrated, network-centric solutions. With the formation of ISS, the Systems Integration business segment has been renamed “Electronic Systems.” The Aeronautics and Technology Services business segments were unaffected by these changes.

 

The Corporation now operates in five principal business segments. Following is a brief description of the activities of each business segment:

 

    Electronic Systems – Engaged in the design, development, integration and production of high performance systems for undersea, shipboard, land, and airborne applications. Major product lines include missiles and fire control systems; air and theater missile defense systems; surface ship and submarine combat systems; anti-submarine and undersea warfare systems; avionics and ground combat vehicle integration; radars; platform integration services; homeland security systems; surveillance and reconnaissance systems; advanced aviation management, security and information technology solutions; simulation and training systems; and postal automation systems.

 

    Aeronautics – Engaged in design, research and development, systems integration, production and support of advanced military aircraft and related technologies. Its customers include the military services of the United States and allied countries throughout the world. Major products and programs include the F-16 multi-role fighter, F/A-22 air dominance and strike fighter, F-35 Joint Strike Fighter, Japanese F-2 combat aircraft, Korean T-50 advanced trainer, C-130 and C-130J tactical airlift aircraft, C-5 strategic airlift aircraft, and support for the F-117 stealth fighter and special mission and reconnaissance aircraft (e.g., Big Safari modifications, the P-3 Orion, S-3 Viking and U-2).

 

    Space Systems – Engaged in the design, development, engineering and production of satellites, missile defense systems and launch services. The satellite product line includes both government and commercial satellites. Missile defense systems include airborne and missile defense technologies and fleet ballistic missiles. Launch services include launches on Titan IV, Atlas and Proton launch vehicles, and also include the Space Shuttle’s external tank. In addition, the segment has investments in joint ventures that are principally engaged in businesses that complement and enhance other activities of the segment.

 

2


    Technology Services – Engaged in a wide array of information management, engineering, scientific and logistic services to federal agencies and other customers. Major product lines include complete life-cycle software support; information systems development; information assurance and enterprise integration for the U.S. Department of Defense, civil government agencies and commercial customers; aircraft and engine maintenance and modification services; management, operation, maintenance, training, and logistics support for military, homeland security and civilian systems; launch, mission, and analysis services for military, classified and commercial satellites; engineering, science and information services for NASA; and research, development, engineering and science in support of nuclear weapons stewardship and naval reactor programs.

 

    Integrated Systems and Solutions – Engaged in the design, development, integration and management of network-centric solutions supporting the intelligence, surveillance and reconnaissance activities of the U.S. Department of Defense and other federal agencies. Focal point for the Corporation in providing an interconnected set of capabilities for gathering, processing, storing and delivery of on-demand information for mission management, modeling, and simulation. Also includes the capabilities to develop, test and demonstrate advanced collaborative operational concepts with our customers.

 

In the following tables of selected financial data by business segment, the total of the operating results of the principal business segments is reconciled to the corresponding consolidated amount. With respect to the caption “Operating profit,” the reconciling item “Unallocated corporate (expense) income, net” includes the FAS/CAS adjustment related to pensions, earnings and losses from equity investments (mainly telecommunications), interest income, costs for stock-based award programs, items not considered part of management’s evaluation of segment operating performance, and Corporate costs not allocated to the operating segments as well as other miscellaneous Corporate activities. For financial statement captions other than “Operating profit,” all activities other than those pertaining to the principal business segments are included on a line item entitled “Other.”

 

The following segment information has been reclassified from amounts previously reported to reflect our new business segment. Accordingly, there has been no change in the operating results reported for our business segments or in total for the Corporation.

 

3


Selected Financial Data by Business Segment—

(Unaudited)

 

    

Three Months

Ended

March 31,


   

Year Ended

December 31,


 
     2003

    2002

    2002

    2001

 
     (In millions)  

Net sales

                                

Electronic Systems

   $ 1,981     $ 1,874     $ 8,685     $ 8,079  

Aeronautics

     2,088       1,334       6,471       5,355  

Space Systems

     1,528       1,389       5,287       5,040  

Technology Services

     687       670       3,104       2,763  

Integrated Systems & Solutions

     772       695       3,015       2,731  
    


 


 


 


Operating segments

     7,056       5,962       26,562       23,968  

Other

     3       4       16       22  
    


 


 


 


Total

   $ 7,059     $ 5,966     $ 26,578     $ 23,990  
    


 


 


 


Operating profit

                                

Electronic Systems

   $ 183     $ 191     $ 875     $ 816  

Aeronautics

     145       92       448       329  

Space Systems

     104       78       279       243  

Technology Services

     48       37       177       114  

Integrated Systems & Solutions

     72       50       241       207  
    


 


 


 


Segment operating profit

     552       448       2,020       1,709  

Unallocated corporate (expense) income, net (a)

     (47 )     26       (862 )     (602 )

FAS 142 adoption impact

     —         —         —         (274 )
    


 


 


 


Reconciling items subtotal

     (47 )     26       (862 )     (876 )
    


 


 


 


Total

   $ 505     $ 474     $ 1,158     $ 833  
    


 


 


 


Margins

                                

Electronic Systems

     9.2 %     10.2 %     10.1 %     10.1 %

Aeronautics

     6.9 %     6.9 %     6.9 %     6.1 %

Space Systems

     6.8 %     5.6 %     5.3 %     4.8 %

Technology Services

     7.0 %     5.5 %     5.7 %     4.1 %

Integrated Systems & Solutions

     9.3 %     7.2 %     8.0 %     7.6 %

Total operating segments

     7.8 %     7.5 %     7.6 %     7.1 %

 

(a)   See notes 2, 6, 8 and 9 to the consolidated financial statements included in our 2002 Annual Report on Form 10-K for information on the unusual items included in “Unallocated corporate (expense) income, net” for years ended December 31, 2002 and 2001.

 

 

4


Selected Financial Data by Business Segment (continued) –

(Unaudited)

 

    

Three Months Ended

March 31,


  

Year Ended

December 31,


     2003

   2002

   2002

   2001

     (In millions)

Depreciation and amortization of property, plant and equipment

                           

Electronic Systems

   $ 37    $ 34    $ 153    $ 142

Aeronautics

     21      20      74      84

Space Systems

     27      26      108      123

Technology Services

     11      9      36      22

Integrated Systems & Solutions

     7      7      34      31
    

  

  

  

Operating segments

     103      96      405      402

Other

     5      7      28      23
    

  

  

  

Total

   $ 108    $ 103    $ 433    $ 425
    

  

  

  

Amortization of intangible assets other than goodwill

                           

Electronic Systems

   $ 12    $ 12    $ 49    $ 47

Aeronautics

     12      12      50      51

Space Systems

     2      2      7      8

Technology Services

     2      2      7      5

Integrated Systems & Solutions

     3      3      12      13
    

  

  

  

Operating segments

     31      31      125      124

Other

                    30
    

  

  

  

Total

   $ 31    $ 31    $ 125    $ 154
    

  

  

  

                             
     March 31,

   December 31,

     2003

   2002

   2002

   2001

     (In millions)

Backlog

                           

Electronic Systems

   $ 16,018    $ 15,500    $ 16,034    $ 15,333

Aeronautics

     38,415      38,502      35,477      36,149

Space Systems

     12,160      11,061      10,701      11,001

Technology Services

     4,412      5,070      4,617      5,116

Integrated Systems & Solutions

     3,580      3,714      3,556      3,670
    

  

  

  

Total

   $ 74,585    $ 73,847    $ 70,385    $ 71,269
    

  

  

  

 

5


Selected Financial Data by Business Segment (continued) –

(Unaudited)

 

     March 31,

   December 31,

     2003

   2002

   2002

   2001

     (In millions)

Assets

                           

Electronic Systems

   $ 8,645    $ 8,618    $ 8,697    $ 8,685

Aeronautics

     2,858      2,921      2,835      3,017

Space Systems

     3,120      3,953      3,147      3,952

Technology Services

     1,725      1,963      1,634      1,911

Integrated Systems & Solutions

     2,085      2,176      2,070      2,183
    

  

  

  

Operating segments

     18,433      19,631      18,383      19,748

Other

     6,582      8,148      7,375      7,906
    

  

  

  

Total

  

$

25,015

  

$

27,779

  

$

25,758

  

$

27,654

    

  

  

  

Goodwill

                           

Electronic Systems

   $ 5,075    $ 5,075    $ 5,075    $ 5,075

Space Systems

     453      453      453      453

Technology Services

     541      532      541      532

Integrated Systems & Solutions

     1,311      1,311      1,311      1,311
    

  

  

  

Total

   $ 7,380    $ 7,371    $ 7,380    $ 7,371
    

  

  

  

Customer advances and amounts

in excess of costs incurred

                           

Electronic Systems

   $ 953    $ 910    $ 816    $ 766

Aeronautics

     2,128      2,325      2,408      2,406

Space Systems

     1,352      1,631      1,238      1,701

Technology Services

     21      4      19      15

Integrated Systems & Solutions

     72      119      57      114
    

  

  

  

Operating segments

     4,526      4,989      4,538      5,002

Other

               4     
    

  

  

  

Total

  

$

4,526

  

$

4,989

  

$

4,542

  

$

5,002

    

  

  

  

 

 

6


Selected Financial Data by Business Segment (continued) –

(Unaudited)

 

     Quarter Ended

 
     December 31,
2002


    September 30,
2002


    June 30,
2002


    March 31,
2002


 
     (In millions)  

Net sales

                                

Electronic Systems

   $ 2,729     $ 2,045     $ 2,037     $ 1,874  

Aeronautics

     1,922       1,668       1,547       1,334  

Space Systems

     1,313       1,342       1,243       1,389  

Technology Services

     947       776       711       670  

Integrated Systems & Solutions

     863       709       748       695  
    


 


 


 


Operating segments

     7,774       6,540       6,286       5,962  

Other

     6       2       4       4  
    


 


 


 


Total

   $ 7,780     $ 6,542     $ 6,290     $ 5,966  
    


 


 


 


Operating profit

                                

Electronic Systems

   $ 276     $ 212     $ 196     $ 191  

Aeronautics

     139       107       110       92  

Space Systems

     66       71       64       78  

Technology Services

     55       44       41       37  

Integrated Systems & Solutions

     56       61       74       50  
    


 


 


 


Segment operating profit

     592       495       485       448  

Unallocated corporate (expense) income, net (a)

     (1,010 )     81       41       26  
    


 


 


 


Total

   $ (418 )   $ 576     $ 526     $ 474  
    


 


 


 


Margins

                                

Electronic Systems

     10.1 %     10.4 %     9.6 %     10.2 %

Aeronautics

     7.2 %     6.4 %     7.1 %     6.9 %

Space Systems

     5.0 %     5.3 %     5.1 %     5.6 %

Technology Services

     5.8 %     5.7 %     5.8 %     5.5 %

Integrated Systems & Solutions

     6.5 %     8.6 %     9.9 %     7.2 %

Total operating segments

     7.6 %     7.6 %     7.7 %     7.5 %

 

(a)   See notes 6, 8 and 9 to the consolidated financial statements included in our 2002 Annual Report on Form 10-K for information on the unusual items included in “Unallocated corporate (expense) income, net.”

 

7


Selected Financial Data by Business Segment (continued) –

(Unaudited)

 

     Quarter Ended

     December 31,
2002


   September 30,
2002


   June 30,
2002


   March 31,
2002


     (In millions)

Depreciation and amortization of property, plant and equipment

                           

Electronic Systems

   $ 44    $ 38    $ 37    $ 34

Aeronautics

     14      21      19      20

Space Systems

     33      19      30      26

Technology Services

     11      8      8      9

Integrated Systems & Solutions

     15      6      6      7
    

  

  

  

Operating segments

     117      92      100      96

Other

     7      8      6      7
    

  

  

  

Total

   $ 124    $ 100    $ 106    $ 103
    

  

  

  

Amortization of intangible assets other than goodwill

                           

Electronic Systems

   $ 12    $ 13    $ 12    $ 12

Aeronautics

     13      12      13      12

Space Systems

     1      2      2      2

Technology Services

     2      1      2      2

Integrated Systems & Solutions

     3      3      3      3
    

  

  

  

Total

   $ 31    $ 31    $ 32    $ 31
    

  

  

  

     December 31,
2002


   September 30,
2002


   June 30,
2002


   March 31,
2002


     (In millions)

Assets

                           

Electronic Systems

   $ 8,697    $ 8,635    $ 8,550    $ 8,618

Aeronautics

     2,835      2,752      2,915      2,921

Space Systems

     3,147      3,256      3,743      3,953

Technology Services

     1,634      1,811      1,881      1,963

Integrated Systems & Solutions

     2,070      2,049      2,050      2,176
    

  

  

  

Operating segments

     18,383      18,503      19,139      19,631

Other

     7,375      10,416      9,192      8,148
    

  

  

  

Total

   $ 25,758    $ 28,919    $ 28,331    $ 27,779
    

  

  

  

 

 

 

8


Selected Financial Data by Business Segment (continued) –

(Unaudited)

 

     December 31,
2002


   September 30,
2002


   June 30,
2002


   March 31,
2002


     (In millions)

Goodwill

                           

Electronic Systems

   $ 5,075    $ 5,075    $ 5,075    $ 5,075

Space Systems

     453      453      453      453

Technology Services

     541      532      532      532

Integrated Systems & Solutions

     1,311      1,311      1,311      1,311
    

  

  

  

Total

   $ 7,380    $ 7,371    $ 7,371    $ 7,371
    

  

  

  

Customer advances and amounts in excess of costs incurred

                           

Electronic Systems

   $ 816    $ 822    $ 863    $ 910

Aeronautics

     2,408      2,785      2,494      2,325

Space Systems

     1,238      1,398      1,586      1,631

Technology Services

     19      4      2      4

Integrated Systems & Solutions

     57      131      123      119
    

  

  

  

Operating segments

     4,538      5,140      5,068      4,989

Other

     4      —        —        —  
    

  

  

  

Total

   $ 4,542    $ 5,140    $ 5,068    $ 4,989
    

  

  

  

 

 

9


Item 7. Financial Statements and Exhibits

 

(c) Exhibits

 

Exhibit No.

  

Description


99.1   

Lockheed Martin Corporation’s Press Release dated June 27, 2003

99.2   

Lockheed Martin Corporation’s Investor Relations’ Website Charts

 

Item 9.   Regulation FD Disclosure and Results of Operations and Financial Condition

 

The following information is being furnished under Item 12 of Form 8-K, “Results of Operations and Financial Condition,” and is included under this Item 9 in accordance with SEC Release No. 33-8216 (March 27, 2003).

 

On June 27, 2003, Lockheed Martin Corporation announced the formation of a new business segment. The press release is furnished as Exhibit 99.1 to this Form and is incorporated herein by reference.

 

In connection with its press release announcing the formation of the new business segment, Lockheed Martin Corporation will post certain charts on its Investor Relations Website providing a breakdown of the Corporation’s previously disclosed forecast of sales and operating profit among the Corporation’s five segments, including the newly formed ISS segment. The website charts are furnished under Item 9 as Exhibit 99.2 to this Form and are incorporated herein by reference.

 

 

10


LOCKHEED MARTIN CORPORATION

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

     
       

LOCKHEED MARTIN CORPORATION


        (Registrant)

 

         
Date: June 27, 2003       By:  

/s/    RAJEEV BHALLA        


               

Rajeev Bhalla

Vice President and Controller

(Chief Accounting Officer)

 

11