Lockheed Martin Corporation

Transcription

1 Lockheed Martin Corporation Credit Suisse Aerospace and Defense Conference 20 November 2008 Bruce L. Tanner Executive Vice President & CFO Ralph Heath Executive Vice President - Aeronautics LMT Credit Suisse_

2 Forward Looking Statements Our presentation contains forward-looking statements or projections based on current expectations. These statements are not guarantees of future performance and are subject to risks and uncertainties. Actual results may differ materially due to: the availability of government funding; changes in customer priorities; the impact of continued hostilities in Iraq; budgetary constraints; program and contract performance; the timing and availability of future government awards; the outcome of legal proceedings; economic, business and regulatory conditions and other factors. We disclaim any duty to update forwardlooking statements to reflect new developments. Our SEC filings (found at or at including our 2007 Form 10-K and 2008 Form 10-Qs, contain more information on the types of risks and other factors that could adversely affect these statements. LMT Credit Suisse_

3 Agenda Corporate Overview Bruce Tanner Aeronautics Overview Ralph Heath Discussion LMT Credit Suisse_

4 Lockheed Martin Global Security Company with Balanced Portfolio 2007 Sales = $41.9 B 11.8% Electronic Systems $11.2B IS&GS $10.2B Aeronautics $12.3B Space Systems $8.2B Operating Segment Margins* (%) 3Q YTD Defense: Air Force Navy/USMC Army 59% Civil, HLS, Intelligence, & Other 26% Int l 15% Return on Invested Capital* (%) *See appendix for definition and calculation LMT Credit Suisse_

5 Aeronautics 2007 Sales = $12.3 B Combat Aircraft 77% Air Mobility 13% Other 10% U.S. Government 78% Key Programs Combat Aircraft F-16 F-22 F-35 Air Mobility Aircraft C-130J C-5 Aircraft Logistics/Sustainment Advanced Development Programs Skunkworks International 22% LMT Credit Suisse_

6 Electronic Systems 2007 Sales = $11.2 B Maritime Systems & Sensors 41% Missiles & Fire Control 37% Platform Training & Energy 22% U.S. Government 74% International 26% Key Programs Missile Defense Aegis, PAC-3, THAAD, MEADS Maritime Systems & Sensors Littoral Combat Ship Radar & Surface Systems Fire Control Systems SNIPER, TADS, Arrowhead Missile Systems Hellfire, ATACMS, GMLRS, JAVELIN, JASSM Ground Vehicles Joint Light Tactical Vehicle Rotary Wing VH-71, MH-60 LMT Credit Suisse_

7 Information Systems & Global Services 2007 Sales = $10.2 B Mission Solutions 46% Information Systems 30% Global Services 24% U.S. Government 94% International 6% Key Programs Mission Solutions Air Traffic Management Census Activities C4ISR National Archives AMF JTRS WIN-T Information Systems FBI Sentinel, NGI HR Systems (IHOPP) GSA Alliant DOE Hanford Global Services Peacekeeping/Nation Building (PAE) RFID Devices (Savi) Army Logistics Support NASA Support (FDOC) LMT Credit Suisse_

8 Space Systems 2007 Sales = $8.2 B Satellites 68% 12% U.S. Government 94% 20% International 6% Strategic & Defensive Missile Systems Space Transportation Key Programs Satellites Government-GPS III, AEHF, SBIRS Commercial Strategic & Defense Missiles FBM Trident D5 Targets & Countermeasures Space Transportation Orion CEV External Tank Space Exploration Systems Shuttle Operations (USA) United Launch Alliance (ULA) LMT Credit Suisse_

9 Cash Flow Generation Cash From Operations ($B) Generated ~$16 Billion Of Cash From Operations Since 2003 LMT Credit Suisse_

10 M&A History Business Area Electronic Systems Leigh Aerosystems Sippican Soflinx Insys HMT Vehicles ISX Perceptek 3DSolve Aculight Tenix/RLM IS&GS Orincon ACS STASYS SYTEX Aspen Savi Tech. MSD RLM Eagle Internat l PAE Space Systems Coherent Nantero 22 Acquisitions Closed Since 2003 for >$3 Billion LMT Credit Suisse_

11 Shareholder Focus: Stock Repurchases & Dividends $0.5 $0.6 ($B) $0.5 $2.1 $ $0.4 $ $0.3 $0.5 $ Share Repurchases Dividends Share Repurchase Focus Continues ~40 Million of Authority Remains Double Digit Increases to Annual Dividends +36% Announced Oct LMT Credit Suisse_

12 Shareholder Focus: Goal: Return 50% of Annual Free Cash to Shareholders 91% 83% $0.5 $0.6 ($B) 55% 72% $0.5 $2.1 $2.1 66% $0.3 $0.5 $0.4 $0.8 $1.2 Share Repurchases Returned $9 Billion to Shareholders over Last Five Years LMT Credit Suisse_

13 Credit Suisse Aerospace & Defense Conference LMT Credit LMT Suisse_ Credit Suisse_

14 Aeronautics Portfolio Development Rate Production Post Production C-130 F-16 UAV Future Bomber F-35 F-22 P-3 Stalker U-2 Next-Gen Airlift Time C-5 LMT Credit LMT Suisse_ Credit Suisse _

15 The Future Is Flying Tracking to Development Milestones Building Production Aircraft Standing Up Global Delivery System Maintaining Strong Partnerships LMT Credit LMT Suisse_ Credit Suisse_

16 World-Class Performance Development 49 Aircraft 38 Zero Defect Production 3 World-Class Lines LMT Credit Suisse_ LMT Credit Suisse_

17 Discussion Powered by Innovation... Guided By Integrity LMT Credit LMT Suisse_ Credit Suisse_

18 LMT Credit Suisse_

19 Definitions of Non-GAAP Measures Non-GAAP Financial Measures Disclosure This presentation contains non-generally Accepted Accounting Principles (GAAP) financial measures (as defined by SEC Regulation G). While we believe that these non-gaap financial measures may be useful in evaluating Lockheed Martin, this information should be considered supplemental and is not a substitute for financial information prepared in accordance with GAAP. In addition, our definitions for non-gaap measures may differ from similarly titled measures used by other companies or analysts. Segment Operating Profit / Margin Segment Operating Profit represents the total earnings from our business segments before unallocated corporate (expense) and income, interest expense, other non-operating income and expense, and income tax expense. This measure is used by our senior management in evaluating the performance of our business segments. The caption Unallocated Corp. Expense, or Unallocated Corp. (Exp.) / Inc. reconciles Segment Operating Profit to consolidated Operating Profit. The caption Other Pre-Tax Expense (net) reconciles Segment Operating Profit to consolidated Earnings Before Income Taxes. Segment Margin is calculated by dividing Segment Operating Profit by Sales. ROIC Management believes that Return on Invested Capital (ROIC) provides greater visibility into how effectively Lockheed Martin deploys capital. Management uses ROIC as a target level to help ensure that overall performance is understood and acceptable when capital is invested. ROIC is not a measure of financial performance under GAAP, and may not be defined and calculated by other companies in the same manner. ROIC should not be considered in isolation or as an alternative to net earnings as an indicator of company performance. Management uses these measures to compare segment performance and for comparisons to other companies within our industry as an alternative to GAAP. These measures also may be helpful to investors in understanding periodover-period financial results separate and apart from items that may, or could, have a disproportionate positive or negative impact on our financial results in any particular period. Free Cash Flow Free Cash Flow is calculated by subtracting Capital Expenditures from Cash From Operations LMT Credit Suisse_

20 Reconciliation to GAAP ($M) Actual Actual Actual Actual Actual Actual Actual YTD 3Q Sales $26,578 $31,824 $35,526 $37,213 $39,620 $41,862 $31,599 Segment Op. Profit 2,020 2,468 2,976 3,421 4,031 4,691 3,715 Unallocated Corp. Expense (862) (449) (887) (568) (261) (164) 68 Consolidated EBIT $1,158 $2,019 $2,089 $2,853 $3,770 $4,527 $3,783 Segment Margin 7.6% 7.8% 8.4% 9.2% 10.2% 11.2% 11.8% Consolidated Margin 4.4% 6.3% 5.9% 7.7% 9.5% 10.8% 12.0% LMT Credit Suisse_

21 ROIC Calculation ($M, Except %) Actual Actual Actual Actual Actual Actual Net Earnings $500 $1,053 $1,266 $1,825 $2,529 $3,033 Interest Exp x Return $878 $1,370 $1,542 $2,066 $2,764 $3,262 Debt (Average) $7,491 $6,612 $5,932 $5,077 $4,727 $4,416 Equity (Average) 6,853 6,170 7,015 7,590 7,686 7,661 Benefit Plan Adjustment (Avg.) 341 1,504 1,296 1,545 2,006 3,171 Invested Capital $14,685 $14,286 $14,243 $14,212 $14,419 $15,248 ROIC 6.0% 9.6% 10.8% 14.5% 19.2% 21.4% Our definition of Return on Invested Capital (ROIC) is net earnings plus after-tax interest expense divided by average invested capital (stockholders' equity plus debt), after adjusting stockholders equity by adding back adjustments related to postretirement benefit plans. Average benefit plan adjustments reflect the cumulative value of entries identified in our Statement of Stockholders Equity related to recognized and unrecognized benefit plan-related amounts, the adjustment for adoption of FAS 158 and the minimum pension liability. LMT Credit Suisse_