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LOCKHEED MARTIN CORPORATION
2014 ANNUAL REPORT

Table of contents

  • Page 1
    LOCKHEED MARTIN CORPORATION 2014 ANNUAL REPORT

  • Page 2
    ... Per Common Share Continuing Operations Net Earnings Cash Dividends Per Common Share Average Diluted Common Shares Outstanding Cash and Cash Equivalents Total Assets Total Debt Stockholders' Equity Common Shares Outstanding at Year-End Net Cash Provided by Operating Activities 2014 2013 2012 $45...

  • Page 3
    ... meaning of the federal securities laws, and are based on Lockheed Martin's current expectations and assumptions. For a discussion identifying important factors that could cause actual results to vary materially from those anticipated in the forward-looking statements, see the Corporation's filings...

  • Page 4
    Lockheed Martin Chairman, President and CEO Marillyn Hewson speaks with employee Caron Hooper in Gloucestershire, UK. EXCEPTIONAL VALUE FOR OUR... ƵƐĨŽƌĨƵƚƵƌĞďƵƐŝŶĞƐƐŐƌŽǁƚŚ͘ OUTSTANDING PERFORMANCE FOR OUR... Lockheed Martin Corporation II

  • Page 5
    ...world's most advanced fighter: ... Combat Ship... Next Generation of Ground Mobility...in Cyber Security and Information Technology... ĐƵƐƚŽŵĞƌƐ͛ͶÄ,ŶĚƚŚĞǁŽƌůĚ͛ƐͶŵŽƐƚĚŝĨĨŝĐƵůƚƉƌŽďůĞŵƐ͘ 2014 Annual Report

  • Page 6
    tÄžǁŝůůĐŽŶƚŝŶƵĞŽƵƌĨŽĐƵƐŽŶInternational GrowthÍ• Ä,ƉƉůLJŝŶŐƚŚĞďƌĞÄ,ĚƚŚŽĨŽƵƌĐÄ,ƉÄ,ďŝůŝƚLJƚŽƐƵƉƉŽƌƚ ... ϯϬϬ͕ϬϬϬƐƋƵÄ,ƌĞĨĞĞƚ͘ Lockheed Martin Corporation IV

  • Page 7
    ...PERFORMANCE...ENGINEERING A BETTER TOMORROW Lockheed Martin employee Randall Mitchner excites students about engineering at Science Olympiad, a STEM initiative at our Aeronautics facility...Hewson ÅšÄ,ŝƌŵÄ,Ŷ͕WƌĞƐŝĚĞŶƚ͕Ä,ŶĚ ŚŝĞĨdžĞĐƵƚŝǀĞKĨĨŝĐĞƌ V 2014 Annual Report

  • Page 8
    ... Information Systems & Global Solutions Dale P. Bennett Executive Vice President Mission Systems and Training Orlando P. Carvalho Executive Vice President Aeronautics Brian P. Colan Vice President, Controller and Chief Accounting Officer Patrick M. Dewar Executive Vice President Lockheed Martin...

  • Page 9
    ... fiscal quarter, which was June 27, 2014, was approximately $51.3 billion. There were 315,583,849 shares of our common stock, $1 par value per share, outstanding as of January 23, 2015. DOCUMENTS INCORPORATED BY REFERENCE Portions of Lockheed Martin Corporation's 2015 Definitive Proxy Statement...

  • Page 10
    ...and Related Transactions, and Director Independence ...Principal Accountant Fees and Services ...94 94 95 95 95 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ...Selected Financial Data ...Management's Discussion and Analysis of Financial...

  • Page 11
    ... General We are a global security and aerospace company principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. We also provide a broad range of management, engineering, technical, scientific, logistics...

  • Page 12
    ...separate systems to work together to increase effectiveness and we continue to invest in new technologies to maintain and enhance competitiveness in military aircraft design, development and production. Information Systems & Global Solutions In 2014, our IS&GS business segment generated net sales of...

  • Page 13
    ... Logistics Support Services program, which provides logistics support services to the special operations forces of the U.S. military. Mission Systems and Training In 2014, our MST business segment generated net sales of $7.1 billion, which represented 16% of our total consolidated net sales. MST...

  • Page 14
    ..., operating profit and related financial information for 2014, 2013 and 2012, see "Business Segment Results of Operations" in Management's Discussion and Analysis of Financial Condition and Results of Operations and "Note 3 - Information on Business Segments" of our consolidated financial statements...

  • Page 15
    ... programs, increased costs or reduced operating profits. No material portion of our business is considered to be seasonal. Various factors can affect the distribution of our sales between accounting periods, including the timing of government awards, the availability of government funding, product...

  • Page 16
    ... products, services and technical data; and • require the review and approval of contractor business systems, defined in the regulations as: (i) Accounting System; (ii) Estimating System; (iii) Earned Value Management System, for managing cost and schedule performance on certain complex programs...

  • Page 17
    ... and uncertainties. Statements and assumptions with respect to future sales, income and cash flows, program performance, the outcome of litigation, anticipated pension cost and funding, environmental remediation cost estimates and planned acquisitions or dispositions of assets or the anticipated...

  • Page 18
    ... Control (MFC) and Mission Systems and Training (MST) business segments due to our production contract backlog. However, our businesses with smaller, short-term contracts are the most susceptible to the impacts of budget reductions, such as our Information Systems & Global Solutions (IS&GS) business...

  • Page 19
    ... Management Agency and various agency Inspectors General, routinely audit and investigate government contractors. These agencies review a contractor's performance under its contracts, its cost structure, its business systems and compliance with applicable laws, regulations and standards. Any costs...

  • Page 20
    ... contracts and programs, our performance, our ability to control costs and evolving U.S. Government procurement policies. Our profitability and cash flow may vary materially depending on the types of long-term government contracts undertaken, the nature of the products produced or services performed...

  • Page 21
    ... relationships and provide superior performance, advanced technology solutions and service at an affordable cost and with the agility that our customers require to satisfy their mission objectives. As a leader in defense and global security, we have a large number of programs for which we are...

  • Page 22
    ... in the estimates of our total costs to complete the contract and may impact our profitability and cash flows. The ability to recover investments that we make is generally dependent upon the successful operation of ventures that we do not control and may involve products and services that are...

  • Page 23
    ... if changed may cause our future earnings and cash flow to fluctuate significantly as well as affect the affordability of our products and services. Many of our employees are covered by defined benefit pension plans and we provide certain health care and life insurance benefits to eligible retirees...

  • Page 24
    ...commitment prior to February 1, 2014. Lockheed Martin does not anticipate any impact on the carrying value of its equity investment in ULA in 2015 as a consequence of the NDAA prohibition. ULA is currently evaluating domestic engine alternatives for its Atlas V launch vehicle and we will monitor the...

  • Page 25
    ... including: engineering, science, manufacturing, information technology, cyber security, business development and strategy and management. Our operating performance is also dependent upon personnel who hold security clearances and receive substantial training in order to work on certain programs or...

  • Page 26
    ... expense, but our income tax expense and payments would be materially reduced in subsequent years. Actual financial results could differ from our judgments and estimates. Refer to "Critical Accounting Policies" in Management's Discussion and Analysis of Financial Condition and Results of Operations...

  • Page 27
    ...4.0 74.6 Aeronautics Information Systems & Global Solutions Missiles and Fire Control Mission Systems and Training Space Systems Corporate activities Total We believe our facilities are in good condition and adequate for their current use. We may improve, replace or reduce facilities as considered...

  • Page 28
    ... 2011 to March 2012; President, Mission Systems & Sensors from January 2010 to July 2011; and Vice President and General Manager, Surface Systems Ballistic Missile Defense Programs from January 2006 to January 2010. Brian P. Colan (age 54), Vice President, Controller, and Chief Accounting Officer...

  • Page 29
    ... served as Vice President, Finance and Business Operations of Electronic Systems from July 2008 to June 2011. Bruce L. Tanner (age 55), Executive Vice President and Chief Financial Officer Mr. Tanner has served as Executive Vice President and Chief Financial Officer since September 2007. 21

  • Page 30
    ...'s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market, Price and Dividend Information Our common stock is traded on the New York Stock Exchange (NYSE) under the symbol LMT. As of January 23, 2015, there were 32,534 holders of record of our common stock...

  • Page 31
    ... to Rule 10b5-1 plans. The program does not have an expiration date. During the quarter ended December 31, 2014, the total number of shares purchased included 57,014 shares that were transferred to us by employees in satisfaction of minimum tax withholding obligations associated with the vesting of...

  • Page 32
    ...equity between years from 2010 to 2014 primarily were due to the annual measurement of the funded status of our postretirement benefit plans at the end of 2014, 2013, 2012 and 2011. See "Critical Accounting Policies - Postretirement Benefit Plans" in Management's Discussion and Analysis of Financial...

  • Page 33
    ... to support and fund our key programs, consistent with the government fiscal year (GFY) 2015 budget. Changes in circumstances may require us to revise our assumptions, which could materially change our current estimate of 2015 net sales and operating profit margin. For additional information related...

  • Page 34
    ... have a material negative effect on our company. Despite the continued uncertainty surrounding U.S. Government budgets, the investments and acquisitions we have made in recent years have sought to align our businesses with what we believe are the most critical national priorities and mission areas...

  • Page 35
    ... and fire control products. In our MST business segment, we continue to experience international interest in the Aegis Ballistic Missile Defense System. We perform activities in the development, production, ship integration and test and lifetime support for ships of international customers such...

  • Page 36
    ... and budgeting processes. Current program challenges include, but are not limited to, supplier and partner performance, software development, level of cost associated with life cycle operations and sustainment and warranties, receiving funding for production contracts on a timely basis, executing...

  • Page 37
    ..., MST and Space Systems business segments and most of our service sales are generated in our IS&GS and MFC business segments. Our consolidated net sales were as follows (in millions): 2014 $36,093 9,507 $45,600 2013 $35,691 9,667 $45,358 2012 $37,817 9,365 $47,182 Products Services Total net sales...

  • Page 38
    ... technical services programs due to lower volume, partially offset by various fire control programs (primarily Special Operations Forces Contractor Logistics Support Services (SOF CLSS)) due to higher volume. Service sales for 2013 were comparable to 2012 at both MST and Space Systems. Cost of Sales...

  • Page 39
    ... reserves recorded on certain training and logistics solutions programs during 2014. These increases in product costs were partially offset by decreases of about $475 million at IS&GS and $130 million at Space Systems, primarily due to the reasons for lower product sales at each respective business...

  • Page 40
    ... to various items impacting the calculations of financial accounting standards (FAS) pension expense and U.S. Government Cost Accounting Standards (CAS) pension cost. FAS pension expense in 2014 was less than 2013 and 2012 due to higher discount rates used to calculate our qualified defined benefit...

  • Page 41
    ... Expense Our effective income tax rate from continuing operations was 31.3% for 2014, 29.0% for 2013 and 32.6% for 2012. The rates for all periods benefited from tax deductions for U.S. manufacturing activities, deductions for dividends paid to our defined contribution plans with an employee stock...

  • Page 42
    ... CAS pension cost through the pricing of our products and services on U.S. Government contracts and, therefore, the CAS pension cost is recognized in each of our business segments' net sales and cost of sales. Since our consolidated financial statements must present pension expense calculated in...

  • Page 43
    ...Mission Systems and Training Space Systems Total net sales Operating profit Aeronautics Information Systems & Global Solutions Missiles and Fire Control Mission Systems and Training Space Systems Total business segment operating profit Unallocated items FAS/CAS pension adjustment FAS pension expense...

  • Page 44
    ... profit booking rate of each contract considers risks surrounding the ability to achieve the technical requirements, schedule and costs in the initial estimated total costs to complete the contract. Profit booking rates may increase during the performance of the contract if we successfully retire...

  • Page 45
    ...reserves recorded on certain training and logistics solutions programs at MST and net warranty reserve adjustments for various programs (including JASSM and GMLRS) at MFC as described in the respective business segment's results of operations below. The consolidated net adjustments for 2013 and 2012...

  • Page 46
    ... production contracts. Operating profit is also expected to decrease in the low single digit range, due primarily to contract mix, resulting in a slight decrease in operating margins between years. Information Systems & Global Solutions Our IS&GS business segment provides advanced technology systems...

  • Page 47
    ...in 2015 margins that are lower than 2014 results. Missiles and Fire Control Our MFC business segment provides air and missile defense systems; tactical missiles and air-to-ground precision strike weapon systems; logistics and other technical services; fire control systems; mission operations support...

  • Page 48
    ... decline in our Air and Missile Defense business, specifically THAAD and PAC-3 volume. Operating profit is expected to decrease in the high single digit percentage range, driven by reduced volume and fewer risk retirements in 2015 compared to 2014. Accordingly, operating profit margin is expected to...

  • Page 49
    ... offset by lower operating profit of about $55 million for training and logistics programs, primarily due to the recording of approximately $30 million of charges mostly related to lower-of-cost-or-market considerations; and about $25 million for ship and aviation systems programs (primarily...

  • Page 50
    ... launch services to the U.S. Government. Space Systems' operating results included the following (in millions): 2014 $ 8,065 1,039 12.9% $18,900 2013 $ 7,958 1,045 13.1% $20,500 2012 $ 8,347 1,083 13.0% $18,100 Net sales Operating profit Operating margins Backlog at year-end 2014 compared to 2013...

  • Page 51
    ... and managing our debt levels, maturities and interest rates. We have generated strong operating cash flows, which have been the primary source of funding for our operations, capital expenditures, acquisitions, debt service and repayments, dividends, share repurchases and postretirement benefit plan...

  • Page 52
    ... cash receipts related to accounts receivable, primarily timing on the F-35 production contracts (including amounts received in 2013 from resolving U.S. Government contractual withholds that were not repeated in 2014). Partially offsetting the decreases in operating cash flows were lower pension...

  • Page 53
    ...of 2012 and $1.15 per share for the last quarter. We paid $1.9 billion, $1.8 billion and $1.0 billion to repurchase 11.5 million, 16.2 million and 11.1 million shares of our common stock during 2014, 2013 and 2012. Cash received from the issuance of our common stock in connection with employee stock...

  • Page 54
    ...-term liabilities recorded as of December 31, 2014. Such amounts mainly include expected payments under non-qualified pension plans, environmental liabilities and deferred compensation plans. Purchase obligations related to operating activities include agreements and contracts that give the supplier...

  • Page 55
    ... in the estimates of our total costs to complete the contract and may impact our profitability and cash flows. The ability to recover investments that we make are generally dependent upon the successful operation of ventures that we do not control and may involve products and services that are...

  • Page 56
    ... products and services under cost-reimbursable, fixed-price and time-and-materials contracts. Contract Types Cost-reimbursable contracts Cost-reimbursable contracts, which accounted for about 40% of our total net sales in 2014 and 45% of our total net sales in 2013 and 2012, provide for the payment...

  • Page 57
    ... profit booking rate of each contract considers risks surrounding the ability to achieve the technical requirements, schedule and costs in the initial estimated total costs to complete the contract. Profit booking rates may increase during the performance of the contract if we successfully retire...

  • Page 58
    ...state income taxes. Services Method of Accounting Under a fixed-price service contract, we are paid a predetermined fixed amount for a specified scope of work and generally have full responsibility for the costs associated with the contract and the resulting profit or loss. We record net sales under...

  • Page 59
    ... as discount rates, employee turnover, participant longevity, the expected rates of increase in future compensation levels through December 31, 2015 for our nonunion plans, the expected long-term rate of return on plan assets and the health care cost trend rates for our retiree medical plans. The...

  • Page 60
    ... billion in 2014, $2.25 billion in 2013 and $3.6 billion in 2012, inclusive of amounts in excess of our required contributions. Funding of our qualified defined benefit pension plans is determined in a manner consistent with CAS and in accordance with the Employee Retirement Income Security Act of...

  • Page 61
    ... and $997 million. We have recorded receivables totaling $836 million and $863 million at December 31, 2014 and 2013 for the portion of environmental costs that are probable of future recovery in pricing of our products and services for agencies of the U.S. Government, as discussed below. The amount...

  • Page 62
    ... U.S. Government business base and contract mix and our history of receiving reimbursement of such costs. As disclosed above, we may record changes in the amount of environmental remediation liabilities as a result of our quarterly reviews of the status of our environmental remediation sites, which...

  • Page 63
    ... and cash flows after considering factors such as general market conditions, U.S. Government budgets, existing firm orders, expected future orders, contracts with suppliers, labor agreements, changes in working capital, long term business plans and recent operating performance. The discount rates...

  • Page 64
    ...main exposure to market risk relates to interest rates, foreign currency exchange rates and market prices on certain equity securities. Our financial instruments that are subject to interest rate risk principally include fixed-rate long-term debt. The estimated fair value of our outstanding debt was...

  • Page 65
    ... to price changes and changes in interest rates. A portion of the liabilities associated with the deferred compensation plans supported by the trust is also impacted by changes in the market price of our common stock and certain market indices. Changes in the value of the liabilities have the effect...

  • Page 66
    ... consolidated balance sheets of Lockheed Martin Corporation as of December 31, 2014 and 2013, and the related consolidated statements of earnings, comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2014. These financial statements...

  • Page 67
    ...) 2,745 - $ 2,745 2014 Net sales Products Services Total net sales Cost of sales Products Services Goodwill impairment charges Severance charges Other unallocated, net Total cost of sales Gross profit Other income, net Operating profit Interest expense Other non-operating income, net Earnings from...

  • Page 68
    Lockheed Martin Corporation Consolidated Statements of Comprehensive Income (in millions) Years Ended December 31, 2013 2012 $ 2,981 $ 2,745 Net earnings Other comprehensive (loss) income, net of tax Postretirement benefit plans Net other comprehensive (loss) income recognized during the period, ...

  • Page 69
    Lockheed Martin Corporation Consolidated Balance Sheets (in millions, except par value) December 31, 2014 2013 Assets Current assets Cash and cash equivalents Receivables, net Inventories, net Deferred income taxes Other current assets Total current assets Property, plant and equipment, net Goodwill...

  • Page 70
    ... Corporation Consolidated Statements of Cash Flows (in millions) Years Ended December 31, 2014 2013 2012 Operating activities Net earnings Adjustments to reconcile net earnings to net cash provided by operating activities Depreciation and amortization Stock-based compensation Deferred income taxes...

  • Page 71
    ...Balance at December 31, 2011 Net earnings Other comprehensive loss, net of tax Repurchases of common stock Dividends declared ($4.15 per share) Stock-based awards and ESOP activity Balance at December 31, 2012 Net earnings Other comprehensive income, net of tax Repurchases of common stock Dividends...

  • Page 72
    Lockheed Martin Corporation Notes to Consolidated Financial Statements Note 1 - Significant Accounting Policies Organization - We are a global security and aerospace company principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology ...

  • Page 73
    ... research and development programs pursuant to contracts are included in net sales and cost of sales. Stock-based compensation - Compensation cost related to all share-based payments is measured at the grant date based on the estimated fair value of the award. We generally recognize the compensation...

  • Page 74
    ... cost or estimated net realizable value. Costs on long-term contracts and programs in progress represent recoverable costs incurred for production or contract-specific facilities and equipment, allocable operating overhead, advances to suppliers and, in the case of contracts with the U.S. Government...

  • Page 75
    ... and cash flows after considering factors such as general market conditions, U.S. Government budgets, existing firm orders, expected future orders, contracts with suppliers, labor agreements, changes in working capital, longterm business plans and recent operating performance. The discount rates...

  • Page 76
    ... 31, 2014 and 2013, the fair value of our trading securities totaled $1.1 billion and $1.0 billion and was included in other noncurrent assets on our Balance Sheets. Our trading securities are held in a separate trust, which includes investments to fund our deferred compensation plan liabilities...

  • Page 77
    ... market prices of our common stock during the respective periods. There were no anti-dilutive equity awards for the year ended December 31, 2014. Note 3 - Information on Business Segments We operate in five business segments: Aeronautics, Information Systems & Global Solutions (IS&GS), MFC, Mission...

  • Page 78
    ... and services on U.S. Government contracts and, therefore, the CAS pension cost is recognized in each of our business segments' net sales and cost of sales. Since our consolidated financial statements must present pension expense calculated in accordance with the financial accounting standards (FAS...

  • Page 79
    ...Mission Systems and Training Space Systems Total net sales Operating profit Aeronautics Information Systems & Global Solutions Missiles and Fire Control Mission Systems and Training Space Systems Total business segment operating profit Unallocated items FAS/CAS pension adjustment FAS pension expense...

  • Page 80
    ... Financial Data by Business Segment (continued) 2014 Intersegment sales Aeronautics Information Systems & Global Solutions Missiles and Fire Control Mission Systems and Training Space Systems Total intersegment sales Depreciation and amortization Aeronautics Information Systems & Global Solutions...

  • Page 81
    Selected Financial Data by Business Segment (continued) Net Sales by Customer Category Net sales by customer category were as follows (in millions): 2014 U.S. Government Aeronautics Information Systems & Global Solutions Missiles and Fire Control Mission Systems and Training Space Systems Total U.S....

  • Page 82
    ... and Fire Control Mission Systems and Training Space Systems Total business segment assets Corporate assets (b) Total assets Goodwill Aeronautics Information Systems & Global Solutions Missiles and Fire Control Mission Systems and Training Space Systems Total goodwill (c) Customer advances and...

  • Page 83
    ... 738 $ 2,977 Work-in-process, primarily related to long-term contracts and programs in progress Less: customer advances and progress payments Other inventories Total inventories, net Work-in-process inventories at December 31, 2014 and 2013 included general and administrative costs of $698 million...

  • Page 84
    ...income tax expense for 2013 reflects the credit for all of 2013 and 2012, which reduced income tax expense by approximately $76 million. We receive a tax deduction for dividends paid on shares of our common stock held by certain of our defined contribution plans with an employee stock ownership plan...

  • Page 85
    ... million in 2014, $340 million in 2013 and $378 million in 2012. All of our existing unsecured and unsubordinated indebtedness rank equally in right of payment. Note 9 - Postretirement Plans Defined Benefit Pension Plans and Retiree Medical and Life Insurance Plans Many of our employees are covered...

  • Page 86
    ...Currently, the calculation of retirement benefits under the affected defined benefit pension plans is determined by a formula that takes into account the participants' years of credited service and average compensation. The freeze will take effect in two stages. Beginning on January 1, 2016, the pay...

  • Page 87
    ... balance Change in plan assets Beginning balance at fair value Actual return on plan assets Benefits paid (a) Company contributions Medicare Part D subsidy Participants' contributions Ending balance at fair value Unfunded status of the plans (a) Retiree Medical and Life Insurance Plans 2014 2013...

  • Page 88
    ... qualified defined benefit pension plans and retiree medical and life insurance plans as described below. The following table provides the amounts recognized in other comprehensive income (loss) related to postretirement benefit plans, net of tax, for the years ended December 31, 2014, 2013 and 2012...

  • Page 89
    ...4.30% 4.30% Retiree Medical and Life Insurance Plans 2014 2013 2012 3.75% 4.50% 3.75% 8.00% 8.00% 8.00% 8.50% 5.00% 2029 8.75% 5.00% 2029 9.00% 5.00% 2029 Discount rate Expected long-term rate of return on assets Rate of increase in future compensation levels Health care trend rate assumed for next...

  • Page 90
    ... associated with our foreign defined benefit pension plans were not material and have not been included in the table above. The following table presents the changes during 2014 and 2013 in the fair value of plan assets categorized as Level 3 in the preceding table (in millions): Private Equity Funds...

  • Page 91
    ... are investment vehicles valued using the Net Asset Value (NAV) provided by the fund managers. The NAV is the total value of the fund divided by the number of shares outstanding. Commingled equity funds are categorized as Level 1 if traded at their NAV on a nationally recognized securities exchange...

  • Page 92
    ... of net actuarial losses Amortization of net prior service credits Other Total reclassified from AOCL Total other comprehensive loss Balance at December 31, 2014 (a) (a) (a) AOCL related to postretirement benefit plans is shown net of tax benefits at December 31, 2014, 2013 and 2012 of $6.4 billion...

  • Page 93
    ... to the closing market price of our common stock on the date of grant less a discount to reflect the delay in payment of dividend-equivalent cash payments. We recognize the grant-date fair value of RSUs, less estimated forfeitures, as compensation expense ratably over the requisite service period...

  • Page 94
    ... less estimated forfeitures, as compensation expense ratably over the vesting period based on the number of awards expected to vest at each reporting date. The remaining PSUs were valued at $134.15 per PSU using a Monte Carlo model as the performance target is related to our total shareholder return...

  • Page 95
    ... a liability is recorded for future environmental costs, we record a receivable for estimated future recovery considered probable through the pricing of products and services to agencies of the U.S. Government, regardless of the contract form (e.g., cost-reimbursable, fixed-price). We continuously...

  • Page 96
    ... U.S. Government, and are conducting remediation activities under various consent decrees and orders relating to soil, groundwater, sediment or surface water contamination at certain sites of former or current operations. Under an agreement related to our Burbank and Glendale, California, sites, the...

  • Page 97
    ...2016. This yearly amortization and our share of ULA's net earnings are reported as equity in net earnings (losses) of equity investees in other income, net on our Statements of Earnings. Our investment in ULA totaled $706 million and $685 million at December 31, 2014 and 2013. Note 13 - Acquisitions...

  • Page 98
    ... related to long-lived assets at the sites to be closed) and incremental costs (e.g., relocation of equipment and other employee related costs) of approximately $15 million, $50 million and $175 million at our IS&GS, MST and Space Systems business segments through the completion of this plan in 2015...

  • Page 99
    ... 31, 2014 and 2013, excluding unamortized discounts of $872 million and $882 million. The estimated fair values of our outstanding debt were determined based on quoted prices for similar instruments in active markets (Level 2). In the fourth quarters of 2014 and 2013, we recorded non-cash goodwill...

  • Page 100
    ... internal control over financial reporting. Our internal control system was designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of financial statements for external purposes. Our management conducted...

  • Page 101
    ... with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Lockheed Martin Corporation as of December 31, 2014 and 2013, and the related consolidated statements of earnings, comprehensive income, stockholders' equity, and cash flows for...

  • Page 102
    ... Conduct, applies to all our employees, including our principal executive officer, principal financial officer, and principal accounting officer and controller, and to members of our Board of Directors. A copy of our Code of Ethics and Business Conduct is available on our investor relations website...

  • Page 103
    ... 10-K. Equity Compensation Plan Information The following table provides information about our equity compensation plans that authorize the issuance of shares of Lockheed Martin common stock to employees and directors. The information is provided as of December 31, 2014. Number of securities to be...

  • Page 104
    ...' Equity - Years ended December 31, 2014, 2013 and 2012 ...Notes to Consolidated Financial Statements ... 59 60 61 62 63 64 The report of Lockheed Martin Corporation's independent registered public accounting firm with respect to the abovereferenced financial statements and their report on internal...

  • Page 105
    ... Corporation Directors Deferred Compensation Plan, as amended (incorporated by reference to Exhibit 10.2 to Lockheed Martin Corporation's Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-11437)). Martin Marietta Corporation Directors' Life Insurance Program (incorporated...

  • Page 106
    ... the quarter ended June 29, 2014). Lockheed Martin Corporation Executive Severance Plan, prior to November 1, 2013, known as the Lockheed Martin Corporation Severance Benefit Plan for Certain Management Employees (incorporated by reference to Exhibit 10.22 of the Corporation's Annual Report on Form...

  • Page 107
    ....CAL 101.DEF 101.LAB 101.PRE * Computation of ratio of earnings to fixed charges. Subsidiaries of Lockheed Martin Corporation. Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm. Powers of Attorney. Certification of Marillyn A. Hewson pursuant to Section 302 of the Sarbanes...

  • Page 108
    ..., thereunto duly authorized. Lockheed Martin Corporation (Registrant) By: Brian P. Colan Vice President, Controller, and Chief Accounting Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the...

  • Page 109
    ...to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. 3. 4. Marillyn A. Hewson Chief Executive Officer Date...

  • Page 110
    ... to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. 3. 4. Bruce L. Tanner Chief Financial Officer Date...

  • Page 111
    ... with the Annual Report of Lockheed Martin Corporation (the "Corporation") on Form 10-K for the period ended December 31, 2014, as filed with the U.S. Securities and Exchange Commission on the date hereof (the "Report"), I, Marillyn A. Hewson, Chief Executive Officer of the Corporation, and I, Bruce...

  • Page 112
    ... Segment Operating Profit (Non-GAAP) Consolidated Operating Margin Segment Operating Margin (Non-GAAP) 2014 2013 $45,600 $45,358 $ $ 5,592 $ 4,505 $ 4 (1,247) $ 5,588 $ 5,752 $ 12.3% 9.9% 12.3% 12.7% 2012 47,182 4,434 (1,149) 5,583 9.4% 11.8% Free Cash Flow Lockheed Martin defines Free Cash Flow...

  • Page 113
    ...http://www.computershare.com/investor DIRECT STOCK PURCHASE AND DIVIDEND REINVESTMENT PLAN Lockheed Martin Direct Invest is a convenient direct stock purchase and dividend reinvestment program available for new investors to make an initial investment in Lockheed Martin common stock and for existing...

  • Page 114
    ...free and is FSC® Mix certified. 30 % The Form 10-K in this report is printed on Rolland Opaque 40, which contains 30% post-consumer recycled fibers.... PAPER CERTIFIED FOR REDUCED ENVIRONMENTAL IMPACT. VIEW SPECIFIC ATTRIBUTES EVALUATED: UL.COM/EL UL 2771 30 % © 2015 Lockheed Martin Corporation