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LOCKHEED MARTIN

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by

Fiona Duong

on 4 December 2013

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Transcript of LOCKHEED MARTIN

LOCKHEED MARTIN
Who are we?
Ratios
Statement of Cash Flows
Effective Tax Rates
The US Federal Statutory Income Tax Rate & Maryland Tax Rate: 40.75%

Effective Tax Rate: 32.6% (2012), 26.6% (2011), and 30.8% (2010)

Laura Dyer
We are a world wide global security, aerospace, defense, and information technology company.
We are one of the world's largest defense contractors
Operating Activities
(2009-2012)
Reasons for decrease in
2011 to 2012:
Higher payments of accountspayable made in 2012.
Account receivables grew due to timing reasons associated with contract negotiations
$3.6 billion cash contribution to pension plans
Operating Activities
Reasons for increase
from 2012 to 2013 (3rd quarter):

Paid less income taxes and spent less on inventory in 2013 than 2012.
We expect to see an
increase
in cash provided by operations in future years.

Investing Activities
Reasons for decrease from 2009 to 2010:
Sale of EIG division
Decreased expenditure for PP&E
Less spent on acquisitions of businesses and investments in affiliates
Aside from the decrease in cash
used for investing activities from
2009-2010, cash used for investing
activities has increased from 2010-2012
Investing Activities
Reasons for Increase from 2012 to 2013 (3rd quarter):
Increase in spending on acquisition of businesses and investments in affiliates, such as acquisition of Armor Group, a “UK-based company specializing in IT solutions for energy, transport and public service sectors” (Lockheed Martin)
Financing Activities
Reasons for Increase from
2009 to 2010:
Increase in repurchase of common stock (we believe the price of stock is undervalued by the market and we repurchased 33 million shares for $2.48 billion) as well as the increase common stocks and dividends.
Quarterly dividends have increased in each of the last three years
.
CFO Vs. Net Income
Main difference between CFO and NI is depreciation and amortization.
Reasons for lower effective tax rates: US Manufacturing Activity Benefit, Research & Development Tax Credits, and Tax Deductible Dividends
Competition Summary

We expect to see an increase in cash used in investing activities in future years.

2013 (3rd quarter)
Years 2009-2012
Years 2009-2012
Lockheed Products
Employee's Benefit
•Defined benefit/contribution pension plans
•401k plans
•Healthcare and life insurance benefits to eligible retirees.
•Paid time off
•Incentives for healthy lifestyle choices
•On-site fitness centers/nutritious food in cafeterias.
•Competitive pay

Company's Risks
Approx.
82%
of our revenue came from U.S. Government contracts in
2012
Based on our diverse group of products, it is less likely that the termination of any program can greatly impact us.

We heavily depend on Government contracts as their reassessment of priorities and budget cuts could materially reduce our programs.
Company's Accomplishments
Secured Future Projects
Continuation on the inventory goal of 2443 F35 Variants
Global Positioning Satellite program
Advanced Extremely High Frequency system

Space-Based infrared System
Phased Adaptive Approach missile defense system,
DDG-51 AEGIS destroyer


Continued operation of U-2 manned ISR aircraft.

Commitment from Britain, Australia, italy, Israel, Japan and the Netherlands to buy F-35s
On Sept. 24, South Korea called off an 8.3 trillion-won ($7.8 billion) tender for 60 fighter jets, rejecting Boeing’s bid

Concerns the F-15 Silent Eagle wasn’t advanced enough to counter North Korea’s nuclear threat.
Previously rejecting the F-35 on cost grounds, South Korea is now looking again at Lockheed’s F-35’s superior jets.
Recent reports show that Korea is intending to buy 40 f35 fighter jets instead of their original 60 to fit budget requirements.
Secured Future Projects
Lockheed Martin Global Expansion Plan
Expansion into Non Defense Sectors

• Critical intelligence
• Knowledge management
• Business consulting
• Government solutions and assurance

Acquired Scotland Based Armor Group on Sept. 11, 2013

• Privately held information group
• Expand international information technology/Civil government services and Energy Renewal

Cyber Security
11 Billion dollar market
Lockheed Martin is emerging as a top contractor for the National Security Agency
Lockheed Martin currently owns the top contracting role at the Defense Cyber Crime Center
Lockheed Martin established a major presence at key domestics agencies such as the Department of Homeland Security
• F-22 Raptor

o Super maneuverable fighter aircraft using stealth technology used as an air superiority fighter. Other uses include: ground attack, electronic warfare, and signals intelligence roles

• C-17 Globemaster III
o Large military transport aircraft designed for U.S. Air Force. Used for strategic airlift missions and used for transporting cargo and troops. Other uses include medical evacuation, airdrop duties and tactical airlift

• F-35 Lightning II
o Multirole fighters used for ground attack, reconnaissance, air defense missions with stealth capability

Headquartered in Bethesda, Maryland with 116,000 employees worldwide
Kevin Jao
Elvin Ng
Team Members
Fiona Duong
Lauren Shigemura
DAMN GOOD TAX GUY!!
Henry Sander
“In a crisis, no one will ask how much that fighter cost,”
George Standridge, a Lockheed vice president for aeronautics strategy and business development,

“The question is, can that fighter go do the job that this government needs it to do.”
Future Predictions and Forecast
U.S. Government's budget plans to cut back on defense spending.
Despite challenges we expect to invest in technologies to fulfill new requirements for customers.
We expect to return at least 50% of free cash flow to investors in forms of dividends and share repurchases.
Number of aircraft contracts for international customers continue to increase.
Investment in acquisitions and new business segments
Company's Executives
Net Income
CFO
Lockheed
Boeing
Liquidity
Efficiency/ Turnover
Long Term Debt
and Solvency Ratios
Profitability Ratios
Market Ratios
Dividends
...and many more!
Important: CFO is increasing from 2009 to 2011 and will increase from 2012 to 2013.
Expected NI to increase in future: selling more raptors internationally , contracted from South Korea, higher net income and profits in future
Marillyn A. Hewson,

Chief Executive Officer and President

Bruce L. Tanner,

Executive Vice President and
Chief Financial Officer

Richard F. Ambrose,
Executive Vice President,
Space Systems

Sondra L. Barbour,

Executive Vice President,
Information Systems & Global Solutions

Dale P. Bennett,

Executive Vice President,
Mission Systems and Training

Orlando P. Carvalho,

Executive Vice President,
Aeronautics


Patrick M. Dewar,

Executive Vice President,
Lockheed Martin International

Richard H. Edwards,

Executive Vice President,
Missiles and Fire Control

Ratio Comparisons
Ratio Comparisons
Ratio Comparisons
Full transcript