Record 2012 Performance in a Challenging Environment

Memorandum

DATE:              January 24, 2013

TO:                  All Lockheed Martin Employees

FROM:            Marillyn Hewson, Chief Executive Officer and President

SUBJECT:       Record 2012 Performance in a Challenging Environment

Thanks to your dedication, focus on program execution and proactive cost-reduction efforts in this very challenging business environment, we achieved record performance in 2012 and are well positioned for continued success. 

Our 2012 results, reported today, show that we grew sales to $47.2 billion, booked $48.7 billion in new orders, and achieved a year-end backlog of $82.3 billion.  We also generated $1.6 billion in cash from operations, after contributing $3.6 billion to our pension funds.  Earnings per share from continuing operations increased six percent to $8.36.

Despite pressures on sales and earnings in the fourth quarter, we saw strong demand for our products around the world.  We were selected by Denmark for nine MH-60R maritime helicopters, the U.S. Air Force awarded us a $1.94 billion contract for the next two Advanced Extremely High Frequency satellites, and we began managing the transformation of the Department of Defense’s Global Information Grid—an award valued at $4.6 billion over seven years.  

Our largest program, the F-35, continued to make significant progress throughout the year.  We met our commitment to deliver 30 aircraft to our customers, including the first two international aircraft to the UK; the Marine Corps stood up the first F-35 operational unit in Yuma, Ariz.; we surpassed 5,000 flight hours on the fleet; and in flight test, we completed the year ahead of plan.  We also reached agreement with the Department of Defense on a $3.8 billion contract to manufacture 32 F-35 aircraft in the fifth production lot.  I am very proud of our team’s performance on this critical program and confident we’ll continue to make steady progress.

We are operating in incredibly dynamic times.  Our company, industry and customers are facing unprecedented global security challenges, we still face the uncertainty of sequestration, and we’re being called upon to do more with less.  You’ve answered that call again and again, with agility, commitment and innovative ideas, while always remaining true to our values.  That’s what distinguishes Lockheed Martin as an industry leader.

I’d like to take a moment to thank Linda Gooden, Executive Vice President of IS&GS, and Joanne Maguire, Executive Vice President of Space Systems, for their extraordinary service to our company and industry; and to congratulate Rick Ambrose and Sondra Barbour on their promotions. Linda and Joanne’s vision and focus on performance have positioned us well for continued growth in these important business areas.

Thank you again for your outstanding performance in 2012.  I am extraordinarily proud and very appreciative of your hard work and dedication, and am confident we will build on this positive momentum to achieve even greater success in 2013 and beyond.