Strong Second Quarter Results
To All Lockheed Martin Employees
Thanks to your outstanding performance, we delivered another strong quarter and continued to make progress on our strategic goals.
We improved our net earnings by 10 percent to $859 million and saw a 4 percent increase in segment operating profit compared to the second quarter of 2012, even as sales declined by 4 percent to $11.4 billion amidst customer budget pressures. Due to strong performance across all Business Areas, our cash flow from operations was a healthy $623 million after a $750 million contribution to the pension fund. We also returned value to our stockholders by repurchasing 4.5 million shares of stock and paying $371 million in cash dividends.
Our financial results reflect your strong performance throughout the quarter as teams across all of our Business Areas delivered on critical commitments. Among the highlights:
- The F-35 met several key milestones, including completing the first vertical take-off and the delivery of the first operational F-35C Carrier Variant to the U.S. Navy;
- we were selected to continue providing IT services to the Air Force National Capital Region, a contract valued at approximately $320 million;
- we achieved successful tests of our PAC-3 Missile and Aegis Ballistic Missile Defense System;
- the USS Freedom (LCS 1) arrived in Singapore, while the USS Fort Worth (LCS 3) completed final contractor trials; and,
- we delivered the second Mobile User Objective System (MUOS) spacecraft to Cape Canaveral, where it was successfully launched on Friday.
On the international front, we received an $830 million order for 18 F-16s for Iraq. This was one of several contracts we received from international customers in the quarter, as we continue our efforts to grow international sales from 17 percent of revenue to over 20 percent in the next few years.
With the recent formation of Lockheed Martin International, we’ll bring together the resources, talent and leadership we need to accelerate the growth of our international business by strengthening customer relationships and pursuing new partnerships globally. We have the right portfolio of products and technologies to help our international customers meet their national security and citizen services needs, and I’m excited by our prospects.
We also made progress in adjacent markets, commissioning a new intelligent energy microgrid for the Army at Fort Bliss, signing an agreement with China to provide safety systems for its nuclear energy plants, and earning federal approval as an authorized provider of secure cloud computing services for U.S. government agencies.
I’m continually amazed by your outstanding achievements and your dedication. Even in these challenging times, you continue to deliver excellent performance for our customers. Performance like that keeps our business strong and makes all of us proud.
Thank you for another great quarter and for your continued support to our customers.
Marillyn A. Hewson,
Chief Executive Officer and President