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RESULTS FROM U.S. MAJORS

RESULTS FROM U.S. MAJORS IN LINE WITH EXPECTATIONS

27 Jan 04. Lockheed Martin Corporation (NYSE: LMT) reported record net sales of $31.8bn in 2003, a 20% increase, (2002: $26.6bn). Sales grew in all business segments in 2003. The Corporation booked more than $38bn of orders in 2003, increasing its year-end backlog to a record $76.9bn.

Net earnings for 2003 were $1.1bn ($2.34 per diluted share), (2002: $500m ($1.11 per diluted share)). Cash provided by operating activities for 2003 was $1.8bn, after a discretionary pre-funding of $450 million in December for future defined benefit pension plan contributions.

Net sales for the quarter were $9.0bn, a 15% increase, (2002: $7.8bn). Net sales were $31.8bn in 2003, a 20% increase, (2002: $26.6 bn).

Net earnings for the three months ended December 31, 2003 were $344m ($0.77 per share), including an $8m gain ($0.02 per share) from the sale of the Corporation’s commercial IT business. The net loss for the comparable 2002 quarter was $347m ($0.77 per share). The 2002 results included charges for the impairment of telecommunications equity investments and Space Imaging, a charge related to a Russian launch services provider, and a loss from discontinued operations. The combined effect of these items decreased fourth quarter 2002 earnings by $727m ($1.62 per share).

Net earnings for 2003 were $1.1bn ($2.34 per diluted share). The 2003 results included the gain on the sale of the commercial IT business and previously reported net charges of $110m ($0.24 per share) primarily associated with the early retirement of long-term debt and the exit from the commercial mail sorting business. The combined effect of these items was to decrease 2003 earnings by $102 million ($0.22 per share). Net earnings for 2002 were $500 million ($1.11 per diluted share).

Net sales for Aeronautics increased by 58% for both the quarter and year in 2003 due to growth in the Combat Aircraft and Air Mobility lines of business. For both the quarter and the year, approximately half the growth in Combat Aircraft was due to higher volume on the F-35 Joint Strike Fighter program with a majority of the remaining growth attributable to F-16 programs as a result of increased deliveries. In the fourth quarter of 2003, 22 F-16’s were delivered, 17 more than in the 2002 period. In 2003, 62 F-16’s were delivered, 41 more than in 2002. Increased C-130J deliveries contributed $300 million to the quarter-over-quarter increase in sales and $470 million to the year-over-year growth in sales. In the fourth quarter of 2003, there were six C-130J deliveries as compared to two deliveries in the 2002 period. For the full year, there were 15 C-130J deliveries compared to eight deliveries in 2002.

Segment operating profit in 2003 increased by 44% for the quarter and 54% for the year compared to the 2002 periods. For the quarter and the year, operating profit was higher primarily due to the impact of the volume increases in Combat Aircraft and performance on other programs. The increase in C-130J deliveries did not impact operating profit for the comparative periods due to the previously disclosed suspension of earnings recognition on the program. Backlog increased primarily as a result of booking the C-130J U.S. Government multi-year and international F-16 contracts.

Net sales for Electronic Systems decreased by 5% for the quarter and increased by 4% for the year compared to the 2002 periods. For the quarter, the sales decrease was attributable to lower volume in Platform, Training & Transportation Systems (PT&TS) and Maritime Systems & Sensors (MS2), which more than offset an increase in Missiles & Fire Control (M&FC). The PT&TS decline of $225 million was the result of lower volume on transportation and security system activities and distribution technology programs. Approximately $150 million of this decline is attributable to the 2002 rapid deployment of Transportation Security Administration

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