4th Quarter Earnings
BETHESDA, MD, 25-JAN-01 -- LOCKHEED MARTIN RAISES 2001 RECURRING EARNINGS PER SHARE OUTLOOK TO A 25 - 30 PERCENT INCREASE FROM 2000 RESULTS OF $1.07; EXPECTS 2002 EARNINGS PER SHARE TO GROW ABOUT 20 PERCENT FROM 2001 GENERATES RECORD FREE CASH FLOW OF $1.8 BILLION FOR FULL YEAR; FREE CASH FLOW FOR 2001 EXPECTED TO BE AT LEAST $800 MILLION; FREE CASH FLOW ESTIMATE OF AT LEAST $1.8 BILLION FOR THE TWO YEARS 2001 AND 2002 COMBINED
REDUCES NET DEBT BY $3.0 BILLION FOR THE YEAR; NET DEBT TO CAPITALIZATION RATIO STANDS AT 54 PERCENT
2000 NET EARNINGS PER SHARE ARE $1.07 EXCLUDING NONRECURRING AND UNUSUAL ITEMS, EXCEEDING PROJECTIONS; REPORTS NET LOSS OF $1.29 PER DILUTED SHARE
Lockheed Martin Corporation (NYSE: LMT) today reported fourth quarter 2000 net earnings per diluted share of $0.21, compared to fourth quarter 1999 net earnings per diluted share of $0.76. Fourth quarter 2000 results were reduced by $68 million, or $0.17 per share, for the combined effects of an after-tax extraordinary charge of $95 million, or $0.23 per share, relating to an early extinguishment of debt, partially offset by an increase to net income of $27 million, or $0.06 per share, related to certain other nonrecurring and unusual items. Nonrecurring and unusual items contributed $0.17 per share to fourth quarter 1999 results. Excluding the aforementioned items, comparable fourth quarter earnings per share would have been $0.38 for 2000 and $0.59 for 1999.
For the year 2000, the Corporation reported a net loss per diluted share of $1.29 compared to net earnings of $0.99 per diluted share for the year 1999. Nonrecurring and unusual items, including the extraordinary item in 2000 and the cumulative effect of a change in accounting adjustment in 1999, reduced 2000 and 1999 earnings per diluted share by $2.36 and $0.51, respectively. Excluding the aforementioned items, comparable diluted earnings per share would have been $1.07 for 2000 and $1.50 for 1999.
The Corporation also reported it generated approximately $265 million of free cash flow in the fourth quarter of 2000 and a record $1.8 billion for the full year. For the year 2001, Lockheed Martin estimates that it will generate at least $800 million of free cash flow. For the years 2001 and 2002 combined, the Corporation estimates it will generate at least $1.8 billion of free cash flow.
We are delighted with the accomplishments that Lockheed Martin achieved in 2000, said Chairman and Chief Executive Officer Vance Coffman. We exceeded all financial goals set for 2000 including achieving record orders and backlog, record free cash flow generation, substantial debt reduction and the receipt of fair value for our divestitures. Our mission success record as measured by key operational and development events was an impressive 95 percent, and our customer relationships have been strengthened. He continued, With the 2000 results as a base, we are on course to continue achieving the Corporation's top four priorities: customer satisfaction, improved performance, cash generation and shareholder value creation.
Sales for the fourth quarter of 2000 were $7.6 billion, compared with fourth quarter 1999 sales of $7.0 billion. Sales for the year 2000 were $25.3 billion, down 1 percent when compared to 1999. Excluding the effects of acquisitions and divestitures, sales for year ended December 31, 2000 would have remained consistent with the year-ago period.
The Corporation's backlog at year-end 2000 was $56.4 billion compared to the year-end 1999 backlog of $45.9 billion, a 23 percent increase. The Corporation recorded a total of approximately $37.0 billion in orders including the Theater High Altitude Area Defense (THAAD); F-16 fighter aircraft for the UAE, Greece, Israel, Korea, Singapore and the U.S. government; 17 new launch services orders for the full complement of launch products including Proton, Atlas, and Athena; three commercial satellite orders; Integrated Weapons Systems for Norwegian frigates; and 19 C-130J aircraft for the U.S., Italy and Denmark. Excluding the reduction in backlog of $1.4 billion associated with the divestiture of Control Systems and the Aerospace Electronics Systems businesses, backlog would have increased 26 percent.
During the fourth quarter, the Corporation completed the sale of its Aerospace Electronics Systems for $1.67 billion in cash, which is expected to result in after-tax proceeds of approximately $1.28 billion, with the tax payment anticipated in 2001. In connection with the completion of the sale, the Corporation recorded a nonrecurring and unusual adjustment in the fourth quarter of 2000 to reduce the amount of the previously estimated loss on the sale, resulting in an increase to fourth quarter net earnings of $102 million, or $0.24 per diluted share. In 2000, the Corporation also completed the sale of its Control Systems business for $510 million in cash (approximately $370 million in after-tax proceeds) and concluded its merger with COMSAT Corporation. In January 2001, the Corporation completed the divestiture of Retech Services, Inc. and Lockheed Martin Energy Technologies, Inc. for $6 million in cash proceeds and $4 million in other consideration, which will have no significant impact on 2001's earnings outlook. These two entities, along with the Hanford Corporation which was divested in 1999, were involved in the environmental management business.
Additionally, in the fourth quarter, the Corporation recorded a nonrecurring charge for an impairment of its investment in the Asian Cellular Satellite System (ACeS), which reduced net earnings by $77 million, or $0.18 per share. ACeS, a geostationary mobile satellite system serving Southeast Asia, was placed in commercial operation in the fourth quarter. As previously announced, the spacecraft has experienced an anomaly that may reduce the overall capacity of the system by about 30 - 35 percent. The adjustment to the Corporation's investment balance was recorded in recognition of the reduced business prospects due to this anomaly as well as overall market conditions.
The Corporation completed a tender offer in the fourth quarter of 2000 in which it purchased approximately $1.9 billion in principal amount of its outstanding debt. For the year, total debt decreased by approximately $2 billion reflecting the extinguishment of $2.4 billion of outstanding debt plus the acquisition of $400 million of COMSAT debt. Net debt, defined as total debt less invested cash, decreased by approximately $3.0 billion in 2000. The net debt to capitalization ratio decreased to 54 percent at the end of 2000 compared to 64 percent at the end of 1999.
The Corporation increased its 2001 earnings per share outlook, excluding the effects of any nonrecurring and unusual items, to a 25 - 30 percent increase from the 2000 base of $1.07 per diluted share. Previously, the Corporation estimated that 2001 earnings would be about $1.25 per diluted share, a 20 percent increase from the prior 2000 estimate of about $1.05 per diluted share. The earnings increase reflects lower interest expense, a lower effective tax rate of 40 percent and an assumed smaller decline in retirement plan income ($25 million) than previously projected. The Corporation estimates the quarterly distribution of diluted earnings per share for 2001 to be approximately 10 - 20 percent for the first quarter, 15 - 25 percent for the second quarter, 20 - 30 percent for the third quarter and 35 - 45 percent for the fourth quarter.
Earnings per diluted share for 2002, excluding nonrecurring and unusual items, are projected to grow around 20 percent from the 2001 base. This projection is based, among other factors, upon an assumed tax rate of 38 percent and an estimated decline in retirement plan income for 2002 of approximately $50 million.
Fourth Quarter And Year-To-Date Detailed Review | AttachmentsSAFE HARBOR
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As for the forward-looking statements that relate to future financial results and other projections, actual results will be different due to the inherent nature of projections and may be better or worse than projected. Given these uncertainties, you should not place any reliance on these forward-looking statements. These forward-looking statements also represent our estimates and assumptions only as of the date that they were made. We expressly disclaim a duty to provide updates to these forward-looking statements, and the estimates and assumptions associated with them, after the date of this press release to reflect events or circumstances or changes in expectations or the occurrence of anticipated events.
In addition to the factors set forth in our filings with the Securities and Exchange Commission (www.sec.gov), the following factors could affect the forward-looking statements; the ability to achieve or quantify savings for our customers or ourselves through business area streamlining, staff reductions, global cost-cutting program and other financial management programs; the ability to obtain or the timing of obtaining future government awards; the availability of government funding and customer requirements; changes in government priorities due to program reviews or revisions to strategic objectives; difficulties in developing and making operational advanced technology systems in space and other business areas; economic conditions; competitive environment; international business and political conditions domestically and internationally; timing of awards and contracts; timing and customer acceptance of product delivery and launches; the outcome of contingencies, including completion of any acquisitions and divestitures, litigation and environmental remediation and program performance. These are only some of the numerous factors which may affect the forward-looking statements in this press release.