Lockheed Martin Corporation Matt Shearer ACG

Executive Summary The future looks great for the Lockheed Martin Corporation. They’ve recently won a contract with the U.S. government to produce several Marine One’s, which is the Presidential Helicopter. They’re in the process of acquiring the Titan Co. and Orincon which will greatly expand information and abilities. And with America’s renewed vigor in the space programs, all areas of business are doing well. The future looks great for the Lockheed Martin Corporation. They’ve recently won a contract with the U.S. government to produce several Marine One’s, which is the Presidential Helicopter. They’re in the process of acquiring the Titan Co. and Orincon which will greatly expand information and abilities. And with America’s renewed vigor in the space programs, all areas of business are doing well. Lockheed Martin Financial Reports

Part A. Introduction CEO: Robert J. Stevens CEO: Robert J. Stevens Headquarters: Bathesda, Maryland Headquarters: Bathesda, Maryland End of last fiscal year: December 31, 2003 End of last fiscal year: December 31, 2003 Engaged in research, design, development, manufacturing and the integration of advanced technology systems, products and services Engaged in research, design, development, manufacturing and the integration of advanced technology systems, products and services This includes Aeronautics, Space Operations, Information Technology, Missile and Fire Control, and Transportation and Security Solutions This includes Aeronautics, Space Operations, Information Technology, Missile and Fire Control, and Transportation and Security Solutions

Part A. Audit Report Independent Auditors: Ernst & Young LLP, Independent Auditors Independent Auditors: Ernst & Young LLP, Independent Auditors What did they say about the Co.? After the auditors ran their tests in accordance with auditing standards generally accepted in the United States, they found no misrepresentation in the financial statements of Lockheed Martin Co. So the reports were fair and assembled correctly. What did they say about the Co.? After the auditors ran their tests in accordance with auditing standards generally accepted in the United States, they found no misrepresentation in the financial statements of Lockheed Martin Co. So the reports were fair and assembled correctly.

Part A. Stock Market Information Most recent price of the company’s stock: $58.88 Most recent price of the company’s stock: $58.88 Twelve month trading range of the company’s stock: $ $62.50 Twelve month trading range of the company’s stock: $ $62.50 Dividend per share: $.88 Dividend per share: $.88 Date of the above information: December 31, 2003 Date of the above information: December 31, 2003 My opinion about the company stock as an investment? Buy! Lockheed Martin is almost single handedly defending America, and some of our allies. With the administration’s hard lined approach to threats and terrorism, the next few years look awful green. My opinion about the company stock as an investment? Buy! Lockheed Martin is almost single handedly defending America, and some of our allies. With the administration’s hard lined approach to threats and terrorism, the next few years look awful green.

Part B. Industry Situation and Company Plans In today’s world, information is the single most important weapon for defense. Lockheed Martin is on the very forefront of Integrated Systems Technologies. Along with these computer systems and satellites, Lockheed Martin recorded a record year in its aeronautics business and its 8 th consecutive year of organic growth in its electronics system business. They completed strategic transactions to acquire the Titan Corporation, which will bolster intelligence and defense capabilities upon completion.

Part C. Income Statement Income from operations didn’t change much from 2002 to 2003, but Net Income did see a nice increase. This tells me that Lockheed trimmed some fat and found a ways to keep some of its own money. Income from operations didn’t change much from 2002 to 2003, but Net Income did see a nice increase. This tells me that Lockheed trimmed some fat and found a ways to keep some of its own money. Single Step Format Single Step Format (in millions) Income from Operations Net Income

Part C. Balance Sheet Assets decreased by more than two thousand with Liabilities and Stockholder’s equity both increasing by less than one thousand. (In millions) Assets = Liabilities + S.E ,60511,5455, ,57610,8076,756

Part C. Statement of Cash Flows Are cash flows from operations more or less than net income for the past two years? In 2002, Income from Operations was 33 million more than Net Income. In 2003, both Income from Op. and Net Income recorded gains of 1053 million Are cash flows from operations more or less than net income for the past two years? In 2002, Income from Operations was 33 million more than Net Income. In 2003, both Income from Op. and Net Income recorded gains of 1053 million Is the company growing through investing activities, i.e., buying property, plant and equipment and other long lived assets? Yes, Lockheed Martin invests millions in its affiliated companies. Is the company growing through investing activities, i.e., buying property, plant and equipment and other long lived assets? Yes, Lockheed Martin invests millions in its affiliated companies. What is the company’s primary source of financing, i.e., long-term loans, stock sales? Long-term loans were the main source of financing for What is the company’s primary source of financing, i.e., long-term loans, stock sales? Long-term loans were the main source of financing for Overall, has cash increased or decreased over the past two years? In 2002, cash saw a huge increase, entering 2003 with $2738 million, but at years end it was down to $1010 million. Acquisitions and doubling dividends from $.44 to $.88 probably had the most to do with this. Overall, has cash increased or decreased over the past two years? In 2002, cash saw a huge increase, entering 2003 with $2738 million, but at years end it was down to $1010 million. Acquisitions and doubling dividends from $.44 to $.88 probably had the most to do with this.

Part D. Accounting Policies Cash and Cash Equivalents – Cash equivalents are generally composed of highly liquid instruments with maturities of 3 months or less. Approx. fair value. Cash and Cash Equivalents – Cash equivalents are generally composed of highly liquid instruments with maturities of 3 months or less. Approx. fair value. Short term Investments – The Corporation’s short- term investments consist of marketable securities that are categorized as available-for sale. Short term Investments – The Corporation’s short- term investments consist of marketable securities that are categorized as available-for sale. Inventories – Inventories are stated at the lower of cost or estimated net realizable value. Costs on long- term contracts and programs in progress represent recoverable costs in Inventories – Inventories are stated at the lower of cost or estimated net realizable value. Costs on long- term contracts and programs in progress represent recoverable costs in Sales & Earnings – Sales and anticipated profits under long term fixed-price production contracts are recorded on a percentage of completion basis, generally using units-of-delivery as the basis to measure progress toward completing and contract and recognizing revenues. Sales & Earnings – Sales and anticipated profits under long term fixed-price production contracts are recorded on a percentage of completion basis, generally using units-of-delivery as the basis to measure progress toward completing and contract and recognizing revenues.

Part D. Accounting Topics of Notes to Financial Statements Significant Accounting Policies Significant Accounting Policies Acquisitions & Divestitures Acquisitions & Divestitures Receivables Receivables Inventories Inventories Debt Debt Income Taxes Income Taxes

Part E. Financial Analysis Liquidity Ratios for 2003 Working Capital: $508 Working Capital: $508 Current Ratio: 1.05 Current Ratio: 1.05 Receivable turnover: 8.27 Receivable turnover: 8.27 Average days’ sales uncollected: 44 Average days’ sales uncollected: 44 Inventory turnover: 12.9 Inventory turnover: 12.9 Average days’ inventory on hand: 28.3 Average days’ inventory on hand: 28.3

Part E. Financial Analysis Profitability Ratios for 2003 Profit margin:.003 Profit margin:.003 Asset turnover: 1.2 Asset turnover: 1.2 Return on assets:.04 Return on assets:.04 Return on equity:.156 Return on equity:.156

Part E. Financial Analysis Solvency Ratio Debt to equity: 2003: 1.32 Debt to equity: 2003: : 1.67 At this point, the bank owns Lockheed Martin, but this is because most of its business is done on credit with contracts extending beyond one cycle of operations. At this point, the bank owns Lockheed Martin, but this is because most of its business is done on credit with contracts extending beyond one cycle of operations.

Part E. Financial Analysis Market Strength Ratios Price/earnings per share: $62.5 Price/earnings per share: $62.5 Dividend yield:.016 Dividend yield:.016