This summary is based on the first quarter fiscal 2008 earnings call conducted by Lockheed Martin Corp. (LMT: chart) on April 22, 2008.

Management:

- VP of IR: Jerry Kircher
- EVP and CFO: Bruce L. Tanner

Key Investors Issues

- Net earnings of $730 million or $1.75 per share, were 5.8% from $690 million or $1.60 per share in 2007.
- Sales increased 8% to $10 billion, from $9.3 billion in the prior year.
- The firm repurchased 11.3 million shares for $1.2 billion.

First Quarter Highlights

Net earnings of $730 million or $1.75 per share, were 5.8% from $690 million or $1.60 per share in 2007 as solid margin expansion, with a 70 basis point increase helping drive earnings.

- This margin expansion is the result of successful risk reduction activities and strong performance on key programs.
- Sales increased 8% to $10 billion, from $9.3 billion in the prior year while cash from operations were $882 million, down from $1.5 billion in 2007 as the firm repurchased 11.3 million shares for $1.2 billion.

The remaining repurchase authorization at the end of the quarter was over 21 million shares or approximately $2.2 billion at current market values.

- The firm also paid a dividend to shareholders of $172 million and is now well positioned to achieve its commitment to return at least half of the annual free cash flow to shareholders for the sixth consecutive year.
- Lockheed made capital expenditures of $104 million and issued $500 million of debt due in 2013 with a coupon rate of 4.121%.

Segment Highlights:

- Aeronautics sales were slightly lower due to declines in Combat Aircraft that partially were offset by increases in Air Mobility.
- The decrease in Combat Aircraft mainly was due to lower volume on F-16 and F-117 programs, which more than offset increased F-22 and F-35 volume.
- The increase in Air Mobility mainly was due to higher volume on C-130 programs, which more than offset lower volume on the C-5 program.
- Operating profit increased by 8% due to higher volume on C-130 programs in Air Mobility and improved performance on F-16 programs in Combat Aircraft.

- Electronic Systems increased by 11% due to higher volume on fire control and tactical missile programs at Missiles & Fire Control (M&FC) and in surface systems and radar activities at Maritime Systems & Sensors (MS2).
- Operating profit increased by 15%, attributable to higher volume and improved performance on fire control and tactical missile programs at M&FC and in surface systems and radar activities at MS2.

- IS&GS sales increased by 17% as Mission Solutions’ sales grew due to higher volume on mission and combat support solutions while Information Systems’ sales grew due to higher volume on information technology programs.
- Growth at Pacific Architects and Engineers contributed to the increase in sales in Global Services.
- Operating profit for IS&GS increased by 16% with the increase in Information Systems primarily due to a benefit from a contract restructuring during the first quarter of 2008.

- Space Systems sales rose 5% as sales growth in Space Transportation partially was offset by declines in Strategic & Defensive Missile Systems (S&DMS) and Satellites.
- The sales growth in Space Transportation primarily was due to higher volume on the Orion program.
- S&DMS sales declined mainly due to lower volume in strategic missile programs and in Satellites, reduced volume in government satellite activities partially was offset by an increase in commercial satellite activities.

Segment operating profit increased by 25% as improved profit at Space Transportation partially was offset by a decline in Satellites.

- In Space Transportation, the increase mainly was attributable to higher equity earnings on the United Launch Alliance joint venture and the results from successful negotiations of a terminated commercial launch services contract.
- In Satellites, the decrease mainly was due to lower volume on government satellite activities.

Key New Business Awards:

- The IS&GS business area had a particularly strong quarter, highlighted by their win of the AMF JTRS program, with the initial contract award for $0.75 billion to provide tactical communications and networking to the US Air Force, Army, Navy, and other users.
- This program has multi-billion dollar future sales potential as radio systems are deployed across this broad user community.
- IS&GS also won a 10-year $1 billion contract from the FBI to develop and maintain the next generation identification system which will provide state-of-the-art multimodal biometric systems for use by local, state and federal authorities.
- This contract award, however, was recently placed under protest and the firm has not yet included it in its backlog.