Lockheed Martin Corp. (LMT)
Q4 2008 Earnings Call Transcript
January 22, 2009 3:00 p.m. ET

Executives

Jerry Kircher – Vice President, Investor Relations
Robert Stevens – Chairman, President, and Chief Executive Officer
Bruce Tanner – Executive Vice President and Chief Financial Officer

Analysts

Richard Safran – Goldman Sachs
Troy Lahr – Stifel Nicolaus & Co.
Robert Spingarn – Credit Suisse
Cai von Rumohr – Cowen & Co., LLC
Douglas Harned – Sanford C. Bernstein & Co.
Peter Arment – Broadpoint AmTech
Heidi Wood – Morgan Stanley
David Strauss – UBS

Presentation

Operator

Good day and welcome everyone to the Lockheed Martin Corporation fourth quarter 2008 earnings conference call. Today''s call is being recorded. At this time for opening remarks and introductions, I''d like to turn the call over to Mr. Jerry Kircher, Vice President of Investor Relations. Please go ahead sir.

Jerry Kircher

Thank you Jason and good afternoon. I''d like to welcome everyone to our fourth quarter 2008 earnings conference call. Joining me today on the call are Bob Stevens, our Chairman, President, and Chief Executive Officer and Bruce Tanner, our Executive Vice President and Chief Financial Officer.

Statements made in today''s call that are not historical facts are considered forward-looking statements and are made pursuant to the Safe Harbor provisions of Federal Securities law. Actual results may differ. Please see today''s press release and our SEC filings for a description of some of the factors that may cause actual results to vary materially from anticipated results.

We have posted charts on our website which supplement our comments today. And with that, I''d like to turn the call over to Bob.

Robert Stevens

Thanks Jerry. Good afternoon everyone. I hope you''ve all had an opportunity to read today''s earnings release and our updated 2009 guidance. As the release outlined, our internal operational performance continued at a very high level and enabled the corporation to achieve record 2008 results in virtually every key financial metric. Our focus, operational tempo, quality and overall execution remain very strong.

However, the release also shows the impact external factors have had on our financial outlook. The market decline and the value of securities and the reduction in discount rates used to calculate our pension earnings have negatively impacted our 2009 earnings per share guidance.

The subject of pension accounting and the impact on our financial results is important to you, it''s important to us, and a key area of our discussion today, and I''ve asked Bruce to provide some additional clarity and depth on pensions later on during the call.

In these times of unprecedented market turmoil, economic uncertainty and falling discount rates, at a time when it seems so difficult to make almost any judgments about the future, I want to focus my comments today on the current state of our corporation and our framework for future performance.

Ralph Heath and his aeronautics team have been performing at an exceptional level across their portfolio. On our largest program, the F-35 Joint Strike Fighter, we continue to retire risk on the development effort. The conventional and the short take off and vertical landing aircraft are progressing well through their flight test programs. The Carrier version design and development is moving forward on schedule and integration and verification of the Mission System suite continues in parallel on our cooperative avionics test bed aircraft. This airplane continues to yield huge risk reduction benefits as we hoped it would.

Production activities in Fort Worth are accelerating with all development aircraft and now the first low rate initial production aircraft in assembly. International partner participation remains solid and we''re seeing additional interest by non-partner nations. By all measures this program remains solidly on track to provide fifth generation, multi-role stealth fighter capability to meet the needs of domestic and international customers for decades to come.

Each of our large aircraft production programs, the C-130J, the F-16 and the F-22 secured new domestic or international awards that enabled all three to extend their production lines. Our C-130J program won new orders from India, Qatar, and the U.S. Government, solidifying production through December 2012. To accommodate new orders, we''re working to double our current annual production rate; 12 to 24 aircraft in 2010. With the versatility, value and proven performance of the C-130J we''ve gained the confidence of our customers and we believe the future market remains bright.