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1997
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997 Commission file number 1-11437
[LOCKHEED MARTIN LOGO]
LOCKHEED MARTIN CORPORATION
(Exact name of registrant as specified in its charter)
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Maryland 52-1893632
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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6801 Rockledge Drive, Bethesda, Maryland 20817-1877 (301/897-6000)
(Address and telephone number of principal executive offices)
_______________
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of Each Class on which registered
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Common Stock, $1 par value New York Stock Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes [x] No [ ]
Indicate by check mark if the disclosure of delinquent filers pursuant to Item
405 or Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ]
State the aggregate market value of the voting stock held by non-affiliates of
the registrant. Approximately $20,230,000,000 as of January 31, 1998.
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date. Common Stock, $1 par value,
194,701,640 shares outstanding as of January 31, 1998.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Lockheed Martin Corporation's 1997 Annual Report to Shareholders
are incorporated by reference in Parts I, II and IV of this Form 10-K.
Portions of Lockheed Martin Corporation's 1998 Definitive Proxy Statement are
incorporated by reference in Part III of this Form 10-K.
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PART I
ITEM 1. BUSINESS
GENERAL
Lockheed Martin Corporation ("Lockheed Martin" or the "Corporation") was
incorporated in Maryland on August 29, 1994 to effect the combination (the
"Combination") of the businesses of Martin Marietta Corporation and Lockheed
Corporation. The Combination was consummated on March 15, 1995. Lockheed
Martin is a highly diversified global enterprise principally engaged in the
conception, research, design, development, manufacture, integration and
operation of advanced technology products and services.
NORTHROP GRUMMAN TRANSACTION
On July 2, 1997, Lockheed Martin and Northrop Grumman Corporation ("Northrop
Grumman") entered into an Agreement and Plan of Merger which was amended on
September 29, 1997 (as so amended, the "Agreement"). The Agreement provides for
the merger (the "Merger") of a wholly-owned subsidiary of Lockheed Martin with
and into Northrop Grumman, with Northrop Grumman surviving as a wholly-owned
subsidiary of Lockheed Martin.
Pursuant to the Agreement, each share of common stock, par value $1.00 per
share, of Northrop Grumman ("Northrop Grumman Common Stock")
outstanding immediately prior to the Effective Time (as defined in the
Agreement) of the Merger (other than shares held in Northrop Grumman's treasury)
will be converted into the right to receive 1.1923 shares of Lockheed Martin
common stock, par value $1.00 per share ("Lockheed Martin Common Stock"). No
fractional shares will be issued and cash, without interest, will be paid in
lieu thereof. As of the Effective Time, all shares of Northrop Grumman Common
Stock issued and outstanding immediately prior to the Effective Time will no
longer be outstanding and will be automatically canceled and retired and will
cease to exist. Each holder of a certificate or certificates which immediately
prior to the Effective Time represented outstanding shares of Northrop Grumman
Common Stock will cease to have any rights with respect thereto, except the
right upon surrender of such certificate to (i) receive certificate(s)
representing the number of whole shares of Lockheed Martin Common Stock into
which such shares of Northrop Grumman Common Stock have been converted and (ii)
any cash, without interest, to be paid in lieu of any fractional share of
Lockheed Martin Common Stock.
On or about January 24, 1998, Lockheed Martin and Northrop Grumman mailed to
their respective stockholders a Joint Proxy Statement/Prospectus relating to
special meetings of stockholders of each of Lockheed Martin and Northrop Grumman
which were held on
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Thursday, February 26, 1998 (the "Special Meetings"). At the Special Meetings,
the stockholders of Lockheed Martin approved the issuance of shares of Lockheed
Martin Common Stock to the stockholders of Northrop Grumman in connection with
the Merger and Northrop Grumman's stockholders approved the Merger. Lockheed
Martin's stockholders also approved an unrelated proposal increasing the number
of shares of Common Stock authorized by Lockheed Martin's Charter. On March 9,
1998, the Corporation announced that it had been informed by the Department of
Justice (DOJ) that the DOJ was fundamentally opposed to the Merger. The
Corporation also announced on that date that it had committed to the DOJ not to
close the transaction before April 24, 1998, and to develop and submit a
proposal to the DOJ by April 8, 1998 designed to address the DOJ's antitrust
concerns while preserving the expected benefits and efficiencies of the
transaction to the Corporation and its stockholders, customers, employees and
suppliers. On March 12, 1998, the DOJ informed the Corporation that it found
this commitment unacceptable and demanded that the Corporation agree, at a
minimum, to certain substantial divestitures or the DOJ will proceed to court.
The DOJ stated that the agency expected a response by March 16,
1998. On March 13, 1998, the Corporation responded to the DOJ by letter and on
the morning of March 16, 1998 representatives of the Corporation and
representatives of Northrop Grumman met with representatives of the DOJ and
Department of Defense (DOD) and discussed the results of the Corporation's
efforts to date. The discussion included a description of the magnitude of
divestitures that the Corporation is willing to make to resolve the horizontal
and organizational conflict of interest issues raised by the DOJ and DOD. In
addition, the nature of a consent order that the Corporation would be willing to
enter to address the foreclosure issues posited by the DOJ and DOD to arise from
the vertical aspects of the combination was described. At the meeting, the
Corporation made clear to the Government that the Corporation is continuing to
work on its proposal but that the Corporation has not yet found an economically
viable way to make divestitures of the scope and magnitude set forth in the
DOJ's March 12, 1998 letter as the agency's minimum demand. In the early evening
of March 16, 1998, the DOJ sent the Corporation another letter restating the
demands of its March 12 letter and demanding an immediate response. The
Corporation responded by letter on March 17, 1998 in which the Corporation
restated its commitments of March 9 as well as the information conveyed in the
meeting of March 16. Later on March 17, the Corporation was informed by a
representative of the DOJ that, as a result of the Corporation's failure to
agree to the substantial divestitures set forth in the DOJ's March 12 letter as
the agency's minimum demand, the DOJ might proceed to court later that day or on
March 18, 1998. On March 18, the Corporation was informed by a representative of
the DOJ that the agency would not file suit on that date. The representative did
not address if or when suit might be filed.
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For additional information regarding the Northrop Grumman Transaction, please
see the Joint Proxy Statement/Prospectus contained in the Registration Statement
on Form S-4 (Reg. No. 333-44671) filed with the Securities and Exchange
Commission on January 22, 1998.
BUSINESSES
The Corporation conducts its principal businesses through five major operating
sectors: Space & Strategic Missiles; Electronics; Information & Services;
Aeronautics; and Energy & Environment. See "Business - Additional Activities
and Business Segment Reporting" on page 13.
Space & Strategic Missiles Sector
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The Space & Strategic Missiles Sector's activities include the design,
development, engineering and production of civil, commercial and military space
systems, including: spacecraft, space launch vehicles, manned space systems and
their supporting ground systems and services; telecommunications systems and
services; strategic fleet ballistic missiles; and defensive missiles.
Major programs of the Space & Strategic Missiles Sector include the Titan
family of launch vehicles including the Titan IV expendable launch vehicle, the
Trident II submarine launched fleet ballistic
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missile, the MILSTAR communications satellite and the Atlas expendable launch
vehicle. In addition, a substantial amount of the Space & Strategic Missiles
Sector's activities are classified.
In 1998, the Sector anticipates that an increased amount of its sales will be
derived from international launch services using the Proton D-1-e launch
vehicle. Lockheed Martin provides the launch services through the Lockheed
Khrunichev Energia International, Inc. joint venture with two Russian aerospace
companies. Lockheed Martin was one of two companies awarded development
contracts for the U.S. Air Force's Evolved Expendable Launch Vehicle (EELV).
The Air Force envisions that the EELV will replace existing Delta, Atlas and
Titan space launch vehicles for use in launching government and commercial
payloads.
Net sales by the Sector represented 29.6% of the Corporation's total net sales
in 1997. Net sales to the United States Government, excluding Foreign Military
Sales, represented 77.9% of the Sector's net sales in 1997.
Electronics Sector
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The Electronics Sector's activities primarily relate to the design,
development, engineering and production of high performance electronic systems
for undersea, shipboard, land-, airborne- and
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space-based applications. Major business elements include: Naval Systems;
Missiles and Air Defense; Aerospace Electronics; and Platform Integration. The
Naval Systems element serves customers world-wide with major lines of business
in surface ship and submarine combat systems, missile launching systems, anti-
submarine warfare systems, and navigation systems. The Air Defense and Missiles
element produces air defense systems; tactical battlefield missiles; and
precision guided weapons and munitions. The Aerospace Electronics element
manufactures major electronics subsystems such as: aircraft controls;
electronic-warfare; electro-optic and night vision; radar; displays; and
computers for the military and commercial aerospace market. The Platform
Integration element performs systems integration of mission specific combat
suites for both fixed and rotary wing aircraft and postal automation.
The Corporation is the prime contractor for the U.S. Navy's AEGIS fleet air
defense system, including the Vertical Launch System, and for the development
and integration of the EH-101 Merlin helicopter's anti-submarine warfare system
for the United Kingdom's Ministry of Defence. In addition, the Sector is the
prime contractor for the Multiple Launch Rocket System, the U.S. Army's general
support fire power system, and the U.S. Air Force and Navy LANTIRN targeting and
navigation system. The Sector also produces the Target Acquisition
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Designation Sight / Pilot Night Vision Sensor. In 1998, the Sector anticipates
that an increased percentage of its revenues will be derived from the Army
Tactical Missile System.
The Electronics Sector also manufactures and installs bar code readers and
sorters for the U.S. Postal Service and international postal services. In 1997,
the Sector was awarded 25 domestic and international postal contracts to provide
advanced recognition, automation, material handling and information management
systems. In addition, the Electronics Sector was awarded contracts for the
production of four AEGIS weapon systems for the Spanish Navy and, through the
Lockheed Martin/Tenix joint venture, for the development and production of the
Jindalee Operational Radar Network, a wide-area surveillance system of over-the-
horizon radars in Australia.
Net sales by the Electronics Sector represented 25.2% of the Corporation's
total net sales in 1997. Net sales to the United States Government, excluding
Foreign Military Sales, represented 68.5% of the Sector's net sales in 1997.
Information & Services Sector
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The Information & Services Sector consists of four major lines of business:
systems integration and command, control, communications, computer and
intelligence (C4I) systems; federal technology services;
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state and municipal systems support services; and commercial systems and
products. The Sector's activities include the development, integration and
operation of large, complex information systems, including satellite command and
control systems, simulation and training systems, and nationally critical
intelligence systems. The Sector provides federal government, civil and military
customers with engineering, scientific, management, technical and information
technology support. Services to state and local government customers include
systems development, integration and operational support in the areas of welfare
reform, municipal services, children and family services, transportation, and
telecommunications. Commercial systems businesses include information technology
services, computer peripheral products, real-time 3-D graphics products and
enterprise data management software. The Sector also provides Lockheed Martin
companies with internal information systems support.
Through its Technology Services Group, the Information & Services Sector
provides a wide array of science and engineering, information management,
operation and maintenance, logistics, assembly and test and installation
services to governmental agencies and prime contractors. The Sector is
upgrading the U.S. National Air Traffic Control System through replacement of
display systems at 20 Federal Aviation Administration (FAA) Air Route Traffic
Control Centers. The Sector is currently completing
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the New En Route Centre for the United Kingdom. In addition, the Sector
performs a substantial amount of classified work. In November 1997, the
Corporation divested its Access Graphics business.
In 1997, the Sector was awarded a 10-year contract to provide engineering
services in support of the FAA's modernization of the nation's air traffic
control system, a contract to provide information systems development and
maintenance to the United States Patent and Trademark Office and two contracts
to support the Environmental Protection Agency's computing and
telecommunications requirements. The United Kingdom National Air Traffic
Services selected Sky Solutions Ltd. as preferred bidder for the New Scottish
Centre, a major new air traffic control facility to be built at Prestwick,
Scotland. Sky Solutions is owned by the Corporation and Bovis Ltd. The Sector is
performing contracts under which it provides information technology services and
support for commercial and federal government customers, such as the Department
of Housing and Urban Development and the Social Security Administration.
Lockheed Martin was also selected as the North American Numbering Plan
Administrator and signed four Local Number Portability Contracts to develop and
operate a system to allow telephone customers to switch local service providers
while keeping their existing telephone numbers.
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Net sales by the Information & Services Sector represented 23.0% of Lockheed
Martin's total net sales in 1997. Net sales to the United States Government,
excluding Foreign Military Sales, represented 62.6% of the Sector's net sales in
1997.
Aeronautics Sector
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The Aeronautics Sector operates in the following primary lines of business;
tactical aircraft, airlift, surveillance/command,
maintenance/modification/logistics, reconnaissance and advanced development
programs. Programs include the F-22 air-superiority fighter, Joint Strike
Fighter, F-16 multirole fighter, C-130J tanker/transport, X-33 reusable launch
vehicle technology demonstrator, DarkStar reconnaissance vehicle, Airborne Early
Warning & Control systems, Contractor Logistics Support and a variety of
maintenance and modification programs for aircraft such as U.S. Navy P-3s and
U.S. Air Force KC-10s, as well as the Big Safari modification program for
special operations forces. The Aeronautics Sector is composed of four Operating
Companies: Aeronautical Systems, Aircraft & Logistics Center, Skunk Works, and
Tactical Aircraft Systems.
The Sector's largest programs include serving as the prime contractor on the
F-16 "Fighting Falcon" fighter aircraft, leading the team responsible for the
Air Force's F-22 air-superiority fighter
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program that achieved first flight in 1997 and manufacturing the C-130 series
airlift aircraft. The Corporation also provides sustaining engineering,
modifications and upgrading for existing aircraft, including the F-117 fighter
bomber, the U-2 reconnaissance aircraft, and earlier model C130s. Through the
Skunk Works and other operating units, the Aeronautics Sector performs a
substantial amount of classified work. The Sector anticipates an increased
percentage of its revenues in 1998 will result from the joint Japan/U.S.
production of the F-2 aircraft.
In 1997, the Corporation completed a critical design review of the X-33
single-stage-to-orbit reusable launch vehicle technology demonstrator, the next
generation of space shuttle, providing go-ahead for assembly of the subscale
prototype. The Corporation also began fabrication of two concept demonstration
aircraft and entered teaming agreements with Northrop Grumman and British
Aerospace in connection with the Joint Strike Fighter (JSF) Program. JSF Program
tasks include the design, development, construction and flight test of a full-
scale demonstration aircraft. In November 1997, the Sector's thrust reverser
business was divested.
Net sales by the Aeronautics Sector represented 21.5% of the Corporation's
total net sales in 1997. Net sales to the United States
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Government, excluding Foreign Military Sales, represented 48.2% of the Sector's
net sales in 1997.
Energy & Environment Sector
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The Energy & Environment Sector's activities primarily focus on the management
of various U.S. Department of Energy (DOE) facilities, environmental management
and remediation, and enrichment services. The Corporation is the largest
management and operations contractor within the DOE's system of laboratories,
managing energy research and defense programs at, among other facilities, the
Sandia National Laboratories, the Idaho National Engineering and Environmental
Laboratory and the Oak Ridge National Laboratory. These contractual
arrangements provide for the Corporation to be reimbursed for the cost of
operations and receive a fee for performing management services. Only the
management fees are reflected within Lockheed Martin's net sales and earnings.
The Corporation is one of two competitors for the DOE's Tank Waste Remediation
System-Privatization program.
Net sales by the Sector represented less than 1% of the Corporation's total
net sales in 1997. Net sales to the United States Government represented 81.2%
of the Sector's net sales in 1997.
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Additional Activities and Business Segment Reporting
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In addition to the above activities, Lockheed Martin has real estate
subsidiaries in Florida and Maryland; runs research laboratories; owns
approximately a 20% interest in Loral Space & Communications, Ltd., a public
company; owns approximately a 34% interest in L-3 Communications Corporation, a
company formed in 1997 in connection with the repositioning of 10 of the
Corporation's business units, is a joint venturer with Boeing in United Space
Alliance and carries on other miscellaneous activities.
For business segment reporting in the Corporation's consolidated financial
statements, the Space & Strategic Missiles, Electronics, Information & Services
and Aeronautics Sectors each comprise reportable business segments. The Energy
& Environment Sector, together with the additional activities described in the
preceding paragraph, are reported as Energy and Other and represent the balance
of the Corporation's revenues.
The Corporation's principal executive offices are located at 6801 Rockledge
Drive, Bethesda, Maryland 20817. The telephone number of the Corporation is
(301) 897-6000.
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COMPETITION AND RISK
Lockheed Martin's sales to the U.S. Government, excluding Foreign Military
Sales, amounted to 65.5% of net sales for the year ended December 31, 1997.
Sales to foreign governments comprised 17.3% of net sales for fiscal year 1997
and approximately 17.2% of net sales were to commercial customers (of which
21.3% were to international customers).
Lockheed Martin encounters extensive competition in all of its lines of
business with numerous other contractors on the basis of price, as well as
technical and managerial capability. The on-going consolidation of the United
States defense industry has intensified this competition as competitors are now
generally larger and more capable. At the same time, the number of contracts
awarded has decreased. In some instances, for example, the ongoing competition
for the Joint Strike Fighter, winning the competition may be a significant
determinant of whether the competitors are able to remain in that line of
business. In addition, the decrease in the number of contracts awarded and
intensified competition for those contracts that are awarded increasingly
requires the Corporation to generate working capital and invest in fixed assets
in order to maintain and/or expand its government business.
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More generally, the aerospace and defense business involves rapidly advancing
technologies and is subject to many uncertainties including, but not limited to,
those resulting from changes in federal budget priorities, particularly the size
and scope of the defense budget, and dependence on Congressional appropriations.
Substantial efforts are undertaken continually on a long-term basis in order to
maintain existing levels of business.
Of the 1997 net sales of the Corporation, 65.5% were made to the United States
Government, either as a prime contractor or as a subcontractor, for which there
is intense competition. Accordingly, a significant portion of the Corporation's
sales are subject to inherent risks, including uncertainty of economic
conditions, changes in government policies and requirements that may reflect
rapidly changing military and political developments, and the availability of
funds. Other characteristics of the industry are complexity of designs, the
difficulty of forecasting costs and schedules when bidding on developmental and
highly sophisticated technical work, and the rapidity with which product lines
become obsolete due to technological advances and other factors characteristic
of the industry. Certain risks inherent in the current defense and aerospace
business environment are discussed in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" on page 11 through
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page 24 of the Corporation's 1997 Annual Report to Shareholders (the "1997
Annual Report").
Earnings may vary materially depending upon the types of long-term government
contracts undertaken, the costs incurred in their performance, the achievement
of other performance objectives and the stage of performance at which the right
to receive fees, particularly under incentive and award fee contracts, is
finally determined.
The Corporation's international business involves additional risks, such as
exposure to currency fluctuations, offset obligations and changes in foreign
economic and political environments. In addition, international transactions
frequently involve increased financial and legal risks arising from stringent
contractual terms and conditions and widely differing legal systems, customs and
mores in foreign countries. The Corporation expects that international sales as
a percentage of the overall sales of the Corporation will continue to increase
in future years as a result of, among other things, continuing changes in the
United States defense industry.
A portion of Lockheed Martin's business includes classified programs that
cannot be specifically discussed, the operating results of which are included in
the Corporation's consolidated financial statements. The nature of and business
risks associated with
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classified programs do not differ materially from those of the Corporation's
other government programs and products.
PATENTS
The Corporation owns numerous patents and patent applications, some of which,
together with licenses under patents owned by others, are utilized in its
operations. While such patents and licenses are, in the aggregate, important to
the operation of the Corporation's business, no existing patent, license or
other similar intellectual property right is of such importance that its loss or
termination would, in the opinion of management, materially affect the
Corporation's business.
RAW MATERIALS AND SEASONALITY
While certain of the Corporation's businesses require relatively difficult to
obtain raw materials, the Corporation has not experienced significant
difficulties in its ability to obtain raw materials and other supplies needed in
its manufacturing processes, nor does the Corporation expect such difficulties
to arise in the future. No material portion of the business of the Corporation
is considered to be seasonal.
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GOVERNMENT CONTRACTS AND REGULATIONS
All government contracts and, in general, subcontracts thereunder are subject
to termination in whole or in part at the convenience of the United States
Government as well as for default. Long-term government contracts and related
orders are subject to cancellation if appropriations for subsequent performance
periods become unavailable. Lockheed Martin generally would be entitled to
receive payment for work completed and allowable termination or cancellation
costs if any of its government contracts were to be terminated for convenience.
Upon termination for convenience of cost-reimbursement-type contracts, the
contractor is normally entitled, to the extent of available funding, to
reimbursement of allowable costs plus a portion of the fee. The amount of the
fee recovered, if any, is related to the proportion of the work accomplished
prior to the termination for convenience and is determined by negotiation. Upon
termination for convenience of fixed-price-type contracts, the contractor is
normally entitled, to the extent of available funding, to receive the purchase
price for delivered items, reimbursement for allowable costs for work in
process, and an allowance for profit thereon or adjustment for loss if
completion of performance would have resulted in a loss.
In addition to the right of the United States Government to terminate,
government contracts are conditioned upon the continuing
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availability of Congressional appropriations. Congress usually appropriates
funds on a fiscal-year basis even though contract performance may extend over
many years. Consequently, at the outset of a program, the contract is usually
partially funded, and additional funds are normally only appropriated to the
contract by Congress in future years.
BACKLOG
Lockheed Martin's total negotiated backlog at December 31, 1997, was $47.1
billion compared with $50.4 billion at the end of 1996. A portion of the change
in total negotiated backlog between year-end 1996 and 1997 is the impact of
divestitures. The total negotiated backlog of the Sectors at December 31, 1997
was as follows: Space & Strategic Missiles - $16.8 billion, Electronics - $9.8
billion, Information & Services - $6.7 billion, and Aeronautics - $13.5 billion.
Unlike the other Sectors, the Energy & Environment Sector is not a reportable
business segment. The reportable business segment of which Energy & Environment
is part, Energy and Other, had total negotiated backlog at December 31, 1997 of
$0.3 billion. Of this figure, almost all was attributable to the Energy &
Environment Sector. These figures are all approximate and include both unfilled
firm orders for the Corporation's products for which funding has been
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authorized and appropriated by the customer (Congress, in the case of
United States Government agencies) and firm orders for which funding has not
been appropriated.
Backlog information and comparisons thereof as of different dates may not be
accurate indicators of future sales or the ratio of Lockheed Martin's future
sales to the United States Government versus its sales to other customers.
Of the Corporation's total 1997 year-end backlog, approximately $31.6 billion,
or 67.1%, is not expected to be filled within one year.
ENVIRONMENTAL REGULATION
Lockheed Martin's operations are subject to and affected by a variety of
federal, state, and local environmental protection laws and regulations. The
Corporation is involved in environmental responses at certain of its facilities,
former facilities and at certain other sites not owned by the Corporation
(third-party sites) where the Corporation has been designated a "Potentially
Responsible Party" (PRP) by the U.S. Environmental Protection Agency (EPA) or by
a state agency. At such third-party sites, the EPA or a state agency has
identified the site as requiring removal or remedial action under the federal
"Superfund" and other related federal or state laws governing the remediation of
hazardous materials. Generally, PRPs that are
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ultimately determined to be "responsible parties" are strictly liable for site
clean-ups and usually agree among themselves to share, on an allocated basis, in
the costs and expenses for investigation and remediation of the hazardous
materials. Under existing environmental laws, however, responsible parties are
jointly and severally liable and, therefore, the Corporation is potentially
liable for the full cost of funding such remediation. In the unlikely event that
the Corporation were required to fund the entire cost of such remediation, the
statutory framework provides that the Corporation may pursue rights of
contribution from the other PRPs.
At third-party sites, the Corporation continues to pursue a course of action
designed to minimize and mitigate its potential liability through assessing the
legal basis for its involvement, including an analysis of such factors as (i)
the amount and nature of materials disposed of by the Corporation, (ii) the
allocation process, if any, used to assign all costs to all involved parties,
and (iii) the scope of the response action that is or may reasonably be
required. The Corporation also continues to pursue active participation in
steering committees, consent orders and other appropriate and available avenues.
Management believes that this approach should minimize the Corporation's
proportionate share of liability at third-party sites where other PRPs share
liability.
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Although the Corporation's involvement and extent of responsibility varies at
each site, management, after an assessment of each site and consultation with
environmental experts and counsel, has concluded that the probability is remote
that the Corporation's actual or potential liability as a PRP in each or all of
these sites, in combination with the Corporation's actual or potential liability
for environmental responses at its own facilities, will have a material adverse
effect on the Corporation's consolidated financial position or results of
operations. While the possibility of insurance coverage is considered in the
Corporation's efforts to minimize and mitigate its potential liability, this
possibility is not taken into account in management's assessment of whether it
is likely that its actual or potential liability will have a material adverse
effect on the Corporation's consolidated financial position.
In addition, Lockheed Martin manages various government-owned facilities on
behalf of the government. At such facilities, environmental compliance and
remediation costs have historically been the responsibility of the government
and the Corporation relied (and continues to rely with respect to past
practices) upon government funding to pay such costs. While the government
remains responsible for capital costs associated with environmental compliance,
responsibility for fines and penalties associated with environmental
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noncompliance, in certain instances, is being shifted from the government to the
contractor with such fines and penalties no longer constituting allowable costs
under the contracts pursuant to which such facilities are managed.
Management does not believe that adherence to presently applicable
environmental regulations at its own facilities or in its contract management
capacity at government-owned facilities will have a material adverse effect on
Lockheed Martin's consolidated financial position or results of operations. For
additional details, see "Legal Proceedings" on page 32 through page 41. See
also "Note 16 -- Commitments and Contingencies" of the "Notes to Consolidated
Financial Statements" on page 41 through page 42 and "Management's Discussion
and Analysis of Financial Condition and Results of Operations, Environmental
Matters" on page 23 through page 24 of the 1997 Annual Report.
RESEARCH AND DEVELOPMENT
Lockheed Martin conducts significant research and development activities, both
under contract funding and with Independent Research and Development (IR&D)
funds. Lockheed Martin expended approximately $1.016 billion in 1997, $1.042
billion in 1996 and $778 million in 1995 using IR&D and bid and proposal funds,
a substantial portion of
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which was included in overhead allocable to United States Government contracts.
A significant portion of the increase in amounts expended in 1997 and 1996 as
compared to 1995 reflects the Corporation's acquisition of Loral Corporation.
During fiscal year 1997, the Corporation did not undertake the development of
a new product or line of business requiring the investment of a material amount
of the Corporation's total assets, however, the Corporation's launch investment
strategy is requiring increasing investments by the Corporation in the
development and improvement of launch vehicles.
See "Research and development and similar costs" in "Note 1--Summary of
Significant Accounting Policies" of the "Notes to Consolidated Financial
Statements" on page 32 of the 1997 Annual Report.
EMPLOYEES
As of December 31, 1997, Lockheed Martin had approximately 173,000 employees,
the majority of whom were located in the United States. The Corporation has a
continuing need for many skilled and professional personnel in order to meet
contract schedules and obtain new and ongoing orders for its products.
Approximately 33,000 of Lockheed Martin's employees are covered by 120 separate
collective
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bargaining agreements with various international and local unions. Management
considers employee relations generally to be good and believes that the
probability is remote that renegotiating these contracts will have a material
adverse effect on its business.
YEAR 2000
The Corporation is near completion of a thorough assessment of the effect of
Year 2000 issues on its computer systems. The Corporation is also near
completion of the development of plans to resolve those issues identified in the
assessment. Current plans provide for substantially all of the Corporation's
systems to be Year 2000 compliant by the end of 1999. Based on information
currently available from the Corporation's internal assessment, management does
not believe that the costs associated with Year 2000 activities over the next
two years will have a material adverse effect on the Corporation's consolidated
results of operations or financial position.
FORWARD LOOKING STATEMENTS - SAFE HARBOR PROVISIONS
This Annual Report on Form 10-K contains or incorporates by reference
statements which, to the extent that they are not recitations of historical
fact, constitute "forward looking
-25-
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act") and Section 21E of the Securities Exchange Act of
1934 (the "Exchange Act"). The words "estimate," "anticipate," "project,"
"intend," "expect," and similar expressions are intended to identify forward
looking statements. All forward looking statements involve risks and
uncertainties, including, without limitation, statements and assumptions with
respect to future revenues, program performance and cash flows, the outcome of
contingencies including litigation and environmental remediation, and
anticipated costs of capital investments and planned dispositions. Readers are
cautioned not to place undue reliance on these forward looking statements which
speak only as of the date of this Annual Report on Form 10-K. The Corporation
does not undertake any obligation to publicly release any revisions to forward
looking statements to reflect events or circumstances or changes in expectations
after the date of this Annual Report on Form 10-K or to reflect the occurrence
of unanticipated events. The forward looking statements in (or incorporated by
reference in) this document are intended to be subject to the safe harbor
protection provided by Sections 27A of the Securities Act and 21E of the
Exchange Act. For a discussion identifying some important factors that could
cause actual results to vary materially from those anticipated in the
-26-
forward looking statements, see the Corporation's Securities and Exchange
Commission filings, including but not limited to, the discussion of "Competition
and Risk" and the discussion of "Government Contracts and Regulations" on pages
14 through 17 and 18 through 19 of this Annual Report on Form 10-K,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 11 through 24 of the 1997 Annual Report, "Note 1 -
Summary of Significant Accounting Policies", "Note 2 - Transaction Agreement
with Northrop Grumman Corporation", and "Note 16 - Commitments and
Contingencies" of the Notes to Consolidated Financial Statements on pages 31
through 32, pages 32 through 33 and 41 through 42, respectively of the
Audited Financial Statements included in the 1997 Annual Report.
-27-
ITEM 2. PROPERTIES
At December 31, 1997, the Corporation operated in approximately 486 offices,
facilities, manufacturing plants, warehouses, service centers, and laboratories
throughout the United States and internationally. Of these, the Corporation
owned floor space at approximately 70 locations aggregating approximately 44.6
million square feet. The Corporation leased space at approximately 416 of its
locations aggregating approximately 25.8 million square feet. Additionally, the
Corporation manages and/or occupies various government-owned facilities at
Marshall Space Flight Center in Alabama; Livermore, Palmdale, San Diego, Santa
Cruz, Sunnyvale and Vandenberg Air Force Base in California; Cape Canaveral Air
Force Station and Kennedy Space Center in Florida; Marietta, Georgia; Kauai,
Hawaii; Idaho Falls and Scoville, Idaho; the United States Enrichment facilities
at Paducah, Kentucky and Piketon, Ohio; the NASA Michoud Assembly Facility near
New Orleans, Louisiana; Stennis Space Center in Mississippi; Las Vegas, Nevada;
Sandia National Laboratories in New Mexico; Knolls Atomic Power Laboratory at
Niskayuna, New York; the Department of Energy facility at Oak Ridge, Tennessee;
Houston and Ft. Worth, Texas, among others. The United States Government also
furnishes certain equipment and property used by the Corporation.
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The Corporation owns a corporate office building located in Bethesda, Maryland
in fee simple, and leases corporate office facilities at WestLake Village,
California, Bethesda, Maryland, and Arlington (Crystal City), Virginia. In
addition, the Corporation owns and leases major office and manufacturing
facilities for various sectors at the following locations, and with
approximately the indicated square footage:
SQUARE FOOTAGE
(In Millions)
--------------------------------
SECTOR LOCATION OWNED LEASED
- ----------------------------- ---------------------------------- --------------- --------------
Space & Strategic Sunnyvale and Palo
Missiles Alto, CA 6.3 .7
Waterton and
Littleton, CO 4.0 .4
East Windsor, NJ .7
King of Prussia, PA .9
Information & Goodyear, AZ 1.0
Services San Jose, CA .5
Colorado Springs, CO .3 .2
Orlando, FL 1.0 .2
Gaithersburg, MD .5
King of Prussia, PA .5 .6
Reston/Fairfax, VA .9
Aeronautics Ontario, CA .9
Palmdale, CA 2.2
Marietta, GA 1.9
Greenville, SC .8
Ft. Worth, TX .8 .2
Electronics Camden, AK 1.5
Orlando, FL 2.2 .3
Eagan, MN .6
Nashua, NH 2.5
Moorestown, NJ .9 .2
Great Neck, NY 1.4
Johnson City, NY .6
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Owego, NY 1.5
Syracuse, NY 1.5
Akron, OH 2.6
Grand Prairie, TX .4 2.0
Manassas, VA 1.4
The above information excludes facilities associated with the former Access
Graphics business unit located in Boulder, Colorado which was divested effective
as of November 17, 1997, as well as the facilities owned and leased by L-3
Communications Corporation.
Finally, the Corporation owns various large tracts of land which are available
for sale or development. The location and approximate size of these large
tracts include:
LOCATION ACREAGE
------------------------------------------------- ------------------------------------
1. Potrero Creek, CA 9100
2. Beaumont Gateway, CA 2800
3. Orlando, FL (under option) 2000
4. Palmdale, CA 650
5. Austin, TX 600
A significant portion of the Corporation's activity is related to engineering
and research and development, which is not susceptible to productive capacity
analysis. In the area of manufacturing, most of the operations are of a job-
order nature, rather than an assembly line process, and productive equipment has
multiple uses for multiple products.
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Management believes that all of the Corporation's major physical facilities
are in good condition and are adequate for their intended use.
-31-
ITEM 3. LEGAL PROCEEDINGS
The Corporation is primarily engaged in providing products and services under
contracts with the United States Government and, to a lesser degree, under
direct foreign sales contracts, some of which are funded by the United States
Government. All such contracts are subject to extensive legal and regulatory
requirements and, from time to time, agencies of the United States Government
investigate whether the Corporation's operations are being conducted in
accordance with these requirements. United States Government investigations of
the Corporation, whether relating to these Government contracts or conducted for
other reasons, could result in administrative, civil or criminal liabilities,
including repayments, fines or penalties being imposed upon the Corporation, or
could lead to suspension or debarment from future Government contracting. The
Corporation is also a party to or has its property subject to various other
litigation and proceedings, including matters arising under provisions relating
to the protection of the environment (collectively, "proceedings").
As previously reported, on June 7, 1990, Boggs, et al. v. Divested Atomic
Energy Corporation, et al., was filed against various defendants including
Lockheed Martin Energy Systems ("LMES"). Plaintiffs' request for class
certification was granted
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and the case is pending in the United States District Court for the Eastern
District of Ohio. Plaintiffs seek $600 million in compensatory and $600 million
in punitive damages based upon allegations that the defendants discharged
hazardous substances into the environment. In the event that any damages are
awarded in these proceedings, such damages will be allowable costs under
contracts between LMES and the Department of Energy ("DOE").
LMES has received a notice of violation from the Tennessee Department of
Environmental Quality relating to alleged violations of state hazardous waste
management regulations in connection with the company's operations at the DOE
complex at Oak Ridge Tennessee. Although the DOE is the principal operator of
this complex, LMES has entered into an arrangement with the DOE by which the
company takes direct regulatory responsibility for certain day-to-day activities
under the company's control at the K-25 and Y-12 facilities within the complex.
The state made an initial penalty demand of just under $500,000 in connection
with the notice of violation, and the company is in negotiation with the state
over the content of the notice as well as the amount of the penalty sought.
The District Attorney for Mendocino County, California has notified the
Corporation that it has prepared a civil complaint naming the Corporation, M4
Environmental L.P. and a third party for
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alleged violations of state and county environmental laws at the Retech facility
in Ukiah, California. The Retech operations relate to efforts by Lockheed Martin
Advanced Environmental Systems to develop technologies for treating mixed
radioactive/hazardous wastes generated by DOE facilities. Although none of the
District Attorney's allegations implicate radioactive materials, the allegations
cover a broad cross-section of conventional environmental laws, including air
and water resources, hazardous materials handling, and storage tank issues, as
well as alleged violations of California's unfair business practices statute.
Negotiations are at the very earliest stages with the District Attorney's
office, and while the potential liability of the Corporation, if any, cannot be
estimated at this time it could be in excess of $100,000.
The Corporation's property in Burbank, California (a former aircraft
manufacturing facility) is the subject of a 1991 consent decree with the U.S.
Environmental Protection Agency ("EPA") which obligates the Corporation to
design and construct facilities to monitor, extract and treat groundwater. A
second consent decree is being finalized which will obligate the Corporation to
fund the continued operation and maintenance of these facilities through the
year 2018. As is common practice, at the time the 1991 consent decree was
lodged, the EPA filed a suit with the United States
-34-
District Court for the Central District of California in order to provide that
Court with jurisdiction over the Consent Decree. The Corporation filed an Answer
and Counterclaim in March, 1997, in the EPA's suit asserting
indemnity/contribution claims against the Government based upon the Government's
ownership and operation of the former aircraft manufacturing facility. The same
former facility is subject to a cleanup and abatement order from the California
Regional Water Quality Board which requires site assessment and action to abate
groundwater contamination through a combination of groundwater and soil cleanup
and treatment. (See "Note 16 -Commitments and Contingencies" of the "Notes to
Consolidated Financial Statements" on page 41 through page 42 of the 1997 Annual
Report). On August 1, 1996, the Corporation consummated a settlement with a
group of 1,350 residents living in the vicinity of the former facility. The
settlement, valued at approximately $67 million, resolved, without litigation,
claims of personal injury and property damage asserted by the residents and
alleged to be related to environmental contamination stemming from historical
operations of the former facility. The Corporation settled the matter for
business reasons after a lengthy mediation, without any admission of liability,
notwithstanding its continuing position that the former facility does not and
has not posed a risk to the community. As the result of publicity surrounding
the
-35-
settlement, the Corporation has been named in two purported federal class action
suits and a series of seventeen state actions on behalf of approximately 3,400
individual residents and former residents of Burbank alleging similar claims of
personal injury, property damage and fear of future illnesses. As with its
remediation activities relating to environmental matters, the Corporation has
tendered these matters to its insurance carriers who have provided a defense but
are contesting coverage.
Following the filing of the lawsuits against the Corporation in connection
with its former aircraft manufacturing facility (In re Burbank Environmental
Litigation), five similar "copycat" actions were filed against the Corporation
in connection with the Corporation's former operations in Redlands, California
(e.g., Carrillo v. LMC). More lawsuits are expected in the Redlands area.
The Corporation previously reported that Lockheed Martin Electro-Optical
Systems was served with two grand jury subpoenas issued by the United States
District Court for the Central District of California and two Department of
Defense Inspector General's ("DOD IG") subpoenas all relating to the accounting
treatment of contract payments received from the Government. The United States
Attorney's Office for the Central District of California has advised the
Corporation that it has closed its criminal investigation. The Government's
civil investigation continues.
-36-
The Corporation previously reported that Lockheed Martin Electronics and
Missiles was served with a DOD IG subpoena in connection with a Government
investigation of allegations that the Corporation's proposal for the Paperless
LANTIRN Automated Depot contract was defectively priced. The Government has
advised the Corporation that this investigation has been closed.
As previously reported, on July 11, 1997, the Corporation was served with a
grand jury subpoena issued by the United States District Court for the Western
District of Tennessee, seeking documents related to the operation of the Milan
Army Ammunition Plant. The Corporation has been informed that the subpoena is a
continuation of a kickback investigation initiated in January 1994 and
previously reported by the Corporation. The Department of Justice has advised
the Corporation that it is no longer pursuing a criminal investigation of the
Corporation. The Government's civil investigation of the Corporation continues.
The Milan Army Ammunition Plant was operated by the Corporation's Armament
Systems business which was sold to General Dynamics Corporation effective
January 1, 1997. Under the terms of the agreement with General Dynamics, the
Corporation retained responsibility for investigations of this type.
As previously reported, on July 7, 1995, the Corporation was served with a
subpoena issued by the United States District Court for the Eastern District of
New York seeking documents relating to
-37-
a number of programs conducted at Lockheed Martin Tactical Defense Systems -
Great Neck. The Corporation has been provided minimal information concerning the
focus of the investigation, but it appears to arise from anonymous complaints
provided to the United States Government by employees about testing and quality
control matters. The Corporation is unaware of any such issues and is
cooperating in the Government's continuing investigation of this matter.
As previously reported, by letter dated September 21, 1995, the Corporation
informed the DOD IG that the Corporation had become aware of certain potential
accounting issues which the Corporation was investigating with respect to the
LANTIRN program. Subsequently, the United States Attorney's Office for the
Middle District of Florida advised the Corporation that a grand jury is
investigating allegations of fraud in connection with certain LANTIRN program
contracts. These allegations were first made in qui tam complaints filed
against the Corporation and unsealed on July 16, 1996. In connection with its
investigation, the Government has served two DOD IG subpoenas on the Corporation
and six grand jury subpoenas on employees of the Corporation. The Corporation
and its employees have responded to the subpoenas and the Government's
investigation continues.
-38-
As previously reported, on January 23, 1996, Lockheed Martin Electronics &
Missiles was served with a grand jury subpoena issued by the United States
District Court for the Middle District of Florida at Jacksonville seeking
documents related to the manufacture and testing of two circuit card assemblies
used in the production of the Hellfire I missile for the U.S. Army. On July 24,
1996, a second grand jury subpoena was served on the Corporation related to the
same subject matter and the Government's investigation of this matter is
continuing.
As previously reported, on June 25, 1996, Lockheed Martin Engineering &
Science Services was served with a grand jury subpoena issued by the United
States District Court for the Southern District of Texas seeking documents
related to two former employees of a predecessor company, Lockheed Engineering &
Sciences Company (LESC), and pertaining to an investigation of cost accounting
issues in connection with NASA service and support contracts. The United States
Attorney's office for the Southern District of Texas has advised the Corporation
that it has closed its criminal investigation. The Government's civil
investigation continues.
As previously reported, on November 27, 1996, Lockheed Martin Tactical Defense
Systems - Great Neck was served with a grand jury subpoena issued by the United
States District Court for the Eastern
-39-
District of New York seeking documents related to tax and financial reporting
issues and the outsourcing of quality tasks contained in various contract
proposals. The Corporation expects this investigation to continue.
As previously reported, on February 6, 1997, three former employees of the
Corporation were served with subpoenas ad testificandum (to testify) issued by a
federal grand jury in Jackson, Tennessee. The individuals were employees of the
Corporation's Armament Systems business which was sold to General Dynamics
Corporation effective January 1, 1997. Under the terms of the agreement with
General Dynamics, the Corporation retained responsibility for investigations of
this type. The Corporation has cooperated within the Government's
investigation.
As previously reported, on August 19, 1997, Lockheed Martin IMS was served
with a grand jury subpoena issued by the United States District Court for the
District of Columbia seeking documents relating to a procurement of parking
meter and other services by the District of Columbia. The Corporation has
cooperated with the Government's investigation.
The Corporation is involved in various other legal and environmental
proceedings arising in the ordinary course of its business, but in the opinion
of management and counsel in the Office of General Counsel of the Corporation
the probability is remote that
-40-
the outcome of any such litigation or proceedings, whether specifically
described above or referred to generally in this paragraph, will have a material
adverse effect on the results of the Corporation's operations or its financial
position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of 1997. At a Special Meeting of Stockholders of the Corporation held
on February 26, 1998 (the "Special Meeting"), the stockholders of the
Corporation approved a proposal (the "Merger Proposal") to issue shares of
Lockheed Martin Common Stock to stockholders of Northrop Grumman in connection
with the Merger. The vote on the Merger Proposal was as follows:
For Against/Withheld Abstentions/Broker Non-votes
--- ---------------- ----------------------------
154,963,677 1,598,121 13,878,762
At the Special Meeting, the stockholders of the Corporation also approved a
proposal (the "Charter Amendment Proposal") to amend the Charter of the
Corporation to increase the number of authorized shares of Lockheed Martin
Common Stock. The vote on the Charter Amendment Proposal was as follows:
For Against/Withheld Abstentions/Broker Non-votes
--- ---------------- ----------------------------
157,792,462 11,623,307 1,024,791
-41-
ITEM 4(a). EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of Lockheed Martin Corporation are listed below. There
were no family relationships among any of the executive officers and directors
of the Corporation. All officers serve at the pleasure of the Board of
Directors.
POSITIONS AND
OFFICES HELD WITH PRINCIPAL OCCUPATION AND
Name CORPORATION BUSINESS EXPERIENCE
(Age at 12/31/97) (Year Elected) (Past Five Years)
- --------------------- ---------------------------- -------------------------------------------------------------
Norman R. Augustine Chairman of the Board; Chairman of Lockheed Martin since January 1997. Chief Executive
(62) Director (1995) Officer of Lockheed Martin from January, 1996 through August 1,
1997. Vice Chairman of Lockheed Martin from April to December
1996. President of Lockheed Martin from March 1995 to June
1996. Previously served as Chairman and Chief Executive Officer
of Martin Marietta from 1988 to 1995; and director of Martin
Marietta from 1986 to 1995.
Marcus C. Bennett Executive Vice President and Executive Vice President and Chief Financial Officer of Lockheed
(61) Chief Financial Officer; Martin since July 1996; Senior Vice President and Chief
Director (1995) Financial Officer of Lockheed Martin from March 1995 to July
1996. Previously served as Vice President and Chief Financial
Officer of Martin Marietta from 1988 to 1995; and director of
Martin Marietta from 1993 to 1995.
James A. Blackwell, Sector President and Chief President and Chief Operating Officer, Aeronautics Sector since
Jr. (57) Operating Officer - March 1995; previously served in Lockheed as Vice President and
Aeronautics President from 1993 to 1995 of Lockheed Aeronautical Systems
Company; served as an executive employee of Lockheed
Aeronautical Systems Company from 1986 until 1995.
-42-
Melvin R. Brashears Sector President and Chief President and Chief Operating Officer Space & Strategic Missiles
(52) Operating Officer - Space & Sector, since January 1996; Deputy, Space & Strategic Missiles
Strategic Missiles Sector from November 1995 to December 1995; Executive Vice
President of Lockheed Missiles & Space Company, Inc. from March
1995 to November 1995 and President of Lockheed Commercial Space
Company; previously served in Lockheed Corporation as Vice
President and Assistant General Manager, Space Systems Division,
Lockheed Missiles & Space Company, Inc., from 1992 to 1995;
Director of Advanced Space Programs, from 1991 to 1992.
Vance D. Coffman (53) Chief Executive Officer and Chief Executive Officer and Vice Chairman of Lockheed Martin
Vice Chairman; Director since August 1997; President of Lockheed Martin from June 1996
(1996) to July 1997 and Chief Operating Officer from January 1996 to
July 1997; Executive Vice President from January to June 1996;
President and Chief Operating Officer, Space & Strategic
Missiles Sector from March 1995 to December 1995; previously
served as Executive Vice President of Lockheed from 1992 to
1995; and President of Lockheed Space Systems Division in 1988.
Thomas A. Corcoran (53) Sector President and Chief President and Chief Operating Officer, Electronics Sector since
Operating Officer - March 1995; previously served in Martin Marietta Corporation as
Electronics President, Electronics Group, from 1993 to 1995; previously
served at General Electric Corporation as Vice President and
General Manager, from 1990 to 1993.
Philip J. Duke (52) Vice President - Finance Vice President Finance since July 1996; Chief Financial Officer,
Space & Strategic Missiles Sector from March 1995 to July 1996;
previously served as Vice President Finance, Martin Marietta
from 1994 to 1995; Chief Financial Officer, Electronics Sector
of Martin Marietta from 1993 to 1994; and Vice President
Business Management of Martin Marietta from 1987 to 1993.
-43-
Arthur E. Johnson (51) Sector President and Chief President and Chief Operating Officer Information & Services
Operating Officer - Sector, since August 1997; President, Systems Integration Group
Information & Services from January to August, 1997; President, Lockheed Martin Federal
Systems from January 1996 to January 1997; previously served as
Vice President, Loral Federal Systems Group of Loral Corporation
from 1994 to 1996 and President and Chief Operating Officer of
IBM Federal Systems Division from 1992 to 1994.
Todd J. Kallman (41) Vice President and Controller Vice President and Controller since August 1997; Vice President
Finance, Aeronautics Sector from July 1995 to August 1997; Vice President
Business Management, Lockheed Martin Aeronautical Systems Company from
March 1995 to July 1995; previously served as Vice President Business
Management, Lockheed Aeronautical Systems Company from 1994 to 1995;
Vice President Finance, Lockheed Aeronautical Systems Company from 1992 to
1994.
Frank H. Menaker, Jr. Senior Vice President and Senior Vice President since July 1996; Vice President and
(57) General Counsel General Counsel for Lockheed Martin Corporation March 1995 to
July 1996, after having served in the same capacity for Martin
Marietta Corporation since 1981.
Walter E. Skowronski Vice President and Treasurer Vice President and Treasurer since March 1995; previously served
(49) in Lockheed Corporation as Vice President and Treasurer from
1992 to 1995; served as staff Vice President, Investor Relations
from 1990 to 1992.
Robert J. Stevens (46) Sector President and Chief President and Chief Operating Officer, Energy and Environment
Operating Officer - Energy & Sector, since January 1998; President, Air Traffic Management
Environment Division from June 1996 through January 1998; Executive Vice
President and Senior Vice President and Chief Financial Officer
of Air Traffic Management from December 1993; previously served
as an executive employee of Loral Corporation from August 1987.
-44-
Peter B. Teets (55) President and Chief President and Chief Operating Officer of Lockheed Martin since
Operating Officer; Director August 1997; President and Chief Operating Officer, Lockheed
(1997) Martin Information & Services Sector from March 1995 to July
1997; previously served as Corporate Vice President of Martin Marietta
from 1985 to 1995, President of Martin Marietta Space Group from
1993 to 1995, and President of Martin Marietta Astronautics
Group from 1987 to 1993.
-45-
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
There were approximately 42,433 holders of record of Lockheed Martin
Corporation Common Stock, $1 par value, as of December 31, 1997. The
Corporation's Common Stock is traded on the New York Stock Exchange, Inc.
Information concerning stock prices and dividends paid during the past two years
is as follows:
Common Dividends Paid and Market Prices
---------------------------------------
Market Price
Quarter ---------------- High/Low High/Low
- ------- Dividends Paid Sales Prices Sales Prices
---------------- ------------ ------------
1997 1996 1997 1996
------- ------- ----- ------
First $ .40 $ .40 $ 92.875/82 $80.875/73.125
Second .40 .40 105.25/78.25 86.75/73
Third .40 .40 113.438/98.375 91.75/76.25
Fourth .40 .40 108.438/88.125 96.625/85.25
----- ----- --------------- --------------
Year 1.60 1.60 113.438/78.25 96.625/73
ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item 6 is included under the caption
"Consolidated Financial Data - Eight-Year Summary" on page 45 of the
1997 Annual Report, and that information is hereby incorporated by
reference in this Form 10-K.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this Item 7 is included under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on page 11 through page 24 of the 1997 Annual Report, and that
information is hereby incorporated by reference in this Form 10-K.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Corporation does not hold or issue derivative financial instruments for
trading purposes. The Corporation uses derivative financial instruments to
manage its exposure to fluctuations in interest rates and foreign exchange
rates. The aggregate value of derivative financial instruments held or issued by
the Corporation is not material to the Corporation nor is the market risk posed.
For additional discussion of the Corporation's use of such instruments see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations, Other Matters" on page 24 of the 1997 Annual Report and "Note 1 -
Summary of Significant Accounting Policies, Derivative financial instruments" of
the Notes to Consolidated Financial Statements on page 32 of the Audited
Financial Statements included in
-47-
the 1997 Annual Report, and that information is hereby incorporated by reference
in this Form 10-K.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item 8 is included under the captions
"Consolidated Statement of Earnings," "Consolidated Statement of Cash Flows,"
"Consolidated Balance Sheet," "Consolidated Statement of Stockholders' Equity,"
and "Notes to Consolidated Financial Statements" on page 27 through page 44 of
the Audited Consolidated Financial Statements included in the 1997 Annual Report
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" on page 11 through page 24 of the 1997 Annual Report. This
information is hereby incorporated by reference in this Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
-48-
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information concerning directors required by this Item 10 is included
under the caption "Election of Directors" in the Corporation's definitive Proxy
Statement to be filed pursuant to Regulation 14A no later than March 23, 1998
(the "1998 Proxy Statement"), and that information is hereby incorporated by
reference in this Form 10-K. Information concerning executive officers required
by this Item 10 is located under Part I, Item 4(a) on page 42 through page 45 of
this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item 11 is included in the text and tables
under the caption "Compensation of Executive Officers" in the 1998 Proxy
Statement and that information, except for the information required by Item
402(k) and 402(l) of Regulation S-K, is hereby incorporated by reference in this
Form 10-K.
-49-
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item 12 is included under the headings
"Security Ownership of Certain Beneficial Owners," "Securities Owned by
Directors, Nominees and Named Executive Officers" and "Voting Securities and
Record Date" in the 1998 Proxy Statement and that information is hereby
incorporated by reference in this Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
-50-
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) List of Financial Statements filed as part of the Form 10-K.
Page
----
The following financial statements of Lockheed Martin Corporation and
consolidated subsidiaries, included in the 1997 Annual Report, are
incorporated by reference into Item 8 on page 48 of this Annual Report
on Form 10-K. Page numbers refer to the 1996 Annual Report:
Consolidated Statement of Earnings--
Years ended December 31, 1997, 1996 and 1995 .................. 27
Consolidated Statement of Cash Flows--
Years ended December 31, 1997, 1996 and 1995 .................. 28
Consolidated Balance Sheet--
December 31, 1997 and 1996 .................................... 29
Consolidated Statement of Stockholders' Equity--
Years ended December 31, 1997, 1996 and 1995 .................. 30
Notes to Consolidated Financial Statements--
Years ended December 31, 1997, 1996 and 1995 .................. 31
(2) List of Financial Statement Schedules filed as part of this Form
10-K.
All schedules have been omitted because they are not applicable, not
required, or the information has been otherwise supplied in the
financial statements or notes to the financial statements.
- 51 -
Ernst & Young LLP
The report of Lockheed Martin's independent auditors with respect to the
above-referenced financial statements appears on page 26 of the 1997
Annual Report and that report is hereby incorporated by reference in this
Form 10-K. The consent of Lockheed Martin's independent auditors appears
as Exhibit 23 to this Annual Report on Form 10-K.
(b) The following reports on Form 8-K were filed during the last quarter of
the period covered by this report:
(1) Lockheed Martin Corporation Current Report on Form 8-K filed with
the Securities and Exchange Commission on November 21, 1997.
During the first quarter of 1998, Lockheed Martin Corporation made the
following filing on Form 8-K:
(1) Lockheed Martin Corporation Current Report on Form 8-K filed with
the Securities and Exchange Commission on January 21, 1998.
(c) Exhibits
(2) Plan of Acquisition, Reorganization, Arrangement, Liquidation or
Succession.
(a) Agreement and Plan of Merger, dated as of July 2, 1997
(as amended as of September 27, 1997), by and among the
Corporation, Hurricane Sub, Inc. and Northrop Grumman
Corporation (incorporated by reference to the
Registration Statement on Form S-4 (Reg. No. 333-
44671) filed by the Corporation on January 22, 1998).
- 52 -
(3)(i) Articles of Incorporation.
(a) Articles of Amendment and Restatement of Lockheed
Martin Corporation (formerly Parent Corporation) filed
with the State Department of Assessments and Taxation
of the State of Maryland on February 7, 1995
(incorporated by reference to Exhibit 3.1 to Lockheed
Martin Corporation's Registration Statement on Form S-4
(No. 33-57645) filed with the Commission on February 9,
1995).
(ii) Bylaws.
(a) Copy of the Bylaws of Lockheed Martin Corporation as
amended through January 22, 1998.
(4) (a) Indenture dated May 16, 1996, between the Corporation,
Lockheed Martin Tactical Systems, Inc., and First Trust
of Illinois, National Association as Trustee
(incorporated by reference to Exhibit 4 of the
Corporation's filing on Form 8-K on May 16, 1996).
No other instruments defining the rights of holders of
long-term debt are filed since the total amount of
securities authorized under any such instrument does
not exceed 10% of the total assets of the Corporation
on a consolidated basis. The Corporation agrees to
furnish a copy of such instruments to the Securities
and Exchange Commission upon request.
(b) See Exhibits 3(i) and 3(ii).
- 53 -
(10)* (a) Format of the agreements between the Corporation
and certain officers to provide for continuity of
management in the event of a change in control of the
Corporation (incorporated by reference to Exhibit 10.14
to Lockheed Martin Corporation's Registration Statement
on Form S-4 (No. 33-57645) filed with Commission on
February 9, 1995).
(b) Lockheed Martin Corporation 1995 Omnibus Performance
Award Plan (incorporated by reference to Exhibit 10.36
to Lockheed Martin Corporation's Registration Statement
on Form S-4 (No. 33-57645) filed with the Commission on
February 9, 1995).
(c) Lockheed Martin Corporation Directors Deferred Stock
Plan, as amended February 27, 1997.
(d) Agreement Containing Consent Order, dated December 22,
1994, among the Corporation, Lockheed Corporation,
Martin Marietta Corporation and the Federal Trade
Commission (incorporated by reference to Exhibit 10.4
to Lockheed Martin Corporation's Registration Statement
on Form S-4 (No. 33-57645) filed with the Commission on
February 9, 1995).
(e) Lockheed Martin Corporation Directors Deferred
Compensation Plan, as amended February 27, 1997.
(f) Martin Marietta Corporation Post-Retirement Income
Maintenance Plan for Directors, as amended
(incorporated by reference to Exhibit 10(iii)(b) to
Martin Marietta Corporation's Annual Report on Form 10-
K for the fiscal year ended December 31, 1994).
- 54 -
(g) Resolutions dated June 27, 1997 relating to Lockheed
Martin Corporation Financial Counseling Program for
directors, officers, company presidents, and other key
employees, as amended.
(h) Martin Marietta Corporation Executive Incentive Plan,
as amended (incorporated by reference to Exhibit 10.7
to Lockheed Martin Corporation's Registration Statement
on Form S-4 (No. 33-57645) filed with Commission on
February 9, 1995).
(i) Deferred Compensation and Estate Supplement Plan, as
amended (incorporated by reference to Exhibit
10(iii)(e) to Martin Marietta Corporation's Annual
Report on Form 10-K for the fiscal year ended December
31, 1994).
(j) Martin Marietta Corporation Post-Retirement Death
Benefit Plan for Senior Executives, as amended
(incorporated by reference to Exhibit 10.9 to Lockheed
Martin Corporation's Registration Statement on Form S-4
(No. 33-57645) filed with Commission on February 9,
1995).
(k) Martin Marietta Corporation 1979 Stock Option Plan for
Key Employees, as amended (incorporated by reference to
Exhibit 10.11 to Lockheed Martin Corporation's
Registration Statement on Form S-4 (No. 33-57645) filed
with Commission on February 9, 1995).
(l) Martin Marietta Corporation 1984 Stock Option Plan for
Key Employees, as amended (incorporated by reference to
Exhibit 10.12 to Lockheed Martin Corporation's
Registration Statement on
- 55 -
Form S-4 (No. 33-57645) filed with the Commission on
February 9, 1995).
(m) Martin Marietta Corporation Amended Omnibus Securities
Award Plan, as amended March 25, 1993 (incorporated by
reference to Exhibit 10.13 to Lockheed Martin
Corporation's Registration Statement on Form S-4 (No.
33-57645) filed with the Commission on February 9,
1995).
(n) Martin Marietta Corporation Supplemental Excess
Retirement Plan, as amended (incorporated by reference
to Exhibit 10.15 to Lockheed Martin Corporation's
Registration Statement on Form S-4 (No. 33-57645) filed
with the Commission on February 9, 1995).
(o) Martin Marietta Corporation Restricted Stock Award
Plan, as amended (incorporated by reference to Exhibit
10.16 to Lockheed Martin Corporation's Registration
Statement on Form S-4 (No. 33-57645) filed with the
Commission on February 9, 1995).
- 56 -
(p) Martin Marietta Corporation Long Term Performance
Incentive Compensation Plan (incorporated by reference
to Exhibit 10(iii)(m) to Martin Marietta Corporation's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1994).
(q) Amended and Restated Martin Marietta Corporation Long-
Term Performance Incentive Compensation Plan
(incorporated by reference to Exhibit 10(iii)(n) to
Martin Marietta Corporation's Annual Report on Form 10-
K for the fiscal year ended December 31, 1994).
(r) Martin Marietta Corporation Directors' Life Insurance
Program (incorporated by reference to Exhibit 10.17 to
Lockheed Martin Corporation's Registration Statement on
Form S-4 (No. 33-57645) filed with the Commission on
February 9, 1995).
(s) Martin Marietta Corporation Executive Special Early
Retirement Option and Plant Closing Retirement Option
Plan (incorporated by reference to Exhibit 10.18 to
Lockheed Martin Corporation's Registration Statement on
Form S-4 (No. 33-57645) filed with the Commission on
February 9, 1995).
(t) Martin Marietta Supplementary Pension Plan for
Employees of Transferred GE Operations (incorporated by
reference to Exhibit 10.19 to Lockheed Martin
Corporation's Registration Statement on Form S-4 (No.
33-57645) filed with the Commission on February 9,
1995).
- 57 -
(u) Form of Retention Agreement, including Addendum.
(v) Martin Marietta Corporation Deferred Compensation Plan
for Selected Officers, as amended June 27, 1997.
(w) Lockheed Corporation 1992 Employee Stock Option Program
(incorporated by reference to the Registration
Statement on Form S-8 (No. 33-49003) of Lockheed
Corporation filed with the Commission on September 11,
1992).
(x) Amendment to Lockheed Corporation 1992 Employee Stock
Option Plan (incorporated by reference to Exhibit 10.22
to Lockheed Martin Corporation's Registration Statement
on Form S-4 (No. 33-57645) filed with the Commission on
February 9, 1995).
(y) Lockheed Corporation 1986 Employee Stock Purchase
Program, as amended (incorporated by reference to
Exhibit 10.23 to Lockheed Martin Corporation's
Registration Statement on Form S-4 (No. 33-57645) filed
with the Commission on February 9, 1995).
(z) Lockheed Corporation 1982 Employee Stock Purchase
Program, as amended (incorporated by reference to
Exhibit 10.24 to Lockheed Martin Corporation's
Registration Statement on Form S-4 (No. 33-57645) filed
with the Commission on February 9, 1995).
- 58 -
(aa) Incentive Retirement Benefit Plan for Certain
Executives of Lockheed Corporation, as amended
(incorporated by reference to Exhibit 10.25 to Lockheed
Martin Corporation's Registration Statement on Form S-4
(No. 33-57645) filed with the Commission on February 9,
1995).
(bb) Supplemental Retirement Benefit Plan for Certain
Transferred Employees of Lockheed Corporation, as
amended (incorporated by reference to Exhibit 10.26 to
Lockheed Martin Corporation's Registration Statement on
Form S-4 (No. 33-57645) filed with the Commission on
February 9, 1995).
(cc) Supplemental Benefit Plan of Lockheed Corporation, as
amended (incorporated by reference to Exhibit 10.27 to
Lockheed Martin Corporation's Registration Statement on
Form S-4 (No. 33-57645) filed with the Commission on
February 9, 1995).
(dd) Long-Term Performance Plan of Lockheed Corporation and
its Subsidiaries (incorporated by reference to Exhibit
10.28 to Lockheed Martin Corporation's Registration
Statement on Form S-4 (No. 33-57645) filed with the
Commission on February 9, 1995).
(ee) Lockheed Martin Corporation Supplemental Savings Plan,
as amended and restated effective January 1, 1997.
- 59 -
(ff) Deferred Compensation Plan for Directors of Lockheed
Corporation, as amended (incorporated by reference to
Exhibit 10.30 to Lockheed Martin Corporation's
Registration Statement on Form S-4 (No. 33-57645) filed
with the Commission on February 9, 1995).
(gg) Lockheed Corporation Retirement Plan for Directors, as
amended (incorporated by reference to Exhibit 10.31 to
Lockheed Martin Corporation's Registration Statement on
Form S-4 (No. 33-57645) filed with the Commission on
February 9, 1995).
(hh) Form of Lockheed Corporation Termination Benefits
Agreement effective January 1, 1991 (included in Form
8, Amendment No. 1 to Exhibit 28 of Form 8-K dated
November 5, 1990 of Lockheed Corporation and
incorporated herein by reference).
(ii) Trust Agreement, as amended February 3, 1995, between
Lockheed Corporation and First Interstate Bank of
California (incorporated by reference to Exhibit 10.33
to Lockheed Martin Corporation's Registration Statement
on Form S-4 (No. 33-57645) filed with the Commission on
February 9, 1995).
(jj) Lockheed Corporation Directors' Deferred Compensation
Plan Trust Agreement, as amended (incorporated by
reference to Exhibit 10.34 to Lockheed Martin
Corporation's Registration Statement on Form S-4 (No.
33-57645) filed with the Commission on February 9,
1995).
(kk) Trust Agreement, dated December 22, 1994, between
Lockheed Corporation and J.P. Morgan California with
respect to certain employee benefit plans of
- 60 -
Lockheed Corporation (incorporated by reference to
Exhibit 10.35 to Lockheed Martin Corporation's
Registration Statement on Form S-4 (No. 33-57645) filed
with the Commission on February 9, 1995).
(ll) Lockheed Martin Corporation Directors Charitable Award
Plan (incorporated by reference to Exhibit 10(oo) to
Lockheed Martin Corporation's Annual Report on Form 10-
K for the year ended December 31, 1996).
(mm) 1983 Stock Option Plan (incorporated by reference from
Loral Corporation's 1983 Proxy Statement).
(nn) Amendment to the 1983 Stock Option Plan (incorporated
by reference from Loral Corporation's Form 10-K for the
fiscal year ended March 31, 1986, Exhibit 10.11).
(oo) Amended 1986 Stock Option Plan (incorporated by
reference from Loral Corporation's Form 10-Q for the
quarter ended June 30, 1988, Exhibit 10.1).
(pp) Amendment to the 1983 and 1986 Stock Option Plans
(incorporated by reference from Loral Corporation's
Form 10-K for the fiscal year ended March 31, 1990,
Exhibit 10.8).
(qq) 1991 Amendment to the 1986 Stock Option Plan
(incorporated by reference from Loral Corporation's
Form 10-K for the fiscal year ended March 31, 1991,
Exhibit 10.9).
(rr) Loral Corporation Incentive Compensation Plan for
Senior Executives (incorporated
- 61 -
by reference from Loral Corporation's 1994 Proxy
Statement).
(ss) 1994 Stock Option and Incentive Stock Purchase Plan
(incorporated by reference from Loral Corporation's
1994 Proxy Statement).
(tt) Loral Corporation Restricted Stock Purchase Plan
(incorporated by reference from Loral Corporation's
Form 8-K dated May 13, 1987, Exhibit 10.28).
(uu) Amendment to the Loral Corporation Restricted Stock
Purchase Plan (incorporated by reference from Loral
Corporation's Form 10-Q for the quarter ended June 30,
1987, Exhibit 10.2).
(vv) Restated Employment Agreement between Loral Corporation
and Bernard L. Schwartz, dated as of April 1, 1990
(incorporated by reference from Loral Corporation's
Form 10-K for the fiscal year ended March 31, 1990,
Exhibit 10.11).
(ww) Extension and Modification Agreement between Loral
Corporation and Bernard L. Schwartz dated as of June
14, 1994 (incorporated by reference from Loral
Corporation's Form 10-K for the fiscal year ended March
31, 1995, Exhibit 10.11).
(xx) Split-dollar life insurance agreement with Bernard L.
Schwartz, dated as of March 15, 1990 (incorporated by
reference from Loral Corporation's Form 10-K for the
fiscal year ended March 31, 1991, Exhibit 10.13).
(yy) Split-dollar life insurance agreement with Bernard L.
Schwartz, dated as of
- 62 -
December 10, 1990 (incorporated by reference from Loral
Corporation's Form 10-K for the fiscal year ended March
31, 1991, Exhibit 10.14).
(zz) Employment Contract between Loral Corporation and Frank
C. Lanza, dated as of April 1, 1987 (incorporated by
reference from Loral Corporation's Form 10-Q for the
quarter ended June 30, 1987, Exhibit 10.1 and Form 10-K
for the fiscal year ended March 31, 1982, Exhibit
10.11).
(aaa)Amendment to Employment Contract between Loral
Corporation and Frank C. Lanza, dated as of March 31,
1988 (incorporated by reference from Loral
Corporation's Form 10-K for the fiscal year ended March
31, 1988, Exhibit 10.19).
(bbb)Amendment to Employment Contract between Loral
Corporation and Frank C. Lanza, dated as of March 21,
1990 (incorporated by reference from Loral
Corporation's Form 10-K for the fiscal year ended March
31, 1990, Exhibit 10.16).
(ccc)Amendment to Employment Contract between Loral
Corporation and Frank C. Lanza, dated as of April 1,
1992 (incorporated by reference from Loral
Corporation's Form 10-K for the fiscal year ended March
31, 1992, Exhibit 10.17).
(ddd)Modification Agreement between Loral Corporation and
Frank C. Lanza dated as of June 14, 1994 (incorporated
by reference from Loral Corporation's Form 10-K for the
fiscal year ended March 31, 1995, Exhibit 10.18).
(eee)Split-dollar life insurance agreement with Frank C.
Lanza, dated as of August
- 63 -
5, 1985 (incorporated by reference from Loral
Corporation's Form 10-K for the fiscal year ended March
31, 1991, Exhibit 10.18).
(fff)Loral Supplemental Executive Retirement Plan
(incorporated by reference to Exhibit 99.2 of the
Schedule 14D-9 filed by Loral Corporation with the
Commission on January 16, 1996).
(ggg)Loral Corporation Supplemental Bonus Plan (incorporated
by reference to Exhibit 99.3 of the Schedule 14D-9
filed by Loral Corporation with the Commission on
January 16, 1996).
(hhh)Loral Corporation Supplemental Severance Program
(incorporated by reference to Exhibit 99.4 of the
Schedule 14D-9 filed by Loral Corporation with the
Commission on January 16, 1996).
(iii)Form of Employment Protection Agreement between Loral
Corporation and Executives of Loral (incorporated by
reference to Exhibit 99.5 of the Schedule 14D-9 filed
by Loral Corporation with the Commission on January 16,
1996).
(jjj)Loral Corporation Employment Protection Plan
(incorporated by reference to Exhibit 99.6 of the
Schedule 14D-9 filed by Loral Corporation with the
Commission on January 16, 1996).
(kkk)Amendment to Lockheed Martin Corporation Supplemental
Excess Retirement Plan (incorporated by reference to
Exhibit 10(nnn) of the Corporation's Annual Report in
Form 10-K for the year ended December 31, 1996).
(lll)Amendment to Terms of Outstanding Stock Option Relating
to Exercise Period for Employees of Divested Business
(incorporated by reference to Exhibit 10(ooo) of the
Corporation's Annual Report on Form 10-K for the year
ended December 31, 1996).
- 64 -
(mmm)Lockheed Martin Corporation Post-Retirement Death
Benefit Plan for Elected Officers, as amended
(incorporated by reference to Exhibit 10(ppp) to the
Corporation's Annual Report on Form 10-K for the year
ended December 31, 1996).
(nnn)Lockheed Martin Corporation Directors Retirement Plan,
as amended (incorporated by reference to Exhibit
10(qqq) to the Corporation's Annual Report on Form 10-K
for the year ended December 31, 1996).
(ooo)Deferred Performance Payment Plan of Lockheed Martin
Corporation Space & Strategic Missiles Sector.
(ppp)Resolutions of Board of Directors of Lockheed Martin
Corporation dated June 27, 1997 amending Lockheed
Martin Non-Qualified Pension Plans.
* Exhibits (10)(a) through (10)(c) and 10(e) through 10 (ppp)
constitute management contracts or compensatory plans or arrangements
required to be filed as an Exhibit to this Form pursuant to Item 14(c)
of this Report.
(12) Computation of ratio of earnings to fixed charges for
the year ended December 31, 1997.
(13) 1997 Annual Report to Security Holders (including an
appendix describing graphic and image material). Those
portions of the 1997 Annual Report to Security Holders
which are not incorporated by reference in this Annual
Report on Form 10-K shall not be deemed "filed" as part
of this Report.
- 65 -
(21) List of Subsidiaries of Lockheed Martin Corporation.
(23) Consent of Ernst & Young LLP.
(24) Powers of Attorney.
(27) Financial Data Schedule
Other material incorporated by reference:
None.
- 66 -
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
LOCKHEED MARTIN CORPORATION
Date: March 18, 1998 By: /s/ FRANK H. MENAKER, JR.
---------------------
Frank H. Menaker, Jr.
Senior Vice President
and General Counsel
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
SIGNATURES TITLE DATE
- -------------------------- ------------------------- --------------
/s/Vance D. Coffman* Chief Executive March 18, 1998
- --------------------------
VANCE D. COFFMAN Officer, Vice Chairman
and Director
/s/Marcus C. Bennett* Executive Vice President, March 18, 1998
- --------------------------
MARCUS C. BENNETT Chief Financial Officer
and Director
/s/Todd J. Kallman* Chief Accounting Officer March 18, 1998
- --------------------------
TODD J. KALLMAN
/s/Norman R. Augustine* Director March 18, 1998
- --------------------------
NORMAN R. AUGUSTINE
- 67 -
SIGNATURES TITLE DATE
- ---------- ----- ----
/s/Lynne V. Cheney* Director March 18, 1998
- ------------------
LYNNE V. CHENEY
/s/Houston K. Flournoy* Director March 18, 1998
- ----------------------
HOUSTON K. FLOURNOY
/s/James F. Gibbons* Director March 18, 1998
- --------------------------
JAMES F. GIBBONS
/s/Edward E. Hood, Jr.* Director March 18, 1998
- --------------------------
EDWARD E. HOOD, JR.
/s/Caleb B. Hurtt* Director March 18, 1998
- --------------------------
CALEB B. HURTT
/s/Gwendolyn S. King* Director March 18, 1998
- --------------------------
GWENDOLYN S. KING
/s/Vincent N. Marafino* Director March 18, 1998
- --------------------------
VINCENT N. MARAFINO
/s/Eugene F. Murphy* Director March 18, 1998
- --------------------------
EUGENE F. MURPHY
/s/Allen E. Murray* Director March 18, 1998
- --------------------------
Allen E. Murray
/s/Frank Savage* Director March 18, 1998
- --------------------------
FRANK SAVAGE
/s/Peter B. Teets Director March 18, 1998
- --------------------------
PETER B. TEETS
- 68 -
SIGNATURES TITLE DATE
- ---------- ----- ----
/s/Daniel M. Tellep* Director March 18, 1998
- --------------------------
DANIEL M. TELLEP
/s/Carlisle A.H. Trost* Director March 18, 1998
- --------------------------
CARLISLE A.H. TROST
/s/James R. Ukropina* Director March 18, 1998
- --------------------------
JAMES R. UKROPINA
/s/Douglas C. Yearley* Director March 18, 1998
- --------------------------
DOUGLAS C. YEARLEY
*By: /s/ STEPHEN M. PIPER March 18, 1998
------------------
(Stephen M. Piper, Attorney-in-fact**)
_____________________
**By authority of Powers of Attorney filed with this Annual
Report on Form 10-K.
- 69 -