Lockheed Sales Up, Net Income Dips Amid Program Losses

Ticker: LMT · Form: 10-Q · Filed: 2025-10-21T00:00:00.000Z

Sentiment: mixed

Topics: Defense, Aerospace, Government Contracts, Earnings Report, Program Losses, Acquisitions, Share Repurchases

Related Tickers: LMT, BA, RTX, GD, NOC

TL;DR

**LMT's sales are up, but a massive jump in program losses for the year is a red flag, making me cautious on this defense giant.**

AI Summary

Lockheed Martin Corporation reported total sales of $18.609 billion for the quarter ended September 28, 2025, an 8.8% increase from $17.104 billion in the prior year quarter. Net earnings, however, slightly decreased to $1.619 billion from $1.623 billion in the same period last year. For the nine months ended September 28, 2025, total sales rose to $54.727 billion, up 4.4% from $52.421 billion, but net earnings significantly declined by 23.7% to $3.673 billion from $4.809 billion. This decline in net earnings for the nine-month period was largely driven by a substantial increase in 'select program losses' to $1.615 billion in 2025 from $248 million in 2024. Aeronautics and Missiles and Fire Control (MFC) segments showed strong sales growth, with Aeronautics sales increasing by 11.9% to $7.256 billion for the quarter and MFC sales growing by 14.1% to $3.624 billion. The company also completed the acquisition of Amentum's Rapid Solutions business for $360 million in cash during the second quarter of 2025, adding $195 million in goodwill to its Space segment. Diluted earnings per common share for the nine months decreased to $15.69 from $20.05, while cash dividends paid per common share increased to $9.90 from $9.45.

Why It Matters

Lockheed Martin's mixed financial results, with increased sales but a notable drop in nine-month net earnings due to 'select program losses,' signal potential headwinds for investors. While the defense sector generally benefits from geopolitical instability, significant program losses could erode investor confidence and impact future profitability. For employees, sustained sales growth in key segments like Aeronautics and MFC suggests job stability, but underperforming programs might lead to internal restructuring. Customers, primarily the U.S. Government and international allies, will be scrutinizing program execution and cost efficiency, especially given the competitive landscape with rivals like Boeing and Raytheon Technologies. The broader market may see this as a bellwether for defense contractor performance, highlighting the inherent risks in large-scale, complex government contracts.

Risk Assessment

Risk Level: high — The risk level is high due to the significant increase in 'select program losses' to $1.615 billion for the nine months ended September 28, 2025, compared to $248 million in the prior year. This 551% increase directly contributed to a 23.7% decline in net earnings for the nine-month period, from $4.809 billion to $3.673 billion, indicating substantial operational challenges on specific projects.

Analyst Insight

Investors should closely monitor Lockheed Martin's upcoming earnings calls for detailed explanations regarding the 'select program losses' and their potential impact on future profitability. Consider a 'hold' position until more clarity emerges on these program issues and management's strategy to mitigate similar risks, as the significant decline in nine-month net earnings warrants caution despite sales growth.

Financial Highlights

revenue
$18.609B
operating Margin
12.3%
total Assets
$60.276B
total Debt
$1.669B
net Income
$1.619B
eps
$6.95
gross Margin
12.0%
cash Position
$3.470B
revenue Growth
+8.8%

Revenue Breakdown

SegmentRevenueGrowth
Aeronautics$7,256M+11.9%
Missiles and Fire Control (MFC)$3,624M+14.1%
Rotary and Mission Systems (RMS)$4,373M+0.1%
Space$3,356M+9.1%

Key Numbers

Key Players & Entities

FAQ

What were Lockheed Martin's total sales for the quarter ended September 28, 2025?

Lockheed Martin's total sales for the quarter ended September 28, 2025, were $18.609 billion, an increase from $17.104 billion in the prior year quarter.

How did Lockheed Martin's net earnings change for the nine months ended September 28, 2025?

For the nine months ended September 28, 2025, Lockheed Martin's net earnings decreased by 23.7% to $3.673 billion, down from $4.809 billion in the same period of 2024.

What caused the significant decline in Lockheed Martin's nine-month net earnings?

The significant decline in Lockheed Martin's nine-month net earnings was primarily due to a substantial increase in 'select program losses,' which rose to $1.615 billion in 2025 from $248 million in 2024.

Which Lockheed Martin business segments showed sales growth in Q3 2025?

The Aeronautics segment's sales increased by 11.9% to $7.256 billion, and the Missiles and Fire Control (MFC) segment's sales grew by 14.1% to $3.624 billion for the quarter ended September 28, 2025.

What was the impact of the Amentum's Rapid Solutions acquisition on Lockheed Martin?

Lockheed Martin paid $360 million in cash for the acquisition of Amentum's Rapid Solutions business during the second quarter of 2025, recording $195 million in goodwill at its Space business segment.

How many shares of Lockheed Martin common stock were outstanding as of October 16, 2025?

As of October 16, 2025, there were 231,397,796 shares of Lockheed Martin's common stock, $1 par value per share, outstanding.

What is the risk associated with Lockheed Martin's 'select program losses'?

The risk associated with 'select program losses' is high, as the $1.615 billion in losses for the nine months ended September 28, 2025, significantly impacted net earnings and indicates potential operational or contractual challenges that could affect future profitability.

How much did Lockheed Martin pay in cash dividends per common share for the nine months ended September 28, 2025?

Lockheed Martin paid $9.90 in cash dividends per common share for the nine months ended September 28, 2025, an increase from $9.45 in the prior year period.

What is Lockheed Martin's primary customer base?

Lockheed Martin's primary customer base is the U.S. Government, accounting for $13.371 billion in sales for the quarter and $39.491 billion for the nine months ended September 28, 2025.

What was Lockheed Martin's total consolidated operating profit for the quarter ended September 28, 2025?

Lockheed Martin's total consolidated operating profit for the quarter ended September 28, 2025, was $2.280 billion, an increase from $2.140 billion in the prior year quarter.

Risk Factors

Industry Context

Lockheed Martin operates in the highly competitive global aerospace and defense industry, dominated by a few large prime contractors. Key trends include increasing defense budgets driven by geopolitical tensions, a focus on advanced technologies like AI and hypersonics, and consolidation within the sector. Competition is fierce from both domestic and international players, with significant R&D investments required to maintain technological leadership.

Regulatory Implications

As a primary contractor to the U.S. government, Lockheed Martin is subject to extensive regulations, including those governing procurement, cybersecurity, export controls (ITAR), and accounting standards. Compliance is critical, as violations can lead to severe penalties, contract cancellations, and reputational damage, impacting its ability to secure future government contracts.

What Investors Should Do

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Key Dates

Glossary

Select Program Losses
Refers to specific financial charges incurred due to cost overruns, performance issues, or other adverse developments on particular contracts or programs. (A significant increase in these losses ($1.615B in YTD 2025 vs $248M in YTD 2024) directly impacted net earnings, indicating potential project execution challenges.)
Goodwill
An intangible asset that arises when one company acquires another for a price greater than the fair market value of its net assets. (The $195 million in goodwill added to the Space segment from the Amentum acquisition signifies the premium paid over the fair value of acquired net assets, reflecting expected future benefits.)
Diluted Earnings Per Common Share (EPS)
A measure of a company's profit allocated to each outstanding share of common stock, assuming all convertible securities and stock options were exercised. (The decrease in diluted EPS for the nine months ($15.69 vs $20.05) reflects the lower net earnings, despite a reduction in shares outstanding due to repurchases.)
Contract Assets
Represents rights to consideration in exchange for goods or services that the entity has transferred to a customer. These are recognized when the entity has performed but has not yet obtained unconditional rights to payment. (The increase in contract assets to $13.949 billion from $12.957 billion suggests a growing backlog of work performed but not yet billed or paid for, indicating future revenue potential.)
Contract Liabilities
Represents obligations to transfer goods or services to a customer for which the entity has received consideration from the customer. These are essentially deferred revenue. (The increase in contract liabilities to $10.259 billion from $9.795 billion indicates a strong order book and future revenue commitments.)
FAS/CAS Pension Operating Adjustment
The difference between pension costs calculated under government contract accounting standards (CAS) and those reported under Financial Accounting Standards (FAS). CAS costs are recoverable through contracts, while FAS costs are for financial reporting. (This adjustment impacts the comparability of segment operating profit to consolidated operating profit, as CAS pension costs are included in segment results, while FAS pension expense is largely in unallocated items.)

Year-Over-Year Comparison

Compared to the prior year's nine-month period, Lockheed Martin's total sales have increased by 4.4% to $54.727 billion, indicating continued top-line growth. However, net earnings have seen a substantial decline of 23.7% to $3.673 billion, primarily driven by a sharp rise in 'select program losses' from $248 million to $1.615 billion. While diluted EPS for the nine months decreased to $15.69 from $20.05, cash dividends paid per share rose to $9.90 from $9.45, suggesting a commitment to shareholder returns despite profitability pressures. New risks related to the acquisition of Amentum's Rapid Solutions business and its integration into the Space segment are now present.

Filing Stats: 4,810 words · 19 min read · ~16 pages · Grade level 16.8 · Accepted 2025-10-21 16:14:32

Key Financial Figures

Filing Documents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements (Unaudited)

ITEM 1. Financial Statements (Unaudited) Consolidated Statements of Earnings for the Quarters and Nine Months Ended September 28, 2025 and September 29, 2024 3 Consolidated Statements of Comprehensive Income for the Quarters and Nine Months Ended September 28, 2025 and September 29, 2024 4 Consolidated Balance Sheets as of September 28, 2025 and December 31, 2024 5 Consolidated Statements of Cash Flows for the Nine Months Ended September 28, 2025 and September 29, 2024 6 Consolidated Statements of Equity for the Quarters Ended September 28, 2025 and September 29, 2024 7 Consolidated Statements of Equity for the Nine Months Ended September 28, 2025 and September 29, 2024 8

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 9 Report of Independent Registered Public Accounting Firm 28

Management's Discussion and Analysis of Financial Condition and Results of Operations

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 29

Quantitative and Qualitative Disclosures About Market Risk

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 44

Controls and Procedures

ITEM 4. Controls and Procedures 44

OTHER INFORMATION

PART II. OTHER INFORMATION

Legal Proceedings

ITEM 1. Legal Proceedings 47

Risk Factors

ITEM 1A. Risk Factors 47

Unregistered Sales of Equity Securities and Use of Proceeds

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 48

Other Information

ITEM 5. Other Information 48

Exhibits

ITEM 6. Exhibits 49 SIGNATURE 50 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

ITEM 1. Financial Statements Lockheed Martin Corporation Consolidated Statements of Earnings (unaudited; in millions, except per share data) Quarters Ended Nine Months Ended September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 Sales Products $ 15,311 $ 14,472 $ 45,396 $ 43,777 Services 3,298 2,632 9,331 8,644 Total sales 18,609 17,104 54,727 52,421 Operating costs and expenses Products ( 13,708 ) ( 12,964 ) ( 41,461 ) ( 39,368 ) Services ( 2,871 ) ( 2,272 ) ( 8,641 ) ( 7,457 ) Impairment and other charges — — ( 66 ) ( 87 ) Other unallocated, net 210 249 738 731 Total operating costs and expenses ( 16,369 ) ( 14,987 ) ( 49,430 ) ( 46,181 ) Gross profit 2,240 2,117 5,297 6,240 Other income, net 40 23 103 77 Operating profit 2,280 2,140 5,400 6,317 Interest expense ( 286 ) ( 256 ) ( 828 ) ( 772 ) Non-service FAS pension (expense) income ( 99 ) 16 ( 296 ) 47 Other non-operating income, net 43 18 115 109 Earnings before income taxes 1,938 1,918 4,391 5,701 Income tax expense ( 319 ) ( 295 ) ( 718 ) ( 892 ) Net earnings $ 1,619 $ 1,623 $ 3,673 $ 4,809 Earnings per common share Basic $ 6.98 $ 6.83 $ 15.74 $ 20.12 Diluted $ 6.95 $ 6.80 $ 15.69 $ 20.05 Cash dividends paid per common share $ 3.30 $ 3.15 $ 9.90 $ 9.45 The accompanying notes are an integral part of these unaudited consolidated financial statements. 3 Table of Contents Lockheed Martin Corporation Consolidated Statements of Comprehensive Income (unaudited; in millions) Quarters Ended Nine Months Ended September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 Net earnings $ 1,619 $ 1,623 $ 3,673 $ 4,809 Other comprehensive income, net of tax Postretirement benefit plans Amortization, net of tax of $ 16 million and $ 51 million in 2025 and $ 6 million and $ 16 million in 2024 65 19 193 57 Other, net of tax of $ 1 million and $ 17 million in 2025 and $ 3 million and $ 5 million in 2024 ( 10 ) 57 157 53 Other comprehensi

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) NOTE 1 - BASIS OF PRESENTATION We prepared these consolidated financial statements in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information, the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission (SEC) Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, these consolidated financial statements reflect all adjustments that are of a normal recurring nature necessary for a fair presentation of our results of operations, financial condition, and cash flows for the interim periods presented. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base these estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Our actual results may differ materially from these estimates. Estimates inherent in the preparation of our consolidated financial statements include, but are not limited to, accounting for sales, cost recognition and profit booking rates; postretirement benefit plans; environmental liabilities and assets for the portion of environmental costs that are probable of future recovery; evaluation of goodwill, intangible assets, investments and other assets for impairment; income taxes including deferred tax assets; fair value measurements; and contingencies. The consolidated financial statements include the accounts of subsidiaries we control and variable interest entities if we are the primary beneficiary. We eliminate intercompany balances and tran

Notes to Consolidated Financial Statements (unaudited) (continued)

Notes to Consolidated Financial Statements (unaudited) (continued) common share also includes the dilutive effects for the assumed vesting of outstanding restricted stock units (RSUs) and performance stock units (PSUs) based on the treasury stock method. There were no significant anti-dilutive equity awards during the quarters and nine months ended September 28, 2025 and September 29, 2024. Basic and diluted weighted average common shares outstanding decreased in 2025 compared to 2024 due to share repurchases. See "Note 9 - Stockholders' Equity" for more information. NOTE 3 - INFORMATION ON BUSINESS SEGMENTS Our operations are organized into four business segments, which also comprise our reportable segments: Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS) and Space. We generally organize our business segments based on the nature of products and services offered. Our chief operating decision maker (CODM) consists of the Chairman, President and Chief Executive Officer and the Chief Operating Officer. The CODM is responsible for allocating resources and assessing the performance of our consolidated enterprise and business segments. The profitability measure the CODM uses to allocate resources and assess segment performance is segment operating profit (and related margin rate, calculated as segment operating profit divided by sales), which is compared to historical and forecasted amounts on a regular basis. 10 Table of Contents Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

Notes to Consolidated Financial Statements (unaudited) (continued) Summary operating results for each of our business segments were as follows (in millions): Quarters Ended Nine Months Ended September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 Sales Aeronautics $ 7,256 $ 6,487 $ 21,733 $ 20,609 Missiles and Fire Control 3,624 3,175 10,430 9,270 Rotary and Mission Systems 4,373 4,367 12,696 13,003 Space 3,356 3,075 9,868 9,539 Total sales $ 18,609 $ 17,104 $ 54,727 $ 52,421 Operating costs and expenses Aeronautics $ 6,571 $ 5,835 $ 20,425 $ 18,531 Missiles and Fire Control 3,114 2,718 8,977 8,057 Rotary and Mission Systems 3,868 3,879 11,896 11,605 Space 3,026 2,804 8,804 8,632 Total operating costs and expenses $ 16,579 $ 15,236 $ 50,102 $ 46,825 Operating profit (a) Aeronautics $ 682 $ 659 $ 1,304 $ 2,089 Missiles and Fire Control 510 456 1,454 1,217 Rotary and Mission Systems 506 483 855 1,408 Space 331 272 1,072 943 Total business segment operating profit 2,029 1,870 4,685 5,657 Unallocated items FAS/CAS pension operating adjustment 380 406 1,138 1,218 Impairment and other charges — — ( 66 ) ( 87 ) Intangible asset amortization expense ( 70 ) ( 61 ) ( 197 ) ( 183 ) Other, net ( 59 ) ( 75 ) ( 160 ) ( 288 ) Total unallocated items 251 270 715 660 Total consolidated operating profit $ 2,280 $ 2,140 $ 5,400 $ 6,317 Intersegment sales Aeronautics $ 85 $ 125 $ 271 $ 262 Missiles and Fire Control 218 210 616 616 Rotary and Mission Systems 580 569 1,778 1,729 Space 77 94 244 300 Total intersegment sales $ 960 $ 998 $ 2,909 $ 2,907 (a) Operating profit by segment includes certain immaterial items, such as other income (primarily equity earnings) that are not presented separately in the table. Accordingly, the difference between sales less operating costs and expenses may not equal operating profit by segment. Segment results exclude intersegment transactions as these activities are eliminated in consolidatio

Notes to Consolidated Financial Statements (unaudited) (continued)

Notes to Consolidated Financial Statements (unaudited) (continued) Unallocated Items Business segment operating profit excludes the FAS/CAS pension operating adjustment described below, a portion of corporate costs not considered allowable or allocable to contracts with the U.S. Government under the applicable U.S. Government Cost Accounting Standards (CAS) or Federal Acquisition Regulations (FAR), and other items not considered part of management's evaluation of segment operating performance such as a portion of management and administration costs, legal fees and settlements, stock-based compensation expense, changes in the fair value of assets and liabilities for deferred compensation plans, retiree benefits, significant severance charges, significant asset impairments, gains or losses from divestitures, intangible asset amortization expense, and other miscellaneous corporate activities. Collectively these items are included in "Unallocated items" to reconcile total segment to consolidated operating profit. See "Note 10 - Other" for a discussion related to certain factors that may impact the comparability of sales and operating profit of our business segments. FAS/CAS Pension Operating Adjustment Our business segment results of operations include pension expense as calculated under CAS, which we refer to as CAS pension cost. We recover CAS pension and other postretirement benefit plan cost through the pricing of our products and services on U.S. Government contracts and, therefore, recognize CAS pension cost in each business segments' sales and operating costs and expenses. Our consolidated financial statements must present pension and other postretirement benefit plan (expense) income calculated in accordance with Financial Accounting Standards (FAS) requirements under U.S. GAAP. The FAS/CAS pension operating adjustment represents the difference between CAS pension cost included in segment operating income and the service cost component of FAS pension (expen

Notes to Consolidated Financial Statements (unaudited) (continued)

Notes to Consolidated Financial Statements (unaudited) (continued) Disaggregation of Sales Sales by products and services, contract type, customer, and geographic region were as follows (in millions): Quarter Ended September 28, 2025 Aeronautics MFC RMS Space Total Sales Products $ 5,807 $ 3,256 $ 3,509 $ 2,739 $ 15,311 Services 1,449 368 864 617 3,298 Total sales $ 7,256 $ 3,624 $ 4,373 $ 3,356 $ 18,609 Sales by contract type Fixed-price $ 4,758 $ 2,638 $ 2,733 $ 878 $ 11,007 Cost-reimbursable 2,498 986 1,640 2,478 7,602 Total sales $ 7,256 $ 3,624 $ 4,373 $ 3,356 $ 18,609 Sales by customer U.S. Government $ 4,681 $ 2,633 $ 2,764 $ 3,293 $ 13,371 International (a) 2,571 989 1,564 55 5,179 U.S. commercial and other 4 2 45 8 59 Total sales $ 7,256 $ 3,624 $ 4,373 $ 3,356 $ 18,609 Sales by geographic region United States $ 4,685 $ 2,635 $ 2,809 $ 3,301 $ 13,430 Europe 1,245 401 343 22 2,011 Asia Pacific 926 281 764 32 2,003 Middle East 138 295 199 1 633 Other 262 12 258 — 532 Total sales $ 7,256 $ 3,624 $ 4,373 $ 3,356 $ 18,609 Nine Months Ended September 28, 2025 Aeronautics MFC RMS Space Total Sales Products $ 17,513 $ 9,338 $ 10,337 $ 8,208 $ 45,396 Services 4,220 1,092 2,359 1,660 9,331 Total sales $ 21,733 $ 10,430 $ 12,696 $ 9,868 $ 54,727 Sales by contract type Fixed-price $ 14,383 $ 7,525 $ 7,688 $ 2,732 $ 32,328 Cost-reimbursable 7,350 2,905 5,008 7,136 22,399 Total sales $ 21,733 $ 10,430 $ 12,696 $ 9,868 $ 54,727 Sales by customer U.S. Government $ 13,969 $ 7,464 $ 8,409 $ 9,649 $ 39,491 International (a) 7,742 2,957 4,117 201 15,017 U.S. commercial and other 22 9 170 18 219 Total sales $ 21,733 $ 10,430 $ 12,696 $ 9,868 $ 54,727 Sales by geographic region United States $ 13,991 $ 7,473 $ 8,579 $ 9,667 $ 39,710 Europe 3,896 1,177 926 66 6,065 Asia Pacific 2,750 728 1,998 128 5,604 Middle East 445 1,012 630 7 2,094 Other 651 40 563 — 1,254 Total sales $ 21,733 $ 10,430 $ 12,696 $ 9,868 $ 54,727 13 Table

Notes to Consolidated Financial Statements (unaudited) (continued)

Notes to Consolidated Financial Statements (unaudited) (continued) Quarter Ended September 29, 2024 Aeronautics MFC RMS Space Total Sales Products $ 5,550 $ 2,811 $ 3,554 $ 2,557 $ 14,472 Services 937 364 813 518 2,632 Total sales $ 6,487 $ 3,175 $ 4,367 $ 3,075 $ 17,104 Sales by contract type Fixed-price $ 4,276 $ 2,211 $ 2,691 $ 865 $ 10,043 Cost-reimbursable 2,211 964 1,676 2,210 7,061 Total sales $ 6,487 $ 3,175 $ 4,367 $ 3,075 $ 17,104 Sales by customer U.S. Government $ 4,465 $ 2,272 $ 2,867 $ 3,081 $ 12,685 International (a) 1,973 901 1,403 61 4,338 U.S. commercial and other 49 2 97 ( 67 ) 81 Total sales $ 6,487 $ 3,175 $ 4,367 $ 3,075 $ 17,104 Sales by geographic region United States $ 4,514 $ 2,274 $ 2,964 $ 3,014 $ 12,766 Europe 1,047 334 309 18 1,708 Asia Pacific 612 216 632 43 1,503 Middle East 206 333 190 — 729 Other 108 18 272 — 398 Total sales $ 6,487 $ 3,175 $ 4,367 $ 3,075 $ 17,104 Nine Months Ended September 29, 2024 Aeronautics MFC RMS Space Total Sales Products $ 17,113 $ 8,217 $ 10,500 $ 7,947 $ 43,777 Services 3,496 1,053 2,503 1,592 8,644 Total sales $ 20,609 $ 9,270 $ 13,003 $ 9,539 $ 52,421 Sales by contract type Fixed-price $ 13,805 $ 6,331 $ 7,980 $ 2,690 $ 30,806 Cost-reimbursable 6,804 2,939 5,023 6,849 21,615 Total sales $ 20,609 $ 9,270 $ 13,003 $ 9,539 $ 52,421 Sales by customer U.S. Government $ 14,072 $ 6,680 $ 8,706 $ 9,350 $ 38,808 International (a) 6,422 2,581 4,035 174 13,212 U.S. commercial and other 115 9 262 15 401 Total sales $ 20,609 $ 9,270 $ 13,003 $ 9,539 $ 52,421 Sales by geographic region United States $ 14,187 $ 6,689 $ 8,968 $ 9,365 $ 39,209 Europe 3,528 788 860 55 5,231 Asia Pacific 1,933 583 1,922 114 4,552 Middle East 603 1,153 552 5 2,313 Other 358 57 701 — 1,116 Total sales $ 20,609 $ 9,270 $ 13,003 $ 9,539 $ 52,421 (a) International sales include foreign military sales (FMS) contracted through the U.S. Government and direct commercial sales to international go

Notes to Consolidated Financial Statements (unaudited) (continued)

Notes to Consolidated Financial Statements (unaudited) (continued) Our Aeronautics business segment includes our largest program, the F-35 Lightning II, an international multi-role, multi-variant, stealth fighter aircraft. Sales for the F-35 program represented approximately 26 % of our total consolidated sales for both the quarter and nine months ended September 28, 2025 and 22 % and 24 % of our total consolidated sales for the quarter and nine months ended September 29, 2024. Assets Total assets for each of our business segments were as follows (in millions): September 28, 2025 December 31, 2024 Assets Aeronautics $ 14,726 $ 13,223 Missiles and Fire Control 6,899 5,952 Rotary and Mission Systems 16,972 17,025 Space 7,865 7,388 Total business segment assets 46,462 43,588 Corporate assets (a) 13,814 12,029 Total assets $ 60,276 $ 55,617 (a) Corporate assets primarily include cash and cash equivalents, deferred income taxes, assets for the portion of environmental costs that are probable of future recovery, property, plant and equipment used in our corporate operations, assets held in a trust for deferred compensation plans, and other marketable investments. NOTE 4 - CONTRACT ASSETS AND LIABILITIES Contract assets include unbilled amounts typically resulting from sales under contracts when the percentage-of-completion cost-to-cost method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer. Contract liabilities include advance payments and billings in excess of revenue recognized. Contract assets and contract liabilities were as follows (in millions): September 28, 2025 December 31, 2024 Contract assets $ 13,949 $ 12,957 Contract liabilities 10,259 9,795 Contract assets are primarily driven by the recognition of revenue related to the satisfaction or partial satisfaction of performance obligations for which we have not yet billed our customers. During the nine months ended September 28, 2025, cont

Notes to Consolidated Financial Statements (unaudited) (continued)

Notes to Consolidated Financial Statements (unaudited) (continued) NOTE 5 - INVENTORIES Inventories consisted of the following (in millions): September 28, 2025 December 31, 2024 Materials, spares and supplies $ 670 $ 661 Work-in-process 2,882 2,617 Finished goods 197 196 Total inv

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