FINANCIAL COMPARISON

BETWEEN

THE BOEING COMPANY

AND

LOCKHEED MARTIN

Keith L. Hohl
EMGT 452
Semester Project
14 December 1999

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 Table of Contents

1. Introduction/Study Objective

2. Boeing Financial Statement and Analysis

2.1. Background and Product Lines

2.2. Consolidated Balance and Income Statements
2.3. Divisional Financial Statements
2.4. Ratio and Trend Analysis

3. Lockheed Martin Financial Statement and Analysis

3.1. Background and Product Lines

3.2. Consolidated Balance and Income Statements
3.3. Divisional Financial Statements
3.4. Ratio and Trend Analysis

4. Financial Comparison between the Two Companies

4.1. Consolidated Comparisons

4.2. Military Aircraft and Space Divisions Comparisons

5. Summary/Conclusions

6. Bibliography

7. List of Tables

8. List of Figures

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 List of Tables
T-1: Consolidated Financial Balance Sheet-The Boeing Company
T-2: Consolidated Income Statement-The Boeing Company
T-3: Divisional Financial Summary-The Boeing Company
T-4: Consolidated Financial Ratio Analysis-The Boeing Company
T-5: Consolidated Financial Balance Sheet-Lockheed Martin
T-6: Consolidated Income Statement- Lockheed Martin
T-7: Divisional Financial Summary- Lockheed Martin
T-8: Consolidated Financial Ratio Analysis- Lockheed Martin

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 List of Figures
F-1: Total Assets Divisional Trend Analysis-The Boeing Company
F-2: Sales Divisional Trend Analysis-The Boeing Company
F-3: Net Earnings Divisional Trend Analysis-The Boeing Company
F-4: Net Capital Expenditures Divisional Trend Analysis-The Boeing Company
F-5: Total Liabilities Divisional Trend Analysis-The Boeing Company
F-6: Research and Development Divisional Trend Analysis-The Boeing Company
F-7: Liquidity Ratio Trend Analysis-The Boeing Company
F-8: Asset Management Ratio Trend Analysis-The Boeing Company
F-9: Total Assets Divisional Trend Analysis- Lockheed Martin
F-10: Sales Divisional Trend Analysis- Lockheed Martin
F-11: Net Earnings Divisional Trend Analysis-Lockheed Martin
F-12: Net Capital Expenditures Divisional Trend Analysis- Lockheed Martin
F-13: Liquidity Ratio Trend Analysis- Lockheed Martin
F-14: Asset Management Ratio Trend Analysis- Lockheed Martin
F-15: Consolidated Total Assets Financial Comparison
F-16: Consolidated Sales Financial Comparison
F-17: Consolidated Net Earnings Financial Comparison
F-18: Consolidated Earnings from Operations Financial Comparison
F-19: Consolidated Earnings per Share Financial Comparison
F-20: Consolidated Return on Assets (ROA) Financial Comparison
F-21: Consolidated Return on Equity (ROE) Financial Comparison
F-22: Consolidated Profit Margin Financial Comparison
F-23: Consolidated Inventories Financial Comparison
F-24: Consolidated Current Ratio Liquidity Financial Comparison
F-25: Consolidated Quick Ratio Liquidity Financial Comparison
F-26: Consolidated Inventory Turnover -Asset Management Ratio Financial Comparison
F-27: Consolidated Fixed Asset –Asset Management Ratio Financial Comparison
F-28: Consolidated Total Asset –Asset Management Ratio Financial Comparison
F-29: Consolidated Day Sales Outstanding -Asset Management Ratio Financial Comparison
F-30: Consolidated Debt Ratio-Debt Management Ratio Financial Comparison
F-31: Consolidated Times Interest Earned Ratio-Debt Management Financial Comparison
F-32: Divisional Sales-Military Aircraft & Space Financial Comparison
F-33: Divisional EBIT- Military Aircraft & Space Financial Comparison
F-34: Divisional Total Assets- Military Aircraft & Space Financial Comparison
F-35: Divisional Net Capital Expenditures- Military Aircraft & Space Financial Comparison

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1. Introduction/Objective

This study will financially compare The Boeing Company and the Lockheed Martin Corporation by using
ratio analysis of the 1998 Balance and Income statements of each company. The study will determine
each company’s current consolidated and divisional financial position. The Military Aircraft and Space
Divisions will be financially compared between The Boeing Company (Boeing) and Lockheed Martin
(LM).

2. Boeing Financial Statement and Analysis

2.1 Background and Product Lines

The Boeing Company is the largest manufacturer of commercial jetliners and Military aircraft in the
world. The Boeing Company is divided into the following divisions; (1) The Commercial Airplane
Group, (2). The Military Aircraft and Missile Group, (3). Space and Communications Group, and (4).
The Customer and Commercial Financing Group. Each group is responsible for certain Products and the
resulting financial performance.

The Commercial Airplane group product line includes the following products: 737, 747, 757, 767,777,
717, MD-11, MD-80, and MD-90 jetliners. Chances are very good that in one’s recent travels that you
were passenger in one of these Boeing jets.

The Military Aircraft and Missiles Product lines includes the following: F18C/D and F18E/F Hornet, F15E
Eagle, AV8B Harrier II Plus, T45 Goshawk, C-17 Globemaster III, V-22 Osprey, CH-47 Chinook Helicopter,
RAH-66 Comanche, AH-64D Apache Longbow, Slam-ER Missile and JDAM missile. The product lines show
the extent in which the Military Aircraft and Missiles provide for the Nation’s defense.

The Space and Communications Group Product lines includes the following: Space Shuttle, Delta II
rockets, Delta III rockets, Delta IV rockets, International Space Station, NMD Interceptor, 767 AWACS,
Airborne Laser, Sea Launch, and Global Positioning System. Space and communication is the division in
which has the highest growth potential for Boeing.

2.2 Consolidated Divisional Financial Statements

Table T-1 shows the Boeing Company Consolidated Financial Balance Sheet for 1996-1998 and the
recent 1999 third Quarter Earnings Report. The Balance sheet takes into the account for the mergers and
acquisitions of The Rockwell Aerospace and Defense Company in Dec 1996 and McDonnell Douglas
Corporation in August 1997. The Balance sheet provides a snapshot of the Boeing Company at a point of
time. Throughout the remainder of this report, analysis will be based upon time ending 31 December
1998 since 1999 Third Quarter comparison data from the Lockheed Martin Corporation could not be
found.
The overall total assets not including the third Qtr Earnings report shows that the total assets are
decreasing since its peak in 1997. It shows that approximately 44% of the 1998 total assets are the
classified under the Current assets. Current assets less inventories are the most liquid of all the assets.
The current assets are decreasing over the three-year time period.
The current liabilities are also decreasing over the three-year time period in which current liabilities
account for 37% of the total liabilities. The long- term debt is also decreasing over the three year time
period accounting for just 16% of the total liabilities.
TableT-2 shows the Boeing Company Consolidated Income Statement for 1996 –1998 and the recent
1999 third Quarter Earnings Report. The “bottom line,” Earning per share at a disappointing $1.16 for

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1998. The income statement shows that even though Sales are increasing, the cost of operations are
increasing more than the sales causing the Earnings per share to be decrease.

2.3Divisional Financial Statements

Table T-3 shows the Boeing Company’s Divisions and selected financial data. The financial data
includes Total Assets, Total Liabilities, Sales, Net Earnings, Depreciation, Research and
Development, Net Capital Expenditures and Contractual backlog. However, due to lack of data
availability from the Lockheed Martin corporation, the Divisional Summary comparison will only
be performed on Total Assets, Sales, Earnings before Income and Taxes (EBIT) and Net Capital
Expenditures.

34% of the total assets are allocated to the Commercial Aircraft division while 18% of the total
assets are allocated to the Military Aircraft and Space Divisions as shown in figure F-1.

The Commercial Aircraft division and Military Aircraft and Space divisions accounted for 63%
and 35% respectively of the total company Sales as shown in Figure F-2. This is very important
correlation to be used later on this report during ratio analysis.

In 1998, the Military Aircraft and Space Divisions contributed approximately 137% to the overall
Net earnings as shown in figure F-3. Even though the Commercial Aircraft division has the
majority of Sales, the Commercial Aircraft division only contributed 6% to the overall net
earnings. This glaring statistic shows the Military Aircraft and Space Divisions are basically
supporting the entire corporation. This could be one of the major reasons why the Boeing
Corporation sought out and acquired Rockwell and McDonnell Douglas Corporations since the
majority of these two corporations business was Military and Space applications.

For Net Capital Expenditures, The Commercial Aircraft and Military Aircraft and Space
contributed to 48% and 30% respectively to Net Capital expenditure as shown in figure F-4.
Since Sales and Cost of operations are high for the Commercial Aircraft division, it is not
surprising that this division is spending approximately half of the capital expenditures.

Figure F-5 and F-6 show the Divisional Total Liabilities and Research and Development Trend
analysis respectively. For 1998, the Commercial Aircraft Division claimed 54% of the available
funding even though its Sales and Cost of operations are increasing. So the question is the 54%
of the funding being spend on new products in lieu of reducing costs of operations? From the
limited data available, it seems to me that the funding is being used with new product
development in conjunction with Sales in lieu of cost reduction product enhancements.

2.4 Ratio and Trend Analysis

Table T-4 shows the consolidated financial ratios summary. Liquidity, Asset Management, Debt
Management, and Profitability ratios were generated, analyzed, and compared to similar industry
averages. Each of the main ratios was graphed and brief explanation accompanied each graph.

Liquidity ratios basically define how, in this case, the Boeing Company can meet its Short -Term
obligations. The Asset Management ratio shows how effectively the firm manages its assets. The
Debt Management ratios show how a firm uses debt financing. And finally, the Profitability
ratios shows how effective are the firms operations. The profitability ratio is a summation of the
effects of the Liquidity, Asset Management, and Debt management ratios.

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Table T-4 shows each individual ratio, the ratio definition, the 1999 industry average, and how
Boeing Company performed during the three- year period. Note the last entry of Table T-4 deals
with the Beta coefficient. The Beta coefficient for the Boeing Company is 1.10. The Beta
coefficient is market risk of the stock. So with a Beta coefficient of 1.10, The Boeing Company
stock is 10% more risky than the average risk stock (the average risk stock has a Beta coefficient
of 1.00)

Figure F-7 shows the Liquidity Ratio Trend analysis. The liquidity ratio includes the Current
Ratio and the Quick ratios. Both ratios are lower than the industry average. For the Boeing
Company, the graph shows that the Boeing Company would have to liquidate its inventory in
order to payoff its current liabilities. Inventories are the least liquid of all assets. In order to
payoff it creditors in full, the Boeing Company could liquidate its current assets at 61% of book
value.

Figure F-8 shows the Asset Management Ratio Trend Analysis. The Asset Management ratios
include the Inventory Turnover, Total Asset Turnover, and Fixed Asset Turnover Ratios. The
inventory Turnover ratio is higher than the Industry average that shows that the inventory sold out
and restocked 6.73 times a year. Since Sales is at an all-time high for the Boeing Company, this
could mean that there is shortage of inventory in order to keep up with the Sales.

The Fixed Asset Turnover Ratio is slightly lower than the industry average. Compared to other
industry, The Boeing Company is not effectively utilizing its plant and equipment. This could be
result of the Rockwell and McDonnell Douglas mergers/acquisitions. In my opinion, it will take
some time for Boeing to utilize it assets from the merger since the Boeing Company is located in
twenty-seven states. The Boeing Company has great potential here to reduce its plant and
equipment assets and to utilize existing assets to the fullest.

The Total Asset Turnover Ratio is higher than the industry average. This is probably due to the
Commercial Aircraft division producing such large volume of Sales compared to the total asset
investment.

Not include in the Asset Management Ratio Trend analysis graph but is included in the Asset
Management ratios analysis is The Day Sales Outstanding ratio. This ratio evaluates account
receivables payments. For the Boeing Company, Payments are being received 2.5 times quicker
than the industry average at short 21 days. This high rate could be the result of large number of
Commercial aircraft being produced. Data was not available to look at the individual divisions.

The Debt Management Ratios are not graphed. The Debt Management Ratios include the Debt
and Times Interest Earned ratios. The Debt ratio identifies how Boeing is financed. Boeing is
slighter higher than the industry average. Creditors have financed 66% of the total financing.
From this ratio, Creditors may make it costly for Boeing to borrow additional funds without
raising more equity capital. However from Table T-1, long-term debt over the last three years has
been declining.

The Times Interest Earned ratio of the Debt Management ratios is Boeing’s ability to pay interest.
Boeing has sufficient funds to meet annual interest costs even if operating income declines.

The Profitability Ratios include Profit Margin, Return on Assets (ROA), Return on Equity (ROE)
and Basic Earning Power. Profit Margins and ROA are low but improving over the three- year
period. This is a result of cost of operations too high, insufficient use of existing plant and
equipment, and long and short-term debts are too high. Boeing needs to find ways to improve in

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these areas in order to obtain respectable Profit Margins and ROA. Evidently from the mergers
and acquisitions, Boeing is beginning to take advantage of its merged assets and becoming to
utilize and consolidate its operations. This is also relevant that the general total employment has
been reduced by more than seven thousand people by the end of 1998.

The Basic Earning Power profitability Ratio measures Boeing’s earning power of its assets,
before the influence of taxes and financing. It is used for comparing firms with different tax
situations and financial leverage. In this case, Boeing will be compared to Lockheed Martin later
in this report.

The Return on Equity (ROE) is much higher than ROA and much higher than the industry
average. Boeing used its debt effectively so that net income is increasing while Common Equity
is decreasing.

3. Lockheed Martin Financial Statement and Analysis

3.1 Background and Product Lines

The Lockheed Martin (LM) Corporation is divided into the following major divisions: (1) Space
Strategic Missiles, (2). Electronics, (3). Aeronautics, (4). Information and Services, and (5)
Energy and other. Each division is responsible for certain products and the resulting financial
performance.

The Space and Strategic Missile Group product line includes Atlas and Trident Ballistic Missile
systems, Trident Launch vehicles, Space Shuttle, and Reusable Launch vehicles.

The Electronics Group product lines includes AEGIS Weapon Systems, LANTIRN Targeting
systems, LOCAAS smart munitions system, and LOSAT Weapon system

The Aeronautics group product lines include F16 Falcon, F22 Raptor, F-117A, and C-130
Hercules Military aircraft

The Information and Services Group provide products and services for NASA, US Army,
Immigration and Naturalization Services (INS) and US Strategic Command.

The Energy and Other Group provide products and services for US Department of Energy.

3.2 Consolidated Balance and Income Statements

Table T-5 shows LM Consolidated Financial Balance sheet for 1996-1998. The balance sheet
takes into the for the mergers and acquisitions of Loral Electronics Corporation in April 1996,
Martin Marietta Corporation in March 1995, and General Dynamics Fort Worth Division and GE
Aerospace in 1993.

The overall total assets show that there has been no significant movement over the last three
years. It shows that approximately 37% of the 1998 total assets are classified under current
assets. Again current assets are remaining fairly constant over the three- year period.
The current liabilities are increasing over the three-year period in which current liabilities account
for 36% of the total liabilities. Long term debt is decreasing over the three- year period
accounting for 31% of the total liabilities.

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Table T-6 shows LM Consolidated Income statement for 1996-1998 and the recent 1999 third
quarter Earnings Report. The bottom line Earnings per share is $2.66 for 1998. The income
statement shows that even though Sales were decreasing compared to 1997 peak, the cost of
operations decreased causing the Earnings per share to increase.

3.3 Divisional Financial Statements

Table T-7 shows LM’s divisions and Selected financial data. The financial data includes Total
Assets, Sales, Earnings before Income and Taxes (EBIT) and Net Capital Expenditures.

36% of the total assets are allocated to the Electronics Division while 32% of the total assets are
allocated to Aeronautic and Space Divisions as shown in Figure F-9.

The Aeronautics and Space Divisions accounted for 51% of the total company Sales as shown in
Figure F-10.

In 1998, The Aeronautics and Space Divisions contributed 65% to the overall Net Earnings
before Interest and Taxes as shown in Figure F-11.

For Net capital Expenditures, the Aeronautics and Space Divisions contributed 56% to the net
Capital expenditures as shown in figure F-12.

3.4 Ratio and Trend Analysis

Table T-8 shows the consolidated financial ratios summary. Liquidity, Asset Management, Debt
Management, and Profitability ratios were generated, analyzed, and compared to similar industry
averages. Each of the main ratios was graphed and brief explanation accompanied each graph.
Each of the ratio definitions was explained under the Boeing’s Ratio and Trend analysis section.

Table T-8 shows each individual ratio, the ratio definition, the 1999 industry average, and how
LM performed during the three- year period. Note the last entry of Table T-8 deals with the Beta
coefficient. The Beta coefficient for LM is 0.80. The Beta coefficient is market risk of the stock.
So with a Beta coefficient of 0.80, LM stock is 20% less risky than the average risk stock (the
average risk stock has a Beta coefficient of 1.00)

Figure F-13 shows the Liquidity Ratio Trend analysis. The liquidity ratio includes the Current
Ratio and the Quick ratios. Both ratios are significantly lower than the industry average
signifying a relatively weak liquidity position. For LM, the graph shows that LM would have to
liquidate its inventory in order to payoff its current liabilities. Inventories are the least liquid of
all assets. In order to payoff it creditors in full, LM could liquidate its current assets at 97% of
book value.

Figure F-14 shows the Asset Management Ratio Trend Analysis. The Asset Management ratios
include the Inventory Turnover, Total Asset Turnover, and Fixed Asset Turnover Ratios. The
inventory Turnover ratio is higher than the Industry average that shows that the inventory sold out
and restocked 6.12 times a year.

The Fixed Asset Turnover Ratio is slightly above than the industry average. Compared to other
industry, LM is as effective utilizing its plant and equipment as other corresponding industries but
still room for improvement. This could be result of the mergers/acquisitions acquired more than
three years ago.

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The Total Asset Turnover Ratio is lower than the industry average. This is probably due LM
generating less sales than total asset investment. Note that Sales basically remained flat during
this three- year period.

Not included in the Asset Management Ratio Trend analysis graph but is included in the Asset
Management ratios analysis is The Day Sales Outstanding ratio. This ratio evaluates account
receivables payments. For LM, Payments are being received five days longer than the industry
average of fifty-two days. Improvement in this area is a must if Net Earnings is expected to
increase.

The Debt Management Ratios are not graphed. The Debt Management Ratios include the Debt
and Times Interest Earned ratios. The Debt ratio identifies how LM is financed. Boeing is
slighter higher than the industry average. Creditors have financed 67% of the total financing.
From this ratio, Creditors may make it costly for LM to borrow additional funds without raising
more equity capital. However from Table T-5, long-term debt over the last three years last been
declining.

The Times Interest Earned ratio of the Debt Management ratios is LM’s ability to pay interest.
LM has sufficient funds to meet annual interest costs even if operating income declines.

The Profitability Ratios include Profit Margin, Return on Assets (ROA), Return on Equity (ROE)
and Basic Earning Power. Profit Margins and ROA are low and declining over the three- year
period. This is a result of cost of operations too high, insufficient use of existing plant and
equipment, and long and short-term debts are too high. LM needs to find ways to improve in
these areas in order to obtain respectable Profit Margins and ROA. Evidently from the mergers
and acquisitions, LM has not taken full advantage of its merged assets and consolidation of its
operations. Note: general total employment has been reduced by more than twenty-five thousand
people by the end of 1998 during this three-year period.

The Basic Earning Power profitability Ratio measures LM’s earning power of its assets, before
the influence of taxes and financing. It is used for comparing firms with different tax situations
and financial leverage. The Basic Earning power is declining.

The Return on Equity (ROE) is much higher than ROA and much higher than the industry
average. However ROE and ROA are declining since net income is decreasing and Common
equity is increasing.

4. Financial Comparison between the Two Companies

4.1 Consolidated Comparisons

The remainder of this report will be utilizing Column and bar charts to emphasize the
commonality and differences between Consolidated Boeing and Consolidated LM.

Figure F-15 compares the consolidated Total Assets. Boeing’s total assets are 1.30 times greater
than LM. Boeing’s assets are decreasing while LM’s are remaining roughly the same.

Figure F-16 Compare the consolidated Sales. Boeing Sales are increasing while LM Sales remain
flat. In 1998, Boeing Sales are more than doubled LM Sales. However Boeing Sales are higher

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due to Commercial Aircraft division that LM does not have. If the Commercial Sales are
removed, then Sales figures for both companies would be fairly close.

Figure F-17 compares the consolidated Net Earnings. LM operations are much more efficient
than Boeings over this three-year period since LM earnings are nearly the same as Boeing’s.
Note Boeing had more than double the sales in 1998 and yet only slight difference in earnings.
However LM earning trend is decreasing over this three-year period.

Figure F-18 compares the consolidated Earnings from Operations. LM cost of operations is much
lower than Boeing’s. LM earnings remain consistent with flat sales receipts. Boeing needs much
improvement in this area.

Figure F-19 compares the consolidated Earning per share. LM has generally higher earnings per
share than Boeing for reasoning stated on earlier figures. Again Boeing need much improvement
in this area.

Figure F-20 compares the consolidated ROA. Figure F-20 shows that LM has out performed
Boeing since Boeing merged with McDonnell Douglas and Rockwell. However, LM’s ROA has
been decreasing over this three-year time period.

Figure F-21 compares the Consolidated ROE. Figure F-21 shows that LM has been
outperforming Boeing by significant margins. However, LM’s ROE has been declining since its
peak in 1997. Again, the figure shows that LM has been more efficient at its operations
compared to Boeing.

Figure F-22 compares the Consolidated profit margin. The figure shows that LM’s profit margins
are decreasing but still significantly ahead of Boeing. Again LM has a more efficient operation
compared to Boeing.

Figure F-23 compares the consolidated Inventories. The figure shows that LM inventories are
increasing while Boeing’s inventories are decreasing. LM inventory to total asset ratio is 50%
less than Boeing’s.

Figure F-24 compares the consolidated liquidity Current ratio. The figure shows that both
companies have a relative weak liquidity position compared to the industry average. However
LM and Boeing has approximately 34% and 20% respectively of its liabilities committed to long
and short term debt.

Figure F-25 compares the consolidated liquidity Quick ratio. The figure shows that both
companies ratio is decreasing. Both companies would have to liquidate its inventory in order to
payoff it current liabilities.

Figure F-26 compares the inventory turnover ratio. It shows that both companies inventory was
sold out and restocked higher than the industry average. LM ratio is higher than Boeing. The
Figure could show that a shortage of needed inventory to support sales for Boeing could be
potential influence here since Boeing had experience record sales during 1998.

Figure F-27 compares the consolidated Fixed Asset Ratio. The figure shows that LM is
effectively using its plant and equipment compared to the industry average and to Boeing.
Boeing requires improvement to better utilize its plant and equipment.

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Figure F-28 compares the Consolidated Total Asset Ratio. The figure shows that LM is
generating sales less than total asset investment compared to the industry average. Boeing on the
other hand, is generating more sales than total asset investment.

Figure F-29 compares the consolidated Day Sales Outstanding Ratio. Boeing’s rate is
outstanding compared to the industry average while LM rate exceed the industry average.

Figure F-30 compares the consolidated Debt ratio. Both companies debt ratio is higher than the
industry average. Creditors have supplied approximately 67% of the total financing.

Figure F-31 compares the consolidated Times Interest Earned Ratio. Both companies have
sufficient funds to meet their annual interest costs if operating incomes decline.

4.2 Military Aircraft and Space Divisions Comparisons

Figure F-32 compares the Military Aircraft and Space divisions Sales. The figure shows that
Boeing and LM Sales are nearly equal. Note Boeing overall sales exceed LM by 1.6 times. LM
sales however are decreasing while Boeing’s are increasing.

Figure F-33 compares the Military Aircraft and Space divisions EBIT. The figure shows nearing
equal EBIT for both companies. Yet both companies claimed an overall Earnings Loss per share
for 1997. The figure shows that in 1997 the Military Aircraft and Space divisions prevented even
further recorded losses.

Figure F-34 compares the Military aircraft and Space Divisions total assets. LM total assets are
increasing while Boeing’s total assets are decreasing. The figure explains while ROA is
increasing at Boeing and decreasing at LM.

Figure F-35 compares the Military Aircraft and space Division Net Capital Expenditures. Net
Capital expenditures for both companies are increasing with Boeing slightly more than LM. Both
companies are trying to reduce its cost of operation by modernization of its plant and equipment.

5.0 Summary/Conclusions

The Boeing Company profitability is increasing but not at industry averages or better. Boeing is still
under performing the S & P 500 average. Over the last three years, Boeing has reduced its long term
debt, reduced its overall inventories, lowered its operating costs, increased its usage of fixed assets,
improved account receivables payments, and has generated more Sales than total investments. Boeing
needs to further reduce its operating costs and further improve on asset utilization.

LM profitability is decreasing and under performing the S & P 500 average. LM Sales are decreasing, Net
income decreasing, cost of operations increasing and short term debt increasing. All of these factors will
be contributing to poor 1999 performance. LM needs to reduce its operating cost, reduce time of account
Receiveable payments, and increase Sales to start producing positive effects on ROA and ROE.

Surprisingly, the Military Aircraft and Space Divisions of Both Boeing and LM are very similar in Sales,
EBIT, Total Assets, and Net Capital Expenditures. These divisions have been contributing significantly to
each of the companies Net Earnings and Sales. Other divisions within each company should be looking
at the Military Aircraft and Space divisions in order to get their respective division in shape.

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 Bibliography

1. Annual Statement of Studies, 1998-1999. RMA. Pages 446-447.

2. Almanac of Business and Industrial Financial Ratios-1999 edition. 30th edition. Troy, Leo,
phd. Pages 160-161.

3. The Value Line Investment Survey, Part I Summary & index. 19 November 1999 issue. Page 5 & 13.

4. The Value Line Investment Survey Edition 4, Part 3. 1 October 1999 issue. Pages 555 and
562.

5. The Boeing Company 1998 Annual Report.

6. The Boeing Company 1997 Annual Report.

7. Lockheed Martin 1998 Annual Report.

8. Lockheed Martin 1997 Annual Report.

9. The Boeing company 1999First Quarter Results News Release.

10. The Boeing Company 1999 Second Quarter Results News Release.

11. The Boeing Company 1999 third Quarter Results News Release.

12. Lockheed Martin 1999 First Quarter Results News Release.

13. Lockheed Martin 1999 Second Quarter Results News Release.

14. Lockheed Martin 1999 Third Quarter Results News Release.

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