Lockheed Martin Corp

Government-
Owned Leased Owned
Aeronautics 5.80 2.40 14.50
Missiles and Fire Control 6.20 2.90 1.80
Rotary and Mission Systems 11.20 7.60 0.40
Space Systems 8.40 2.40 13.60
Corporate activities 2.70 1.00 —
Total 34.30 16.30 30.30
Total
22.70
10.90
19.20
24.40
3.70
80.90
Common Stock – Dividends Paid Per Share and Market Prices

Dividends Paid Per Share
Quarter 2016 2015
First $ 1.65 $ 1.50
Second 1.65 1.50
Third 1.65 1.50
Fourth 1.82 1.65
Year $ 6.77 $ 6.15
Stock Prices (High-Low)
2016 2015
$223.19  -  $200.47 $207.06  -  $186.01
245.37  -    218.34 206.19  -    185.65
266.93  -    235.28 213.34  -    181.91
269.90  -    228.50 227.91  -    199.01
$269.90  -  $200.47 $227.91  -  $181.91
Purchases of Equity Securities

Total
Number of
Shares
Period (a) Purchased

September 26, 2016 – October 30, 2016 1,294,018

October 31, 2016 – November 27, 2016 712,100
November 28, 2016 – December 31, 2016 1,281,651
Total 3,287,769(c)
Average
Price Paid
Per Share

$ 235.56
$ 254.42
$ 259.81
$ 249.09
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans or
Programs (b)

1,293,734
711,974
1,270,668
3,276,376
Amount
Available for
Future Share
Repurchases
Under the
Plans or
Programs
(b)
(in millions)
$ 4,015
$ 3,834
$ 3,504
(In millions, except per share data) 2016
Operating results
Net sales $ 47,248
Operating
Net earningsprofit
from(a)(b)
continuing operations 5,549
(a)(b)
Net earnings from discontinued operations 3,753
(c) 1,549
Net earnings (b) 5,302
Earnings from continuing operations per common share
Basic (a)(b) 12.54
Diluted (a)(b) 12.38
Earnings from discontinued operations per common share
Basic 5.17
Diluted 5.11
Earnings per common share
Basic
Diluted(b) 17.71
(b) 17.49
Cash dividends declared per common share $ 6.77
Balance sheet (d)
Cash, cash equivalents and short-term investments (b) $ 1,837
Total current assets (e) 15,108
Goodwill (f) 10,764
Total assets (b)(e)(f) 47,806
Total current liabilities (e) 12,542
Total debt, net (g) 14,282
Total liabilities (b)(e)(g) 46,200
Total equity (b) 1,606
Common shares in stockholders’ equity at year-end 289
Cash flowprovided
Net cash information
by operating activities
(b)(h)
Net cash used for investing activities $ 5,189
(i) (985)
Net cash provided by (used for) financing activities (j)
Backlog (3,457)
(k) $ 96,200
2015 2014

$ 40,536 $ 39,946
4,712 5,012
3,126 3,253
479 361
3,605 3,614

10.07 10.27
9.93 10.09

1.55 1.14
1.53 1.12

11.62 11.41
11.46 11.21
$ 6.15 $ 5.49

$ 1,090 $ 1,446
14,573 10,684
10,695 7,964
49,304 37,190
13,918 10,954
15,261 6,142
46,207 33,790
3,097 3,400
303 314

$ 5,101 $ 3,866
(9,734) (1,723)
4,277 (3,314)
$ 94,800 $ 74,500
2013 2012

$ 39,243 $ 40,573
4,066 3,748
2,701 2,297
280 448
2,981 2,745

8.42 7.10
8.27 6.99

0.87 1.38
0.86 1.36

9.29 8.48
9.13 8.36
$ 4.78 $ 4.15

$ 2,617 $ 1,898
12,081 12,401
7,698 7,697
36,352 38,890
10,983 11,993
6,127 6,280
31,434 38,851
4,918 39
319 321

$ 4,546 $ 1,561
(1,121) (1,177)
(2,706) (2,068)
$ 76,300 $ 75,600
Consolidated Results of Operations

2016
Net sales $ 47,248
Cost of sales (42,186)
Gross profit 5,062
Other income, net 487
Operating profit (a) 5,549
Interest expense (663)
Other non-operating income, net —
Earnings from continuing operations before income taxes 4,886
Income tax expense (1,133)
Net earnings from continuing operations 3,753
Net earnings from discontinued operations 1,549
Net earnings $ 5,302
Diluted earnings per common share
Continuing operations $ 12.38
Discontinued operations 5.11
Total diluted earnings per common share $ 17.49
2015 2014
$ 40,536 $ 39,946
(36,044) (35,263)
4,492 4,683
220 329
4,712 5,012
(443) (340)
30 5
4,299 4,677
(1,173) (1,424)
3,126 3,253
479 361
$ 3,605 $ 3,614

$ 9.93 $ 10.09
1.53 1.12
$ 11.46 $ 11.21
Net Sales

2016 2015
Products $ 40,365 $ 34,868
% of total net sales 85.4% 86.0%
Services 6,883 5,668
% of total net sales 14.6% 14.0%
Total net sales $ 47,248 $ 40,536
2014
$ 34,984
87.6%
4,962
12.4%
$ 39,946
Cost of Sales

2016 2015
Cost of sales – products ($36,616) ($31,091)
% of product sales 90.7% 89.2%
Cost of sales – services (6,040) (4,824)
% of service sales 87.8% 85.1%
Severance charges (80) (82)
Other unallocated, net 550 (47)
Total cost of sales ($42,186) ($36,044)
2014
($30,983)
88.6%
(4,184)
84.3%
—
(96)
($35,263)
Business Segment Results of Operations

2016
Net sales
Aeronautics $ 17,769
Missiles and Fire Control 6,608
Rotary and Mission Systems 13,462
Space Systems 9,409
Total net sales $ 47,248
Operating profit
Aeronautics $ 1,887
Missiles and Fire Control 1,018
Rotary and Mission Systems 906
Space Systems 1,289
Total business segment operating profit 5,100
Unallocated items
FAS/CAS pension adjustment
FAS pension expense (a) (1,019)
Less: CAS pension cost (a)(b) 1,921
FAS/CAS pension adjustment (c) 902
Severance charges (a)(d) (80)
Stock-based
Other, net compensation (149)
(e)(f) (224)
Total unallocated, net 449
Total consolidated operating profit $ 5,549
2015 2014

$ 15,570 $ 14,920
6,770 7,092
9,091 8,732
9,105 9,202
$ 40,536 $ 39,946

$ 1,681 $ 1,649
1,282 1,344
844 936
1,171 1,187
4,978 5,116

(1,127) (1,099)
1,527 1,416
400 317
(82) —
(133) (154)
(451) (267)
(266) (104)
$ 4,712 $ 5,012
Aeronautics

2016 2015
Net sales $ 17,769 $ 15,570
Operating profit 1,887 1,681
Operating
Backlog at margin 10.6% 10.8%
year-end $ 34,200 $ 31,800
2014
$ 14,920
1,649
11.1%
$ 27,600
Missiles and Fire Control

2016 2015
Net sales $ 6,608 $ 6,770
Operating profit 1,018 1,282
Operating
Backlog at margin 15.4% 18.9%
year-end $ 14,700 $ 15,500
2014
$ 7,092
1,344
19.0%
$ 13,300
Rotary and Mission Systems

2016 2015
Net sales $ 13,462 $ 9,091
Operating profit 906 844
Operating
Backlog at margin 6.7% 9.3%
year-end $ 28,400 $ 30,100
2014
$ 8,732
936
10.7%
$ 13,300
Space Systems

2016 2015
Net sales $ 9,409 $ 9,105
Operating profit 1,289 1,171
Operating
Backlog at margin 13.7% 12.9%
year-end $ 18,900 $ 17,400
2014
$ 9,202
1,187
12.9%
$ 20,300
Liquidity and Cash Flows

2016
Cash and cash equivalents at beginning of year $ 1,090

Operating activities
Net earnings 5,302
Non-cash adjustments (35)
Changes in working capital (1,042)
Other, net 964
Net cash provided by operating activities 5,189
Net
Net cash
cash used for investing
provided by (used activities
for) financing (985)
activities (3,457)
Net change in cash and cash equivalents 747
Cash and cash equivalents at end of year $ 1,837
2015 2014
$ 1,446 $ 2,617

3,605 3,614
821 876
(846) (372)
1,521 (252)
5,101 3,866
(9,734) (1,723)
4,277 (3,314)
(356) (1,171)
$ 1,090 $ 1,446
Contractual Commitments and Off-Balance Sheet Arrangements

Payments Due By Period Less Than

Total 1 Year
Long-term debt (a) $ 15,228 $—
Interest payments 10,602
Other liabilities 2,923
Operating lease obligations 762
Purchase obligations:
Operating activities 38,357
Capital expenditures 229
Total contractual cash obligations $ 68,101 $ 21,305
Less Than Years   Years  
1 Year 2 and 3 4 and 5
$— $ 1,650 $ 2,150
630 1,245 1,120
268 531 417
179 281 181

20,060 13,271 3,484

168 54 7
$ 21,305 $ 17,032 $ 7,359
After        
5 Years
$ 11,428
7,607
1,707
121

1,542
—
$ 22,405
,

Commitment Expiration By Period

Total       Less Than
Commitment 1 Year
Standby letters of credit (a) $ 2,661
Surety bonds 368
Third-party Guarantees 709
Total commitments $ 3,738
Less Than Years Years
1 Year 2 and 3 4 and 5
$ 1,232 $ 893 $ 363
366 — 2
14 276 20
$ 1,612 $ 1,169 $ 385
After        
5 Years
$ 173
—
399
$ 572
Consolidated Statements of Earnings

Years Ended December 31,
2016
Net sales
Products $ 40,365
Services 6,883
Total net sales 47,248
Cost of sales
Products (36,616)
Services (6,040)
Severance charges (80)
Other unallocated, net 550
Total cost of sales (42,186)
Gross profit 5,062
Other income, net 487
Operating profit 5,549
Interest
Other expense (663)
non-operating income, net —
Earnings from continuing operations before income taxes 4,886
Income tax expense (1,133)
Net earnings from continuing operations 3,753
Net earnings from discontinued operations 1,549
Net earnings $ 5,302

Earnings per common share

Basic
Continuing operations $ 12.54
Discontinued operations 5.17
Basic earnings per common share $ 17.71
Diluted
Continuing operations $ 12.38
Discontinued operations 5.11
Diluted earnings per common share $ 17.49
d December 31,
2015 2014

$ 34,868 $ 34,984
5,668 4,962
40,536 39,946

(31,091) (30,983)
(4,824) (4,184)
(82) —
(47) (96)
(36,044) (35,263)
4,492 4,683
220 329
4,712 5,012
(443) (340)
30 5
4,299 4,677
(1,173) (1,424)
3,126 3,253
479 361
$ 3,605 $ 3,614

$ 10.07 $ 10.27
1.55 1.14
$ 11.62 $ 11.41

$ 9.93 $ 10.09
1.53 1.12
$ 11.46 $ 11.21
Consolidated Statements of Comprehensive Income

Net earnings
Other comprehensive (loss) income, net of tax
Postretirement benefit plans
Net other comprehensive loss recognized during the period, net of tax benefit of $668 million
in 2016, $192 million in 2015
Amounts reclassified from and $1.5 billion
accumulated otherincomprehensive
2014 loss, net of tax expense of
$382 million in 2016, $464 million in 2015 and $386 million in 2014
Reclassifications from divestiture of IS&GS business
Other, net
Other comprehensive (loss) income, net of tax
Comprehensive income
Years Ended December 31,
2016 2015 2014
$ 5,302 $ 3,605 $ 3,614

(1,232) (351)
699 850
(134) —
9 (73)
(658) 426
$ 4,644 $ 4,031 $ 1,345
2014
$ 3,614

(2,870)
706
—
(105)
(2,269)
$ 1,345
Consolidated Balance Sheets

December 31,
2016
Assets
Current assets
Cash and cash equivalents $ 1,837
Receivables, net 8,202
Inventories, net 4,670
Other current assets 399
Assets of discontinued operations —
Total current assets 15,108

Property, plant and equipment, net 5,549

Goodwill 10,764
Intangible assets, net 4,093
Deferred income taxes 6,625
Other noncurrent assets 5,667
Assets of discontinued operations —
Total assets $ 47,806

Liabilities and equity

Current liabilities
Accounts payable $ 1,653
Customer advances and amounts in excess of costs incurred 6,776
Salaries, benefits and payroll taxes 1,764
Current maturities of long-term debt —
Other current liabilities 2,349
Liabilities of discontinued operations —
Total current liabilities 12,542

Long-term debt, net 14,282

Accrued pension liabilities 13,855
Other postretirement benefit liabilities 862
Other noncurrent liabilities 4,659
Liabilities of discontinued operations —
Total liabilities 46,200

Stockholders’ equity
Common stock, $1 par value per share 289
Additional paid-in capital —
Retained earnings 13,324
Accumulated other comprehensive loss (12,102)
Total stockholders’ equity 1,511
Noncontrolling interests in subsidiary 95
Total equity 1,606
Total liabilities and equity $ 47,806
1,
2015

$ 1,090
7,254
4,819
441
969
14,573

5,389
10,695
4,022
6,068
5,396
3,161
$ 49,304

$ 1,745
6,703
1,707
956
1,859
948
13,918

14,305
11,807
1,070
4,902
205
46,207

303
—
14,238
(11,444)
 3,097
—
3,097
$ 49,304
Consolidated Statements of Cash Flows

Operating activities
Net earnings
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation and amortization
Stock-based compensation
Deferred income taxes
Goodwill impairment charges
Severance charges
Gain on divestiture of IS&GS business
Gain on step acquisition of AWE
Changes in assets and liabilities
Receivables, net
Inventories, net
Accounts payable
Customer advances and amounts in excess of costs incurred
Postretirement benefit plans
Income taxes
Other, net
Net cash provided by operating activities

Investing activities
Capital expenditures
Acquisitions of businesses and investments in affiliates
Other, net
Net cash used for investing activities

Financing activities
Special cash payment from divestiture of IS&GS business
Repurchases of common stock
Proceeds from stock option exercises
Dividends paid
Proceeds from the issuance of long-term debt
Repayments of long-term debt
Proceeds from borrowings under revolving credit facilities
Repayments of borrowings under revolving credit facilities
Other,
Net cashnet(used for) provided by financing
activities
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Years Ended December 31,
2016 2015 2014

$ 5,302 $ 3,605 $ 3,614

1,215 1,026
149 138
(152) (445)
— —
99 102
(1,242) —
(104) —

(811) (256)
(46) (398)
(188) (160)
3 (32)
1,028 1,068
146 (48)
(210) 501
5,189 5,101

(1,063) (939)
— (9,003)
78 208
(985) (9,734)

1,800 —
(2,096) (3,071)
106 174
(2,048) (1,932)
— 9,101
(952) —
— 6,000
— (6,000)
(267) 5
(3,457) 4,277
747 (356)
1,090 1,446
$ 1,837 $ 1,090 $ 1,446
2014

$ 3,614

994
164
(401)
119
—
—
—

28
77
95
(572)
(880)
351
277
3,866

(845)
(898)
20
(1,723)

—
(1,900)
308
(1,760)
—
—
—
—
38
(3,314)
(1,171)
2,617
$ 1,446
Consolidated Statements of Equity

Balance at December 31, 2013

Net earnings
Other comprehensive loss, net of tax
Repurchases of common stock
Dividends declared ($5.49 per share)
Stock-based awards and ESOP activity and other
Balance at December 31, 2014
Net earnings
Other comprehensive income, net of tax
Repurchases of common stock
Dividends declared ($6.15 per share)
Stock-based awards and ESOP activity and other
Balance at December 31, 2015
Net earnings
Other comprehensive loss, net of tax
Shares exchanged and retired in connection with divestiture of IS&GS business
Repurchases of common stock
Dividends declared ($6.77 per share)
Stock-based awards and ESOP activity and other
Increase in noncontrolling interests in subsidiary
Balance at December 31, 2016
 Additional  
Common   Paid-In Retained  
Stock Capital Earnings
$ 319 $    —
— —
— —
(12) (792)
— —
7 792
314 —
— —
— —
(15) (656)
— —
4 656
303 —
— —
— —
(9) —
(9) (395)
— —
4 395
— —
$ 289 $    —
 Accumulated
Other Total
Retained     Comprehensive     Stockholders’  
Earnings Loss Equity
$ 14,200 $      (9,601) $ 4,918
3,614 — 3,614
— (2,269) (2,269)
(1,096) — (1,900)
(1,762) — (1,762)
— — 799
14,956 (11,870) 3,400
3,605 — 3,605
— 426 426
(2,400) — (3,071)
(1,923) — (1,923)
— — 660
14,238 (11,444) 3,097
5,302 — 5,302
— (658) (658)
(2,488) — (2,497)
(1,692) — (2,096)
(2,036) — (2,036)
— — 399
— — —
$ 13,324 $    (12,102) $ 1,511
Noncontrolling  
Interests in Total
Subsidiary   Equity
$    — $ 4,918
— 3,614
— (2,269)
— (1,900)
— (1,762)
— 799
— 3,400
— 3,605
— 426
— (3,071)
— (1,923)
— 660
— 3,097
— 5,302
— (658)
— (2,497)
— (2,096)
— (2,036)
— 399
95 95
$ 95 $ 1,606
Note 2 – Earnings Per Share

2016
Weighted average common shares outstanding for basic computations
Weighted
Weighted average
average dilutive
commoneffect of outstanding
shares equity awards
for diluted
computations
2016 2015 2014
299.30 310.30 316.80
3.80 4.40 5.60
303.10 314.70 322.40
Allocation of Purchase Price to Assets Acquired and Liabilities Assumed

Cash and cash equivalents $ 75

Receivables, net 1,924
Inventories, net 1,632
Other current assets 46
Property, plant and equipment 649
Goodwill 2,842
Intangible assets:
Customer programs 3,184
Trademarks 887
Other noncurrent assets 572
Deferred income taxes, noncurrent 256
Total identifiable assets and goodwill 12,067
Accounts payable (565)
Customer advances and amounts in excess of costs incurred (1,197)
Salaries, benefits, and payroll taxes (105)
Other current liabilities (430)
Customer contractual obligations (a) (507)
Other noncurrent liabilities (185)
Total liabilities assumed (2,989)
Total consideration $ 9,078
Supplemental Pro Forma Financial Information (unaudited)

2015 2014
Net sales $ 45,366 $ 47,369
Net earnings 3,534
Basic earnings per common share 11.39
Diluted earnings per common share 11.23
2014
$ 47,369
3,475
10.97
10.78
Divestiture of the Information Systems & Global Solutions Business

Receivables, net $ 807

Inventories, net 143
Other current assets 19
Property, plant and equipment, net 101
Goodwill 2,881
Intangible assets 125
Other noncurrent assets 54
Total assets of the disposal group $ 4,130
Accounts payable ($229)
Customer advances and amounts in excess of costs incurred (285)
Salaries, benefits and payroll taxes (209)
Other current liabilities (225)
Deferred income taxes (145)
Other noncurrent liabilities (60)
Total liabilities of the disposal group ($1,153)
 Year Ended December 31,
2016 (a)
Net sales $ 3,410
Cost of sales (2,953)
Goodwill impairment charges —
Severance charges (19)
Gross profit 438
Other income, net 16
Operating
Other profit 454
non-operating income, net operations before income
Earnings from discontinued —
taxes 454
Income
Net gaintax
on expense
divestiture of discontinued (147)
operations 1,242
Net earnings from discontinued operations $ 1,549
December 31,
2015 2014
$ 5,596 $ 5,654
(4,868) (4,963)
— (119)
(20) —
708 572
16 8
724 580
— 1
724 581
(245) (220)
— —
$ 479 $ 361
Note 4 – Goodwill and Acquired Intangibles

Aeronautics MFC
Balance at December 31, 2014 (a) $ 171 $ 2,181
Sikorsky acquisition —
Other —
Balance at December 31, 2015 171
Purchase accounting adjustments —
Other —
Balance at December 31, 2016 $ 171 $ 2,260
 Space     
MFC RMS Systems
$ 2,181 $ 4,022 $ 1,590
— 2,764 —
17 (48) (2)
2,198 6,738 1,588
— 78 —
62 (68) (3)
$ 2,260 $ 6,748 $ 1,585
Total
$ 7,964
2,764
(33)
10,695
78
(9)
$ 10,764
 2016
Gross
Carrying Accumulated
Amount Amortization
Finite-Lived:
Customer programs $ 3,184
Customer relationships 359
Other 111
Total finite-lived intangibles 3,654
Indefinite-Lived:
Trademarks 887
Total acquired intangibles $ 4,541
 Net
Accumulated Carrying
Amortization Amount

($273) $ 2,911
(92) 267
(83) 28
(448) 3,206

— 887
($448) $ 4,093
2015
Gross
Carrying Accumulated
Amount Amortization

$ 3,127
137
111
3,375

816
$ 4,191
 Net
Accumulated Carrying
Amortization Amount

$ (38) $ 3,089
(59) 78
(72) 39
(169) 3,206

— 816
($169) $ 4,022
Selected Financial Data by Business Segment

2016
Net sales
Aeronautics $ 17,769
Missiles and Fire Control 6,608
Rotary and Mission Systems 13,462
Space Systems 9,409
Total net sales $ 47,248
Operating profit
Aeronautics $ 1,887
Missiles and Fire Control 1,018
Rotary and Mission Systems 906
Space Systems 1,289
Total business segment operating profit 5,100
Unallocated items
FAS/CAS pension adjustment
FAS pension expense (a) (1,019)
Less: CAS pension cost (a) (b) 1,921
FAS/CAS pension adjustment 902
Severance charges (a) (c) (80)
Stock-based
Other, net compensation (149)
(d), (e) (224)
Total unallocated items 449
Total consolidated operating profit $ 5,549
2015 2014

$ 15,570 $ 14,920
6,770 7,092
9,091 8,732
9,105 9,202
$ 40,536 $ 39,946

$ 1,681 $ 1,649
1,282 1,344
844 936
1,171 1,187
4,978 5,116

(1,127) (1,099)
1,527 1,416
400 317
(82) —
(133) (154)
(451) (267)
(266) (104)
$ 4,712 $ 5,012
Selected Financial Data by Business Segment (continued)

2016
Intersegment sales
Aeronautics $ 137
Missiles and Fire Control 305
Rotary and Mission Systems 1,816
Space Systems 110
Total intersegment sales $ 2,368

Depreciation and amortization

Aeronautics $ 299
Missiles and Fire Control 105
Rotary and Mission Systems 476
Space Systems 212
Total business segment depreciation and amortization 1,092
Corporate activities 75
Total depreciation and amortization (a) $ 1,167

Capital expenditures
Aeronautics $ 358
Missiles and Fire Control 167
Rotary and Mission Systems 271
Space Systems 183
Total business segment capital expenditures 979
Corporate activities 75
Total capital expenditures (b) $ 1,054
2015 2014

$ 102 $ 103
315 256
1,533 1,245
146 137
$ 2,096 $ 1,741

$ 317 $ 322
99 99
211 167
220 232
847 820
98 107
$ 945 $ 927

$ 387 $ 283
120 142
169 164
172 172
848 761
60 66
$ 908 $ 827
Net Sales by Customer Category

2016
U.S. Government
Aeronautics $ 11,714
Missiles and Fire Control 4,026
Rotary and Mission Systems 9,187
Space Systems 8,543
Total U.S. Government net sales $ 33,470
International (a)
Aeronautics $ 5,973
Missiles and Fire Control 2,444
Rotary and Mission Systems 3,798
Space Systems 488
Total international net sales $ 12,703
U.S. Commercial and Other
Aeronautics $ 82
Missiles and Fire Control 138
Rotary and Mission Systems 477
Space Systems 378
Total U.S. commercial and other net sales $ 1,075
Total net sales $ 47,248
2015 2014

$ 11,195 $ 10,704
4,150 4,509
6,961 6,752
8,845 8,921
$ 31,151 $ 30,886

$ 4,328 $ 4,183
2,449 2,421
2,016 1,921
218 89
$ 9,011 $ 8,614

$ 47 $ 33
171 162
114 59
42 192
$ 374 $ 446
$ 40,536 $ 39,946
 2016
Assets (a)
Aeronautics $ 7,896
Missiles and Fire Control 4,000
Rotary and Mission Systems 18,367
Space Systems 5,250
Total business segment assets 35,513
Assets of discontinued operations —
Corporate assets (b) 12,293
Total assets $ 47,806

Customer advances and amounts in excess of costs incurred

Aeronautics $ 2,133
Missiles and Fire Control 1,517
Rotary and Mission Systems 2,590
Space Systems advances and amounts in excess of costs
Total customer 536
incurred $ 6,776
2015

$ 6,618
4,027
19,187
4,861
34,693
4,130
10,481
$ 49,304

$ 2,045
1,766
2,415
477
$ 6,703
Note 6 – Receivables, net

2016
U.S. Government
Amounts billed $ 792
Unbilled costs and accrued profits 6,877
Less: customer advances and progress payments (1,346)
Total U.S. Government receivables, net 6,323
Other governments and commercial
Amounts billed 546
Unbilled costs and accrued profits 1,847
Less:
Total customer advances and commercial receivables,
other governments (514)
net 1,879
Total receivables, net $ 8,202
2015

$ 1,205
5,243
(1,193)
5,255

704
1,888
(593)
1,999
$ 7,254
Note 7 – Inventories, net

Work-in-process,
primarily related to long-term contracts and programs in progress
Spare parts, used aircraft and general stock materials
Other inventories
Total inventories
Less: customer advances and progress payments
Total inventories, net
2016 2015
$ 7,864 $ 8,081
833 1,030
719 740
9,416 9,851
(4,746) (5,032)
$ 4,670 $ 4,819
Note 8 – Property, Plant and Equipment, net

2016
Land $ 127
Buildings 6,385
Machinery and equipment 7,389
Construction in progress 976
Total property, plant and equipment 14,877
Less: accumulated depreciation and amortization (9,328)
Total property, plant and equipment, net $ 5,549
2015
$ 112
6,007
7,261
886
14,266
(8,877)
$ 5,389
Note 9 – Income Taxes

2016 2015
Federal income tax expense (benefit):
Current $ 1,327 $ 1,573
Deferred (231)
Total federal income tax expense 1,096
Foreign income tax expense (benefit):
Current 56
Deferred (19)
Total foreign income tax expense 37
Total income tax expense $ 1,133 $ 1,173
2015 2014

$ 1,573 $ 1,770
(473) (351)
1,100 1,419

39 13
34 (8)
73 5
$ 1,173 $ 1,424
 2016
Amount
Income tax expense at the U.S. federal statutory tax rate $ 1,710
Adoption of stock-based compensation ASU (152)
U.S. manufacturing deduction benefit (117)
Research and development tax credit (107)
Tax deductible dividends (92)
Other, net (109)
Income tax expense $ 1,133
 2015
Rate Amount
35.0% $ 1,505
(3.10) —
(2.40) (123)
(2.20) (70)
(1.90) (87)
(2.20) (52)
23.2% $ 1,173
 2014
Rate Amount Rate
35.0% $ 1,637
— —
(2.90) (124)
(1.60) (63)
(2.00) (82)
(1.20) 56
27.3% $ 1,424
Rate
35.0%
—
(2.60)
(1.30)
(1.80)
1.10
30.4%
 2016
Deferred tax assets related to:
Accrued compensation and benefits $ 1,012
Pensions (a) 5,197
Other postretirement benefit obligations 302
Contract accounting methods 878
Foreign company operating losses and credits 30
Other 327
Valuation allowance (b) (15)
Deferred tax assets, net 7,731
Deferred tax liabilities related to:
Goodwill and purchased intangibles 378
Property, plant and equipment 346
Exchanged debt securities and other (c) 418
Deferred tax liabilities 1,142
Net deferred tax assets $ 6,589
2015

$ 919
4,462
375
1,039
62
418
(73)
7,202

274
457
408
1,139
$ 6,063
Note 10 – Debt

December 31,
2016
Notes
2.13% and 7.65% due 2016 $—
1.85% due 2018 750
4.25% due 2019 900
2.50% due 2020 1,250
3.35% due 2021 900
3.10% due 2023 500
2.90% due 2025 750
3.55% due 2026 2,000
3.60% due 2035 500
4.50% and 6.15% due 2036 1,152
4.85% due 2041 600
4.07% due 2042 1,336
3.80% due 2045 1,000
4.70% notes
Other due 2046
with rates from 5.50% to 8.50%, due 2023 to 2,000
2040 1,656
Total debt 15,294
Less: unamortized discounts and issuance costs (1,012)
Total debt, net 14,282
Less: current portion —
Long-term debt, net $ 14,282
1,
2015

$ 952
750
900
1,250
900
500
750
2,000
500
1,152
600
1,336
1,000
2,000
1,706
16,296
(1,035)
15,261
(956)
$ 14,305
Defined Benefit Pension Plans and Retiree Medical and Life Insurance Plans

Qualified Defined
Benefit Pension Plans (a)
2016
Service cost $ 827
Interest cost 1,861
Expected return on plan assets (2,666)
Recognized net actuarial losses 1,359
Amortization of net prior service (credit) cost (b) (362)
Total net periodic benefit cost $ 1,019
(a)
2015 2014
$ 836 $ 841
1,791 1,912
(2,734) (2,693)
1,599 1,173
(365) (134)
$ 1,127 $ 1,099
Retiree Medical and
Life Insurance Plans
2016
$ 24
119
(138)
34
22
$ 61
2015 2014
$ 21 $ 22
110 123
(147) (146)
43 23
4 4
$ 31 $ 26
 Qualified Defined Benefit
Pension Plans
2016
Change in benefit obligation
Beginning balance $ 43,702
Service cost 827
Interest cost 1,861
Benefits paid (2,172)
Actuarial losses (gains) 1,402
New longevity assumptions (a) (687)
Plan amendments and acquisitions (b) 110
Service cost related to discontinued operations 21
Medicare Part D subsidy —
Participants’ contributions —
Ending balance $ 45,064

Change in plan assets

Beginning balance at fair value $ 32,096
Actual return on plan assets 1,470
Benefits paid (2,172)
Company contributions 23
Medicare Part D subsidy —
Participants’ contributions —
Ending balance at fair value $ 31,417
Unfunded status of the plans ($13,647)
efit

2015

$ 45,882
836
1,791
(2,055)
(1,988)
(834)
31
39
—
—
$ 43,702

$ 34,673
(527)
(2,055)
5
—
—
$ 32,096
($11,606)
Retiree Medical and
Life Insurance Plans
2016 2015

$ 2,883 $ 3,034
24 21
119 110
(222) (307)
(135) (170)
(53) (77)
(32) 157
— —
4 14
61 101
$ 2,649 $ 2,883

$ 1,813 $ 1,932
95 (27)
(222) (307)
36 100
4 14
61 101
$ 1,787 $ 1,813
($862) ($1,070)
 Qualified Defined Benefit
Pension Plans
2016
Prepaid pension asset $ 208
Accrued postretirement benefit liabilities (13,855)
Accumulated other comprehensive loss (pre-tax) related
to:
Net actuarial losses 20,184
Prior
Total service (credit) cost (a) (2,896)
(b) $ 17,288
efined Benefit
ns
2015
$ 201
(11,807)

19,632
(3,565)
$ 16,067
Retiree Medical and
Life Insurance Plans
2016 2015
$— $—
(862) (1,070)

447 627
96 167
$ 543 $ 794
 2016
Plans where ABO was in excess of plan assets
Projected benefit obligation $ 44,946
Less: fair value of plan assets 31,091
Unfunded status of plans (a) (13,855)

Plans where ABO was less than plan assets

Projected benefit obligation 118
Less: fair value of plan assets 326
Funded status of plans (b) $ 208
2015

$ 43,575
31,768
(11,807)

127
328
$ 201
 Incurred but Not Yet
Recognized in Net
Periodic Benefit Cost
2016
Gains (losses)
Actuarial gains and losses
Qualified defined benefit pension plans ($1,236)
Retiree medical and life insurance plans 94
Other plans (62)
(1,204)

Credit (cost)
Net prior service credit and cost
Qualified defined benefit pension plans (54)
Retiree medical and life insurance plans 27
Other plans (1)
(28)
($1,232)
2015 2014

($291) ($5,505)
46 (160)
21 (245)
(224) (5,910)

(18) 2,959
(102) (3)
(7) 84
(127) 3,040
($351) ($2,870)
Recognition of
Previously
Deferred Amounts
2016 2015 2014
(Gains) losses

$ 879 $ 1,034 $ 758

22 28
37 47
938 1,109

(Credit) cost (a)

(235) (235)
14 2
(9) (10)
(230) (243)
$ 708 $ 866 $ 717
2014

$ 758
15
33
806

(87)
3
(5)
(89)
$ 717
Actuarial Assumptions

Weighted average discount rate

Expected long-term rate of return on assets
Rate of increase in future compensation levels (for applicable bargained pension plans)
Health care trend rate assumed for next year
Ultimate
Year that health care trend
the ultimate rate
health care trend rate is
reached
Qualified Defined Benefit
Pension Plans
2016 2015 2014
4.125% 4.375% 4.00%
7.50% 8.00% 8.00%
4.50% 4.50% 4.30%
Retiree Medical and
Life Insurance Plans
2016 2015 2014
4.00% 4.25% 3.75%
7.50% 8.00% 8.00%

8.75% 9.00% 8.50%

5.00% 5.00% 5.00%
2,032 2,032 2029
Investment policies and strategies

Asset Allocation
Asset Class Ranges
Cash and cash equivalents 0-20%
Equity 15-65%
Fixed income 10-60%
Alternative investments:
Private equity funds 0-15%
Real estate funds 0-10%
Hedge funds 0-20%
Commodities 0-25%
Fair value measurements

December 31, 2016
Total
Investments measured at fair value
Cash and cash equivalents (a) $ 2,301
Equity (a):
U.S. equity securities 4,166
International equity securities 3,971
Commingled equity funds 2,332
Fixed income (a):
Corporate debt securities 4,333
U.S. Government securities 6,811
U.S. Government-sponsored enterprise securities 919
Other fixed income investments 2,215
Alternative investments:
Hedge funds 33
Private equity funds
Commodities —
(a) 523
Total $ 27,604
Investments measured at NAV (b)
Commingled equity funds 60
Private equity funds 3,614
Real estate funds 1,411
Hedge funds 462
Total investments measured at NAV 5,547
Receivables, net 53
Total $ 33,204
Level 1 Level 2 Level 3

$ 2,301 $— $—

4,139 23
3,927 40
788 1,544

— 4,316
— 6,811
— 919
— 2,214

— 33
— —
525 (2)
$ 11,680 $ 15,898 $ 26
Level 3

$—

4
4
—

17
—
—
1

—
—
—
$ 26
December 31, 2015
Total Level 1 Level 2

$ 2,658 $ 2,658 $—

4,790 4,771
6,121 6,087
1,794 614

3,929 —
5,069 —
1,377 —
3,252 —

57 —
200 —
(26) 1
$ 29,221 $ 14,131 $ 14,859

141
2,931
1,108
465
4,645
43
$ 33,909
Level 2 Level 3

$— $    —

19 —
24 10
1,180 —

3,914 15
5,069 —
1,377 —
3,246 6

57 —
— 200
(27) —
$ 14,859 $ 231
 Private
  Equity
  Funds Other
Balance at January 1, 2015 $  —
Actual return on plan assets:
Realized losses, net —
Unrealized gains, net —
Purchases, sales and settlements, net —
Transfers into (out of) Level 3, net 200
Balance at December 31, 2015 $ 200
Actual return on plan assets:
Realized losses, net —
Unrealized gains, net —
Purchases, sales and settlements, net (200)
Transfers into Level 3, net —
Balance at December 31, 2016 $  —
Other Total
$ 61 $ 61

(12) (12)
7 7
(22) (22)
(3) 197
$ 31 $ 231

(6) (6)
3 3
(7) (207)
5 5
$ 26 $ 26
Contributions and Expected Benefit Payments

2017
Qualified defined benefit pension plans $ 2,260
Retiree medical and life insurance plans 180
2018 2019 2020
$ 2,340 $ 2,420 $ 2,510
180 190
2020 2021 2022 – 2026
$ 2,510 $ 2,590 $ 13,920
190 190 870
Accumulated Other Comprehensive Loss

Balance at December 31, 2013

(a)
Other comprehensive loss before reclassifications
Amounts reclassified from AOCL
Recognition of net actuarial losses
Amortization of net prior service credits
Other
Total reclassified from AOCL
Total other
Balance comprehensive
at December 31, loss
2014
(a)
Other comprehensive loss before reclassifications
Amounts reclassified from AOCL
Recognition of net actuarial losses
Amortization of net prior service credits
Total reclassified from AOCL
Total other
Balance comprehensive
at December 31, income (loss)
2015
(a)
Other comprehensive loss before reclassifications
Amounts reclassified from AOCL
Recognition of net actuarial losses
Amortization of net prior service credits
Recognition
Other of net prior service credits from divestiture of IS&GS segment (b)
(b)
Total reclassified from AOCL
Total other comprehensive (loss) income
Balance at December 31, 2016 (a)
Postretirement  
Benefit Plans Other, net AOCL
$  (9,649) $ 48
(2,870) (103)

806 —
(100) —
— (2)
706 (2)
(2,164) (105)
(11,813) (57)
(351) (73)

1,109 —
(259) —
850 —
499 (73)
(11,314) (130)
(1,232) —

938 —
(239) —
(134) —
— 9
565 9
(667) 9
($11,981) ($121)
AOCL
$  (9,601)
(2,973)

806
(100)
(2)
704
(2,269)
(11,870)
(424)

1,109
(259)
850
426
(11,444)
(1,232)

938
(239)
(134)
9
574
(658)
($12,102)
RSUs

Number Weighted Average
of RSUs Grant-Date Fair
(In thousands) Value Per Share
Nonvested at December 31, 2013 3,859
Granted 745
Vested (2,194)
Forfeited (84)
Nonvested at December 31, 2014 2,326
Granted 595
Vested (1,642)
Forfeited (43)
Nonvested at December 31, 2015 1,236
Granted 679
Vested (1,009)
Forfeited (118)
Nonvested at December 31, 2016 788
Weighted Average
Grant-Date Fair
Value Per Share
$ 82.42
146.85
87.66
91.11
$ 97.80
192.47
103.30
132.28
$ 134.87
206.69
137.62
203.65
$ 183.00
Stock Options

2016
Grant-date fair value of all stock options that vested $—
Intrinsic value of all stock options exercised 172
2015 2014
$ 8 $ 18
265 297
Note 16 – Fair Value Measurements

December 31, 2016
Total Level 1
Assets
Equity securities $ 79 $ 79
Mutual funds 856 856
U.S. Government securities 113 —
Other securities 151 —
Derivatives 27 —
Liabilities
Derivatives 85 —
 December 31, 2015
Level 2 Total

$  — $ 89
— 745
113 119
151 147
27 15

85 35
Level 1 Level 2

$ 89 $  —
745 —
— 119
— 147
— 15

— 35
Note 17 – Summary of Quarterly Information (Unaudited)

2016 Quarters
First (b)
Net sales (a) $ 10,368
Operating profit (a) 1,158
Net earnings from continuing operations 806
Net earnings from discontinued operations 92
Net earnings 898
Earnings per common share from continuing operations
(f):
Basic 2.65
Diluted 2.61

Earnings per common share from discontinued operations (f):

Basic 0.30
Diluted 0.30
Basic earnings per common share (f) 2.95
Diluted earnings per common share (f) 2.91

2015 Quarters
First
Net sales (a) $ 8,721
Operating profit (a) 1,147
Net earnings from continuing operations 738
Net earnings from discontinued operations 140
Net earnings (g) 878
Earnings per common share from continuing operations
(f):
Basic 2.34
Diluted 2.30

Earnings per common share from discontinued operations (f):

Basic 0.44
Diluted 0.44
Basic earnings per common share (f) 2.78
Diluted earnings per common share (f) 2.74
ers
Second Third (c)(d)
$ 11,577 $ 11,551
1,375 1,588
899 1,089
122 1,306
1,021 2,395

2.97 3.64
2.93 3.61

0.40 4.38
0.39 4.32
3.37 8.02
3.32 7.93

ers
Second Third
$ 10,235 $ 10,060
1,273 1,192
815 756
114 109
929 865

2.61 2.45
2.58 2.42

0.37 0.35
0.36 0.35
2.98 2.80
2.94 2.77
Fourth (d)
$ 13,752
1,428
959
29
988

3.29
3.25

0.10
0.10
3.39
3.35

Fourth (e)
$ 11,520
1,100
817
116
933

2.67
2.63

0.38
0.38
3.05
3.01
 Number of
securities
to be
Equity Compensation Plan Information issued
upon
exercise of
outstanding
options,
warrants
Plan category
Equity compensation plans approved by security and rights (a)
holders (1) 5,802,673
Equity compensation plans not approved by
security
holders (2) 1,082,347
Total 6,885,020
 Number of
securities
remaining
available
for
future
Weighted-average issuance under equity
exercise compensation
price of plans
outstanding (excluding
options, securities
warrants and reflected in
rights column (a))
(b) (c)
$ 85.82 6,216,471

— 2,481,032
$ 85.82 8,697,503
List of financial statements filed as part of this Form 10-K

Consolidated Statements of Earnings – 

Years ended December 31,
Consolidated Statements of2016, 2015 and 2014
Comprehensive Income – 
Years ended December 31, 2016, 2015 and
Consolidated Balance Sheets – At December 2014
31, 2016 and 2015
Consolidated Statements of Cash Flows – 
Years
Consolidated Statements of2016,
ended December 31, 2015
Equity  –  and 2014
Years ended December 31, 2016, 2015 and 2014
Notes to Consolidated Financial Statements
Page
62
63
64
65
66
67
10.60

10.70

10.80

10.90

10.10

10.11

10.12

10.13

10.14

10.15

10.16

10.17

10.18

10.19

10.20

10.21

10.22
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 (File No. 033-57645) filed with the SEC on February 9, 1995).
Martin
Corporation’s Current Report on Form 8-K filed with the SEC on November 2, 2006 (File No. 001-11437)).
Lockheed Martin Corporation 2009 Directors Equity Plan (incorporated by reference to Appendix E to Lockheed Martin
Corporation’s Definitive Proxy Statement on schedule 14A filed with the SEC on March 14, 2008 (File No. 001-11437)).
by reference to Exhibit 10.4 to Lockheed Martin Corporation ’s Quarterly Report on Form 10-Q for the quarter ended
March 29, 2015).
2016 (incorporated by reference to Exhibit 10.1 to Lockheed Martin Corporation ’s Quarterly Report on Form 10-Q for the
quarter ended June 26, 2016).
Report on Form 8-K filed with the SEC on February 2,
2016).
Exhibit 10.17 to Lockheed Martin Corporation ’s Annual Report on Form 10-K for the year ended December 31, 2008 (File
No. 001-11437)).
ended December 31, 2007 (File
No. 001-11437)).
ended December 31, 2008 (File
No. 001-11437)).
ended December 31, 2009 (File
No. 001-11437)).
on February 3, 2011 (File
No. 001-11437)).
Form of Indemnification Agreement (incorporated by reference to Exhibit 10.34 to Lockheed Martin Corporation ’s Annual
Report on Form 10-K for the year ended December 31, 2009 (File No. 001-11437)).
January 1, 2017 (incorporated by reference to Exhibit 10.2 to Lockheed Martin Corporation ’s Quarterly Report on Form 10-
Q for the quarter ended June 26, 2016).
ended December 31, 2011 (File
No. 001-11437)).
Exhibits 10.3, 10.4 and 10.5, respectively, to Lockheed Martin Corporation ’s Current Report on Form 8-K filed with the SEC
on January 28, 2014).
December 18, 2015 (incorporated by reference to Exhibit 10.22 of Lockheed Martin Corporation ’s Annual Report on Form
10-K for the year ended December 31, 2015).
Non-Employee Director Compensation Summary (incorporated by reference to Exhibit
10.1 to Lockheed Martin Corporation’s Current Report on Form 8-K filed with the SEC on June 26, 2015).
Lockheed Martin Corp

LOCKHEED MARTIN CORPORATION

By: /s/ Patricia L. Lewis

Patricia L. Lewis
Senior Vice President, Human Resources

Date: 12/19/16
By: /s/ Patricia L. Lewis
Patricia L. Lewis
Senior Vice President, Human Resources
LOCKHEED MARTIN CORPORATION

By: /s/ Patricia L. Lewis

Patricia L. Lewis
Senior Vice President, Human Resources
LOCKHEED MARTIN CORPORATION

By: /s/ John T. Lucas

John
SeniorT.Vice
LucasPresident, Human Resources &
Communications
Lockheed Martin Corp

LOCKHEED MARTIN CORPORATION

By: /s/ Patricia

Patricia L. Lewis
L. Lewis Senior Vice President,
Human Resources

Date: 11/29/16
SIGNED this              day of                
                         , 2        .

(Signature)

(Printed Name)

(Title)

FOR LOCKHEED MARTIN CORPORATION

(Signature)

(Printed Name)

(Title)

(Date)
Additional “Restricted Companies” For Purposes of Section 6(a) of the PECA

Description of the Competitive

Entity Name Business
SIGNED this              day of                
                         , 2        .

(Signature)

(Printed Name)

(Title)

FOR LOCKHEED MARTIN CORPORATION

(Signature)

(Printed Name)

(Title)

(Date)
Additional “Restricted Companies” For Purposes of Section 6(a) of the PECA

Description of the Competitive

Entity Name Business
Computation of Ratio of Earnings to Fixed Charges

Years ended December 31,

2016
Earnings

Earnings from continuing operations before income taxes $ 4,886

Interest expense
Undistributed earnings from equity investees, net
Portion of rents representative of the interest factor

Earnings from continuing operations before income taxes, as adjusted $ 5,407

Fixed Charges

Interest expense $ 663

Portion of rents representative of the interest factor

Total fixed charges $ 694

Ratio of Earnings to Fixed Charges

Years ended December 31,
2016 2015 2014

$ 4,886 $ 4,299 $ 4,677

663 443 340
(173) (83) (91)
31 36 41

$ 5,407 $ 4,695 $ 4,967

$ 663 $ 443 $ 340

31 36 41

$ 694 $ 479 $ 381

7.80 9.80 13.00

2013 2012

$ 3,715 $ 3,388
350 383
(91) 20
48 48

$ 4,022 $ 3,839

$ 350 $ 383
48 48

$ 398 $ 431

10.10 8.90
Subsidiaries of Lockheed Martin Corporation

Name of Subsidiary Place of Formation

AWE Management Limited United Kingdom
AWE PLC United Kingdom
Helicopter Support, Inc. Connecticut
Lockheed Martin Aerospace Systems Integration, LLC Delaware
Lockheed Martin Australia Pty Limited Australia
Lockheed Martin Canada Inc. Canada
Lockheed Martin Engine Investments, LLC Delaware
Lockheed Martin Global, Inc. Delaware
Lockheed Martin Space Alliance Company Delaware
Lockheed Martin UK Ampthill Limited United Kingdom
Lockheed Martin UK Limited United Kingdom
Polskie Zaklady Lotnicze Sp. zo.o Poland
Sikorsky Aircraft Corporation Delaware
Sikorsky International Operations, Inc. Delaware
Zeta Associates, Inc. Virginia
LOCKHEED MARTIN CORPORATION

/s/ Daniel F. Akerson

DANIEL F. AKERSON Director
LOCKHEED MARTIN CORPORATION

/s/ Nolan D. Archibald

NOLAN D. ARCHIBALD Director
LOCKHEED MARTIN CORPORATION

/s/ Rosalind G. Brewer

ROSALIND G. BREWER Director
LOCKHEED MARTIN CORPORATION

/s/ David B. Burritt

DAVID B. BURRITT Director
LOCKHEED MARTIN CORPORATION

/s/ Bruce A. Carlson

BRUCE A. CARLSON Director
LOCKHEED MARTIN CORPORATION

/s/ James O. Ellis, Jr.

JAMES O. ELLIS, JR. Director
LOCKHEED MARTIN CORPORATION

/s/ Thomas J. Falk

THOMAS J. FALK Director
LOCKHEED MARTIN CORPORATION

/s/ Ilene S. Gordon

ILENE S. GORDON Director
LOCKHEED MARTIN CORPORATION

/s/ James M. Loy

JAMES M. LOY Director
LOCKHEED MARTIN CORPORATION

/s/ Joseph W. Ralston

JOSEPH W. RALSTON Director
LOCKHEED MARTIN CORPORATION

/s/ Anne Stevens

ANNE STEVENS Director
Lockheed Martin Corp

/s/ Marillyn A. Hewson

Marillyn A. Hewson
Chief Executive Officer
Lockheed Martin Corp

/s/ Bruce L. Tanner

Bruce L. Tanner
Chief Financial Officer
Lockheed Martin Corp

/s/ Marillyn A. Hewson

Marillyn A. Hewson
Chief Executive Officer

/s/ Bruce L. Tanner

Bruce L. Tanner
Chief Financial Officer