Lockheed Martin (LMT) 8-K Lockheed Martin Announces Second Quarter 2005 Results

Exhibit 99.1

LOCKHEED MARTIN CORPORATION

Information

FOR IMMEDIATE RELEASE

LOCKHEED MARTIN ANNOUNCES SECOND QUARTER 2005 RESULTS

• SECOND QUARTER NET EARNINGS UP 56% TO $461 MILLION; YEAR-TO-DATE NET EARNINGS UP 41% TO $830 MILLION

• SECOND QUARTER EARNINGS PER SHARE UP 55% TO $1.02; YEAR-TO-DATE EARNINGS PER SHARE UP 41% TO $1.85

• SECOND QUARTER NET SALES UP 6% TO $9.3 BILLION; YEAR-TO-DATE SALES UP 4% TO $17.8 BILLION

• GENERATES $697 MILLION IN CASH FROM OPERATIONS IN THE SECOND QUARTER; $2.2 BILLION YEAR-TO-DATE

• INCREASES OUTLOOK FOR 2005 EARNINGS PER SHARE

BETHESDA, Maryland, July 26, 2005 – Lockheed Martin Corporation (NYSE: LMT) today reported second quarter 2005 net earnings of $461 million ($1.02 per diluted share) compared to $296 million ($0.66 per diluted share) in 2004. The second quarter results include a gain of $27 million ($0.06 per share) related to the Corporation’s investment in Inmarsat.

Net sales were $9.3 billion, a 6% increase over second quarter 2004 sales of $8.8 billion. Cash provided by operating activities for the second quarter of 2005 was $697 million, after the Corporation contributed $450 million to its defined benefit pension plans’ trust to pre-fund the majority of its anticipated 2006 funding requirements.

“We had excellent operational and financial performance in the second quarter driven by double-digit growth in our Systems and IT Group”, said Bob Stevens, Chairman, President and CEO. “Every business segment increased earnings in the quarter compared to the prior year, and we’re pleased to increase our 2005 outlook for EPS and ROIC. These increases are the result of our continued focus on meeting our customer commitments, capturing new orders, improving productivity, and generating cash.”

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SUMMARY REPORTED RESULTS AND OUTLOOK

The following table presents the Corporation’s results for the quarter and year-to-date periods on a GAAP basis:

  REPORTED RESULTS

(In millions, except per share data)	2nd Quarter						Year-to-Date
	2005			2004			2005			2004
Net sales	$	9,295		$	8,776		$	17,783		$	17,123
Operating profit
Segment operating profit	$	865		$	740		$	1,627		$	1,408
Unallocated corporate, net:
FAS/CAS pension adjustment		(156	)		(148	)		(311	)		(298	)
Unusual items		41			—			58			—
Other		14			(48	)		20			(30	)
	$	764		$	544		$	1,394		$	1,080
Net earnings	$	461		$	296		$	830		$	587
Diluted earnings per share	$	1.02		$	0.66		$	1.85		$	1.31
Cash flow from operations	$	697		$	734		$	2,245		$	1,796

The following table and other sections of this press release contain forward-looking statements, which are based on the Corporation’s current expectations. Actual results may differ materially from those projected. See the “Forward-Looking Statements” discussion contained in this press release.

  OUTLOOK

(In millions, except per share data)	2005 Outlook
Net sales	$36,500 - $38,000
Diluted earnings per share	$3.60 - $3.75
Cash flow from operations	At least $3,000
Return on invested capital (ROIC)*	> 14.0%

The increase in projected 2005 diluted earnings per share (prior range $3.35-$3.55) reflects improved operating performance in the Systems & IT Group and the Space Systems segment, a slight reduction in both unallocated corporate expense and the effective tax rate, and the benefit of the gain recognized on the Corporation’s Inmarsat investment in the second quarter.

It is the Corporation’s practice not to incorporate adjustments to its outlook for proposed acquisitions, pending divestitures or unusual activities until such transactions have been consummated.

* See “Non-GAAP Performance Measures” on page 11 for ROIC definition and calculation.

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Year-to-Date Results

Net sales for the first six months of 2005 were $17.8 billion, a 4% increase over the $17.1 billion recorded in the comparable 2004 period.

Net earnings for the six months ended June 30, 2005 were $830 million ($1.85 per share) compared to $587 million ($1.31 per share) in 2004. In addition to the Inmarsat gain, the 2005 results include the effects of two previously disclosed unusual items recognized in the first quarter: an after-tax gain of $31 million ($0.07 per share) from the sale of the Corporation’s Intelsat investment, and an after-tax loss of $19 million ($0.04 per share) related to an impairment in the value of a telecommunications satellite operated by a subsidiary. On a combined basis, these items increased 2005 net earnings by $39 million ($0.09 per share). No unusual items were recognized in the first half of 2004.

Cash Flow and Leverage

Cash from operations for the quarter and six months ended June 30, 2005 was $697 million and $2.2 billion. The Corporation continued to execute its balanced cash deployment strategy during the quarter and first half of the year as follows:

• Repurchased 5.0 million of its common shares at a cost of $320 million in the quarter and 5.6 million of its common shares at a cost of $355 million during the first six months of the year;

• Paid cash dividends of $112 million in the quarter and $222 million for the first half of year;

• Made a discretionary prepayment of $450 million to pre-fund our pension plan trust;

• Paid $410 million in the first quarter to acquire The SYTEX Group, Inc. and STASYS Limited (additional payments of approximately $110 million will be made primarily in 2006);

• Made capital expenditures of $119 million in the quarter and $208 million during the first six months of the year; and

• Retired $37 million of debt in advance of its maturity.

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The Corporation’s ratio of total debt-to-capitalization was 39% at the end of the second quarter, an improvement from 42% at December 31, 2004. At June 30, 2005, the Corporation’s cash and short-term investments were $3.5 billion.

SEGMENT RESULTS

The Corporation operates in five principal business segments: Aeronautics, Electronic Systems, Space Systems, Integrated Systems & Solutions (IS&S), and Information & Technology Services (I&TS). The results of Electronics, IS&S and I&TS have been aggregated and reported as the Systems & IT Group due to the common focus on information technology and systems integration solutions across these segments.

Consistent with the manner in which the Corporation’s business segment operating performance is evaluated, unusual items are excluded from segment results and included in “Unallocated corporate (expense) income, net.” See our 2004 Form 10-K for a description of “Unallocated corporate (expense) income, net,” including the FAS / CAS pension adjustment.

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The following table presents the operating results of the Systems & IT Group, Aeronautics and Space Systems and reconciles these amounts to the Corporation’s financial results as determined by GAAP.

(In millions)	2nd Quarter						Year-to-Date
	2005			2004			2005			2004
Net sales
Systems & IT Group
Electronic Systems	$	2,740		$	2,206		$	4,997		$	4,340
Integrated Systems & Solutions		1,052			964			2,010			1,871
Information & Technology Services		998			918			1,843			1,770
Systems & IT Group		4,790			4,088			8,850			7,981
Aeronautics		2,879			3,141			5,645			6,016
Space Systems		1,626			1,547			3,288			3,126
Total net sales	$	9,295		$	8,776		$	17,783		$	17,123
Operating profit
Systems & IT Group
Electronic Systems	$	295		$	220		$	527		$	422
Integrated Systems & Solutions		93			81			177			161
Information & Technology Services		86			71			157			131
Systems & IT Group		474			372			861			714
Aeronautics		245			239			467			445
Space Systems		146			129			299			249
Segment operating profit		865			740			1,627			1,408
Unallocated corporate, net:		(101	)		(196	)		(233	)		(328	)
Total operating profit	$	764		$	544		$	1,394		$	1,080

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The following discussion compares the operating results of each business segment for the quarter and six months ended June 30, 2005 to the same periods in 2004.

Systems & IT Group

($ millions)

	2nd Quarter				Year-to-Date
	2005		2004		2005		2004
Net sales	$	4,790	$	4,088	$	8,850	$	7,981
Operating profit	$	474	$	372	$	861	$	714

Net sales for the Systems & IT Group increased by 17% for the quarter and 11% for the six months ended June 30, 2005 from the 2004 periods. Each of the business segments in the group reported sales growth during the quarter and first half of the year.

In Electronic Systems, for both the quarter and year-to-date periods, the increases in sales were primarily attributable to higher sales volume in surface system programs at Maritime Systems & Sensors (MS2), in fire control programs at Missiles & Fire Control (M&FC) and in platform integration activities at Platform Training & Transportation Solutions (PT&TS). In IS&S, for both the quarter and year-to-date periods, the increases in sales were primarily attributable to higher volume and performance related to intelligence, defense and information assurance activities. In I&TS, for both the quarter and year-to-date periods, the increases in sales were primarily attributable to higher volume in Information Technology, which offset declines in NASA programs. Information Technology’s sales growth includes the impact of the March 31, 2005 acquisition of SYTEX and organic growth on existing and new IT programs.

Operating profit for the Systems & IT Group increased by 27% for the quarter and 21% for the six months ended June 30, 2005 compared to the 2004 periods. Each of the business segments in the group reported growth in operating profit during the quarter and first half of the year.

In Electronic Systems, for both the quarter and year-to-date periods, the increases were mainly due to tactical missile program activities and improved performance in fire control programs at M&FC and volume on surface systems programs at MS2. In IS&S, for both the quarter and first half of the year, the increases were primarily attributable to higher volume and performance related to intelligence, defense and information assurance

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activities. In I&TS, for both the quarter and year-to-date periods, the increases were due to higher volume in Information Technology and improved performance in Defense Services.

Aeronautics

($ millions)

	2nd Quarter				Year-to-Date
	2005		2004		2005		2004
Net sales	$	2,879	$	3,141	$	5,645	$	6,016
Operating profit	$	245	$	239	$	467	$	445

Net sales for Aeronautics decreased by 8% for the quarter and 6% for the six months ended June 30, 2005 from the 2004 periods, due to planned declines in Combat Aircraft, which more than offset growth in Air Mobility. Combat Aircraft sales decreased by $320 million in the quarter and $530 million for the six-month period primarily due to declines in F-16 volume, which more than offset higher F/A-22 volume. Increases in C-130J deliveries contributed to the growth in Air Mobility revenue in each period.

Segment operating profit increased by 3% for the quarter and 5% for the six months ended June 30, 2005 from the 2004 periods. Air Mobility operating profit increased for the quarter and year-to-date periods mainly due to profits recognized on C-130J deliveries in 2005. In each period, Combat Aircraft operating profit declined slightly due to lower F-16 volume. In both periods, reduced earnings on the F-35 development program were offset by increased volume and improved performance on F/A-22 and other Combat Aircraft programs.

Space Systems

($ millions)

	2nd Quarter				Year-to-Date
	2005		2004		2005		2004
Net sales	$	1,626	$	1,547	$	3,288	$	3,126
Operating profit	$	146	$	129	$	299	$	249

Net sales for Space Systems increased by 5% for both the quarter and the six months ended June 30, 2005 from the 2004 periods. In both periods, sales growth in Strategic & Defensive Missile Systems (S&DMS) and Satellites offset declines in Launch Services. The increases in Satellites were primarily due to higher volume on government satellite programs that more than offset declines in commercial satellite activities. There were no

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commercial satellite deliveries in 2005 compared to one in the second quarter and two in the first six months of 2004. The increases in S&DMS were attributable to the fleet ballistic missile program. In Launch Services, the decreases in sales were mainly due to fewer Atlas launches in the 2005 periods as compared to 2004. There were no Atlas launches in the second quarter and two in the first six months of 2005 compared to two and four launches in the comparable 2004 periods.

Segment operating profit increased by 13% for the quarter and 20% for the six months ended June 30, 2005, when compared to the 2004 periods. For the quarter, increases in Launch Services operating profit were partially offset by declines in Satellites. In Satellites, a decrease in commercial satellites was partially offset by higher volume on government satellite programs.

For the six-month period, operating profit increased in both Launch Services and Satellites. In Satellites, the increase was due to the impact of higher volume on government satellite programs, which more than offset a decline in commercial satellites.

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SECOND QUARTER 2005 HIGHLIGHTS

• Systems & IT increased backlog to more than $30 billion at the end of the second quarter through the year-to-date capture of important business with: DoD, SSA, FAA, DFAS, FDIC, NASA and several classified customers

• Awarded a system design and development contract for the joint U.S., German and Italian Medium Extended Air Defense System (MEADS)

• Announced an agreement to create a joint venture – United Launch Alliance – that will combine the government launch operations of Boeing’s Delta and Lockheed Martin’s Atlas expendable launch vehicles

• Significant orders and deliveries for U.S. Army programs included: ordered four Virtual Combat Convoy Trainers; delivered the first Arrowhead^™ system to the U.S. Army, with improved targeting and pilot vision capabilities; and received a production contract for additional Hellfire missiles

• Laid the keel for the nation’s first Littoral Combat Ship, USS Freedom

• The FAA commenced operational use of Lockheed Martin’s Advanced Technologies and Oceanic Procedures (ATOP) system at an air traffic control facility in New York that will increase the capacity of international air routes

• Opened the Center for Innovation, a unique collaborative laboratory where net-centric solutions will be developed in partnership with our customers to strengthen our nation’s military effectiveness, homeland security, and other vital government missions

• The C-130J achieved two “firsts:” a U.S. Marine Corps KC-130J completed a combat aerial delivery in Iraq, and a WC-130J “Weatherbird” completed an operational mission in hurricane winds

• Began full-rate production of the F/A-22 Raptor

• Selected by NASA as a finalist to compete to design and build the new Crew Exploration Vehicle, which will replace the Space Shuttle

• Successfully completed a Proton launch and received four launch vehicle orders

• Awarded a contract for a commercial satellite order

• Selected by the U.S. Navy to provide a variety of aircraft maintenance and modification services for the P-3 Orion under the Sustainment Modification Installation Program

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###

NEWS MEDIA CONTACT:	Craig Quigley 301/897-6352
INVESTOR RELATIONS CONTACT:	James Ryan, 301/897-6584 or
	Mike Gabaly, 301/897-6455

Web site:www.lockheedmartin.com

Conference call: Lockheed Martin will webcast the earnings conference call (listen-only mode) at 11 a.m. E.T. on July 26, 2005. A live audio broadcast, including relevant charts, will be available on the Investor Relations page of the company’s web site at:http://www.lockheedmartin.com/investor.

FORWARD-LOOKING STATEMENTS

Statements in this release that are “forward-looking statements” are based on Lockheed Martin’s current expectations and assumptions. Forward-looking statements in this release include estimates of future sales, earnings and cash flow. These statements are not guarantees of future performance and are subject to risks and uncertainties. Actual results could differ materially because of factors such as: the availability of government funding for our products and services both domestically and internationally; changes in government and customer priorities and requirements (including changes to respond to Department of Defense reviews, Congressional actions, budgetary constraints, cost-cutting initiatives, terrorist threats and homeland security); the impact of continued military operations in Iraq and Afghanistan on funding for existing defense programs; the award or termination of contracts; difficulties in developing and producing operationally advanced technology systems; the timing and customer acceptance of product deliveries; performance issues with key suppliers, subcontractors and customers; financial market and other changes that may impact pension plan assumptions; charges from any future impairment reviews that may result in the recognition of losses, and a reduction in the book value of goodwill or other long-term assets; the future impact of legislation or changes in accounting or tax rules, interpretations or pronouncements; the future impact of acquisitions or divestitures, joint ventures or teaming arrangements; the outcome of legal proceedings and other contingencies (including lawsuits, government investigations or audits, and environmental remediation efforts); the competitive environment for government and information technology products and services; and economic, business and political conditions domestically and internationally.

These are only some of the factors that may affect the forward-looking statements contained in this press release. For further information regarding risks and uncertainties associated with Lockheed Martin’s business, please refer to the Corporation’s SEC filings, including the “Management’s Discussion and Analysis of Results of Operations and Financial Condition,” “Risk Factors and Forward-Looking Statements” and “Legal Proceedings” sections of the Corporation’s 2004 annual report on Form 10-K, copies of which may be obtained at the Corporation’s website: http://www.lockheedmartin.com.

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It is the Corporation’s policy to only update or reconfirm its earnings, sales and cash outlook by issuing a press release. The Corporation generally plans to provide a forward-looking outlook as part of its quarterly earnings release but reserves the right to provide outlook at different intervals or to revise its practice in future periods. All information in this release is as of July 25, 2005. Lockheed Martin undertakes no duty to update any forward-looking statement to reflect subsequent events, actual results or changes in the Corporation’s expectations. We also disclaim any duty to comment upon or correct information that may be contained in reports published by investment analysts or others.

NON-GAAP PERFORMANCE MEASURES

The Corporation defines return on invested capital (ROIC) as net earnings plus after-tax interest expense divided by average invested capital (stockholders’ equity plus debt). The Corporation believes that reporting ROIC provides investors with greater visibility into how effectively Lockheed Martin uses the capital invested in its operations. The Corporation uses ROIC to evaluate multi-year investment decisions and as a long-term performance measure, and also plans to use ROIC as a factor in evaluating management performance for incentive compensation purposes in 2005. ROIC is not a measure of financial performance under generally accepted accounting principles in the U.S., and may not be defined and calculated by other companies in the same manner. ROIC should not be considered in isolation or as an alternative to net earnings as an indicator of performance. The Corporation calculates ROIC as follows:

(In millions, except percentages)		2005 Outlook	2004 Actual
NET EARNINGS INTEREST EXPENSE (MULTIPLIEDBY 65%)1	}	COMBINED	$	1,266 276
RETURN		> $ 1,840	$	1,542
AVERAGE DEBT2,4 AVERAGE EQUITY3,4	}	COMBINED		5,932 7,015
AVERAGE INVESTED CAPITAL		< $ 13,150	$	12,947
RETURNONINVESTEDCAPITAL		> 14.0%		11.9	%

¹ Represents after-tax interest expense utilizing the federal statutory rate of 35%.

² Debt consists of long-term debt, including current maturities, and short-term borrowings (if any).

³ Equity includes non-cash adjustments for other comprehensive losses, primarily for the additional minimum pension liability.

⁴ Yearly averages are calculated using balances at the start of the year and at the end of each quarter.

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LOCKHEED MARTIN CORPORATION

Consolidated Statement of Earnings

Preliminary and Unaudited

(In millions, except per share data and percentages)

	THREE MONTHS ENDED JUNE 30,						SIX MONTHS ENDED JUNE 30,
	2005			2004			2005			2004
Net Sales	$	9,295		$	8,776		$	17,783		$	17,123
Cost of Sales		8,637			8,243			16,583			16,122
		658			533			1,200			1,001
Other Income and (Expenses), net		106			11			194			79
Operating Profit		764			544			1,394			1,080
Interest Expense		94			106			184			214
Earnings before Income Taxes		670			438			1,210			866
Income Tax Expense		209			142			380			279
Net Earnings	$	461		$	296		$	830		$	587
Effective Tax Rate		31.2	%		32.4	%		31.4	%		32.2	%
Earnings per Common Share:
Basic	$	1.03		$	0.67		$	1.87		$	1.32
Diluted	$	1.02		$	0.66		$	1.85		$	1.31
Average Number of Shares Outstanding:
Basic		445.3			443.9			443.3			444.1
Diluted		451.3			447.0			448.9			447.2

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LOCKHEED MARTIN CORPORATION

Net Sales, Operating Profit and Margins

Preliminary and Unaudited

(In millions, except percentages)

	THREE MONTHS ENDED JUNE 30,								SIX MONTHS ENDED JUNE 30,
	2005			2004			% Change		2005			2004			% Change
Net sales:
Systems & IT Group:
Electronic Systems	$	2,740		$	2,206				$	4,997		$	4,340
Integrated Systems & Solutions		1,052			964					2,010			1,871
Information & Technology Services		998			918					1,843			1,770
Systems & IT Group		4,790			4,088		17	%		8,850			7,981		11	%
Aeronautics		2,879			3,141		(8	)%		5,645			6,016		(6	)%
Space Systems		1,626			1,547		5	%		3,288			3,126		5	%
Total net sales	$	9,295		$	8,776		6	%	$	17,783		$	17,123		4	%
Operating profit:
Systems & IT Group:
Electronic Systems	$	295		$	220				$	527		$	422
Integrated Systems & Solutions		93			81					177			161
Information & Technology Services		86			71					157			131
Systems & IT Group		474			372		27	%		861			714		21	%
Aeronautics		245			239		3	%		467			445		5	%
Space Systems		146			129		13	%		299			249		20	%
Segment operating profit		865			740		17	%		1,627			1,408		16	%
Unallocated corporate expense, net1		(101	)		(196	)				(233	)		(328	)
Total operating profit	$	764		$	544		40	%	$	1,394		$	1,080		29	%
Segment margins:
Systems & IT Group:
Electronic Systems		10.8	%		10.0	%				10.5	%		9.7	%
Integrated Systems & Solutions		8.8	%		8.4	%				8.8	%		8.6	%
Information & Technology Services		8.6	%		7.7	%				8.5	%		7.4	%
Systems & IT Group		9.9	%		9.1	%				9.7	%		8.9	%
Aeronautics		8.5	%		7.6	%				8.3	%		7.4	%
Space Systems		9.0	%		8.3	%				9.1	%		8.0	%
													—
Total Segments		9.3	%		8.4	%				9.1	%		8.2	%

¹ “Unallocated corporate expense, net” includes the FAS/CAS pension adjustment, earnings and losses from equity investments, interest income, costs for stock-based compensation programs, unusualitems not considered in the evaluation of segment operating performance, corporate costs not allocated to the operating segments and miscellaneous corporate activities.

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LOCKHEED MARTIN CORPORATION

Selected Financial Data

Preliminary and Unaudited

(In millions)

	THREE MONTHS ENDED JUNE 30,						SIX MONTHS ENDED JUNE 30,
	2005			2004			2005			2004
Summary of unallocated corporate expense, net
FAS/CAS pension adjustment	$	(156	)	$	(148	)	$	(311	)	$	(298	)
Items not considered in segment operating performance		41			—			58			—
Other, net		14			(48	)		20			(30	)
Unallocated corporate expense, net	$	(101	)	$	(196	)	$	(233	)	$	(328	)
	THREE MONTHS ENDED JUNE 30,						SIX MONTHS ENDED JUNE 30,
	2005			2004			2005			2004
FAS/CAS pension adjustment
FAS 87 expense	$	(280	)	$	(220	)	$	(559	)	$	(443	)
Less: CAS costs		(124	)		(72	)		(248	)		(145	)
FAS/CAS pension adjustment - expense	$	(156	)	$	(148	)	$	(311	)	$	(298	)

	THREE MONTHS ENDED JUNE 30, 2005						SIX MONTHS ENDED JUNE 30, 2005
	Operating profit (loss)		Net earnings (loss)		Earnings (loss) per share		Operating profit (loss)			Net earnings (loss)			Earnings (loss) per share
Discrete Items
Gain on Intelsat sale	$	—	$	—	$	—	$	47		$	31		$	0.07
LMI impairment		—		—		—		(30	)		(19	)		(0.04	)
Inmarsat gain		41		27		0.06		41			27			0.06
	$	41	$	27	$	0.06	$	58		$	39		$	0.09

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LOCKHEED MARTIN CORPORATION

Selected Financial Data

Preliminary and Unaudited

(In millions)

	THREE MONTHS ENDED JUNE 30,				SIX MONTHS ENDED JUNE 30,
	2005		2004		2005		2004
Depreciation and amortization of property, plant and equipment
Systems & IT Group:
Electronic Systems	$	43	$	41	$	84	$	80
Integrated Systems & Solutions		12		9		20		16
Information & Technology Services		4		12		7		25
Systems & IT Group		59		62		111		121
Aeronautics		31		23		60		46
Space Systems		32		25		63		58
Segments		122		110		234		225
Unallocated corporate expense, net		10		9		24		20
Total depreciation and amortization	$	132	$	119	$	258	$	245
	THREE MONTHS ENDED JUNE 30,				SIX MONTHS ENDED JUNE 30,
	2005		2004		2005		2004
Amortization of purchased intangibles
Systems & IT Group:
Electronic Systems	$	12	$	11	$	24	$	23
Integrated Systems & Solutions		3		4		7		7
Information & Technology Services		5		3		9		7
Systems & IT Group		20		18		40		37
Aeronautics		13		13		25		25
Space Systems		2		2		4		4
Segments		35		33		69		66
Unallocated corporate expense, net		3		2		6		5
Total amortization of purchased intangibles	$	38	$	35	$	75	$	71

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LOCKHEED MARTIN CORPORATION

Consolidated Condensed Balance Sheet

Preliminary and Unaudited

(In millions)

	JUNE 30,       2005		DECEMBER 31, 2004
Assets
Cash and cash equivalents	$	3,062	$	1,060
Short-term investments		414		396
Accounts receivable		4,287		4,094
Inventories		1,755		1,864
Other current assets		1,658		1,539
Total current assets		11,176		8,953
Property, plant and equipment, net		3,552		3,599
Investments in equity securities		312		812
Goodwill		8,299		7,892
Purchased intangibles, net		633		672
Prepaid pension asset		1,052		1,030
Other noncurrent assets		2,369		2,596
Total assets	$	27,393	$	25,554
Liabilities and Stockholders’ Equity
Accounts payable	$	1,933	$	1,726
Customer advances and amounts in excess of costs incurred		4,572		4,028
Other accrued expenses		3,036		2,797
Current maturities of long-term debt		208		15
Total current liabilities		9,749		8,566
Long-term debt		4,874		5,104
Accrued pension liabilities		1,717		1,660
Post-retirement and other noncurrent liabilities		3,167		3,203
Stockholders’ equity		7,886		7,021
Total liabilities and stockholders’ equity	$	27,393	$	25,554

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LOCKHEED MARTIN CORPORATION

Consolidated Condensed Statement of Cash Flows

Preliminary and Unaudited

(In millions)

	SIX MONTHS ENDED JUNE 30,
	2005			2004
Operating Activities
Net earnings	$	830		$	587
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization of property, plant and equipment		258			245
Amortization of purchased intangibles		75			71
Changes in operating assets and liabilities
Receivables		(124	)		365
Inventories		107			434
Accounts payable		194			85
Customer advances and amounts in excess of costs incurred		544			(494	)
Other		361			503
Net cash provided by operating activities		2,245			1,796
Investing Activities
Expenditures for property, plant and equipment		(208	)		(260	)
(Purchase) sale of short-term investments, net		(18	)		240
Acquisitions of businesses / investments in affiliated companies		(413	)		—
Divestitures and other activities		803			15
Other		3			17
Net cash provided by investing activities		167			12
Financing Activities
Repayments related to long-term debt		(39	)		(137	)
Common stock activity, net		(149	)		(242	)
Common stock dividends		(222	)		(196	)
Net cash used for financing activities		(410	)		(575	)
Net increase in cash and cash equivalents		2,002			1,233
Cash and cash equivalents at beginning of period		1,060			1,010
Cash and cash equivalents at end of period	$	3,062		$	2,243

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LOCKHEED MARTIN CORPORATION

Consolidated Statement of Stockholders’ Equity

Preliminary and Unaudited

(In millions)

	Common Stock		Additional Paid-In Capital		Retained Earnings			Unearned Compensation			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
Balance at January 1, 2005	$	438	$	2,223	$	5,915		$	(23	)	$	(1,532	)	$	7,021
Net earnings						830									830
Common stock dividends						(222	)								(222	)
Common stock activity, net		3		104					5						112
Other comprehensive income												145			145
Balance at June 30, 2005	$	441	$	2,327	$	6,523		$	(18	)	$	(1,387	)	$	7,886

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LOCKHEED MARTIN CORPORATION

Operating Data

Preliminary and Unaudited

(In millions)

	JUNE 30,       2005		DECEMBER 31, 2004
Backlog
Systems & IT Group:
Electronic Systems	$	20,982	$	18,239
Integrated Systems & Solutions		4,426		4,586
Information & Technology Services		4,704		4,560
Systems & IT Group		30,112		27,385
Aeronautics		26,796		30,489
Space Systems		16,302		16,112
Total	$	73,210	$	73,986

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