1994
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994 Commission file number 1-11810
[MARTIN MARIETTA LOGO]
MARTIN MARIETTA CORPORATION
(Exact name of registrant as specified in its charter)
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Maryland 52-1801551
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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6801 Rockledge Drive, Bethesda, Maryland 20817-1877 (301/897-6000)
(Address and telephone number of principal executive offices)
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of Each Class on which registered
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New York Stock Exchange, Inc.
Chicago Stock Exchange, Incorporated
Common Stock, $1 par value Pacific Stock Exchange, Incorporated
Philadelphia Stock Exchange, Inc.
7% Debentures due 2011 New York Stock Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes [x] No [ ]
Indicate by check mark if the disclosure of delinquent files pursuant to Item
405 or Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [x]
State the aggregate market value of the voting stock held by non-affiliates
of the registrant. Approximately $4,300,000,000 as of January 31, 1995.
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date. Common Stock, $1 par value,
96,067,318 shares outstanding as of January 31, 1995.
DOCUMENTS INCORPORATED BY REFERENCE
N/A
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PART I
ITEM 1. BUSINESS
General
Martin Marietta Corporation is a diversified enterprise principally engaged
in the conception, design, manufacture and integration of advanced technology
products and services for the United States Government and private industry.
Martin Marietta Corporation manages significant facilities for the Department of
Energy and produces construction aggregates and specialty chemical products.
In 1993, Martin Marietta Corporation consummated a transaction in which its
businesses and the Aerospace businesses of the General Electric Company were
combined. As a result, the then existing Martin Marietta Corporation, which was
formed in 1961 by the consolidation of the Glenn L. Martin Company (founded in
1909) and the American-Marietta Company (founded in 1913), was renamed Martin
Marietta Technologies, Inc. (Technologies). Technologies became a wholly-owned
subsidiary of a new corporation which assumed the Martin Marietta Corporation
name.
Martin Marietta Corporation and Technologies, although separate Maryland
corporations, are operated functionally as an integrated organization and this
Annual Report on Form 10-K treats them in this fashion. Unless the context
otherwise requires, references to "Martin Marietta" or the "Corporation" refer
to
Martin Marietta Corporation, its consolidated subsidiaries (including
Technologies) and certain nonconsolidated associated companies or joint
ventures. See "Martin Marietta Technologies, Inc. - Reporting Status" on page
23 through page 24.
Business Segment Information
In 1994, Martin Marietta conducted business in six reportable industry
segments. These segments were: the Electronics Group, the Space Group, the
Information Group, the Services Group, the Materials Group, and Energy and Other
Operations.
Information concerning Martin Marietta's net sales, operating profit,
assets employed, and certain additional information attributable to each
reportable business segment for each year in the three-year period ended
December 31, 1994, is included in the "Analysis of Financial Condition and
Operating Results" on page 6 through page 12 of the Corporation's Current Report
on Form 8-K filed with the SEC on February 17, 1995 ("Current Report on Form 8-
K") and in "Note R: Industry Segments" of the "Notes to Consolidated Financial
Statements" on page 35 through page 36 of the Current Report on Form 8-K.
On August 29, 1994, Martin Marietta Corporation entered into an Agreement
and Plan of Reorganization to combine the businesses of Lockheed Corporation
("Lockheed") with the businesses of Martin Marietta (the "Combination"). The
Agreement and Plan of Reorganization was amended on February 7, 1995 (as
amended, the "Reorganization Agreement"). On March 15, 1995, the Combination
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was consummated and each of Martin Marietta and Lockheed became a wholly owned
subsidiary of Lockheed Martin Corporation ("Lockheed Martin") on the terms set
forth in the Reorganization Agreement. Lockheed Martin was formed by Lockheed
and Martin Marietta in August 1994 to hold the businesses of Martin Marietta and
Lockheed.
The business of Lockheed Martin consists of the businesses previously
conducted by Lockheed and Martin Marietta and their respective subsidiaries.
Further, although Lockheed Martin and its wholly owned subsidiaries, Lockheed
and Martin Marietta, are separate corporations, they will be operated
functionally as an integrated organization, Lockheed Martin.
The business of Lockheed Martin is organized into four major operating
sectors: Aeronautics; Electronics; Information and Technology Services; and
Space and Strategic Missiles. These sectors include businesses of Lockheed and
Martin Marietta and their respective subsidiaries. Other Lockheed Martin units
include Energy Systems, Sandia Corporation, Idaho Technologies and Martin
Marietta Materials, Inc. Consequently, the organization of various Martin
Marietta operations and contracts into industry segments described herein as
well as the assessment of the potential significance of such operations and
contracts to these segments in 1995 does not take into account changes that will
occur as a result of the Combination.
For additional details concerning the Combination, please see the
Registration Statement on Form S-4 of Lockheed Martin
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Corporation (Reg. No. 33-57645) filed with the Securities and Exchange
Commission on February 9, 1995.
Electronics Group
The Electronics Group carries out its operations through the following
organizations: Aero & Naval Systems, Armament Systems, Defense Systems,
Communications Systems, Control Systems, Electronics & Missiles, Government
Electronic Systems, and Ocean, Radar & Sensor Systems. The Group's activities
are diverse, but primarily relate to the design, development, engineering and
production of electronic systems for precision guidance, navigation, detection
and tracking of threats; missiles and missile launching systems; armaments;
aircraft controls and subsystems (thrust reversers); and secure communications
systems.
The Group is the prime contractor for the United States Navy's AEGIS fleet
air-defense system and produces the AEGIS Weapon System including the AN/SPY-1
radar. AEGIS was the Group's largest program in terms of sales in 1994 and is
expected to be the largest in 1995.
The Group serves as primary contractor for the development of the AN/BSY-2
Submarine Combat System for the Navy's new Seawolf attack submarine. The Group
produces the LANTIRN system, an advanced night vision, navigation and targeting
fire control system for fixed-wing aircraft and the Target Acquisition
Designation Sight/Pilot Night Vision Sensor (TADS/PNVS) for the Army's AH-64
Apache Attack helicopter. The Group also produces thrust reversers for use in
the General Electric Company's CF6 series of commercial
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aircraft engines under a requirements contract awarded in 1993 that is expected
to run for up to 15 years.
The Group's 1994 operating profits were adversely affected by a loss
provision of $83 million to cover additional costs anticipated on Aero and Naval
Systems' Pratt & Whitney jet engine thrust reverser program. The additional
costs are associated with initial production start-up problems and certain
redesign efforts.
Sales by the Group represented approximately 39% of the Corporation's total
sales in 1994. Sales to the United States Government represented approximately
86% of the Group's sales in 1994.
Space Group
The Space Group's operations are carried out through three organizations:
Astronautics, Astro Space and Manned Space Systems. The Group's activities
include the design, development, engineering and production of spacecraft, space
launch vehicles and supporting ground systems, electronics and instrumentation.
The Group serves as the prime integration, systems production and launch
contractor to the U.S. Air Force for the Titan series of expendable space launch
vehicles. These include the Titan II and Titan IV.
The design, development and fabrication of the Titan IV, together with the
provision of related payload integration and launch services, was the Group's
(and the Corporation's) largest program in 1994, constituting approximately 35%
of the Group's 1994
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sales. The first Titan IV equipped with a newly developed Centaur upper stage
was successfully launched in February, 1994. Subsequently, two additional Titan
IVs equipped with a Centaur upper stage have been successfully launched. The
new configuration allows the launching of significantly heavier payloads to
geosynchronous orbit. Titan IV is expected to continue to be the Group's
largest program over the next several years.
On May 2, 1994, the Corporation completed its acquisition of the Space
Systems Division of General Dynamics Corporation. The primary activity of the
Space Systems Division business relates to the Atlas series of space launch
vehicles and the Centaur upper stages used with Atlas and Titan IV launch
vehicles. Acquisition of the Atlas series of launch vehicles has allowed the
Corporation to enter the intermediate-lift launch market.
A third focus of the Group is the design, development, assembly and testing
of expendable external fuel tanks for the National Aeronautics and Space
Administration's (NASA) Space Shuttle program. The external tank program is
expected to remain a significant program in future years.
An additional area of operations is the design, development, production and
integration of military, civil and commercial spacecraft and related subsystems.
Spacecraft missions include communications (e.g., INTELSAT VIII, AsiaSat,
Echostar, Koreasat, GE-1, INMARSAT and the Defense Satellite Communications
System), global positioning (e.g., GPS Block IIR), weather monitoring (e.g., the
Television Infrared Observation Satellite program and the
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Defense Meteorological Satellite program), environmental/earth observing (e.g.,
Global Geospace Science Satellite, EOS AM, and Landsat satellites), and
planetary exploring (e.g., Mars Global Surveyor and Cassini).
Sales by the Group represented approximately 35% of the Corporation's total
sales in 1994. Sales to the United States Government represented approximately
79% of the Group's sales in 1994.
Information Group
The Information Group consists of four organizations: Automation Systems,
Information Systems, Internal Information Systems and Management & Data Systems.
The Group provides command and control systems, information processing services,
systems engineering, integration, program management, software development,
computer-based simulations and training products, computer-based test control,
machinery control, and automated logistics systems to civil, military and
commercial customers.
The Group is the prime contractor for the U.S. Navy's Consolidated
Automated Support System (CASS). CASS is an automated, self-contained
diagnostic unit for testing Navy electronic and avionic systems. Additionally,
the Group received a commercial CASS contract from the Spanish electronics
company CESELSA in 1994.
In 1994, the Group received a U.S. Air Force contract for visual and sensor
simulation upgrades to the B1-B, B-2 and F-15E
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weapon systems trainers located in the United States and Europe. Other
simulation and training contracts include U.S. Army contracts for M1A2 armor
training systems for use by the Kuwaiti military, tank platoon gunnery training
systems, and the next-generation Advanced Gunnery Training System.
The Group is in the fourth year of a 12-year contract with the U.S.
Department of Housing & Urban Development (HUD) to modernize HUD's data
processing systems, and it provides systems engineering and integration for the
Federal Aviation Administration Capital Investment Plan.
The Group also performs on a number of major contracts for classified
customers encompassing real-time command-and-control systems engineering and
systems integration, analysis, and program control for large distributed
Information Systems efforts.
Sales by the Group represented approximately 15% of the Corporation's total
sales in 1994. Sales to the United States Government represented approximately
93% of the Group's sales in 1994.
Services Group
The Services Group consists of Martin Marietta Services, Inc., Martin
Marietta Technical Services, Inc. and KAPL, Inc. The Group provides management,
engineering, logistics, information systems software and processing support, and
other technical services to military, civil government and international
customers as well as
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to other organizations within the Corporation. The Department of Defense is the
Group's largest customer.
The Group is responsible for the operation of the EPA's National Computer
Center in Raleigh, North Carolina, the Washington Information Center in
Washington, D.C., and the National Environmental Supercomputer Center in Bay
City, Michigan. The Group is in the third year of a five year contract to
provide information center support and various consulting and design services to
the EPA. Work for the EPA is expected to remain one of the Group's major
sources of revenue in 1995.
The Group provides scientific, engineering, operations and management
services support to NASA's Johnson Space Flight Center with respect to that
organization's efforts in life sciences experimentation. As part of that
contract, the Group was selected to provide such support on the ten upcoming
Russian/American Life Sciences Missions. The Group provides similar services
supporting NASA missions at Goddard Space Flight Center, Ames Research Center,
and the Dryden Flight Center.
The Group also provides quality control and engineering services, training,
installation and maintenance support of the U.S. Navy's AEGIS fleet air-defense
system for which the Corporation's Electronics Group is prime contractor.
In addition, the Group provides engineering, operation and maintenance
support for the U.S. Navy's Atlantic Fleet Weapons Training Facility located in
Puerto Rico and surrounding islands.
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The contract's period of performance expires in September 1995 and the Group is
currently competing for a new five-year contract.
KAPL, Inc., a component of the Group, provides high-level engineering and
scientific support to the Department of Energy's Knolls Atomic Power Laboratory.
Sales by the Group represented approximately 5% of the Corporation's total
sales in 1994. Sales to the United States Government represented essentially
all of the Group's sales in 1994.
Materials Group
In February 1994, an initial public offering of the common stock of Martin
Marietta Materials, Inc. (Materials) was consummated and 8,797,500 shares of
common stock (representing approximately 19% of the shares outstanding) were
sold at an initial offering price of $23.00 per share. The Corporation
continues to own all of the remaining shares and presently intends to maintain
such ownership. Maintenance by the Corporation of at least an 80% ownership
position will enable the Corporation to continue to include Materials in the
Corporation's consolidated group for federal income tax purposes. See "Note N:
Other Income and Expenses" of the "Notes to Consolidated Financial Statements"
on page 33 of the Current Report on Form 8-K.
On January 3, 1995, Materials purchased the assets of Dravo Corporation's
construction aggregates business for approximately
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$122 million in cash, adding over 20 million tons of annual production capacity.
Materials carries on its operations through two divisions, Aggregates and
Magnesia Specialties. Following the acquisition of the Dravo construction
aggregates business, the Aggregates division is the United States' second
largest producer of aggregates for the construction of highways and other
infrastructure projects and for the commercial and residential construction
industries. Materials has focussed on the production of construction aggregates
and has not integrated vertically into other construction materials businesses.
As a result of dependence upon the construction industry, the profitability
of construction aggregates producers is sensitive to regional economic
conditions, particularly to cyclical swings in construction spending and changes
in the level of infrastructure spending funded by the public sector. The
aggregates business is also highly seasonal, due primarily to the effect of
weather conditions on construction activity in the markets served. Materials'
aggregates business is concentrated principally in the Southeast, the Midwest
and, with the addition of the Dravo operations, along the Ohio and Mississippi
River systems from western Pennsylvania throughout the central and southern U.S.
Management believes that raw material reserves are sufficient to permit
production at present operational levels for the foreseeable future.
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Through its Magnesia Specialties Division, Materials manufactures and
markets magnesia-based products, including refractory products for the steel
industry and chemical products for industrial, environmental and agricultural
uses. Magnesia Specialties' refractory and dolomitic lime products are sold
primarily to the steel industry, and such sales may be affected by developments
in that industry.
Sales by the Group represented approximately 5% of the Corporation's total
sales in 1994.
Energy and Other Operations
Energy Group - The Energy Group's operations are performed through three
organizations: Martin Marietta Energy Systems, Inc., Martin Marietta Utility
Services, Inc. and Martin Marietta Specialty Components, Inc. In addition,
Martin Marietta Environmental Holdings Inc. was established in August 1994 to
conduct business in the field of environmental management.
The Group's primary programs are (i) the development of safe, economic, and
environmentally acceptable technologies for the efficient production and use of
energy; (ii) a manufacturing and developmental engineering organization engaged
primarily in programs related to the national defense; (iii) environmental and
other technical programs performed for the DOE and other federal agencies; (iv)
the production of enriched uranium for use as fuel in nuclear power plants and
other ancillary uranium enrichment services; and (v) the manufacturing of
electronic and
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electromechanical components primarily for nuclear weapons. An additional
mission is the transfer of technology to the private sector to enhance national
competitiveness.
Recent defense-related budget reductions have decreased production at some
of the Energy Group's facilities.
Sandia Corporation - The Corporation, through Sandia Corporation, a wholly-
owned subsidiary, manages and operates Sandia National Laboratories. Sandia is
a federally funded research and development center with significant
responsibilities for national security programs in defense as well as programs
in the fields of energy and the environment. A derivative activity is the
transfer of technology to the private sector to enhance national
competitiveness.
Martin Marietta Overseas Corporation - Martin Marietta Overseas Corporation
(MMOC), a wholly-owned subsidiary of Martin Marietta, is generally responsible
for contracts, joint ventures, teaming and other agreements with international
customers and parties. In recent years, the amount of business conducted by the
Corporation internationally (directly and through MMOC) has increased and
international business now constitutes approximately 17% of the Corporation's
business. Included in this percentage are Foreign Military Sales which, because
such sales are made through the U.S. Government, are also taken into account in
calculating the percentage of the Corporation's sales to the U.S. Government.
International business includes the production of commercial communications
satellites for customers such as AsiaSat, Japan
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Broadcasting Corporation, Korea Telecom, the 52-nation INMARSAT Consortium and
the 124-nation INTELSAT consortium, and the sale of airborne, ground and naval
surveillance radars, the Patriot Missile System, the LANTIRN system, and the
TADS/PNVS system to various allied nations.
Additional Activities - For information relating to activities undertaken
by the Corporation included within this reportable business segment, including
information pertaining to activities not discussed above, see "Note R: Industry
Segments" of the "Notes to Consolidated Financial Statements" on page 35 through
page 36 of the Current Report on Form 8-K.
Competition, Contracts and Risk
Martin Marietta competes with numerous other contractors on the basis of
price and technical capability. Its business involves rapidly advancing
technologies and is subject to many uncertainties including, but not limited to,
those resulting from changes in federal budget priorities, particularly the size
and scope of the defense budget, and dependence on Congressional appropriations.
Due to the intense competition for available government business, the
maintenance and/or expansion of government business increasingly requires the
Corporation to invest in its working capital and fixed asset base.
Approximately 80% of the 1994 sales of the Corporation were made to the
United States Government, either as a prime contractor or as a subcontractor,
principally to the Department of Defense
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(including Foreign Military Sales) and NASA, and additionally to the U.S.
Department of Energy, the U.S. Department of Housing & Urban Development, and
the U.S. Environmental Protection Agency. Accordingly, sales and earnings are
subject to the size, schedule and funding of government programs and are subject
to periodic review in light of changes in government policies and requirements,
availability of funds and technical or schedule progress.
Earnings may vary materially depending upon the types of long-term
government contracts undertaken, the costs incurred in their performance, the
achievement of other performance objectives and the stage of performance at
which the right to receive fees, particularly under incentive and award fee
contracts, is finally determined.
See "Note A: Accounting Policies" of the "Notes to Consolidated Financial
Statements" on page 20 through page 21 of the Current Report on Form 8-K for
information concerning Martin Marietta's accounting policies governing
recognition of revenues and earnings.
All government contracts and, in general, subcontracts thereunder are
subject to termination in whole or in part at the convenience of the United
States Government as well as for default. Long-term government contracts and
related orders are subject to cancellation if appropriations for subsequent
performance periods become unavailable. Martin Marietta generally would be
entitled to receive payment for work completed and allowable termination or
cancellation costs if any of its government contracts were to be
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terminated for convenience. Upon termination for convenience of cost-
reimbursement-type contracts, the contractor is normally entitled, to the extent
of available funding, to reimbursement of allowable costs plus a portion of the
fee related to work accomplished. Upon termination for convenience of fixed-
price-type contracts, the contractor is normally entitled, to the extent of
available funding, to receive the purchase price for delivered items,
reimbursement for allowable costs for work in process, and an allowance for
profit thereon or adjustment for loss if completion of performance would have
resulted in a loss.
A portion of Martin Marietta's business includes classified programs.
Although these programs are not discussed herein, the operating results relating
to those programs are included in the Corporation's consolidated financial
statements. The nature of and business risks associated with classified
programs do not differ materially from those of the Corporation's other
government programs and products.
An increasing percentage of Martin Marietta's business is conducted
internationally. While this is one of the Corporation's objectives,
international business may involve additional risks, such as exposure to
currency fluctuations, offset obligations and changes in foreign economic and
political environments. In addition, international transactions frequently
involve increased financial and legal risks arising from stringent contractual
terms and conditions and widely differing legal systems, customs and mores in
various foreign countries.
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The Corporation owns numerous patents and patent applications, some of
which, together with licenses under patents owned by others, are utilized in its
operations. While such patents and licenses are, in the aggregate, important to
the operation of the Corporation's business, no existing patent, license or
other similar intellectual property right is of such importance that its loss or
termination would, in the opinion of management, materially affect the
Corporation's business.
Certain risks inherent in the current defense and aerospace business
environment are discussed in "Analysis of Financial Condition and Operating
Results" on page 6 through page 12 of the Current Report on Form 8-K.
Backlog
Martin Marietta's backlog of orders at December 31, 1994, was $16.6 billion
compared with $16.7 billion at the end of 1993. The 1994 amount includes funded
backlog of $10.8 billion compared with $9.3 billion at the end of 1993.
Typically, the United States Government funds its major programs only to
the dollar level appropriated annually by the Congress despite total estimated
program values being significantly higher. Accordingly, the government funded
backlog reflected in the above amounts represents only the government's present
obligation and represents the amount from which Martin Marietta can be
reimbursed for work performed.
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Backlog information and comparisons thereof as of different dates may not
be accurate indicators of future sales or the ratio of Martin Marietta's future
sales to the United States Government versus its sales to other customers.
Of the Corporation's total 1994 year-end backlog, approximately $9.9
billion, or 59%, is not expected to be filled within one year.
Environmental Regulation
Martin Marietta's operations are subject to and affected by a variety of
federal, state, and local environmental protection laws and regulations,
including those regulating air and water quality, hazardous materials and solid
wastes. Management believes that, on an overall basis, all of the facilities,
owned or leased by the Corporation, are currently operated in substantial
compliance with applicable statutes and regulations. Some of these facilities
are currently subject to remedial actions for removing hazardous contamination
that exists from prior operations. The Corporation is actively involved in
environmental responses at certain of its facilities and at certain waste
disposal sites not currently owned by the Corporation (third-party sites) where
the Corporation, its former aluminum subsidiary, or one of the former GE
Aerospace businesses acquired by the Corporation from GE has been designated a
"Potentially Responsible Party" (PRP) by the U.S. Environmental Protection
Agency (EPA). At such third-party sites, the EPA or a state agency has
identified the site as requiring removal or
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remedial action under the federal "Superfund" and other related federal or state
laws governing the remediation of hazardous materials. Generally, PRPs that are
ultimately determined to be "responsible parties" are strictly liable for site
clean-ups and usually agree among themselves to share, on an allocated basis, in
the costs and expenses for investigation and remediation of the hazardous
materials. Under existing environmental laws, however, responsible parties are
jointly and severally liable and, therefore, the Corporation is potentially
liable for the full cost of funding such remediation. In the unlikely event
that the Corporation were required to fund the entire cost of such remediation,
the statutory framework provides that the Corporation may pursue rights of
contribution from the other PRPs.
At third-party sites, the Corporation continues to pursue a course of
action designed to minimize and mitigate its potential liability through
assessing the legal basis for its involvement, including an analysis of such
factors as (i) the amount and nature of materials disposed of by the
Corporation, (ii) the allocation process, if any, used to assign all costs to
all involved parties, and (iii) the scope of the response action that is or may
reasonably be required. The Corporation also continues to pursue active
participation in steering committees, consent orders and other appropriate and
available avenues. Management believes that this approach should minimize the
Corporation's proportionate share of liability at third-party sites where other
PRPs share liability.
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Although the Corporation's involvement and extent of responsibility varies
at each site, management, after an assessment of each site and consultation with
environmental experts and counsel, has concluded that the probability is remote
that the Corporation's actual or potential liability as a PRP in each or all of
these sites will have a material adverse effect on the Corporation's
consolidated financial position or results of operations. While the possibility
of insurance coverage is considered in the Corporation's efforts to minimize and
mitigate its potential liability, this possibility is not taken into account in
management's assessment of whether it is likely that its actual or potential
liability will have a material adverse effect on the Corporation's consolidated
financial position.
As part of its established environmental management program, the
Corporation is currently engaged in waste-minimization projects designed to
reduce generation of hazardous waste and to reduce future costs associated with
waste disposal. Capital investments for environmental control purposes
generally afford minimal financial return and result in increased operating
costs. New and revised requirements are being continually imposed which may
require further investment. Such requirements add to the costs of operations in
the industries in which Martin Marietta does business, but the amount of such
costs cannot reasonably be estimated.
In addition, Martin Marietta manages various government-owned facilities on
behalf of the government. At such facilities,
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environmental compliance and remediation costs have historically been the
responsibility of the government and the Corporation relied (and continues to
rely with respect to past practices) upon government funding to pay such costs.
While the government remains responsible for capital costs associated with
environmental compliance, responsibility for fines and penalties associated with
environmental noncompliance, in certain instances, is being shifted from the
government to the contractor with such fines and penalties no longer
constituting allowable costs under the contracts pursuant to which such
facilities are managed.
Management does not believe that adherence to presently applicable
environmental regulations at its own facilities or in its contract management
capacity at government-owned facilities will have a material adverse effect on
Martin Marietta's consolidated financial position or results of operations. For
additional details, see "Legal Proceedings" on page 28 through page 39. See
also "Note I: Contingencies" of the "Notes to Consolidated Financial
Statements" on page 27 and "Analysis of Financial Condition and Operating
Results, Environmental Matters" on page 6 through page 12 of the Current Report
on Form 8-K.
Research and Development
Martin Marietta conducts significant research and development activities,
both under contract funding and with Independent Research and Development (IR&D)
funds. A large portion of these activities are carried out at the Corporation's
Electronics Group,
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Space Group and Information Group facilities. Research and development projects
at these facilities relate to such diverse areas as sensor technologies, state-
of-the-art software, expert systems and computing technologies, space launch and
space platform technologies, and electronics. In addition, the Corporation's
Advanced Development & Technology Operations (ADTO), headquartered in San Diego,
California, is chartered to identify, develop and demonstrate advanced
technological concepts having broad applications in space, defense, information
and communications systems, and commercial fields. An element of ADTO is Martin
Marietta Laboratories, a research and development facility near Baltimore,
Maryland. Martin Marietta Laboratories conduct basic scientific and engineering
research projects in fields such as advanced materials, photonics, micro-
electronics and information processing.
In addition, the Corporation has an Electronics Laboratory in Syracuse, New
York, which conducts advanced research in solid-state microwave and millimeter-
wave technology, infrared sensor focal plane electronics and specialized
integrated microelectronic modules for radar, space, communications and infrared
sensor systems, and an Advanced Technology Laboratory in Moorestown, New Jersey,
which conducts research and development in advanced computing technologies.
Finally, in connection with the combination of the Corporation's businesses with
the Aerospace businesses of General Electric Company (GE) that was consummated
in
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April 1993, the Corporation is afforded access to the GE Corporate Research and
Development Laboratories.
See "Note P: Research and Development" of the "Notes to Consolidated
Financial Statements" on page 33 of the Current Report on Form 8-K.
Employees
As of January 31, 1995, Martin Marietta had approximately 90,000 employees,
including approximately 20,000 persons employed by the Energy Group, 9,000
persons employed by Sandia Corporation and 3,000 employed by KAPL, Inc.
Approximately 17,000 of Martin Marietta's employees are covered by 82 separate
collective bargaining agreements with various international and local unions.
Management considers employee relations generally to be good and believes that
the probability is remote that renegotiating these contracts will have a
material adverse effect on its business.
Martin Marietta Technologies, Inc. - Reporting Status
Martin Marietta Corporation and Martin Marietta Technologies, Inc. each
have securities registered pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (1934 Act), although it is anticipated that, as a result of
the Combination, this will cease to be the case in April 1995. The staff of the
Securities and Exchange Commission (SEC) has taken the position that Martin
Marietta Technologies, Inc. need not file separate 1934 Act reports provided
those reports filed by Martin Marietta Corporation include
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additional information concerning Martin Marietta Technologies, Inc. Such
additional information is included in this Annual Report on Form 10-K and in
"Note J: Martin Marietta Technologies, Inc." of the "Notes to Consolidated
Financial Statements" on page 28 of the Current Report on Form 8-K. In
addition, certain documents required to be filed as Exhibits to this Form 10-K
or incorporated by reference to previous filings with the SEC are incorporated
herein by reference to previous SEC filings by Technologies. At the time of
such filings, Technologies was known as Martin Marietta Corporation and filed
under Commission File Number 1-4552. See "Note C: Acquisition of GD Space
Systems and Business Combination with GE Aerospace" of the "Notes to
Consolidated Financial Statements" on page 23 of the Current Report on Form 8-K.
-24-
ITEM 2. PROPERTIES
At December 31, 1994, excluding Martin Marietta Materials, Inc., the
Corporation operated in approximately 207 offices, facilities, plants and
laboratories located throughout the United States and internationally. Of
these, Martin Marietta owned approximately 18 locations, aggregating
approximately 16.8 million square feet, in fee simple and leased approximately
189 locations aggregating approximately 9.7 million square feet. In addition,
Martin Marietta manages various government-owned facilities, including the NASA
Michoud Assembly Facility at New Orleans, Louisiana, the Department of Energy
facilities at Oak Ridge, Tennessee, and Largo, Florida, the United States
Enrichment Corporation's facilities at Paducah, Kentucky, and Piketon, Ohio, the
Sandia National Laboratories at Albuquerque, New Mexico and Livermore,
California, the Knolls Atomic Power Laboratory at Niskayuna, New York, and an
Army ordnance plant at Milan, Tennessee. Martin Marietta personnel also occupy
government-owned facilities at Cape Canaveral Air Force Station and Kennedy
Space Center in Florida, at Marshall Space Flight Center in Alabama, at
Vandenberg Air Force Base in California and at Jericho, Vermont; Johnson City,
New York; and Pittsfield, Massachusetts. The United States Government also
furnishes certain equipment and property used by Martin Marietta.
Martin Marietta owns its headquarters office building located in Bethesda,
Maryland in fee simple. In addition, the Corporation owns 200 acres of land and
approximately 2.1 million square feet of
-25-
buildings at Middle River, Maryland, near Baltimore; a 1.8 million square foot
office building and manufacturing park located in Syracuse, New York;
approximately 3,300,000; 3,100,000; 675,000; 500,000 and 1,200,000 square feet
of office and manufacturing facilities located in Orlando, Florida; Waterton,
Colorado; East Windsor, New Jersey; Utica, New York; and King of Prussia,
Pennsylvania, respectively; approximately 900,000 square feet of office space in
Littleton, Colorado; and approximately 700 acres of land which could be
developed in Orlando, Florida. The Syracuse and Utica, New York facilities are
occupied by the Electronics Group while the Waterton, Colorado and East Windsor,
New Jersey facilities are occupied by the Space Group. The King of Prussia,
Pennsylvania facilities are occupied by both the Space Group and the Information
Group.
In 1993, the Corporation embarked upon a five-year facilities consolidation
plan which is expected to reduce operating costs by $1.5 billion. Since the
combination with GE Aerospace in 1993, approximately five million square feet of
capacity has been eliminated from the Corporation's facilities in various
locations. Some of these reductions were contemplated prior to the
implementation of the facilities consolidation plan, but most reflect the
operation of that plan. These reductions have been partially offset by the
addition of nearly 1.8 million square feet of leased facilities resulting from
the acquisition of General Dynamics Corporation's Space Systems Division in
1994. For additional details, see "Analysis of Financial Condition and
-26-
Operating Results" on page 6 through page 12 of the Current Report on Form 8-K.
Including the assets acquired from Dravo Corporation, Materials processes
or ships aggregates from 210 quarries and distribution yards in 20 states in the
Southwest, Midwest and Mid-Atlantic regions and in the Bahamas of which 46 are
located on land owned by Materials, 59 are located on land owned in part and
leased in part by Materials, 88 are on leased land, and 17 are on facilities
neither owned nor leased, where raw materials are removed under an agreement
with the owner. Materials conducts its specialty chemical products operations at
facilities in Woodville, Ohio and Manistee, Michigan and at smaller plants in
Bridgeport, Connecticut, River Rouge, Michigan and Pittsburgh, Pennsylvania.
Management believes that all of Martin Marietta's major physical facilities
are in good condition and are adequate for their intended use.
-27-
ITEM 3. LEGAL PROCEEDINGS
Martin Marietta is primarily engaged in providing products and services
under contracts with the United States Government and, to a lesser degree, under
foreign government contracts, some of which are funded by the United States
Government. All such contracts are subject to extensive legal and regulatory
requirements and, from time to time, agencies of the United States Government
investigate whether Martin Marietta's operations are being conducted in
accordance with these requirements. Such investigations could result in
administrative, civil or criminal liabilities including reimbursements, fines or
penalties being imposed upon Martin Marietta or could lead to suspension or
debarment from future government contracting by Martin Marietta. Neither
management nor counsel is aware of any such investigation presently ongoing
which is likely to result in the suspension or debarment of the Corporation or
which is likely to result in the imposition of reimbursements, fines or
penalties which would have a material adverse effect on the Corporation's
financial position. Martin Marietta is also involved in various other legal and
environmental proceedings.
Martin Marietta Energy Systems, Inc. (MMES), a wholly-owned subsidiary of
Technologies, manages certain facilities on behalf of the Department of Energy
(DOE) under contracts with the DOE. MMES is involved in proceedings arising out
of work performed under these contracts including the following:
-28-
- - On June 7, 1990, Boggs, et al. v. Divested Atomic Corporation, et al., was
----------------------------------------------------
filed against various defendants including MMES. Plaintiffs' request for
class certification was granted and the case is pending in the United
States District Court for the Eastern District of Ohio. Plaintiffs seek
monetary damages of $600 million based upon allegations that the defendants
discharged hazardous substances into the environment. In the event that
any damages are awarded in these proceedings, such damages will be
allowable costs under the contracts between MMES and the DOE.
- - On May 28, 1992, the Arkansas State Attorney General filed a civil suit
against MMES and the DOE relating to the shipment of hazardous waste (which
may have contained trace amounts of radioactivity) from facilities managed
for the DOE by MMES into the State of Arkansas. The suit, which is in the
United States District Court for the Eastern District of Arkansas, Western
Division, seeks civil penalties to be set by the Court plus an award to the
State of Arkansas for the costs of its investigation plus reasonable
attorney's fees and costs. MMES and the DOE have filed Motions to Dismiss
and the setting of a trial date has been postponed until the Court issues
its decision on these Motions. In the event that any damages are awarded
in these proceedings, such damages will be allowable costs under the
contracts between MMES and the DOE.
- - On December 28, 1993, MMES received a subpoena issued by a Federal Grand
Jury in the Eastern District of Virginia
-29-
requiring the production of documents relating to subcontracts with two of
MMES' suppliers. MMES has produced the documents required. The prosecutor
has informed MMES that MMES is not, at this time, the target of the
investigation.
- - During 1994, MMES and the DOE engaged in discussions with the General
Counsel for the Tennessee Department of Environment and Conservation
("TDEC") related to the clean up of hazardous waste associated with the
closure of two surface impoundments at the DOE's Oak Ridge K-25 Site. The
matter was settled in 1994, and the terms of the settlement will not have a
material adverse effect on the Corporation.
On August 5, 1991, Technologies (then known as Martin Marietta Corporation)
was served with two subpoenas by the Department of Defense Inspector General
relating to documents pertaining to a contract with the Navy for the full-scale
development of the Supersonic Low Altitude Target (SLAT) and documents
associated with six Independent Research and Development (IR&D) tasks,
collectively known as Navy Missile Systems. Technologies has complied with
these subpoenas and, in 1994, was informed that criminal prosecution had been
declined. In addition, the Civil Division of the Justice Department conducted a
civil fraud investigation dealing with the same or similar allegations and
issued Civil Investigative Demands for the testimony of several current and
former employees. On May 16, 1994, the Department of Justice, Civil Division,
filed an amended complaint in the United States District Court for the District
of Maryland, thereby intervening in
-30-
a qui tam action which was filed under seal in July 1991, United States of
--- --- ----------------
America ex. rel. Jerry J. Mayman v. Martin Marietta Corporation. The Complaint
- ---------------------------------------------------------------
alleges that Martin Marietta's method of allocating its portion of the IRAD
costs for the years 1984 through 1987 constitutes a violation of the False
Claims Act (the "Act") and represents a breach of Martin Marietta's SLAT
contract. The Complaint seeks unspecified multiple damages and civil penalties.
Martin Marietta denies that it is in violation of the Act or any common law
principle and is defending itself against the allegations. In this regard, the
Corporation has filed a Motion to Dismiss on a number of different grounds. A
hearing was held on the Motion to Dismiss on February 2, 1995. The Court has
not yet ruled on the Motion.
The Inspector General of the Department of Defense has been investigating
alleged defective pricing and labor mischarging in the Pershing II program since
at least January 1987, when Technologies (then known as Martin Marietta
Corporation) was served with an Inspector General's subpoena. Subsequently,
Technologies was served with additional Inspector General's subpoenas seeking
records relating to the Pershing II program. In addition, current and former
employees were subpoenaed to appear and have testified before a Federal Grand
Jury in Orlando, Florida. In January 1994, the Corporation was informed that
criminal prosecution had been declined but that the Civil Division of the
Justice Department intended to further investigate the matter.
-31-
On January 6, 1994, the Corporation's Ordnance Systems facility at Milan,
Tennessee, received a Federal Grand Jury subpoena issued in the Western District
of Tennessee. The subpoena requested the production of certain purchase order
files. On January 20, 1994, the Corporation received a second subpoena in this
matter. The Corporation has complied with each subpoena. The Corporation has
not been identified as a target of the investigation and has not been informed
of its purpose.
On December 22, 1994, the Corporation's Ordnance Systems Facility received
a subpoena issued by the Inspector General's Office seeking documents related to
health and safety matters at the facility. Documents responsive to the subpoena
have been produced. The Corporation has not been informed of the purpose of the
investigation.
On January 20, 1994, the Corporation received two subpoenas issued by the
Defense Investigative Service relating to the LANTIRN program. One of the
subpoenas requests documents relating to repairs to the navigation and targeting
pods and relates to the charging of repair work under the warranty provisions of
the LANTIRN contract. The other pertains to purchases from a subcontractor and
relates to the disclosure of pricing data concerning these purchases. The
Corporation has responded to each subpoena. The Corporation has been identified
as a potential target in each of the investigations and during 1994 the
Government interviewed certain former employees of the Corporation in connection
with these investigations.
-32-
On May 26, 1994, the Equal Employment Opportunity Commission ("EEOC") filed
a class action Complaint against Martin Marietta alleging violations of the Age
Discrimination in Employment Act ("ADEA") by Martin Marietta Astronautics. The
class, as included in the EEOC's Complaint, consists of approximately 2,200
class members. The Complaint, EEOC v. Martin Marietta Corporation, was filed in
-----------------------------------
the United States District Court for the District of Colorado and seeks
reinstatement, payment of lost wages and benefits in an amount to be determined
at trial, and a permanent injunction enjoining Martin Marietta from engaging in
age discrimination. Martin Marietta denies that it has violated the ADEA and is
defending itself in this action.
On November 29, 1994, the Corporation received a subpoena issued by the
Inspector General's Office seeking documents pertaining to testing of the
AN/BQG-5 Standalone Wide Aperture Array, which is produced by the Corporation's
Ocean, Radar & Sensor Systems Division. The Corporation has complied with the
subpoena.
On June 27, 1994, Martin Marietta received a subpoena from the Department
of Defense Inspector General's Office for documents related to Martin Marietta's
Compu-Scene IV image generator product. The Government appears to be
investigating the exemption for and/or waiver of the submission of cost or
pricing data. Martin Marietta has negotiated an agreement with the Government
to reduce the scope of the subpoena and is producing responsive documents.
-33-
As a result of the combination of General Electric Company's Aerospace
businesses with the businesses of the Corporation (the "GE Transaction"),
subject to certain limitations and subject to certain limited rights to
indemnification all as discussed in Parent Corporation's Registration Statement
on Form S-4 (Registration No. 33-58494), Martin Marietta assumed liabilities
relating to or arising out of legal and environmental proceedings pertaining to
the GE Aerospace businesses transferred to Martin Marietta.
In April 1992, GE voluntarily disclosed to the U.S. Department of Defense a
matter involving allegations concerning payments, certifications, and
acquisition of competitive information and related claims in connection with
contracts with the Arab Republic of Egypt for the sale of radar units by one of
the GE Aerospace businesses which is now part of Martin Marietta. In 1994,
after negotiations involving the Corporation, the Department of Justice and GE,
the matter was settled. The terms of the settlement will not have a material
adverse effect on the Corporation.
On March 6, 1995, AT&T filed suit against Martin Marietta Corporation in
the United States District Court for the Eastern District of Virginia seeking
damages of approximately $250 million plus punitive damages for the alleged
breach of a spacecraft agreement and a launch agreement. Under the spacecraft
agreement, which the Corporation assumed as part of the GE Transaction, the
Corporation committed to build for AT&T three commercial communications
satellites. The first of these was launched
-34-
successfully, but the second failed to achieve the proper orbit. AT&T's suit
seeks damages for the loss of this satellite and for delays in the delivery of a
replacement satellite. Under the launch agreement, which was assumed by the
Corporation's commercial launch vehicle subsidiary as part of the Corporation's
acquisition of General Dynamics Corporation's Space Systems Division in 1994,
the Corporation is under contract to launch the third satellite, which is
scheduled for delivery in the summer of 1995, during the second quarter of 1996
although, under certain circumstances, AT&T may be granted an earlier launch
slot. AT&T's suit also seeks damages for the failure of the Corporation to
offer AT&T a launch slot in 1995 and, in addition, seeks specific performance to
force the launch of the satellite in 1995. On the same day that AT&T filed its
suit, the Corporation sued AT&T in the District Court, County of Jefferson,
State of Colorado seeking a determination that there has been no breach of the
launch contract and sued in Federal District Court for the District of New
Jersey for payments which AT&T has withheld under the spacecraft agreement. The
Corporation believes that it has defenses to AT&T's claims and intends to defend
the action.
Martin Marietta is a party to a number of lawsuits relating to the
Combination. Class certification has been requested in each suit.
Lockheed, Martin Marietta and the directors of Lockheed are parties to
three lawsuits filed in the Superior Court of the State of California (i)
Richard Rampell and Frederick Rand v. Daniel M.
- -----------------------------------------------
-35-
Tellep, et al., (filed August 31, 1994); (ii) Stanton Discount Pharmacy, Inc. v.
- -------------- ----------------------------------
Daniel M. Tellep, et al., (filed September 12, 1994); and (iii) Rose Hadian v.
- ------------------------ --------------
Daniel M. Tellep, et al., (filed October 27, 1994) and one lawsuit filed in the
- ------------------------
Court of Chancery of the State of Delaware, Daniel Lifshitz v. Lockheed
---------------------------
Corporation, et al., (filed September 6, 1994). Martin Marietta, Lockheed and
- -------------------
the directors of Martin Marietta are parties to an additional lawsuit filed in
the Superior Court of the State of California, Doris R. Fish v. Marcus C.
--------------------------
Bennett, et al., (filed October 26, 1994).
- ---------------
Each of these lawsuits generally alleges the breach, or aiding and abetting
a breach, of various fiduciary duties. In particular, the lawsuits focus, among
other things, on the alleged unconscionability and gross unfairness of the
consideration to be offered in the Combination, alleged director self-dealing
and conflicts of interests, the alleged negative effects of the $100 million
termination fee and the alleged duty to maximize stockholder value via an
auction, open bidding or other "market check" mechanism. The lawsuits also seek
similar relief, generally in the form of a request that the Combination be
enjoined, the entry of an order directing the directors to carry out their
fiduciary duties, and a request for unspecified monetary damages.
Settlement discussions with respect to the pending litigations began
between the parties on or about January 4, 1995. During these discussions,
counsel for the plaintiffs requested and shortly thereafter received document
discovery from Lockheed and Martin Marietta relating to the Combination. Counsel
for the plaintiffs
-36-
also announced their intention to consolidate all of the shareholder class
actions into a single case and to file an amended class action and derivative
complaint in California in the lead case, the Rampell Complaint referenced
-------
above, incorporating all of the existing claims from the original complaints,
and adding claims relating to: (i) the formation of Lockheed's Employee Stock
Ownership Plan in 1989 after the disclosure by Valhi, Inc. and persons related
to it that they owned 5.3% of the Lockheed Common Stock; (ii) Lockheed's plea
agreement of January 27, 1995 with the United States of America pursuant to
which Lockheed agreed to plead guilty to one count of conspiring to violate the
anti-bribery provisions of the Foreign Corrupt Practices Act and conspiring to
falsify its books, records and accounts and Lockheed's payment under the plea
agreement of $24.8 million in fines and penalties to the United States; (iii)
the compensation to be paid to certain Martin Marietta officers and executives
as a result of the Combination; and (iv) disclosures made and proposed to be
made to stockholders of stockholders of Lockheed and Martin Marietta. The
parties continued their discussions regarding a settlement of the claims alleged
in the complaints referred to above (as well as the claims expected to be
alleged in the revised Rampell Complaint) and, in the course of negotiations,
-------
reached an oral agreement in principle on January 30, 1995 with respect to the
terms of a proposed settlement of such claims. On February 2, 1995 the Rampell
Complaint was amended.
-37-
On March 10, 1995, a stipulation of settlement (a "Stipulation") was
executed pursuant to which, subject to Court approval, the parties settled each
of the above referenced proceedings. The Stipulation includes the following
elements: (a) Lockheed Martin agreed, subject to any restrictions imposed by
Maryland law, to pay a regular quarterly dividend of $.40 (rather than $.35, as
otherwise contemplated) per share on each outstanding share of Lockheed Martin
Common Stock for each of the first three quarters after consummation of the
Combination and approval of the settlement in which net income (excluding non-
recurring restructure costs and extraordinary charges and transaction expenses)
is sufficient to pay such a dividend; (b) Lockheed agreed to strengthen its
policies and procedures to help to ensure compliance with the Foreign Corrupt
Practices Act; and (c) Lockheed Martin agreed to the payment of $6 million in
counsel fees and expenses to plaintiffs' counsel with interest from the date
plaintiffs' counsel delivered to defendants' counsel a draft of the Stipulation.
The proposed settlement was expressly conditioned upon (i) the Combination
being consummated substantially on the terms set forth in the Reorganization
Agreement, (ii) Lockheed and Martin Marietta receiving evidence satisfactory to
them that the provisions of the proposed settlement will not result in the
pooling of interests method of accounting for the Combination being unavailable
under the requirements of APB No. 16; (iii) certification of the stockholder
classes (for the purpose of obtaining approval of the Stipulation and entry of
an appropriate judgment); (iv) court
-38-
approval of the Stipulation; and (v) final dismissal of the actions with
prejudice and release of the claims asserted in such actions with prejudice.
Martin Marietta is involved in various other legal and environmental
litigation and proceedings arising in the ordinary course of its business. In
the opinion of management (which opinion is based in part upon consideration of
the opinion of counsel) and in the opinion of counsel, the probability is remote
that the outcome of any litigation or proceedings, whether or not specifically
described above or otherwise referred to herein, will have a material adverse
effect on the results of Martin Marietta's operations or its financial position.
See also "Note I: Contingencies" of the "Notes to Consolidated Financial
Statements" on page 27 of the Current Report on Form 8-K and "Analysis of
Financial Condition and Operating Results" on page 6 through page 12 of the
Current Report on Form 8-K.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of 1994.
-39-
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
There were approximately 32,000 holders of record of Martin Marietta
Corporation Common Stock, $1 par value, as of February 7, 1995. The exchanges
on which the Corporation's Common Stock was traded are listed on the cover of
this Form 10-K. In connection with the consummation of the Combination,
Lockheed Martin Corporation became the sole stockholder of Martin Marietta and
the Common Stock was delisted from each of the exchanges on which it had been
traded. Information concerning stock prices and dividends paid during the past
two years is as follows:
Common Dividends Paid and Market Prices
---------------------------------------
Market Price
Quarter Dividends Paid High/Low High/Low
------- -------------- -------- --------
1994 1993 1994 1993
---- ---- ---- ----
First .225 .21 $47.25/$41.875 $37.44/$32.00
Second .225 .21 $45.00/$40.875 $39.94/$35.81
Third .24 .225 $51.00/$43.00 $44.875/$39.06
Fourth .24 .225 $47.25/$41.50 $46.625/$40.375
---- ----
Year .93 .87
ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item 6 is included under the caption
"Five-Year Summary" on page 38 of the Current Report on Form 8-K, and that
information is hereby incorporated by reference in this Form 10-K.
-40-
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this Item 7 is included under the caption
"Analysis of Financial Condition and Operating Results" on page 6 through
page 12 of the Current Report on Form 8-K, and that information is hereby
incorporated by reference in this Form 10-K.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item 8 is included under the captions
"Consolidated Statement of Earnings," "Consolidated Balance Sheet,"
"Consolidated Statement of Cash Flows," "Consolidated Statement of
Shareowners' Equity," "Notes to Consolidated Financial Statements," and
"Quarterly Performance (Unaudited)" on page 16 through page 37 of the
Current Report on Form 8-K and "Analysis of Financial Condition and
Operating Results" on page 6 through page 12 of the Current Report on Form
8-K. This information is hereby incorporated by reference in this Form 10-
K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
-41-
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Board of Directors
The Board of Directors held twelve meetings during 1994, of which
eight were regularly scheduled meetings. Effective March 1, 1994,
directors, other than officers of the Corporation, received $36,000
annually for service on the Board and $1,000 per meeting attended,
including the Annual Meeting of Stockholders of the Corporation. Directors
were also reimbursed for expenses incurred in connection with attendance at
Board and Committee meetings.
Prior to the Combination, the Board had five standing Committees:
Audit and Ethics, Compensation, Executive, Finance, and Nominating.
Directors, other than officers of the Corporation, received $5,400 annually
for each Committee on which they served and $1,000 per Committee meeting
attended (effective March 1, 1994). Directors, other than officers of the
Corporation, who served as Chairmen of Committees received the following
additional compensation: Chairmen of the Audit and Ethics, Compensation,
Executive, and Finance Committees - $4,000 additional compensation per year
and the Chairman of the Nominating Committee - $2,000 additional
compensation per year.
Under the Directors Deferred Compensation Plan, an eligible director
had the option each year of deferring receipt of all or part of the fees
earned as a director until after termination of service as a director. A
director's annual election was irrevocable and interest was accrued on the
amount deferred. Under
-42-
the terms of the plan, effective with the Combination, no further deferral
of amounts earned prior to the Combination is permitted, and each
participating director will receive a disbursement of the balance of his or
her deferred compensation account as of the date of the Combination. The
amount of each director's deferred compensation balance as of January 31,
1995 (including accrued interest) was as follows: Mr. Byrne, $580,000; Mr.
Clark, $561,000; Mr. Colodny, $32,000; Mr. Hood, $130,000; Mr. Laird,
$1,185,000; Mr. Macklin, $224,000; and General Vessey, $372,000.
Prior to the Combination, a $100,000 Life Insurance Plan was available
to directors. Upon consummation of the Combination, the benefit became
fully vested for directors who had served five years. Premiums were paid by
the Corporation.
A Financial Counseling Program which provides reimbursement for tax
and financial planning and tax preparation services is available to
directors, officers, and other key employees of the Corporation. The
Corporation pays a maximum of $6,000 annually per participant.
Non-employee directors are provided, under the Corporation's business
travel accident policy, with $100,000 coverage for death or dismemberment
resulting from an accident while traveling on the Corporation's business.
Martin Marietta previously maintained a Post-Retirement Income
Maintenance Plan for Directors which provided that a director who at the
time of retirement had served five continuous years, or such shorter period
otherwise approved by the Nominating Committee, and
-43-
who had attained mandatory retirement age would receive for life an annual
fee equal to the annual basic retainer in effect at the time of retirement.
A director who retired early after completing at least five years of
service was entitled to receive an annual fee equal to the annual retainer
in effect at the time of retirement for a period equal to the number of
years served on the Board. Under the terms of the plan, as a result of the
Combination, each director is entitled to receive a lump sum payment equal
to the present value (i.e., discounted value) of his or her vested plan
benefits determined as if he or she had retired from the Martin Marietta
Board on the date of the Combination. Years of service have been rounded
up to the nearest whole year. Thus, as a result of the Combination,
directors who had not attained retirement age as of that date are treated
as if they had retired early and are not eligible to receive a lifetime
retirement benefit. Any active director over the age of 62 with five years
of service who was not nominated to the Lockheed Martin Board will receive
a lump sum amount based on the present value (i.e., discounted value) of
the amounts that would be payable over the longer of the following periods;
(a) the director's life expectancy or (b) years of service as a Martin
Marietta Board member. In determining present value, an after-tax discount
rate will be used. The Plan was also recently amended to provide that (i)
non-continuous service will be aggregated for the purpose of satisfying the
service requirement and (ii) outside directors who were not nominated to
the Lockheed Martin Board will also receive board and committee fees that
would
-44-
have been paid had the director continued to serve on the Board for the
remaining term of election by Martin Marietta's stockholders. Directors
who have been nominated to the Lockheed Martin Board will receive a lump
sum payment based on the plan provisions prior to these amendments.
In view of the intended operation of the plan in the absence of a
change in control, the Martin Marietta Board determined to value the
benefit for directors eligible to receive a lifetime benefit on the basis
of the cost of an annuity contract issued by an insurance company providing
the same annual payments on an after-tax basis over the expected life of
the director. The cost of such annuity contracts may differ from the cost
of providing lump sum payments; however, the differences in cost are not
material.
The amount payable under the plan to each eligible director is
estimated to be as follows: Mr. Alexander, $236,000; Mr. Augustine,
$291,000; Mr. Byrne, $572,000; Mr. Clark, $377,000; Mr. Colodny, $243,000;
Mr. Everett, $465,000; Mr. Hennessy, $357,000; Mr. Hurtt, $243,000; Mr.
Laird, $427,000; Mr. Murray, $162,000; General Vessey, $428,000; and Mr.
Young, $190,000.
The Directors Charitable Award Plan provided that in the event of the
death of an incumbent director, Martin Marietta would make donations to
charities or other eligible tax-exempt organizations previously recommended
by the director in an aggregate amount of $1 million. Directors were
vested under this plan if (a) they had served for at least five years on
the Martin Marietta Board or (b)
-45-
their service on the Martin Marietta Board was terminated due to death,
disability or retirement. Under the terms of the plan, upon consummation
of the Combination, incumbent directors with fewer than five years of
service on the Board (Mrs. King and Messrs. Alexander, Bennett, Hood,
Macklin, Murphy and Murray), became vested under this plan. This plan did
not result in any economic benefit to directors.
The Audit and Ethics Committee was composed of directors who were not
employees of the Corporation. Its powers related to accounting and
auditing matters. The Committee recommended the selection and monitored
the independence of independent auditors for the Corporation, reviewed the
scope and timing of their work, reviewed with the Corporation's management
and independent auditors the financial accounting and reporting principles
used by the Corporation, as well as the policies and procedures concerning
audits and accounting and financial controls and any recommendations to
improve existing practices. It reviewed the results of the independent
audit as well as the activities of the corporate internal audit staff. In
addition, the Committee monitored compliance with the Corporation's Code of
Ethics and Standards of Conduct, reviewed and resolved all matters of
concern presented to it by the Corporate Ethics Office, and reviewed and
monitored the adequacy of the Corporation's policies and procedures, as
well as the organizational structure, for ensuring general compliance with
laws and regulations including environmental laws and regulations and the
policies and procedures
-46-
relating thereto; it reviewed with the Corporation's management significant
litigation and regulatory proceedings in which the Corporation was involved
and reviewed the accounting and financial reporting issues, including the
adequacy of disclosure for all environmental matters. The Audit and Ethics
Committee met three times during 1994.
The Compensation Committee was composed of directors who were not
employees of the Corporation. The Committee reviewed the compensation
policy and established standards of compensation for the Corporation. The
Committee recommended compensation to be paid to elected officers and
approved the compensation for all employees, other than elected officers,
who received a salary of $200,000 or more per year. The Committee approved
employee benefits provided by all special compensation plans, including
pension, insurance, and health plans; and it also served as the Stock
Option Committee. The Compensation Committee met seven times during 1994.
The Executive Committee had the authority to exercise, during the
intervals between the meetings of the Board of Directors, any of the powers
vested in the full Board subject to applicable law. The Executive
Committee did not meet during 1994.
The Finance Committee was authorized to exercise, during the intervals
between the meetings of the Board of Directors, the powers of the Board in
the financial affairs of the Corporation, including responsibilities
related to borrowing arrangements and the investment of the Corporation's
available cash resources. It reviewed changes in the capital structure of
the Corporation and
-47-
the proposed capital expenditure and contributions budgets. It reviewed
the financial impact of the implementation of employee benefit plans and
reviewed those plans to ensure that they are operated in accordance with
existing legal requirements and sound financial principles. The Finance
Committee met two times during 1994.
The Nominating Committee was composed of directors who were not
employees of the Corporation. It made recommendations to the Board
concerning the composition and compensation of the Board, including its
size and the qualifications for membership. It also recommended nominees
to fill vacancies or new positions on the Board and the Board's nominees
for election by the stockholders at the annual meeting of stockholders.
The Nominating Committee met five times during 1994.
During 1994, all incumbent directors attended at least 75 percent of
Board and Committee meetings. Average attendance at all Board and
Committee meetings was 95 percent.
Executive Officers Of The Registrant
The executive officers of Martin Marietta Corporation for the fiscal
year 1994 and 1995 through the date of the Combination are listed below.
There were no family relationships among any of the executive officers and
directors of the Corporation. All officers served at the pleasure of the
Board of Directors.
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Principal
Positions and Occupation and
Offices Held Business
Name with Corporation Experience*
(Age at 3/30/95) (Year Elected) (Past Five Years)
---------------- ---------------- -----------------
Norman R. Augustine (59) Chairman of the Board
(1988), Chief
Executive Officer
(1987) and Director
(1986)
A. Thomas Young (56) President and Chief Executive Vice
Operating Officer President, 1989
(1990) and Director
(1989)
Marcus C. Bennett (59) Corporate Vice
President (1984),
Chief Financial
Officer (1988), and
Director (1993)
Peter A. Bracken (53) Corporate Vice President, Martin
President (1992) and Marietta Electronics,
President, Information Information & Missiles,
Group (1993) 1992-1993; Vice
President, Technical
Operations for
Information Systems,
1986-1992
Michael F. Camardo (53) Corporate Vice President, GE
President (1993) and Government Services,
President, Services Inc., 1990-1993;
Group (1993) President, GE
Government Services,
1988-1990
Thomas A. Corcoran (50) Corporate Vice Vice President and
President (1993) and General Manager,
President, Electronics General Electric
Group (1993) Company, 1990-1993;
General Manager, GE
Government
Communications, 1988-
1990
Philip J. Duke (49) Corporate Vice Vice President,
President - Finance Finance, Martin
(1994) Marietta Electronics,
1993-1994; Vice
President, Business
Operations, 1987-1993
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Clyde C. Hopkins (65) Corporate Vice President, Martin
President (1991) and Marietta Energy
President, Energy Systems, Inc. 1988-1993
Group (1993)
Bobby F. Leonard (62) Corporate Vice
President, Human
Resources (1981)
Janet L. McGregor (41) Treasurer (1992) Deputy Treasurer, 1991-
1992; Assistant
Treasurer, 1984-1991
Frank H. Menaker, Jr. (54) Corporate Vice
President (1982) and
General Counsel (1981)
Peter B. Teets (53) Corporate Vice President, Martin
President (1985) and Marietta Astronautics
President, Space Group Group, 1987-1993
(1993)
Stephen P. Zelnak, Jr. (50) President and Chief Corporate Vice
Executive Officer, President, 1989-1994,
Martin Marietta President, Materials
Materials, Inc. (1994) Group, 1993-1994
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ITEM 11. EXECUTIVE COMPENSATION
As a result of the Combination, the Corporation became a wholly owned
subsidiary of Lockheed Martin Corporation. Upon consummation of the
Combination each outstanding share of Martin Marietta Common Stock was
converted into the right to receive one share of Lockheed Martin
Corporation Common Stock. Consequently, references to what were
historically the securities of Martin Marietta Corporation, now refer to
the securities of Lockheed Martin Corporation.
SUMMARY COMPENSATION TABLE
Long Term Compensation/(1)/
Annual Compensation Awards
----------------------------------------- ---------------------------
Number
Restricted of Securities
Name and Other Annual Stock(3) Underlying All Other
Principal Position Year Salary Bonus Compensation/(2)/ Awards /(4)/ Options/SARs Compensation/(5)/
------------------ --- ------ ----- ----------------- ------------ ------------ -----------------
Norman R. Augustine 1994 $930,000 $900,000 $ 35,577 --- 100,000 $ 6,260
Chairman & Chief 1993 830,000 800,000 20,544 1,152,000 100,000 2,275
Executive Officer 1992 796,923 575,000 30,900 --- 60,000 1,750
A. Thomas Young 1994 610,000 575,000 19,849 --- 60,000 11,941
President & Chief 1993 535,000 500,000 32,620 864,000 60,000 10,087
Operating Officer 1992 501,731 375,000 131,193 --- 35,000 1,750
Peter B. Teets 1994 424,231 300,000 11,333 --- 30,000 5,250
Vice President 1993 391,827 250,000 278,410 432,000 20,000 4,859
1992 357,116 200,000 12,372 --- 15,000 1,750
Marcus C. Bennett 1994 410,000 300,000 9,839 --- 28,000 11,334
Vice President & 1993 370,000 250,000 10,116 432,000 18,000 9,321
Chief Financial
Officer 1992 351,923 190,000 13,422 --- 13,500 1,750
Thomas A. Corcoran/(6)/
Vice President 1994 346,336 240,000 281,939 --- 30,000 5,250
1993 220,833 200,000 88,070 526,500 20,000 3,288
1992 --- --- --- --- --- ---
(1) There were no payouts under the Corporation's long-term incentive plans
(Martin Marietta Corporation Long Term Performance Incentive
Compensation Plan and Amended and Restated Martin Marietta Corporation
Long Term Performance Incentive Compensation Plan) during 1994, 1993 or
1992 to the named executives. During the first quarter of 1995, all
outstanding awards under these plans will be paid out in accordance
with the terms of the plans. Certain of these payments were
accelerated as a result of the Combination.
(2) Amounts reported under the column generally represent amounts
reimbursed for the payment of taxes and financial counseling fees.
Some executive officers of the Corporation received certain personal
benefits from the Corporation. The cost of the personal benefits
furnished to each executive officer, with the exception of Mr. Corcoran
in 1994 and 1993, Mr. Teets in 1993 and Mr. Young in 1992, did not
exceed the lesser of $50,000 or 10 percent of the total annual salary
and bonus of that executive officer as reported in the
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above table. Consistent with the Corporation's policies and
procedures, the amounts reported for Mr. Corcoran in 1994 and 1993
include payments of $141,044 and $86,468, respectively, for relocation.
In addition, the amount reported for Mr. Teets in 1993 includes
payments of $245,187 for relocation. On occasion, the Corporation
determines that it is in its best interest to pay membership fees,
dues, and other expenses related to employee participation in
professional and social organizations. Determinations are made on a
case-by-case basis rather than pursuant to a formal program or plan.
The amount reported for Mr. Young in 1992 includes a one-time
membership fee of $50,000.
(3) Dividends were paid on restricted stock at the same rate as paid to all
stockholders. The market close on December 31, 1994 is the basis for
the following dollar values. On December 31, 1994, Mr. Augustine held
a total of 47,000 restricted shares having a then current value of
$2,085,625; of those shares, 32,000 shares having a value of $1,420,000
vested at the consummation of the Combination. Mr. Young held a total
of 36,000 restricted shares having a then current value of $1,597,500;
of those shares, 24,000 shares having a value of $1,065,000 vested at
the consummation of the Combination. Mr. Teets held a total of 18,000
restricted shares having a then current value of $798,750; of those
shares, 12,000 shares having a value of $532,500 vested at the
consummation of the Combination. Mr. Bennett held a total of 17,000
shares having a then current value of $754,375; of those shares 12,000
shares having a value of $532,500 vested at the consummation of the
Combination. Mr. Corcoran held a total of 12,000 shares having a then
current value of $532,500. All 12,000 shares having a value of
$532,500 vested at the consummation of the Combination. Of the 129,000
restricted shares awarded in 1991, 58,000 shares remain subject to the
terms and conditions of the governing plan documents; 13,000 shares
have been forfeited. Assuming no other forfeitures occur with respect
to 1991 awards, restrictions on the remaining 58,000 shares will lapse
on July 25, 1996. In 1994, restricted stock totalling 5,000 shares was
awarded; restrictions on all 5,000 shares lapsed at the consummation of
the Combination.
(4) Messrs. Augustine, Young, Teets, and Bennett, each of whom was an
executive officer of Martin Marietta and is an executive officer of
Lockheed Martin, borrowed $341,066, $273,971, $102,373, and $114,155,
respectively, from the Corporation in 1994. The loans were used to
satisfy personal income tax obligations associated with the vesting of
restricted stock previously granted to these individuals by the
Corporation. The plan under which such restricted stock was granted
envisions that recipients may satisfy such tax obligations by
instructing the Corporation to withhold the appropriate number of
shares from the certificate delivered to the recipient when the
restricted stock vests. In this instance, as a result of possible
restrictions on sales by the Corporation's executive officers resulting
from the then proposed Combination and later potentially imposed by
Section 16 of the Securities Exchange Act of 1934 and rules relating to
accounting for the Combination as a pooling of interests, counsel for
the Corporation recommended that its executive officers not utilize
this tax withholding feature. As the restrictions on sales resulted
from the Corporation's actions in effecting the proposed Combination,
which is in the best interest of the Corporation, the Corporation
offered short-term loans to such persons to enable them to satisfy
their income tax obligations. The loans and their terms were approved
by disinterested members of the Corporation's Board of Directions. No
interest will be paid on the loans. All loans must be paid within five
(5) days following demand by the Corporation.
(5) Amounts reported under All Other Compensation primarily represent the
Corporation's matching contributions to the Martin Marietta Corporation
Performance Sharing Plan and payments of director life insurance
premiums where applicable.
(6) Mr. Corcoran became an employee of the Corporation on April 2, 1993.
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OPTION/SAR GRANTS IN LAST FISCAL YEAR/(1)/
Shown below is information on grants of options on Common Stock awarded
pursuant to the Martin Marietta Corporation Amended Omnibus Securities Award
Plan ("Amended Omnibus Plan")/(2)/ to the named executives.
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation For
Individual Grants Option Term /(1)/
- ----------------------------------------------------------------- ---------------------
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees Base Price Expiration
Name Granted in 1994 Per Share Date 5% 10%
- ---- ------------ ----------- ---------- ---------- -- ---
Norman R. Augustine 100,000 7.4% $44.875 7/27/04 $2,822,165 $7,151,919
A. Thomas Young 60,000 4.4% 44.875 7/27/04 1,693,299 4,291,152
Peter B. Teets 30,000 2.2% 44.875 7/27/04 846,649 2,145,576
Marcus C. Bennett 28,000 2.1% 44.875 7/27/04 790,206 2,002,537
Thomas A. Corcoran 30,000 2.2% 44.875 7/27/04 846,649 2,145,576
(1) No SARs were granted in the last fiscal year.
(2) Awards were granted at the discretion of a disinterested committee, the
Compensation Committee, of the Board of Directors upon the
recommendation of management and were awarded based on past performance
or as incentive for future performance. Each award under this Plan was
evidenced by an award agreement setting forth the number and type of
stock-based awards subject to the terms and conditions applicable to the
award as determined by the Compensation Committee. Under the 1994 award
agreements issued pursuant to the Amended Omnibus Plan, options vest and
become exercisable in three approximately equal increments in multiples
of 100 shares on the first, second, and third anniversary dates of the
grant. Options awarded in 1994 expire three months following
termination of employment, except in instances following death,
disability or retirement. In the event of death, all outstanding
options vest immediately and will expire one year following the date of
death. In instances of disability or normal retirement, and in many
cases of early retirement, the award agreement states that the terms of
all outstanding options will be unaffected by such retirement or
disability.
(3) The dollar amounts set forth in these columns are the result of
calculations at the 5 percent and 10 percent rates set by the Securities
and Exchange Commission and, therefore, are not intended to forecast
possible future appreciation, if any, of the Corporation's Common Stock
price.
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AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES(1)
Shown below is information relating to the exercise of options on Common
Stock and stock appreciation rights (SARs) during the last completed fiscal
year and the fiscal year-end value of unexercised options of Common Stock
and SARs for the named executives.
Number of Securities
Underlying Unexercised Value of Unexercised In-the-Money
Options/SARs at Fiscal Year End Options/SARs at Fiscal Year End
------------------------------- ---------------------------------
Shares
Acquired Value
Name on Exercise Realized/(2)/ Exercisable Unexercisable/(3)/ Exercisable Unexercisable/(3)/
---- ----------- ------------- ----------- ------------------ ------------ -------------------
Norman R. Augustine 0 $ 0 280,000 206,800 $4,412,532 $1,012,200
A. Thomas Young 57,800 1,098,315 58,200 123,400 724,006 595,825
Peter B. Teets 20,800 428,946 20,600 53,400 268,915 239,850
Marcus C. Bennett 17,000 365,996 22,200 49,000 295,443 215,625
Thomas A. Corcoran 0 0 6,600 43,400 26,400 53,600
(1) Includes shares that vested upon consummation of the Combination.
(2) Includes value realized from exercise of options of Common Stock and SARs.
(3) Of the shares shown as unexercisable as of December 31, 1994, the following
amounts vested and became exercisable as a result of the Combination: Mr.
Augustine, 106,800 shares valued at $1,012,200; Mr. Young, 63,400 shares
valued at $595,825; Mr. Teets, 23,400 shares valued at $239,850; Mr.
Bennett, 21,000 shares valued at $215,625; and Mr. Corcoran, 13,400 shares
valued at $53,600. Prior to the Combination, Mr. Augustine informed Martin
Marietta's Board of Directors that he intends to voluntarily refrain from
exercising options pertaining to 106,800 shares which vested on an
accelerated basis as a result of the Combination.
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LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
The following table sets forth the awards under the Amended and Restated
Martin Marietta Corporation Long Term Performance Incentive Compensation Plan to
the named executives.
Performance Estimated Future Payouts
Number of or Other Period Under Non-Stock Price-Based Plans
Shares, Units or Until Maturation -------------------------------------
Name Other Rights/(1)/ Payout/(1)/ Threshold Target/(2)/ Maximum
---- ----------------- ---------------- --------- ------ -------
Norman R. Augustine 100,000 12/31/96 N/A N/A N/A
A. Thomas Young 60,000 12/31/96 N/A N/A N/A
Peter B. Teets 30,000 12/31/96 N/A N/A N/A
Marcus C. Bennett 28,000 12/31/96 N/A N/A N/A
Thomas A. Corcoran 30,000 12/31/96 N/A N/A N/A
(1) If the Combination had not occurred, each of the awards made under the
Amended and Restated Martin Marietta Corporation Long Term Performance
Incentive Compensation Plan ("Plan") would have vested on December 31,
1996. Vested units would have been exchanged for an amount of cash
calculated under a formula which requires that a base amount
(established by the Compensation Committee at the time of grant) be
subtracted from earnings per share for the year ending December 31,
1996 and the resulting difference, if a positive number, be multiplied
by a factor (also established by the Compensation Committee at the time
of grant). The resulting value would then have been multiplied by the
number of units held to establish the cash payout. The Plan provides
that in the event of a change in control the cash payout for each unit
is determined by the Compensation committee. The Committee determined
that as a result of the Combination with Lockheed, the value of units
awarded in 1994 would be based on an estimate of 1996 EPS, discounted
to March 1995. It is estimated that this will result in each unit
awarded in 1994 being valued at $7.71.
(2) As a result of the consummation of the Combination, no further
performance units will be awarded under the Amended and Restated Long
Term Incentive Compensation Plan. In addition, since all outstanding
units awarded under the plan vested in their entirety and became
payable upon consummation of the Combination, no awards will be deemed
to be outstanding for purposes of the Reorganization Agreement.
The Corporation has two additional plans which covered executives who
occupied key positions: the Deferred Compensation and Estate Supplement
Plan and the Post-Retirement Death Benefit Plan for Senior Executives.
Under the Deferred Compensation and Estate Supplement Plan, officers and
senior executive personnel were eligible to receive a benefit after
retirement. Benefit levels were determined by a schedule approved by the
Martin Marietta Board and depended on the position of the executive and
years of plan participation. Each participant received a percentage of the
total scheduled benefit payable based on age at retirement, payable over
ten years commencing at retirement (or, to
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a participant's estate, if a participant died while an active employee).
Upon consummation of the Combination, benefits under the plan became
payable in an amount equal to the present value of the earned benefit
determined as follows: (a) the total scheduled benefit was discounted to
present value and, (b) each participant was, on the date of the
Combination, entitled to receive a percent (determined by the number of
full years up to ten years, rounded up to the nearest whole year, of plan
participation, and ranging from 20% to 100%) of the amount determined by
such present value calculation. As a result of the Combination, benefits
paid under the plan to approximately 20 employee participants would be
approximately $8,200,000, including the following amounts payable to
executive officers: Mr. Augustine, $1,064,000; Mr. Young, $801,000; Mr.
Teets, $561,000; Mr. Bennett, $728,000; and Mr. Corcoran, $0 and other
executive officers, $1,704,000.
The Post-Retirement Death Benefit Plan was a death benefit program for
senior executives who hold specific positions approved for participation by
the Board of Directors. The plan provided death benefit coverage
commencing immediately upon retirement in amounts ranging from 15 percent
(upon retirement at age 55) to 150 percent (upon retirement at or after age
64) of final annualized salary, depending upon the age of the participant
at retirement. Benefits were grossed up for income tax purposes. This
plan has been discontinued as a result of the Combination. In lieu
thereof, a death benefit will be paid calculated based on the applicable
percentage (determined by age at retirement) and annualized salary
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at the time of consummation of the Combination. If each participant could
retire on March 1, 1995 and the applicable percentage is assumed to be 100%
for each participant (which is assumed solely for purposes of this
calculation), the death benefits payable to such persons would be
approximately $6,400,000 in the aggregate.
Under the Martin Marietta Corporation Deferred Compensation Plan for
Selected Officers, benefits paid as a result of the Combination under the
Martin Marietta Corporation Amended and Restated Long Term Performance
Incentive Compensation Plan and the Deferred Compensation and Estate
Supplement Plan will be deferred for any individual who may be one of the
five most highly compensated executive officers of Lockheed Martin
Corporation. Amounts deferred (plus interest credited at a daily rate
equivalent to the Federal long-term rate) will be paid in a single sum as
of February 1 following the year in which the individual ceases to be an
officer of Lockheed Martin Corporation, or if earlier, the year in which
the amount could be deducted for federal income tax purposes.
The Martin Marietta Corporation Performance Sharing Plan ("Performance
Plan") generally covers all full-time salaried employees of the Corporation
with the exception of certain employees working at facilities operated by
the Corporation for the Department of Energy who participate in separate
401(k) plans. The Performance Plan permits eligible employees to make
regular savings through systematic payroll deductions. For the year ended
December 31, 1994, participants could contribute up to 17 percent of their
current base salary subject to the limitations imposed by the Internal
Revenue Code and direct the investment of such contributions into an
Indexed Equity Fund, a Fixed Income Fund, a fund which consisted of the
Corporation's Common Stock and is now comprised of Lockheed Martin Common
Stock, an Intermediate-Term Investment Grade Bond Fund, and a Long-Term
Investment Grade Bond Fund. Executive officers of the Corporation were
limited in 1994 to directing the investment of contributions among the
Indexed Equity Fund, the Fixed Income Fund, the Intermediate-Term
Investment Grade Bond Fund, and the Long-Term Investment Grade Bond Fund.
Effective April 3, 1995, five publicly traded mutual funds will be made
available to all participants as investment options. In addition,
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the Corporation makes a matching contribution to the participant's account
equal to 50% of up to the first 7 percent of the compensation contributed
by the participant subject to limitations imposed by the Internal Revenue
Code. Performance Plan contributions are 100 percent vested.
Full distributions under the Performance Plan are generally made upon
the termination, layoff, retirement, disability or death of the
participant. Distributions of account balances invested in Martin Marietta
Corporation Common Stock (or Lockheed Martin Common Stock after the
Combination) are automatically distributed in kind unless a recipient
requests otherwise.
Set forth below is a pension plan table which shows the estimated annual
benefits payable upon retirement for specified earnings and years of
service under the Martin Marietta Retirement Income Plan for Salaried
Employees ("Plan"), which is the basic plan covering the named executive
officers of the Corporation on a non-contributing basis.
PENSION PLAN TABLE/(1)/
Final Years of Service
Average --------------------------------------------------------
Earnings
-------- 15/(2)/ 20/(3)/ 25/(3)/ 30/(3)/ 40/(3)/
$ 100,000 $ 21,198 $ 41,720 $ 46,935 $ 52,150 $ 57,757
150,000 32,448 63,720 71,685 79,650 88,007
200,000 43,698 85,720 96,435 107,150 118,257
300,000 66,198 129,720 145,935 162,150 178,757
400,000 88,698 173,720 195,435 217,150 239,257
500,000 111,198 217,720 244,935 272,150 299,757
600,000 133,698 261,720 294,435 327,150 360,257
700,000 156,198 305,720 343,935 382,150 420,757
800,000 178,698 349,720 393,435 437,150 481,257
900,000 201,198 393,720 442,935 492,150 541,757
1,000,000 223,698 437,720 492,435 547,150 602,257
1,200,000 268,698 525,720 591,435 657,150 723,257
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1,400,000 313,698 613,720 690,435 767,150 844,257
1,600,000 358,698 701,720 789,435 877,150 965,257
1,800,000 403,698 789,720 888,435 987,150 1,086,257
2,000,000 448,698 877,720 987,435 1,097,150 1,207,257
2,200,000 493,698 956,720 1,086,435 1,207,150 1,328,257
(1) Calculated based on a formula in effect on January 1, 1995.
(2) Calculated under the Post-ERISA formula.
(3) Calculated under the Pre-ERISA formula.
Compensation covered by the Plan generally includes, but is not limited
to, base salary, bonuses (executive incentive compensation awards), and
overtime. The normal retirement age under the Plan is 65; however,
unreduced early retirement benefits are available at age 60 (age 62 prior
to 1995) and reduced benefits are available as early as age 55. The
calculation of retirement benefits under the Plan is generally based upon
an annual accrual rate, average compensation for the highest three years
(five years prior to 1995) of the ten years preceding retirement, and the
number of years of service. Maximum benefits payable under this Plan are
subject to the current Internal Revenue Code limitations. The amounts
listed in this table are not subject to any deduction for Social Security
benefits or other offset amounts.
When the Plan was amended to comply with the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), a modified version of the
existing benefit accrual formula was preserved for certain employees who
were participants in the Plan prior to October 1, 1975 ("Pre-ERISA
Formula"). Employees who became participants after that date accrue
benefits under a different formula ("Post-ERISA Formula"). In January
1991, the Plan was amended to provide that future accruals for all highly
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compensated employees would be based on the Post-ERISA Formula. If as a
result of the amendment, an employee receives less from the Plan than would
have been otherwise received under the Pre-ERISA Formula, the Corporation
intends to make up the difference out of general corporate assets.
As of December 31, 1994, the estimated annual benefits payable upon
retirement at age 65 for the individuals named in the compensation table,
based on continued employment at current compensation, are as follows: Mr.
Augustine, $874,045; Mr. Young, $533,977; Mr. Teets, $487,038; Mr. Bennett,
$448,160; Mr. Corcoran, $367,448. These amounts include benefits payable
under the Corporation's Supplemental Excess Retirement Plan. The years of
credited service as of December 31, 1994, for Messrs. Augustine, Young,
Teets, Bennett, and Corcoran were 18 years, 12.8 years, 32.1 years, 36
years, and 27.5 years, respectively.
Sections 401(a)(17) and 415(d) of the Internal Revenue Code of 1986, as
amended, limit the annual benefits which may be paid under the Plan. As
permitted by ERISA, the Corporation maintains the Supplemental Excess
Retirement Plan which provides for the payment of benefits in excess of
those limits and payment of amounts equalizing the differences in the
accrual method for those certain employees who were not participants in the
Plan prior to October 1, 1975.
The Corporation has entered into employment agreements with certain of
its officers, including the named executive officers, in order to provide
continuity of management in the event of a change
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of control. Under these agreements, following a change of control, which
was deemed to have occurred as a result of the Combination, an officer may,
for good cause (as that term is defined in the various agreements) and
within two years after the effective date of the Combination and within six
months after the date on which circumstances constituting good cause exist,
give notice that he or she elects to terminate employment under the
agreement. Upon receipt of such notice, or upon involuntary termination by
Martin Marietta, the agreements require Martin Marietta to pay the officer
an amount equal to three times his or her average annual taxable
compensation for the preceding five years, less one dollar, as well as any
other compensation or benefits due and any amount necessary to compensate
the officer for any excise tax imposed with respect to payments made under
the agreement or any other agreement between the officer and Martin
Marietta. Mr. Augustine has voluntarily waived his rights under his
employment agreement as it relates to the Combination.
The Corporation also assumed employment agreements for certain
individuals who transferred from GE. Those agreements generally provide
for a two year term of employment at the same (or greater) annual base
salary and bonus as the executive was receiving prior to the transfer of
employment. In the event the executive is still an employee of the
Corporation on April 2, 1995, a bonus is to be paid to the executive equal
to the amount of his or her then base salary and annual bonus. In the
event the executive is terminated prior to April 2, 1996, the agreement
states the executive will be
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offered a position by GE comparable in position, level, and compensation to
the position he or she held prior to the transfer, or if GE is unable to
provide such a position, GE will pay the executive a sum equal to his then
current base salary and annual bonus.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As a result of the Combination, the Corporation became a wholly owned
subsidiary of Lockheed Martin Corporation. Upon consummation of the
Combination each outstanding share of Martin Marietta Common Stock was
converted into the right to receive one share of Lockheed Martin
Corporation Common Stock. Consequently, references to what were
historically the securities of Martin Marietta Corporation, now refer to
the securities of Lockheed Martin Corporation.
Securities Owned by Management
The following table shows the number of shares of Common Stock
beneficially owned by each of the directors, the Chief Executive Officer,
and the four most highly compensated executive officers and by all
directors and executive officers as a group on December 31, 1994. The
number of shares shown for each director and each of the named executive
officers represented less than 1 percent of the shares of Common Stock
outstanding. The number of shares shown for all executive officers and
directors as a group represented 1.3 percent of the Common Stock of Martin
Marietta outstanding.
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Individuals have sole voting and investment power over the stock unless
otherwise indicated in the footnotes.
Name of Individual or Amount and Nature of
Identity of Group Beneficial Ownership
- ----------------- --------------------
Lamar Alexander........................................... 100
Norman R. Augustine....................................... 429,380 /(1)(8)/
Marcus C. Bennett......................................... 67,529 /(2)(8)/
John J. Byrne............................................. 6,750
A. James Clark............................................ 21,612
Edwin I. Colodny.......................................... 2,000
Thomas A. Corcoran........................................ 32,000 /(3)/
James L. Everett, III..................................... 6,750 /(4)/
Edward L. Hennessy, Jr.................................... 2,224
Edward E. Hood, Jr........................................ 2,000
Caleb B. Hurtt............................................ 4,336
Gwendolyn S. King......................................... 200
Melvin R. Laird........................................... 69,100 /(5)/
Gordon S. Macklin......................................... 2,000
Eugene F. Murphy.......................................... 200
Allen E. Murray........................................... 3,000
Peter B. Teets............................................ 74,833 /(6)(8)/
John W. Vessey, Jr........................................ 400
A. Thomas Young........................................... 181,829 /(7)(8)/
All executive officers and directors as a group (26
individuals including those named above)............. 1,202,315 /(8)(9)/
(1) Includes 47,000 shares awarded to Mr. Augustine under the Corporation's
restricted stock award plans. Of these shares, 15,000 shares will
remain subject to the terms and conditions described in the governing
plan documents. The remaining 32,000 shares vested upon the closing of
the Combination. Also includes 326,800 shares which are subject to
presently exercisable options. Prior to the closing of the
Combination, Mr. Augustine informed Martin Marietta's Board of
Directors that he intends to voluntarily refrain from exercising
options pertaining to 106,800 shares which vested on an accelerated
basis as a result of the Combination prior to the date the options
would have been exercisable had the Combination not been consummated.
(2) Includes 17,000 shares awarded to Mr. Bennett under the Corporation's
restricted stock award plans. Of these shares, 5,000 shares will
remain subject to the terms and conditions described in the governing
plan documents. The remaining 12,000 shares vested upon closing of the
Combination. Also includes 40,800 shares which are subject to
presently exercisable options.
(3) Includes 12,000 shares awarded to Mr. Corcoran under the Corporation's
restricted stock award plans which vested upon closing of the
Combination. Also includes 20,000 shares which are subject to
presently exercisable options.
(4) Shared voting and investment power.
(5) Includes approximately 66,100 shares held by Metropolitan Life
Insurance Company and its subsidiaries. Mr. Laird specifically
disclaims ownership of these shares.
(6) Includes 18,000 shares awarded to Mr. Teets under the Corporation's
restricted stock award plans. Of these shares, 6,000 shares will
remain subject to the terms and conditions described in the governing
plan documents. The remaining 12,000 shares vested upon closing of the
Combination. Also includes 42,000 shares which are subject to
presently exercisable options.
(7) Includes 36,000 shares awarded to Mr. Young under the Corporation's
restricted stock award plans. Of these shares, 12,000 shares will
remain subject to the terms and conditions described in the governing
plan documents. The remaining 24,000 shares vested upon closing of the
Combination. Also includes 114,200 shares which are subject to
presently exercisable options.
(8) From 1989 through 1992, and for a portion of 1993, the Corporation made
matching contributions to participants' accounts in the Martin Marietta
Corporation Performance Sharing Plan in Common Stock. Where
appropriate, the shares shown include an approximation of the number of
shares in the participant's account as of December 31, 1994. Executive
officers do not have investment power over these shares.
(9) Includes 792,100 shares of Common Stock which are subject to presently
exercisable options and 41,500 shares awarded under the Corporation's
restricted stock award plans which are subject to the terms and
conditions described in the governing plan documents.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to the terms of the Standstill Agreement entered into by the
Corporation and General Electric Company ("GE") as part of the transaction
in which the Aerospace businesses of GE and the
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businesses of the Corporation were combined (the "GE Transaction"), until
the consummation of the Combination, GE was entitled to representation upon
Martin Marietta's Board of Directors. See "General" page 1 through page 2.
Messrs. Edward E. Hood, Jr., retired Vice Chairman and a former director of
GE, and Eugene F. Murphy, President and Chief Executive Officer of GE
Aircraft Engines, served as GE's representatives on Martin Marietta's Board
of Directors.
As part of the Combination, Martin Marietta, Lockheed and GE entered
into an agreement, described in detail in the Registration Statement on
Form S-4 of Lockheed Martin Corporation (Reg. No. 33-57645), which, among
other things, modified the Standstill Agreement to anticipate the fact
that, in the Combination the Martin Marietta Series A Preferred Stock held
by GE would be converted to Lockheed Martin Series A Preferred Stock. The
Standstill Agreement was also modified so as to make it applicable to the
ongoing relationship between GE and Lockheed Martin in generally the same
manner as it had been applicable to the relationship between GE and the
Corporation. Consequently, GE is entitled to representation on the
Lockheed Martin Board of Directors and Messrs. Hood and Murphy currently
serve on the Lockheed Martin Board of Directors in this capacity. The
Standstill Agreement resulted from arm's-length negotiations between the
Corporation and GE.
A portion of the consideration received by GE in the GE Transaction
consisted of 20 million shares of Martin Marietta's
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Series A Preferred Stock, par value $1.00 per share, which, until the
consummation of the Combination, was convertible into Martin Marietta
Common Stock and which, if converted, would have represented approximately
23% of the shares of Common Stock outstanding after giving effect to such
conversion. In the Combination each outstanding share of Martin Marietta
Series A Preferred Stock, all of which were held by GE, was converted into
the right to receive one share of Lockheed Martin Series A Preferred Stock.
The terms of the Lockheed Martin Series A Preferred Stock are substantially
the same as those of the Martin Marietta Series A Preferred Stock. The
Lockheed Martin Series A Preferred Stock is convertible into shares of
Lockheed Martin Common Stock and, if converted, would represent
approximately 13% of the Lockheed Martin Common Stock outstanding after
giving effect to the conversion.
Further, there are existing business relationships between the
Corporation and GE. These relationships are the product of arm's-length
negotiations between the corporations.
John J. Byrne, a director of Martin Marietta since 1978, is the Chief
Executive Officer of Fund American Enterprises, Inc. (Fund American).
Hanover Advisors, Inc., formerly a wholly-owned subsidiary of Fund
American, served as an investment manager for the Corporation's Master
Retirement Trust through August 1994. Pursuant to the arrangement, Hanover
Advisors receives management fees from the Corporation which aggregated
approximately $517,000 in 1994. These engagements resulted from arm's-
length negotiations
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in which Mr. Byrne played no part. Mr. Byrne is not serving as a director
of Lockheed Martin.
Messrs. Richard G. Adamson, Marcus C. Bennett, Bobby F. Leonard and
Frank H. Menaker, Jr., serve as Directors (Mr. Bennett as Chairman) of
Martin Marietta Materials, Inc. See "Materials Group" on page 10 through
page 12. Following the consummation of the Combination, these individuals
continue to serve as directors (Mr. Bennett as Chairman) of Materials.
During 1994, Mr. Adamson was an Executive Officer of Martin Marietta,
Messrs. Bennett, Leonard and Menaker were Executive Officers of Martin
Marietta during 1994 and continued in this capacity until the consummation
of the Combination. Upon consummation of the Combination, Messrs. Bennett
and Menaker became Executive Officers of Lockheed Martin.
Messrs. Norman R. Augustine, Marcus C. Bennett, Peter B. Teets and A.
Thomas Young, each of whom was, until the consummation of the Combination,
an Executive Officer of Martin Marietta, and each of whom became, upon
consummation of the Combination, an Executive Officer of Lockheed Martin
borrowed $341,066, $114,155, $102,373 and $273,971, respectively, from the
Corporation in 1994. The loans were used to satisfy personal income tax
obligations associated with the vesting of restricted stock previously
granted to these individuals by the Corporation. The plan under which such
restricted stock was granted envisions that recipients may satisfy such tax
obligations by instructing the Corporation to withhold the appropriate
number of shares from the certificate delivered to the recipient when the
restricted stock vests. In this instance, as a
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result of possible restrictions on sales by the Corporation's Executive
Officers imposed by Section 16 of the Securities Exchange Act of 1934, by
prohibitions against conducting transactions while in possession of
material non public information and by the Corporation's desire that the
Combination qualify as a pooling of interests for accounting and financial
reporting purposes, in each instance resulting from the Combination,
counsel for the Corporation recommended that its Executive Officers not
utilize this tax withholding feature. As the restrictions on sale resulted
from the Corporation's actions in effecting the Combination which was in
the best interest of the Corporation, the Corporation offered short-term
loans to such persons to enable them to satisfy their income tax
obligations. The loans and their terms were approved by disinterested
members of the Corporation's Board of Directors. No interest will be paid
on the loans which will be due and payable at such time as counsel for the
Corporation advises the Corporation that the possible restrictions on sales
referred to above are no longer applicable. See Footnote Number 4 to the
Summary Compensation Table included in Item 11 - "Executive Compensation"
on page 52.
Mr. Alexander, a director of the Corporation, is counsel to Baker,
Donelson, Bearman and Caldwell, a law firm that provides legal services to
the corporation from time to time. Mr. Alexander is not serving as a
director of Lockheed Martin. Mr. Colodny, a director of the Corporation,
is Of Counsel to Paul, Hastings, Janofsky & Walker, a law firm that
provides legal services to the
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Corporation from time to time. Mr. Colodny is serving as a director of
Lockheed Martin.
In addition, certain Executive Officers of Lockheed Martin serve as
officers of the Corporation. For additional information relating to the
relationship of Martin Marietta Corporation's directors and executive
officers to those of Lockheed Martin, please see Items 10 and 11 on page 43
through page 62.
As a result of the Combination, Martin Marietta is now a wholly owned
subsidiary of Lockheed Martin Corporation. The following directors of
Martin Marietta are serving as directors of Lockheed Martin: Messrs.
Augustine, Bennett, Clark, Colodny, Everett, Hennessy, Hood, Hurtt,
Macklin, Murphy, and Murray and Mrs. King. It is anticipated that,
following the filing of this Annual Report on Form 10-K, the existing
Martin Marietta directors will resign and will be replaced by a Board of
Directors consisting of employees of Lockheed Martin or the Corporation.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) List of Financial Statements filed as part of the Form 10-K.
Page
----
The following financial statements of Martin Marietta
Corporation and consolidated subsidiaries, included in
the Current Report on Form 8-K, are incorporated by
reference into Item 8 on page 42 of this Annual Report
on Form 10-K. Page numbers refer to the Current Report
on Form 8-K:
Consolidated Balance Sheet--
December 31, 1994 and 1993 17
Consolidated Statement of Earnings--
Years ended December 31, 1994, 1993 and 1992 16
Consolidated Statement of Shareowners' Equity--
Years ended December 31, 1994, 1993 and 1992 19
Consolidated Statement of Cash Flows--
Years ended December 31, 1994, 1993 and 1992 18
Notes to Consolidated Financial Statements--
Years ended December 31, 1994, 1993 and 1992 20-36
(2) List of Financial Statement Schedules filed as part
of this Form 10-K.
All schedules have been omitted because they are not applicable,
not required, or the information has been otherwise supplied in
the financial statements or notes to the financial statements.
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Ernst & Young LLP
The report of Martin Marietta's independent auditors with respect
to the above-referenced financial statements appears on page 15
of the Current Report on Form 8-K and that report is hereby
incorporated by reference in this Form 10-K. The consent of
Martin Marietta's independent auditors appears on page 81.
KPMG Peat Marwick LLP
The report of the former GE Aerospace businesses' independent
auditors with respect to the GE Aerospace businesses'
consolidated statements of earnings and cash flows for the year
ended December 31, 1992, included in Parent Corporation's
Registration Statement on Form S-4 (Registration No. 33-58494),
which report is hereby incorporated by reference in this Form
10-K. The consent of the former GE Aerospace businesses'
independent auditors appears on page 82.
Arthur Andersen LLP
The report of the former General Dynamics Space Systems Group's
independent auditors with respect to the General Dynamics Space
Systems Group's combined financial statements as of December 31,
1993 and 1992 and for each of the three years in the period ended
December 31, 1993, included in Martin Marietta Corporation's
Current Report on Form 8-K, dated May 13, 1994, which report is
hereby incorporated by reference. The consent of the former
General Dynamics, Space Systems Group's independent auditors
appears on page 83.
(b) No reports on Form 8-K were filed during the last quarter of the
period covered by this report. During the first quarter of 1995,
Martin Marietta Corporation made the following filings on Form
8-K:
(1) Martin Marietta Corporation Current Report on Form 8-K filed
with the Securities and Exchange Commission on February 13,
1995;
(2) Martin Marietta Corporation Current Report on Form 8-K filed
with the Securities and Exchange Commission on February 17,
1995; and
(3) Martin Marietta Corporation Current Report on Form 8-K filed
with the Securities and Exchange Commission on March 15,
1995.
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(c) Exhibits
(2) Plan of Acquisition, Reorganization, Arrangement,
Liquidation or Succession.
(a) Agreement and Plan of Reorganization dated August
29, 1994, as amended on February 7, 1995
(incorporated by reference to the Corporation's
Joint Proxy Statement/Prospectus contained in
Lockheed Martin Corporation's Registration
Statement on Form S-4 (No. 33-57645) filed with
the Commission on February 9, 1995).
(3)(i) Articles of Incorporation.
(a) Articles of Restatement of Martin Marietta
Corporation (formerly Parent Corporation) filed
with the State Department of Assessments and
Taxation of the State of Maryland on June 30, 1993
(incorporated by reference to Exhibit (c)(3)(i)(a)
to the Corporation's Annual Report on Form 10-K
for the fiscal year ended December 31, 1993).
(ii) Bylaws
(a) Copy of the Bylaws of Parent Corporation (now
Martin Marietta Corporation) as amended on January
13, 1993, effective April 2, 1993 (incorporated by
reference to Exhibit (c)(3)(ii)(a) to the
Corporation's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993).
(4) (a) Indenture dated April 22, 1993, between the
Corporation, Technologies, and Continental Bank,
National Association as Trustee (incorporated by
reference to Exhibit 4 of the Corporation's filing
on Form 8-K on April 15, 1993).
No other instruments defining the rights of
holders of long-term debt are filed since the
total amount of securities authorized under any
such instrument does not exceed 10% of the total
assets of the Corporation on a consolidated basis.
The Corporation agrees to furnish a copy of
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such instruments to the Securities and Exchange
Commission upon request.
(10)(iii)* (a) Martin Marietta Corporation Directors Deferred
Compensation Plan, as amended.
(b) Martin Marietta Corporation Post-Retirement Income
Maintenance Plan for Directors, as amended.
(c) Martin Marietta Corporation Financial Counseling
Program for directors, officers, company
presidents, and other key employees, as amended
(incorporated by reference to Exhibit 10.6 to
Lockheed Martin Corporation's Registration
Statement on Form S-4 (No. 33-57645) filed with
Commission on February 9, 1995).
(d) Martin Marietta Corporation Executive Incentive
Plan, as amended (incorporated by reference to
Exhibit 10.7 to Lockheed Martin Corporation's
Registration Statement on Form S-4 (No. 33-57645)
filed with Commission on February 9, 1995).
(e) Deferred Compensation and Estate Supplement Plan,
as amended.
(f) Martin Marietta Corporation Post-Retirement Death
Benefit Plan for Senior Executives, as amended
(incorporated by reference to Exhibit 10.9 to
Lockheed Martin Corporation's Registration
Statement on Form S-4 (No. 33-57645) filed with
Commission on February 9, 1995).
(g) Martin Marietta Corporation 1979 Stock Option Plan
for Key Employees, as amended (incorporated by
reference to Exhibit 10.11 to Lockheed Martin
Corporation's Registration Statement on Form S-4
(No. 33-57645) filed with Commission on February
9, 1995).
(h) Martin Marietta Corporation 1984 Stock Option Plan
for Key Employees, as amended (incorporated by
reference to Exhibit 10.12 to Lockheed Martin
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Corporation's Registration Statement on Form S-4
(No. 33-57645) filed with Commission on February
9, 1995).
(i) Martin Marietta Corporation Amended Omnibus
Securities Award Plan, as amended March 25, 1993
(incorporated by reference to Exhibit 10.13 to
Lockheed Martin Corporation's Registration
Statement on Form S-4 (No. 33-57645) filed with
Commission on February 9, 1995).
(j) Format of the agreements between the Corporation
and certain officers to provide for continuity of
management in the event of a change in control of
the Corporation (incorporated by reference to
Exhibit 10.14 to Lockheed Martin Corporation's
Registration Statement on Form S-4 (No. 33-57645)
filed with Commission on February 9, 1995).
(k) Martin Marietta Corporation Supplemental Excess
Retirement Plan, as amended (incorporated by
reference to Exhibit 10.15 to Lockheed Martin
Corporation's Registration Statement on Form S-4
(No. 33-57645) filed with Commission on February
9, 1995).
(l) Martin Marietta Corporation Restricted Stock Award
Plan, as amended (incorporated by reference to
Exhibit 10.16 to Lockheed Martin Corporation's
Registration Statement on Form S-4 (No. 33-57645)
filed with Commission on February 9, 1995).
(m) Martin Marietta Corporation Long Term Performance
Incentive Compensation Plan.
(n) Amended and Restated Martin Marietta Corporation
Long-Term Performance Incentive Compensation Plan.
(o) Martin Marietta Corporation Directors' Life
Insurance Program (incorporated by reference to
Exhibit 10.17 to Lockheed Martin Corporation's
Registration Statement on Form S-4 (No. 33-57645)
filed with Commission on February 9, 1995).
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(p) (1) Transaction Agreement dated November 22,
1992, among General Electric Company,
Technologies and the Corporation
(incorporated by reference from Parent
Corporation's Registration Statement
on Form S-4 (Registration No. 33-58494)
filed with the SEC on February 18, 1993).
(2) Form of Amendment Agreement, dated as of
February 17, 1993, among General Electric
Company, Technologies and the Corporation
(incorporated by reference from Parent
Corporation's Registration Statement on Form
S-4 (Registration No. 33-58494) filed with
the SEC on February 18, 1993).
(3) Form of Amendment Agreement, dated as of
March 28, 1993, among General Electric
Company, Technologies and the Corporation
(incorporated by reference from Parent
Corporation's Registration Statement on Form
S-4 (Registration No. 33-58494) filed with
the SEC on February 18, 1993).
(q) Martin Marietta Corporation Executive Special
Early Retirement Option and Plant Closing
Retirement Option Plan (incorporated by reference
to Exhibit 10.18 to Lockheed Martin Corporation's
Registration Statement on Form S-4 (No. 33-57645)
filed with Commission on February 9, 1995).
(r) Martin Marietta Supplementary Pension Plan for
Employees of Transferred GE Operations
(incorporated by reference to Exhibit 10.19 to
Lockheed Martin Corporation's Registration
Statement on Form S-4 (No. 33-57645) filed with
Commission on February 9, 1995).
(s) Form of Employment Agreement between Martin
Marietta Corporation and certain officers
(incorporated by reference to Exhibit 10.20 to
Lockheed Martin Corporation's Registration
Statement on Form S-4 (No. 33-57645) filed with
the Commission on February 9, 1995).
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(t) Martin Marietta Corporation Deferred Compensation
Plan for Selected Officers (incorporated by
reference to Exhibit 10.10 to Lockheed Martin
Corporation's Registration Statement on Form S-4
(No. 33-57645) filed with the Commission on
February 9, 1995).
* Exhibit (10)(iii)(a) through Exhibit
(10)(iii)(o) and Exhibit (10)(iii)(q)
through Exhibit (10)(iii)(t) constitute
management contracts or compensatory plans
or arrangements required to be filed as an
Exhibit to this Form pursuant to Item 14(c)
of this Report.
(11) Computation of net earnings per common share for
the years ended December 31, 1994, 1993 and 1992.
(12) Computation of ratio of earnings to fixed charges
for the year ended December 31, 1994.
(21) List of Subsidiaries of Martin Marietta
Corporation.
(23) (a) Consent of Ernst & Young LLP, Independent Auditors
for Martin Marietta Corporation (included in this
Form 10-K at page 81).
(b) Consent of KPMG Peat Marwick LLP, Independent
Auditors for the former GE Aerospace businesses
(included in this Form 10-K at page 82).
(c) Consent of Arthur Andersen LLP, Independent
Auditors for the General Dynamics Space Systems
Group (included in this Form 10-K at page 83).
(24) Powers of Attorney.
(27) Financial Statement Schedules (incorporated by
reference to Exhibit 27 to the Current Report on
Form 8-K).
(99) Other Exhibits
(a) Assumption Agreement among Martin Marietta
Materials, Inc. and Technologies dated as of
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November 12, 1993 (incorporated by reference
to Exhibit 10.01 to Martin Marietta
Materials, Inc.'s Registration Statement on
Form S-1 (Reg. No. 33-72648). Exhibit filed
with the SEC on December 8, 1993).
(b) Transfer and Capitalization Agreement dated
as of November 12, 1993, among Technologies,
Martin Marietta Investments, Inc., and
Martin Marietta Materials, Inc.
(incorporated by reference to Exhibit 10.02
to Martin Marietta Materials, Inc.'s
Registration Statement on Form S-1 (Reg. No.
33-72648). Exhibit filed with the SEC on
December 8, 1993).
(c) Form of Intercompany Services Agreement
between Martin Marietta Materials, Inc. and
the Corporation (incorporated by reference
to Exhibit 10.03 to Martin Marietta
Materials, Inc.'s Registration Statement on
Form S-1 (Reg. No. 33-72648). Exhibit filed
with the SEC on February 2, 1994).
(d) Form of Tax-Sharing Agreement between Martin
Marietta Materials, Inc. and the Corporation
(incorporated by reference to Exhibit 10.04
to Martin Marietta Materials, Inc.'s
Registration Statement on Form S-1 (Reg. No.
33-72648). Exhibit filed with the SEC on
February 2, 1994).
(e) Form of Corporate Agreement between Martin
Marietta Materials, Inc. and the Corporation
(incorporated by reference to Exhibit 10.05
to Martin Marietta Materials, Inc.'s
Registration Statement on Form S-1 (Reg. No.
33-72648). Exhibit filed with the SEC on
February 2, 1994).
(f) Form of Cash Management Agreement between
Martin Marietta Materials, Inc. and
Technologies (incorporated by reference to
Exhibit 10.08 to
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Martin Marietta Materials, Inc.'s
Registration Statement on Form S-1 (Reg. No.
33-72648). Exhibit filed with the SEC on
February 2, 1994).
(g) General Dynamics Space Systems Group
Combined Financial Statements for the years
ended December 31, 1993, 1992 and 1991.
(h) Audited Consolidated Financial Statements of
Martin Marietta and Subsidiaries as of
December 31, 1994 and 1993 and for the three
years in the period ended December 31, 1994.
(i) Quarterly Performance (unaudited)
(j) Five Year Summary
Other material incorporated by reference:
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
MARTIN MARIETTA CORPORATION
Date: March 28, 1995 By: /s/ FRANK H. MENAKER, JR.
---------------------
Frank H. Menaker, Jr.
Vice President and
General Counsel
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
----------------------------------------------
/s/ Norman R. Augustine Chairman of the March 28, 1995
------------------- Board, Chief
Norman R. Augustine* Executive Officer
/s/ Marcus C. Bennett Director, Vice March 28, 1995
------------------ President, Chief
Marcus C. Bennett* Financial and
Chief Accounting
Officer
/s/ Lamar Alexander Director March 28, 1995
---------------
Lamar Alexander*
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Signature Title Date
----------------------------------------------
/s/ John J. Byrne Director March 28, 1995
-------------
John J. Byrne*
/s/ A. James Clark Director March 28, 1995
--------------
A. James Clark*
/s/ Edwin I. Colodny Director March 28, 1995
----------------
Edwin I. Colodny*
/s/ James L. Everett, III Director March 28, 1995
---------------------
James L. Everett, III*
/s/ Edward L. Hennessy, Jr. Director March 28, 1995
----------------------
Edward L. Hennessy, Jr.*
/s/ Edward E. Hood, Jr. Director March 28, 1995
----------------------
Edward E. Hood, Jr.*
/s/ Caleb B. Hurtt Director March 28, 1995
--------------
Caleb B. Hurtt*
/s/ Gwendolyn S. King Director March 28, 1995
----------------------
Gwendolyn S. King*
/s/ Melvin R. Laird Director March 28, 1995
----------------------
Melvin R. Laird*
/s/ Gordon S. Macklin Director March 28, 1995
----------------------
Gordon S. Macklin*
/s/ Eugene F. Murphy Director March 28, 1995
----------------------
Eugene F. Murphy*
/s/ Allen E. Murray Director March 28, 1995
----------------------
Allen E. Murray*
/s/ John W. Vessey, Jr. Director March 28, 1995
----------------------
John W. Vessey, Jr.*
/s/ A. Thomas Young Director March 28, 1995
----------------------
A. Thomas Young*
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*By: /s/ STEPHEN M. PIPER March 28, 1995
--------------------
(Stephen M. Piper, Attorney-in-fact**)
_____________________
**By authority of Powers of Attorney filed with this Annual
Report on Form 10-K.
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CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report on
Form 10-K of Martin Marietta Corporation of our report dated January 20,
1995, included in Martin Marietta Corporation's Current Report on Form 8-K
dated February 17, 1995.
We also consent to the incorporation by reference of our report dated
January 20, 1995, included in Martin Marietta Corporation's Current Report
on Form 8-K dated February 17, 1995, with respect to Martin Marietta
Corporation's consolidated financial statements incorporated by reference
in the following Registration Statements:
(1) Registration Statement Number 33-59466-01 of Martin Marietta
Corporation and Martin Marietta Technologies, Inc. on Form S-3, dated
March 12, 1993;
(2) Registration Statement Number 33-58067 of Lockheed Martin Corporation
on Form S-3, dated March 14, 1995;
(3) Registration Statement Numbers: 33-58073, 33-58075, 33-58077, 33-
58079, 33-58081, 33-58083, 33-58085, 33-58089, and 33-58097 of
Lockheed Martin Corporation on Forms S-8, each dated March 15, 1995;
(4) Post-Effective Amendment No. 1, dated March 15, 1995 to Registration
Statement Number 33-57645 of Lockheed Martin Corporation on Form S-8.
ERNST & YOUNG LLP
Washington, DC
March 24, 1995
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Consent Of KPMG Peat Marwick LLP, Independent Auditors
------------------------------------------------------
The Board of Directors
General Electric Company:
The Board of Directors
Lockheed Martin Corporation:
We consent to the incorporation by reference of our report dated February
3, 1993 relating to the consolidated statements of earnings and cash flows
of GE Aerospace Businesses for the year ended December 31, 1992, which
report is incorporated by reference in the December 31, 1994 annual report
on Form 10-K of Martin Marietta Corporation, in the following Registration
Statements:
(1) Registration Statement Number 33-59466-01 of Martin Marietta
Corporation and Martin Marietta Technologies, Inc. on Form S-3, dated
March 12, 1993;
(2) Registration Statement Number 33-58067 of Lockheed Martin Corporation
on Form S-3, dated March 14, 1995;
(3) Registration Statement Numbers: 33-58073, 33-58075, 33-58077, 33-
58079, 33-58081, 33-58083, 33-58085, 33-58089, and 33-58097 of
Lockheed Martin Corporation on Form S-8, each dated March 15, 1995;
(4) Post-Effective Amendment No. 1, dated March 15, 1995 to Registration
Statement Number 33-57645 of Lockheed Martin Corporation on Form S-8.
Harrisburg, PA
March 24, 1995
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CONSENT OF ARTHUR ANDERSEN LLP
INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Form 10-K of Martin Marietta Corporation of our report
dated January 20, 1994 on our audits of the combined financial statements
of the General Dynamics Space Systems Group as of December 31, 1993 and
1992 and for each of the three years in the period ended December 31, 1993
included in Martin Marietta Corporation's Form 8-K dated May 13, 1994.
We also hereby consent to the incorporation by reference of our report
dated January 20, 1994 on our audits of the combined financial statements
of the General Dynamics Space Systems Group as of December 31, 1993 and
1992 and for each of the three years in the period ended December 31, 1993
included in Martin Marietta Corporation's Form 8-K dated May 13, 1994 in
the following Registration Statements:
(1) Registration Statement Number 33-59466-01 of Martin Marietta
Corporation and Martin Marietta Technologies, Inc. on Form S-3, dated
March 12, 1993;
(2) Registration Statement Number 33-58067 of Lockheed Martin Corporation
on Form S-3, dated March 14, 1995;
(3) Registration Statement Numbers: 33-58073, 33-58075, 33-58077, 33-
58079, 33-58081, 33-58083, 33-58085, 33-58089, and 33-58097 of
Lockheed Martin Corporation on Forms S-8, each dated March 15, 1995;
(4) Post-Effective Amendment No. 1, dated March 15, 1995 to Registration
Statement Number 33-57645 of Lockheed Martin Corporation on Form S-8
ARTHUR ANDERSEN LLP
San Diego, California
March 24, 1995
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