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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 10-Q 
 
 
 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 29, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission file number: 1-11437 
 
LOCKHEED MARTIN CORPORATION
(Exact name of registrant as specified in its charter) 
Maryland
 
52-1893632
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
 
 
 
6801 Rockledge Drive,
Bethesda,
Maryland
 
20817
(Address of principal executive offices)
 
(Zip Code)
(301) 897-6000
(Registrant’s telephone number, including area code) 
 
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Common Stock, $1 par value
LMT
New York Stock Exchange
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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non–accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b–2 of the Exchange Act.
Large accelerated filer Accelerated filer Non–accelerated filer Smaller reporting company Emerging growth company 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
There were 280,435,314 shares of our common stock, $1 par value per share, outstanding as of April 17, 2020.
 



Lockheed Martin Corporation
Form 10-Q
For the Quarterly Period Ended March 29, 2020
Table of Contents 
 
 
 
Page
 
 
 
 
 
 
 
 
ITEM 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ITEM 2.
 
 
 
 
 
ITEM 3.
 
 
 
 
 
ITEM 4.
 
 
 
 
 
 
 
 
ITEM 1.
 
 
 
 
 
ITEM 1A.
 
 
 
 
 
ITEM 2.
 
 
 
 
 
ITEM 6.
 
 
 




PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Lockheed Martin Corporation
Consolidated Statements of Earnings
(unaudited; in millions, except per share data)
 
 
Quarters Ended
 
 
 
March 29,
2020
 
March 31,
2019
 
Net sales
 
 
 
 
 
 
 
Products
 
$
13,166

 
 
$
11,970

 
 
Services
 
2,485

 
 
2,366

 
 
Total net sales
 
15,651

 
 
14,336

 
 
Cost of sales
 
 
 
 

 
 
Products
 
(11,742
)
 
 
(10,625
)
 
 
Services
 
(2,213
)
 
 
(2,047
)
 
 
Other unallocated, net
 
395

 
 
524

 
 
Total cost of sales
 
(13,560
)
 
 
(12,148
)
 
 
Gross profit
 
2,091

 
 
2,188

 
 
Other income, net
 
31

 
 
95

 
 
Operating profit
 
2,122

 
 
2,283

 
 
Interest expense
 
(148
)
 
 
(171
)
 
 
Other non-operating income (expense), net
 
56

 
 
(167
)
 
 
Earnings before income taxes
 
2,030

 
 
1,945

 
 
Income tax expense
 
(313
)
 
 
(241
)
 
 
Net earnings
 
$
1,717

 
 
$
1,704

 
 
 
 
 
 
 

 
 
Earnings per common share
 
 
 
 

 
 
Basic
 
$
6.10

 
 
$
6.03

 
 
Diluted
 
$
6.08

 
 
$
5.99

 
 
 
 
 
 
 
 
 
 
Cash dividends paid per common share
 
$
2.40

 
 
$
2.20

 
 
The accompanying notes are an integral part of these unaudited consolidated financial statements.


3



Lockheed Martin Corporation
Consolidated Statements of Comprehensive Income
(unaudited; in millions)
 
 
Quarters Ended
 
 
 
March 29,
2020
 
March 31,
2019
 
Net earnings
 
$
1,717

 
 
$
1,704

 
 
Other comprehensive income, net of tax
 
 
 
 

 
 
Recognition of previously deferred postretirement benefit plan amounts
 
110

 
 
227

 
 
Other, net
 
(97
)
 
 

 
 
Other comprehensive income, net of tax
 
13

 
 
227

 
 
Comprehensive income
 
$
1,730

 
 
$
1,931

 
 
The accompanying notes are an integral part of these unaudited consolidated financial statements.


4



Lockheed Martin Corporation
Consolidated Balance Sheets
(in millions, except par value)
 
 
March 29,
2020
 
December 31,
2019
 
 
(unaudited)
 
 
 
Assets
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
Cash and cash equivalents
 
$
1,988

 
 
$
1,514

 
Receivables, net
 
2,892

 
 
2,337

 
Contract assets
 
10,189

 
 
9,094

 
Inventories
 
3,539

 
 
3,619

 
Other current assets
 
614

 
 
531

 
Total current assets
 
19,222

 
 
17,095

 
Property, plant and equipment, net
 
6,605

 
 
6,591

 
Goodwill
 
10,565

 
 
10,604

 
Intangible assets, net
 
3,142

 
 
3,213

 
Deferred income taxes
 
3,164

 
 
3,319

 
Other noncurrent assets
 
6,550

 
 
6,706

 
Total assets
 
$
49,248

 
 
$
47,528

 
Liabilities and equity
 
 
 
 

 
Current liabilities
 
 
 
 

 
Accounts payable
 
$
3,166

 
 
$
1,281

 
Contract liabilities
 
7,205

 
 
7,054

 
Salaries, benefits and payroll taxes
 
2,022

 
 
2,466

 
Current maturities of long-term debt
 
1,250

 
 
1,250

 
Other current liabilities
 
2,009

 
 
1,921

 
Total current liabilities
 
15,652

 
 
13,972

 
Long-term debt, net
 
11,439

 
 
11,404

 
Accrued pension liabilities
 
13,078

 
 
13,234

 
Other noncurrent liabilities
 
5,592

 
 
5,747

 
Total liabilities
 
45,761

 
 
44,357

 
Stockholders’ equity
 
 
 
 

 
Common stock, $1 par value per share
 
279

 
 
280

 
Additional paid-in capital
 

 
 

 
Retained earnings
 
18,708

 
 
18,401

 
Accumulated other comprehensive loss
 
(15,541
)
 
 
(15,554
)
 
Total stockholders’ equity
 
3,446

 
 
3,127

 
Noncontrolling interests in subsidiary
 
41

 
 
44

 
Total equity
 
3,487

 
 
3,171

 
Total liabilities and equity
 
$
49,248

 
 
$
47,528

 
The accompanying notes are an integral part of these unaudited consolidated financial statements.


5



Lockheed Martin Corporation
Consolidated Statements of Cash Flows
(unaudited; in millions)
 
 
Quarters Ended
 
 
March 29,
2020
 
March 31,
2019
Operating activities
 
 
 
 
 
 
Net earnings
 
$
1,717

 
 
$
1,704

 
Adjustments to reconcile net earnings to net cash provided by operating activities
 
 
 
 
 
 
Depreciation and amortization
 
301

 
 
277

 
Stock-based compensation
 
42

 
 
37

 
Gain on property sale
 

 
 
(51
)
 
Changes in assets and liabilities
 
 
 
 

 
Receivables, net
 
(555
)
 
 
(389
)
 
Contract assets
 
(1,095
)
 
 
(1,025
)
 
Inventories
 
80

 
 
(288
)
 
Accounts payable
 
1,894

 
 
744

 
Contract liabilities
 
151

 
 
305

 
Postretirement benefit plans
 
(39
)
 
 
278

 
Income taxes
 
167

 
 
243

 
Other, net
 
(349
)
 
 
(172
)
 
Net cash provided by operating activities
 
2,314

 
 
1,663

 
Investing activities
 
 
 
 

 
Capital expenditures
 
(293
)
 
 
(284
)
 
Other, net
 
(2
)
 
 
27

 
Net cash used for investing activities
 
(295
)
 
 
(257
)
 
Financing activities
 
 
 
 

 
Dividends paid
 
(693
)
 
 
(638
)
 
Repurchases of common stock
 
(756
)
 
 
(281
)
 
Repayments of commercial paper, net
 

 
 
(200
)
 
Other, net
 
(96
)
 
 
(68
)
 
Net cash used for financing activities
 
(1,545
)
 
 
(1,187
)
 
Net change in cash and cash equivalents
 
474

 
 
219

 
Cash and cash equivalents at beginning of period
 
1,514

 
 
772

 
Cash and cash equivalents at end of period
 
$
1,988

 
 
$
991

 
The accompanying notes are an integral part of these unaudited consolidated financial statements.


6



Lockheed Martin Corporation
Consolidated Statements of Equity
(unaudited; in millions)
 
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Stockholders’
Equity
Noncontrolling
Interests in
Subsidiary
Total
Equity
Balance at December 31, 2019
$
280

$

 
$
18,401

$
(15,554
)
 
$
3,127

 
$
44

 
$
3,171

Net earnings


 
1,717


 
1,717

 

 
1,717

Other comprehensive income, net of tax


 

13

 
13

 

 
13

Repurchases of common stock
(2
)
(29
)
 
(733
)

 
(764
)
 

 
(764
)
Dividends declared


 
(677
)

 
(677
)
 

 
(677
)
Stock-based awards, ESOP activity and other
1

29

 


 
30

 

 
30

Net decrease in noncontrolling interests in subsidiary


 


 

 
(3
)
 
(3
)
Balance at March 29, 2020
$
279

$

 
$
18,708

$
(15,541
)
 
$
3,446

 
$
41

 
$
3,487

 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2018
$
281

$

 
$
15,434

$
(14,321
)
 
$
1,394

 
$
55

 
$
1,449

Net earnings


 
1,704


 
1,704

 

 
1,704

Other comprehensive income, net of tax


 

227

 
227

 

 
227

Repurchases of common stock
(1
)
(46
)
 
(237
)

 
(284
)
 

 
(284
)
Dividends declared


 
(623
)

 
(623
)
 

 
(623
)
Stock-based awards, ESOP activity and other
1

46

 


 
47

 

 
47

Net increase in noncontrolling interests in subsidiary


 


 

 
2

 
2

Balance at March 31, 2019
$
281

$

 
$
16,278

$
(14,094
)
 
$
2,465

 
$
57

 
$
2,522

The accompanying notes are an integral part of these unaudited consolidated financial statements.


7


Lockheed Martin Corporation
Notes to Consolidated Financial Statements (unaudited)



NOTE 1 – BASIS OF PRESENTATION
We prepared these consolidated financial statements in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information, the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission (SEC) Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements.
In the opinion of management, these consolidated financial statements reflect all adjustments that are of a normal recurring nature necessary for a fair presentation of our results of operations, financial condition, and cash flows for the interim periods presented. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base these estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Our actual results may differ materially from these estimates. Significant estimates inherent in the preparation of our consolidated financial statements include, but are not limited to, accounting for sales and cost recognition, postretirement benefit plans, assets for the portion of environmental costs that are probable of future recovery and liabilities, evaluation of goodwill, investments and other assets for impairment, income taxes including deferred tax assets, fair value measurements and contingencies. The consolidated financial statements include the accounts of subsidiaries we control and variable interest entities if we are the primary beneficiary. We eliminate intercompany balances and transactions in consolidation.
We close our books and records on the last Sunday of the calendar quarter, which was on March 29 for the first quarter of 2020 and March 31 for the first quarter of 2019, to align our financial closing with our business processes. The consolidated financial statements and tables of financial information included herein are labeled based on that convention. This practice only affects interim periods as our fiscal year ends on December 31.
We adopted Accounting Standards Update (ASU) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, effective January 1, 2020 using the modified retrospective approach. The new standard changes how we account for credit losses for financial assets and certain other instruments, including trade receivables and contract assets, that are not measured at fair value through net income. Under legacy standards, we recognized an impairment of receivables when it was probable that a loss had been incurred. Under the new standard, we are required to recognize estimated credit losses expected to occur over the estimated life or remaining contractual life of an asset (which includes losses that may be incurred in future periods) using a broader range of information including reasonable and supportable forecasts about future economic conditions. The adoption of the standard did not have a significant impact on our operating results, financial position or cash flows.
We adopted ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Topic 715-20): Disclosure Framework—Changes to the Disclosure Requirements For Defined Benefit Plans, effective January 1, 2020. The new standard modifies the annual disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The guidance requires disclosure changes to be presented on a retrospective basis. As this standard relates only to financial disclosures, its adoption did not have an impact to our operating results, financial position or cash flows.
The results of operations for the interim periods presented are not necessarily indicative of results to be expected for the full year or future periods. Unless otherwise noted, we present all per share amounts cited in these consolidated financial statements on a “per diluted share” basis. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019 (2019 Form 10-K).

8



Lockheed Martin Corporation
Notes to Consolidated Financial Statements (unaudited) (continued)

NOTE 2 – EARNINGS PER COMMON SHARE
The weighted average number of shares outstanding used to compute earnings per common share were as follows (in millions):
 
 
Quarters Ended
 
 
 
March 29,
2020
 
March 31,
2019
 
Weighted average common shares outstanding for basic computations
 
281.3

 
 
282.5

 
 
Weighted average dilutive effect of equity awards
 
1.3

 
 
1.8

 
 
Weighted average common shares outstanding for diluted computations
 
282.6

 
 
284.3

 
 

We compute basic and diluted earnings per common share by dividing net earnings by the respective weighted average number of common shares outstanding for the periods presented. Our calculation of diluted earnings per common share also includes the dilutive effects for the assumed vesting of outstanding restricted stock units (RSUs) and performance stock units (PSUs) and exercise of outstanding stock options based on the treasury stock method. There were no significant anti-dilutive equity awards during the quarters ended March 29, 2020 or March 31, 2019.
NOTE 3 – INFORMATION ON BUSINESS SEGMENTS
We operate in four business segments: Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS) and Space. We organize our business segments based on the nature of products and services offered.
Net sales and operating profit of our business segments exclude intersegment sales, cost of sales, and profit as these activities are eliminated in consolidation. Business segment operating profit includes our share of earnings or losses from equity method investees as the operating activities of the equity method investees are closely aligned with the operations of our business segments.
Business segment operating profit also excludes the FAS/CAS operating adjustment described below, a portion of corporate costs not considered allowable or allocable to contracts with the U.S. Government under the applicable U.S. government cost accounting standards (CAS) or federal acquisition regulations (FAR), and other items not considered part of management’s evaluation of segment operating performance such as a portion of management and administration costs, legal fees and settlements, environmental costs, stock-based compensation expense, retiree benefits, significant severance actions, significant asset impairments, gains or losses from significant divestitures, and other miscellaneous corporate activities.
Excluded items are included in the reconciling item “Unallocated items” between operating profit from our business segments and our consolidated operating profit. See “Note 10 – Otherfor a discussion related to certain factors that may impact the comparability of net sales and operating profit of our business segments.

9



Lockheed Martin Corporation
Notes to Consolidated Financial Statements (unaudited) (continued)

Summary operating results for each of our business segments were as follows (in millions):
 
 
Quarters Ended
 
 
 
March 29,
2020
 
March 31,
2019
 
Net sales
 
 
 
 
 
 
 
Aeronautics
 
$
6,369

 
 
$
5,584

 
 
Missiles and Fire Control
 
2,619

 
 
2,350

 
 
Rotary and Mission Systems
 
3,746

 
 
3,762

 
 
Space
 
2,917

 
 
2,640

 
 
Total net sales
 
$
15,651

 
 
$
14,336

 
 
Operating profit
 
 
 
 
 
 
 
Aeronautics
 
$
672

 
 
$
585

 
 
Missiles and Fire Control
 
396

 
 
417

 
 
Rotary and Mission Systems
 
376

 
 
379

 
 
Space
 
281

 
 
334

 
 
Total business segment operating profit
 
1,725

 
 
1,715

 
 
Unallocated items
 
 
 
 
 
 
 
FAS/CAS operating adjustment (a)
 
469

 
 
512

 
 
Stock-based compensation
 
(42
)
 
 
(37
)
 
 
Other, net
 
(30
)
 
 
93

 
 
Total unallocated items
 
397

 
 
568

 
 
Total consolidated operating profit
 
$
2,122

 
 
$
2,283

 
 
Intersegment sales
 
 
 
 
 
 
 
Aeronautics
 
$
59

 
 
$
42

 
 
Missiles and Fire Control
 
136

 
 
121

 
 
Rotary and Mission Systems
 
499

 
 
499

 
 
Space
 
108

 
 
68

 
 
Total intersegment sales
 
$
802

 
 
$
730

 
 
(a) 
The FAS/CAS operating adjustment represents the difference between the service cost component of financial accounting standards (FAS) pension income (expense) and total pension costs recoverable on U.S. Government contracts as determined in accordance with CAS.  

10



Lockheed Martin Corporation
Notes to Consolidated Financial Statements (unaudited) (continued)

Our total net FAS/CAS pension adjustment for the quarters ended March 29, 2020 and March 31, 2019, including the service and non-service cost components of FAS pension income (expense) for our qualified defined benefit pension plans, were as follows (in millions):
 
 
Quarters Ended
 
 
 
March 29,
2020
 
March 31,
2019
 
Total FAS income (expense) and CAS costs
 
 
 
 
 
 
 
FAS pension income (expense)
 
$
30

 
 
$
(273
)
 
 
Less: CAS pension cost
 
494

 
 
641

 
 
Net FAS/CAS pension adjustment
 
$
524

 
 
$
368

 
 
 
 
 
 
 
 
 
 
Service and non-service cost reconciliation
 
 
 
 
 
 
 
FAS pension service cost
 
$
(25
)
 
 
$
(129
)
 
 
Less: CAS pension cost
 
494

 
 
641

 
 
FAS/CAS operating adjustment
 
469

 
 
512

 
 
Non-operating FAS pension income (expense)
 
55

 
 
(144
)
 
 
Net FAS/CAS pension adjustment
 
$
524

 
 
$
368

 
 
We recover CAS pension and other postretirement benefit plan cost through the pricing of our products and services on U.S. Government contracts and, therefore, recognize CAS cost in each of our business segment’s net sales and cost of sales. Our consolidated financial statements must present FAS pension and other postretirement benefit plan expense calculated in accordance with FAS requirements under U.S. GAAP. The operating portion of the net FAS/CAS pension adjustment represents the difference between the service cost component of FAS pension income (expense) and total CAS pension cost. The non-service FAS pension income (expense) component is included in other non-operating income (expense), net in our consolidated statements of earnings. As a result, to the extent that CAS pension cost exceeds the service cost component of FAS pension income (expense), we have a favorable FAS/CAS operating adjustment.
The corporation will have FAS pension income in 2020, compared to FAS pension expense in prior periods. We will no longer have service costs for certain of our plans as a result of completing the planned freeze of our salaried pension plans effective January 1, 2020 that was previously announced on July 1, 2014. See “Note 6 – Postretirement Benefit Plans” for additional information regarding the corporation’s FAS pension expense or income and CAS pension cost.

11



Lockheed Martin Corporation
Notes to Consolidated Financial Statements (unaudited) (continued)

Net sales by products and services, contract type, customer, and geographic region were as follows (in millions):
 
 
Quarter Ended March 29, 2020
 
 
Aeronautics
 
MFC
 
RMS
 
Space
 
Total
Net sales
 
 
 
 
 
 
 
 
 
 
Products
 
$
5,455

 
$
2,275

 
$
2,986

 
$
2,450

 
$
13,166

Services
 
914

 
344

 
760

 
467

 
2,485

Total net sales
 
$
6,369

 
$
2,619

 
$
3,746

 
$
2,917

 
$
15,651

Net sales by contract type
 
 
 
 
 
 
 
 
 
 
Fixed-price
 
$
4,584

 
$
1,718

 
$
2,482

 
$
519

 
$
9,303

Cost-reimbursable
 
1,785

 
901

 
1,264

 
2,398

 
6,348

Total net sales
 
$
6,369

 
$
2,619

 
$
3,746

 
$
2,917

 
$
15,651

Net sales by customer
 
 
 
 
 
 
 
 
 
 
U.S. Government
 
$
4,033

 
$
1,955

 
$
2,788

 
$
2,483

 
$
11,259

International (a)
 
2,321

 
660

 
855

 
420

 
4,256

U.S. commercial and other
 
15

 
4

 
103

 
14

 
136

Total net sales
 
$
6,369

 
$
2,619

 
$
3,746

 
$
2,917

 
$
15,651

Net sales by geographic region
 
 
 
 
 
 
 
 
 
 
United States
 
$
4,048

 
$
1,959

 
$
2,891

 
$
2,497

 
$
11,395

Asia Pacific
 
995

 
75

 
318

 
28

 
1,416

Europe
 
948

 
168

 
167

 
398

 
1,681

Middle East
 
328

 
407

 
207

 
(6
)
 
936

Other
 
50

 
10

 
163

 

 
223

Total net sales
 
$
6,369

 
$
2,619

 
$
3,746

 
$
2,917

 
$
15,651

 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended March 31, 2019
 
 
Aeronautics
 
MFC
 
RMS
 
Space
 
Total
Net sales
 
 
 
 
 
 
 
 
 
 
Products
 
$
4,796

 
$
1,916

 
$
3,059

 
$
2,199

 
$
11,970

Services
 
788

 
434

 
703

 
441

 
2,366

Total net sales
 
$
5,584

 
$
2,350

 
$
3,762

 
$
2,640

 
$
14,336

Net sales by contract type
 
 
 
 
 
 
 
 
 
 
Fixed-price
 
$
4,170

 
$
1,535

 
$
2,619

 
$
523

 
$
8,847

Cost-reimbursable
 
1,414

 
815

 
1,143

 
2,117

 
5,489

Total net sales
 
$
5,584

 
$
2,350

 
$
3,762

 
$
2,640

 
$
14,336

Net sales by customer
 
 
 
 
 
 
 
 
 
 
U.S. Government
 
$
3,435

 
$
1,633

 
$
2,675

 
$
2,236

 
$
9,979

International (a)
 
2,095

 
670

 
995

 
395

 
4,155

U.S. commercial and other
 
54

 
47

 
92

 
9

 
202

Total net sales
 
$
5,584

 
$
2,350

 
$
3,762

 
$
2,640

 
$
14,336

Net sales by geographic region
 
 
 
 
 
 
 
 
 
 
United States
 
$
3,489

 
$
1,680

 
$
2,767

 
$
2,245

 
$
10,181

Asia Pacific
 
906

 
122

 
330

 
8

 
1,366

Europe
 
798

 
122

 
198

 
381

 
1,499

Middle East
 
337

 
413

 
285

 
6

 
1,041

Other
 
54

 
13

 
182

 

 
249

Total net sales
 
$
5,584

 
$
2,350

 
$
3,762

 
$
2,640

 
$
14,336

 
 
 
 
 
 
 
 
 
 
 

(a) 
International sales include foreign military sales (FMS) contracted through the U.S. Government and direct commercial sales to international governments and other international customers.

12



Lockheed Martin Corporation
Notes to Consolidated Financial Statements (unaudited) (continued)

Our Aeronautics business segment includes our largest program, the F-35 Lightning II Joint Strike Fighter, an international multi-role, multi-variant, stealth fighter aircraft. Net sales for the F-35 program represented approximately 28% of our total consolidated net sales for the quarter ended March 29, 2020 and 26% of our total consolidated net sales for the quarter ended March 31, 2019.
Total assets for each of our business segments were as follows (in millions):
 
 
March 29,
2020
 
December 31,
2019
Assets
 
 
 
 
 
 
Aeronautics
 
$
10,003

 
 
$
9,109

 
Missiles and Fire Control
 
5,210

 
 
5,030

 
Rotary and Mission Systems
 
18,901

 
 
18,751

 
Space
 
6,164

 
 
5,844

 
Total business segment assets
 
40,278

 
 
38,734

 
Corporate assets (a)
 
8,970

 
 
8,794

 
Total assets
 
$
49,248

 
 
$
47,528

 
(a) 
Corporate assets primarily include cash and cash equivalents, deferred income taxes, assets for the portion of environmental costs that are probable of future recovery and investments held in a separate trust.
NOTE 4 – CONTRACT ASSETS AND LIABILITIES
Contract assets include unbilled amounts typically resulting from sales under contracts when the percentage-of-completion cost-to-cost method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer. Contract liabilities include advance payments and billings in excess of revenue recognized. Contract assets and contract liabilities were as follows (in millions):
 
 
March 29,
2020
 
December 31,
2019
Contract assets
 
$
10,189

 
 
$
9,094

 
Contract liabilities
 
7,205

 
 
7,054

 
Contract assets increased $1.1 billion during the quarter ended March 29, 2020, primarily due to the recognition of revenue related to the satisfaction or partial satisfaction of performance obligations during the quarter ended March 29, 2020 for which we have not yet billed our customers. There were no significant credit or impairment losses related to our contract assets during the quarters ended March 29, 2020 and March 31, 2019.
Contract liabilities increased $151 million during the quarter ended March 29, 2020, primarily due to payments received in excess of revenue recognized on these performance obligations. During the quarter ended March 29, 2020, we recognized $1.6 billion of our contract liabilities that existed at December 31, 2019 as revenue. During the quarter ended March 31, 2019, we recognized $1.8 billion of our contract liabilities at December 31, 2018 as revenue.
NOTE 5 –