LOCKHEED MARTIN CORP

Previous wording

We are a global aerospace and defense technology company that builds and sustains the solutions America and its allies need to deter conflict and advance national security and scientific exploration objectives. Our four business areas – Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space – work as one company offering integrated solutions, at scale, across all warfighting domains. Our defense, space, intelligence, homeland security, information technology, and cybersecurity capabilities serve U.S. and international customers in defense, civil and commercial applications. Our principal customers are agencies of the U.S. Government and allies. During the six months ended June 28, 2026, 70% of our $38.1 billion in sales were from the U.S. Government, either as a prime contractor or as a subcontractor (including 61% from U.S. Department of War (DoW), also known as the Department of Defense under 10 U.S.C. § 111(a)), and 30% were from international customers (including foreign military sales (FMS) contracted through the U.S. Government).

Current wording

We are a global aerospace and defense technology company that builds and sustains the solutions America and its allies need to deter conflict and advance national security and scientific exploration objectives. Our four business areas – Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space – work as one company offering integrated solutions, at scale, across all warfighting domains. Our defense, space, intelligence, homeland security, information technology, and cybersecurity capabilities serve U.S. and international customers in defense, civil and commercial applications. Our principal customers are agencies of the U.S. Government and allies. During the nine months ended September 27, 2026, 70% of our $58.8 billion in sales were from the U.S. Government, either as a prime contractor or as a subcontractor (including 61% from U.S. Department of War (DoW), also known as the Department of Defense under 10 U.S.C. § 111(a)), and 30% were from international customers (including foreign military sales (FMS) contracted through the U.S. Government).

Previous wording

We operate in a complex and evolving global security environment. Conflicts or tensions in areas such as the Middle East, Europe, and the Pacific region have heightened tensions and highlighted security requirements globally, including in these regions as well as the U.S. Although these tensions and conflicts may drive interest in specific products or services as countries seek to improve their security posture, our business primarily operates on a long-cycle basis. As a result, the U.S. Government has been broadly focused on increasing industry capacity to meet long-term demand. We are working with the U.S. Government, international partners, and our supply chain with the objective of increasing capacity and enhancing our ability to scale operations to anticipated demand. We expect these efforts will enable us to deliver critical capabilities and replenish depleted U.S. and allied stockpiles, although there can be no assurance that production capacity will increase at the rate or to the extent we or our customers expect due to supply chain constraints, workforce limitations, government funding decisions, and other factors described in our risk factors.

Current wording

We operate in a complex and evolving global security environment. Conflicts or tensions in areas such as the Middle East, Europe, and the Pacific region have heightened tensions and highlighted security requirements globally, including in these regions as well as the U.S. Although these tensions and conflicts may drive interest in specific products or services as countries seek to improve their security posture, our business primarily operates on a long-cycle basis. As a result, the U.S. Government has been broadly focused on increasing industry capacity to meet long-term demand. We are working with the U.S. Government, international partners, and our supply chain with the objective of increasing capacity and enhancing our ability to scale operations to contracted or anticipated demand. In 2026, we have entered into multi-year contracts with the DoW intended to increase production quantities and accelerate delivery schedules for the Patriot Advanced Capability-3 Missile Segment Enhancement (PAC-3 MSE) and Terminal High Altitude Area Defense (THAAD) programs. We have also entered into munitions framework agreements to rapidly accelerate production and delivery of the Precision Strike Missile (PrSM) and the Joint Advanced Tactical Missile (JATM), and a framework agreement for multi-year production and sustainment of the F-35 Lightning II.

Previous wording

Certain materials and component parts that go into making our products are imported into the U.S. and are subject to tariffs, sanctions, embargoes, export and import controls, and other trade restrictions. Changes in trade policies, including tariffs and other restrictions, may affect the cost or availability of certain materials and components. While we continue to monitor these developments and pursue mitigation strategies where appropriate, excluding the near-term cash flow impact, we do not currently expect existing tariffs to have a material long-term impact on our results of operations. Through the six months ended June 28, 2026, we have received approximately $140 million in refunds related to prior tariff assessments.

Current wording

Certain materials and component parts that go into making our products are imported into the U.S. and are subject to tariffs, sanctions, embargoes, export and import controls, and other trade restrictions. Changes in trade policies, including tariffs and other restrictions, may affect the cost or availability of certain materials and components. While we continue to monitor these developments and pursue mitigation strategies where appropriate, excluding the near-term cash flow impact, we do not currently expect existing tariffs to have a material long-term impact on our results of operations. Through the nine months ended September 27, 2026, we have received approximately $225 million in refunds related to prior tariff assessments.

Previous wording

In addition, recent government actions relating to rare earth minerals that are used in certain of our products have raised concerns about supply availability. We are monitoring the rare earth minerals supply chain and maintaining active engagement with our suppliers as the regulatory landscape evolves. If we are unable to successfully mitigate disruptions to the availability of rare earth minerals, our future profits, margins and cash flows may be adversely affected.

Current wording

In addition, recent government actions relating to rare earth minerals that are used in certain of our products have raised concerns about supply availability. We are monitoring the rare earth minerals supply chain and maintaining active engagement with our suppliers as the regulatory landscape evolves, and taking steps to mitigate potential disruptions, including identifying and qualifying alternative sources, securing supply through long-term agreements, and collaborating with our customers on industry-wide solutions. If we are unable to successfully mitigate disruptions to the availability of rare earth minerals, our future profits, margins and cash flows may be adversely affected.

Previous wording

Our primary customer is the U.S. Government, from which we derived 70% of our sales during the six months ended June 28, 2026, including 61% from the DoW. Funding for U.S. Government programs is subject to a variety of factors that can affect our business, including the Administration’s budget requests and procurement priorities and policies, annual congressional budget authorization and appropriation processes, and other U.S. Government domestic and international priorities. U.S. Government spending levels, particularly defense spending, and timely funding thereof can affect our financial performance over the short and long term.

Current wording

Our primary customer is the U.S. Government, from which we derived 70% of our sales during the nine months ended September 27, 2026, including 61% from the DoW. Funding for U.S. Government programs is subject to a variety of factors that can affect our business, including the Administration’s budget requests and procurement priorities and policies, annual congressional budget authorization and appropriation processes, and other U.S. Government domestic and international priorities. U.S. Government spending levels, particularly defense spending, and timely funding thereof can affect our financial performance over the short and long term.

Previous wording

On April 3, 2026, the Administration released the FY 2027 Defense topline request. The FY 2027 proposal seeks a historic $1.5 trillion defense budget, driven by a large discretionary base request and an additional $350 billion of mandatory funding through reconciliation. It emphasizes a $760 billion weapons‑procurement and modernization effort—highlighting commitment to munitions framework deals, Golden Dome missile defense, a major shipbuilding program, and an increase in F‑35 purchases. The FY 2027 proposal is subject to Congressional appropriation, and there can be no assurance that it will be enacted at the levels proposed or that increases in authorized quantities will translate into increased orders for our programs within any particular timeframe.

Current wording

On April 3, 2026, the Administration released the FY 2027 Defense topline request. The FY 2027 proposal seeks a historic $1.5 trillion defense budget, driven by a large discretionary base request and an additional $350 billion of mandatory funding through reconciliation. It emphasizes a $760 billion weapons‑procurement and modernization effort—highlighting commitment to munitions framework deals, Golden Dome missile defense, and an increase in F‑35 purchases, among other items. On September 2, 2026, the President signed a continuing resolution that generally maintains FY 2026 funding levels through December 11, 2026. Congress has not completed action on full-year FY 2027 appropriations, and the timing and ultimate level of FY 2027 defense funding remain uncertain.

Previous wording

Product sales increased $1.6 billion, or 11%, during the quarter ended June 28, 2026, compared to the same period in 2025. This increase was due to higher product sales of approximately $650 million at Aeronautics (higher volume on F-35 production contracts and the sales impact of the 2025 reach-forward loss on a classified program); $635 million at MFC (production ramp-up on Patriot Advanced Capability-3 (PAC-3) and Terminal High Altitude Area Defense (THAAD) programs); $185 million at RMS (higher volume on undersea combat systems programs and the River Class Destroyer program and the sales impact of the 2025 reach-forward loss on the Türkish Utility Helicopter Program (TUHP) program); and $165 million at Space (higher volume on Fleet Ballistic Missile (FBM) and Next Generation Interceptor (NGI) programs).

Current wording

Product sales increased $2.1 billion, or 14%, during the quarter ended September 27, 2026, compared to the same period in 2025. This increase was due to higher product sales of approximately $865 million at MFC (production ramp-up on Patriot Advanced Capability-3 (PAC-3), Terminal High Altitude Area Defense (THAAD), Guided Multiple Launch Rocket Systems (GMLRS) and Precision Strike Missile (PrSM) programs); $845 million at Aeronautics (higher volume on F-35 and C-130 production contracts); $225 million at Space (higher volume on Fleet Ballistic Missile (FBM) and Next Generation Interceptor (NGI), partially offset by program lifecycle on the OPIR mission) and $185 million at RMS (higher volume on radar programs).

Previous wording

Product costs increased $594 million, or 4%, during the quarter ended June 28, 2026, compared to the same period in 2025. Higher product costs of approximately $515 million at MFC, $165 million at RMS and $155 million at Space, partially offset by lower product costs of $240 million at Aeronautics. Product costs for all four business segments reflect the production ramp-up and higher volume as described above in “Product Sales”. Additionally, lower product costs at Aeronautics reflect the 2025 reach-forward loss on a classified program.

Current wording

Product costs increased $1.9 billion, or 14%, during the quarter ended September 27, 2026, compared to the same period in 2025. This increase was due to higher product costs of approximately $805 million at Aeronautics, $750 million at MFC, $200 million at Space and $145 million at RMS. Product costs for all four business segments reflect the production ramp-up and higher volume as described above in “Product Sales”.

Previous wording

Product sales during the six months ended June 28, 2026 increased $1.5 billion, or 5%, compared to the same period in 2025. This increase was due to higher product sales of approximately $940 million at MFC (production ramp-up on PAC-3 and THAAD programs); $405 million at Aeronautics (primarily higher volume on F-35 production contracts); and $320 million at Space (higher volume on FBM and NGI programs).

Current wording

Product sales during the nine months ended September 27, 2026 increased $3.6 billion, or 8%, compared to the same period in 2025. This increase was due to higher product sales of approximately $1.8 billion at MFC (production ramp-up on PAC-3, THAAD, GMLRS and PrSM programs); $1.3 billion at Aeronautics (higher volume on F-35 production contracts); and $545 million at Space (higher volume on FBM and NGI programs).

Previous wording

Product costs during the six months ended June 28, 2026 increased $708 million, or 3%, compared to the same period in 2025. Higher product costs of approximately of $765 million at MFC and $400 million at Space were partially offset by lower product costs of $380 million at Aeronautics. Product costs for MFC, Aeronautics and Space reflect the production ramp-up and higher volume as described above in “Product Sales”. Additionally, lower product costs at Aeronautics reflect the 2025 reach-forward loss on a classified program.

Current wording

Product costs during the nine months ended September 27, 2026 increased $2.6 billion, or 6%, compared to the same period in 2025. This increase was due to higher product costs of approximately of $1.5 billion at MFC and $600 million at Space and $425 million at Aeronautics. Higher product costs reflect the production ramp-up and higher volume as described above in “Product Sales”, partially offset by the sales impact of the 2025 reach-forward loss on a classified program.

Previous wording

RMS’ sales during the six months ended June 28, 2026 were comparable to the same period in 2025. Lower sales of $160 million on Sensors, Effectors & Mission Systems (SEMS) programs due to lower volume across the portfolio were mostly offset by higher sales of $145 million at Sikorsky. Higher sales at Sikorsky were due to the sales impact of the reach-forward losses recognized on CMHP and TUHP in 2025, partially offset by the sales impact of unfavorable profit adjustments recognized in 2026.

Current wording

Service sales and service costs during the quarter ended September 27, 2026 were comparable to the same period in 2025.

Previous wording

Service sales during the six months ended June 28, 2026 increased $437 million, or 7%, compared to the same period in 2025. The increase was primarily attributable to higher service sales of approximately $180 million at Aeronautics (higher volume on the F-35 sustainment contracts, partially offset by the sales impact of lower net favorable profit adjustments on C-130 program); and $160 million at RMS (sales impact of the 2025 reach-forward loss on CMHP).

Current wording

Service sales during the nine months ended September 27, 2026 increased $421 million, or 5%, compared to the same period in 2025. The increase was primarily attributable to higher service sales of approximately $295 million at Aeronautics (higher volume on the F-35 sustainment contracts) and $115 million at RMS (sales impact of the 2025 reach-forward loss on CMHP).

Previous wording

Service costs during the six months ended June 28, 2026 decreased $124 million, or 2%, compared to the same period in 2025. The decrease was primarily attributable to lower service costs of $465 million at RMS, partially offset by higher service costs of approximately $210 million at Aeronautics as described above in “Service Sales”.

Current wording

Service costs during the nine months ended September 27, 2026 decreased $113 million, or 1%, compared to the same period in 2025. The decrease was primarily attributable to lower service costs of $485 million at RMS, partially offset by higher service costs of approximately $305 million at Aeronautics as described above in “Service Sales”.

Previous wording

During the second quarter of 2025, we recorded charges totaling $66 million ($52 million, or $0.22 per share, after-tax) primarily for the write-off of fixed assets resulting from the U.S. Air Force’s Next Generation Air Dominance (NGAD) competition and down-select decision.

Current wording

During the nine months ended September 28, 2025, we recorded charges totaling $66 million ($52 million, or $0.22 per share, after-tax) primarily for the write-off of fixed assets resulting from the U.S. Air Force’s Next Generation Air Dominance (NGAD) competition and down-select decision.

Previous wording

Other unallocated, net primarily includes the FAS/CAS pension operating adjustment (which represents the difference between total CAS pension cost recorded in our business segments’ results of operations and the service cost component of FAS pension expense), stock-based compensation expense, changes in the fair value of assets and liabilities for deferred compensation plans, significant severance charges, significant asset impairments, intangible asset amortization expense, and other miscellaneous corporate activities. Other unallocated, net operating expenses were $308 million and $547 million during the quarter and six months ended June 28, 2026, compared to $244 million and $528 million during the quarter and six months ended June 29, 2025. The fluctuations in other unallocated, net were primarily due to changes in fair value of net assets and liabilities for deferred compensation plans and costs associated with various corporate items, none of which were individually significant.

Current wording

Other unallocated, net primarily includes the FAS/CAS pension operating adjustment (which represents the difference between total CAS pension cost recorded in our business segments’ results of operations and the service cost component of FAS pension expense), stock-based compensation expense, changes in the fair value of assets and liabilities for deferred compensation plans, intangible asset amortization expense, and other miscellaneous corporate activities. Other unallocated, net reduced operating expenses were $216 million and $763 million during the quarter and nine months ended September 27, 2026, compared to $210 million and $738 million during the quarter and nine months ended September 28, 2025. The fluctuations in other unallocated, net were primarily due to changes in fair value of net assets and liabilities for deferred compensation plans and costs associated with various corporate items, none of which were individually significant.

Previous wording

Other income, net was $33 million and $18 million during the quarter and six months ended June 28, 2026, compared to $14 million and $63 million during the quarter and six months ended June 29, 2025. Other income, net, primarily includes earnings generated by equity method investees, as well as gains or losses for acquisitions, divestitures, and other items, none of which are individually significant.

Current wording

Other income, net was $7 million and $25 million during the quarter and nine months ended September 27, 2026, compared to $40 million and $103 million during the quarter and nine months ended September 28, 2025. Other income, net, primarily includes earnings generated by equity method investees, as well as gains or losses for acquisitions, divestitures, and other items, none of which are individually significant for the nine months ended September 27, 2026. Other income, net for the nine months ended September 28, 2025 included an intellectual property license arrangement and the Commercial Engine Solutions divestiture net working capital true-up.

Previous wording

Non-service FAS pension expense was $80 million and $160 million during the quarter and six months ended June 28, 2026, compared to $99 million and $197 million during the quarter and six months ended June 29, 2025. See “Note 6 - Retirement Benefits” included in our Notes to Consolidated Financial Statements for additional information.

Current wording

Non-service FAS pension expense was $81 million and $241 million during the quarter and nine months ended September 27, 2026, compared to $99 million and $296 million during the quarter and nine months ended September 28, 2025. See “Note 9 - Retirement Benefits” included in our Notes to Consolidated Financial Statements for additional information.

Previous wording

Other non-operating income, net primarily includes gains or losses related to adjustments in valuation of early-stage company investments or gains or losses upon the sale of these investments and interest income earned on cash and cash equivalents. Other non-operating income, net was $45 million and $105 million during the quarter and six months ended June 28, 2026, compared to $42 million and $72 million during the quarter and six months ended June 29, 2025. See “Note 8 - Fair Value Measurements” included in our Notes to Consolidated Financial Statements for additional information.

Current wording

Other non-operating income, net primarily includes gains or losses related to adjustments in valuation of early-stage company investments or gains or losses upon the sale of these investments and interest income earned on cash and cash equivalents. Other non-operating income, net was $74 million and $179 million during the quarter and nine months ended September 27, 2026, compared to $43 million and $115 million during the quarter and nine months ended September 28, 2025. See “Note 12 - Fair Value Measurements” included in our Notes to Consolidated Financial Statements for additional information.

Previous wording

Our effective income tax rates were 15.7% and 15.9% for the quarter and six months ended June 28, 2026 and 18.0% and 16.3% for the quarter and six months ended June 29, 2025. The lower effective income tax rates for the quarter and six months ended June 28, 2026 were primarily attributable to lower interest expense on our uncertain tax position and the reach-forward losses recognized in 2025. The rates for all periods benefited from the tax deductions for foreign derived deduction eligible income, research and development tax credits, dividends paid to our defined contribution plans with an employee stock ownership plan feature and employee equity awards.

Current wording

Our effective income tax rates were 15.1% and 15.6% for the quarter and nine months ended September 27, 2026 and 16.5% and 16.4% for the quarter and nine months ended September 28, 2025. The decreases were primarily attributable to increased tax deductions for foreign derived deduction eligible income (FDDEI), partially offset by the absence of the favorable resolution of certain federal income tax audit items as compared to the prior year. In addition, the rates for all periods benefited from research and development tax credits, dividends paid to our defined contribution plans with an employee stock ownership plan feature and employee equity awards.

Previous wording

We reported net earnings of $1.8 billion ($7.94 per share) and $3.3 billion ($14.38 per share) during the quarter and six months ended June 28, 2026 and $342 million ($1.46 per share) and $2.1 billion ($8.75 per share) during the quarter and six months ended June 29, 2025. Net earnings and earnings per share for the quarter and six months ended June 28, 2026 were affected by the factors mentioned above. Earnings per share also benefited from a net decrease of approximately 3.2 million and 3.7 million weighted average common shares outstanding during the the quarter and six months ended June 28, 2026, compared to the same periods in 2025. The reduction in weighted average common shares was a result of share repurchases in the second half of 2025, but none during the quarter and six months ended June 28, 2026, partially offset by share issuances under our stock-based awards and certain defined contribution plans.

Current wording

We reported net earnings of $1.8 billion ($7.97 per share) and $5.2 billion ($22.36 per share) during the quarter and nine months ended September 27, 2026 and $1.6 billion ($6.95 per share) and $3.7 billion ($15.69 per share) during the quarter and nine months ended September 28, 2025. Net earnings and earnings per share for the quarter and nine months ended September 27, 2026 were affected by the factors mentioned above. Earnings per share also benefited from a net decrease of approximately 1.3 million and 2.9 million weighted average common shares outstanding during the quarter and nine months ended September 27, 2026, compared to the same periods in 2025. The reduction in weighted average common shares was a result of share repurchases in the second half of 2025, but none during the quarter and nine months ended September 27, 2026, partially offset by share issuances under our stock-based awards and certain defined contribution plans.

Previous wording

Management evaluates performance on our contracts by focusing on sales and operating profit and not by type or amount of operating expense. Consequently, our discussion of business segment performance focuses on sales and operating profit, consistent with our approach for managing the business. This approach is consistent throughout the life cycle of our contracts, as management assesses the bidding of each contract by focusing on sales and operating profit and monitors performance on our contracts in a similar manner through their completion. This method and assumptions used to evaluate contracts and recognize revenue, including the use of percentage-of-completion accounting for contracts with continuous transfer of control to the customer, are consistent with those described in our 2025 Form 10-K under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. Additionally, for updates related to fixed-price contracts, see “Note 10 - Other” included in our Notes to Consolidated Financial Statements.

Current wording

Management evaluates performance on our contracts by focusing on sales and operating profit and not by type or amount of operating expense. Consequently, our discussion of business segment performance focuses on sales and operating profit, consistent with our approach for managing the business. This approach is consistent throughout the life cycle of our contracts, as management assesses the bidding of each contract by focusing on sales and operating profit and monitors performance on our contracts in a similar manner through their completion. This method and assumptions used to evaluate contracts and recognize revenue, including the use of percentage-of-completion accounting for contracts with continuous transfer of control to the customer, are consistent with those described in our 2025 Form 10-K under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. Additionally, for updates related to fixed-price contracts, see “Note 2 - Significant Accounting Policies” included in our Notes to Consolidated Financial Statements.

Previous wording

Comparability of our segment sales, operating profit and operating margin may be impacted favorably or unfavorably by changes in profit booking rates on our contracts, see “Note 10 - Other” included in our Notes to Consolidated Financial Statements.

Current wording

Comparability of our segment sales, operating profit and operating margin may be impacted favorably or unfavorably by changes in profit booking rates on our contracts, see “Note 2 - Significant Accounting Policies” included in our Notes to Consolidated Financial Statements.

Previous wording

During the six months ended June 28, 2026, we recorded unfavorable profit adjustments of $125 million on the F-16 program at Aeronautics as a result of production performance and development delays, $95 million on the C-130 program at Aeronautics as a result of continued diminishing manufacturing source integration challenges and associated delivery delays, $95 million on Heavy Lift programs at RMS as a result of production performance, and $80 million on Seahawk programs at RMS as a result of production performance and schedule delays. During the quarter ended June 29, 2025, we recorded losses of $950 million on an ongoing classified program at Aeronautics, and $570 million on Canadian Maritime Helicopter Program (CMHP) and $95 million on Türkish Utility Helicopter Program (TUHP) at RMS. During the six months ended June 29, 2025, in addition to the losses above, we recorded $125 million of adjustments resulting from favorable performance upon completion on certain commercial civil space programs at Space and an $80 million favorable adjustment upon completion of a classified program at Aeronautics.

Current wording

During the nine months ended September 27, 2026, we recorded unfavorable profit adjustments of $170 million on the F-16 program at Aeronautics as a result of production performance and development delays, $175 million on the C-130 program at Aeronautics as a result of continued diminishing manufacturing source integration challenges and associated delivery delays, $125 million on the Heavy Lift program at RMS as a result of production performance, and $95 million on the Seahawk program at RMS as a result of production performance and schedule delays. During the nine months ended September 28, 2025, we recorded losses of $950 million on an ongoing classified program at Aeronautics, and $570 million on Canadian Maritime Helicopter Program (CMHP) and $95 million on Türkish Utility Helicopter Program (TUHP) at RMS and $105 million of unfavorable profit adjustments on the C-130 program at our Aeronautics business segment. In addition to the losses and unfavorable profit adjustments above, during the nine months ended September 28, 2025 we also recorded $130 million of favorable adjustments upon completion on certain commercial civil space programs at Space and $80 million favorable adjustments upon completion of a classified program at Aeronautics.

Previous wording

There are certain programs where there is a risk of additional losses, including Aeronautics, MFC and RMS business segments. For further discussion regarding the losses recognized on these programs, including factors that could contribute to potential future losses, see “Note 10 - Other” included in our Notes to Consolidated Financial Statements.

Current wording

There are certain programs where there is a risk of additional losses, including Aeronautics, MFC and RMS business segments. For further discussion regarding the losses recognized on these programs, including factors that could contribute to potential future losses, see “Note 2 - Significant Accounting Policies” included in our Notes to Consolidated Financial Statements.

Previous wording

Aeronautics’ sales during the quarter ended June 28, 2026 increased $692 million, or 9%, compared to the same period in 2025. The increase was primarily due to higher sales of $475 million on the F‑35 program as a result of higher volume on production contracts, and $360 million due to the sales impact of the reach-forward loss recognized on a classified contract in 2025. These increases were partially offset by lower sales of $120 million on F-16 and C-130 programs due to lower volume on sustainment contracts.

Current wording

Aeronautics’ sales during the quarter ended September 27, 2026 increased $958 million, or 13%, compared to the same period in 2025. The increase was primarily due to higher sales of $710 million on the F‑35 program as a result of higher volume on production and sustainment contracts and $270 million on the C-130 program due to the liquidation of pre-contract costs incurred in anticipation of a contract award in the third quarter of 2026. These increases were partially offset by lower sales of $130 million on the F-16 program due to lower production volume and the sales impact of unfavorable profit adjustments recognized.

Previous wording

Aeronautics’ sales during the six months ended June 28, 2026 increased$588 million, or 4%, compared to the same period in 2025. The increase was primarily due to higher sales of $795 million on the F‑35 program as a result of higher volume on production and sustainment contracts; partially offset by lower sales of $225 million on the F-16 program due to the sales impact of unfavorable profit adjustments recognized in first quarter of 2026 and lower production volume, and

Current wording

Aeronautics’ sales during the nine months ended September 27, 2026 increased$1.5 billion, or 7%, compared to the same period in 2025. The increase was primarily due to higher sales of $1.5 billion on the F‑35 program as a result of higher volume on production and sustainment contracts and $200 million on the F-22 program due to higher volume. These increases were partially offset by lower sales of $360 million on the F-16 program due to the sales impact of $165 million of unfavorable profit adjustments recognized in 2026 and lower production volume. Sales for classified programs were comparable as the impact of lower volume during the nine months of 2026 was mostly offset by the reach-forward loss recognized on a classified contract in 2025.

Previous wording

Aeronautics’ operating profit during the quarter ended June 28, 2026 increased $858 million compared to the same period in 2025. The increase was attributable to the $950 million reach-forward loss recognized on a classified contract in 2025, and higher sales volume on F-35 production contracts. The increases were partially offset by $160 million of lower net favorable profit adjustments across the portfolio.

Current wording

Aeronautics’ operating profit during the nine months ended September 27, 2026 increased $818 million, or 63%, compared to the same period in 2025. The increase was primarily attributable to the $950 million reach-forward loss recognized on a classified contract in 2025 and the higher sales volume previously described; partially offset by higher unfavorable profit adjustments of $165 million on the F-16 program and $70 million on the C-130 program.

Previous wording

Additionally, during the quarter ended June 28, 2026, we delivered 19 F-35 aircraft. Since the program inception through June 28, 2026, we delivered 1,344 production F-35 aircraft, including 956 F-35A variants, 250 F-35B variants and 138 F-35C variants, and our backlog as of that date was 317 aircraft.

Current wording

Additionally, during the quarter ended September 27, 2026, we delivered 43 F-35 aircraft. Since the program inception through September 27, 2026, we delivered 1,387 production F-35 aircraft, including 989 F-35A variants, 255 F-35B variants and 143 F-35C variants, and our backlog as of that date was 274 aircraft. We remain in negotiations with the U.S. Government on the production contracts for F-35 lots 20 and higher. Our costs incurred began to exceed the current contractual authorization and funding on the Lot 20 advance acquisition contract during the third quarter of 2026. Without additional contractual authorization and funding from the U.S. Government, our results of operations, cash flows, and financial condition will be negatively impacted in future periods.

Previous wording

MFC’s sales during the quarter ended June 28, 2026 increased $668 million, or 19%, compared to the same period in 2025. The increase was primarily attributable to higher sales of $560 million on integrated air and missile defense programs due to production ramps (PAC-3 and THAAD), and $100 million on tactical and strike missile programs due to production ramps (Precision Strike Missile (PrSM)).

Current wording

MFC’s sales during the quarter ended September 27, 2026 increased $877 million, or 24%, compared to the same period in 2025. The increase was primarily attributable to higher sales of $480 million on integrated air and missile defense programs due to production ramps (PAC-3 and THAAD), and $330 million on tactical and strike missile programs due to production ramps (GMLRS and PrSM).

Previous wording

MFC’s operating profit during the quarter ended June 28, 2026 increased $115 million, or 24%, compared to the same period in 2025. The increase was primarily attributable to higher sales volume previously described, and $60 million due to higher net favorable profit adjustments.

Current wording

MFC’s operating profit during the quarter ended September 27, 2026 increased $121 million, or 24%, compared to the same period in 2025. The increase was primarily attributable to higher sales volume previously described.

Previous wording

MFC’s sales during the six months ended June 28, 2026 increased $944 million, or 14%, compared to the same period in 2025. The increase was primarily attributable to higher sales of $750 million on integrated air and missile defense programs due to production ramps (PAC-3 and THAAD), and $175 million on tactical and strike missile programs due to production ramps (PrSM).

Current wording

MFC’s sales during the nine months ended September 27, 2026 increased $1.8 billion, or 17%, compared to the same period in 2025. The increase was primarily attributable to higher sales of $1.2 billion on integrated air and missile defense programs due to production ramps (PAC-3 and THAAD), and $510 million on tactical and strike missile programs due to production ramps (GMLRS and PrSM).

Previous wording

MFC’s operating profit during the six months ended June 28, 2026 increased $150 million, or 16%, compared to the same period in 2025. The increase was primarily attributable to higher sales volume previously described, and $65 million due to higher net favorable profit adjustments.

Current wording

MFC’s operating profit during the nine months ended September 27, 2026 increased $271 million, or 19%, compared to the same period in 2025. The increase was primarily attributable to the higher sales volume previously described, and $75 million due to higher net favorable profit adjustments on integrated air and missile defense (PAC-3 and THAAD).

Previous wording

RMS’ sales during the quarter ended June 28, 2026 increased $359 million, or 9%, compared to the same period in 2025. The increase was attributable to higher sales of $255 million on Sikorsky helicopter programs due to the sales impact of the reach-forward loss recognized on CMHP and TUHP in 2025, and $115 million on Mission Integrated Command & Control (MIC2) programs due to higher volume on undersea combat systems programs and the River Class Destroyer program.

Current wording

RMS’ sales during the nine months ended September 27, 2026 increased $160 million, or 1%, compared to the same period in 2025. The increase was primarily attributable to higher sales of $150 million on Mission Integrated Command & Control (MIC2) programs due to higher volume on undersea mission systems programs and the River Class Destroyer program, and $60 million on Sikorsky helicopter programs. Higher sales at Sikorsky were due to the sales impact of the reach-forward losses recognized on CMHP and TUHP in 2025, partially offset by the sales impact of unfavorable profit adjustments recognized on Heavy Lift and Seahawk programs in 2026.

Previous wording

RMS’ operating profit during the six months ended June 28, 2026 increased $511 million compared to the same period in 2025. The increase was attributable to the $570 million reach-forward loss recognized on the CMHP program and the $95 million reach-forward loss recognized on TUHP in 2025, partially offset by unfavorable profit adjustments of $95 million on Heavy Lift and $80 million on Seahawk programs in 2026.

Current wording

RMS’ operating profit during the nine months ended September 27, 2026 increased $529 million, or 62%, compared to the same period in 2025. The increase was attributable to the $570 million reach-forward loss recognized on CMHP and the $95 million reach-forward loss recognized on TUHP in 2025, partially offset by unfavorable profit adjustments of $125 million on Heavy Lift and $95 million on Seahawk programs in 2026.

Previous wording

Space’s sales during the quarter ended June 28, 2026 increased $189 million, or 6%, compared to the same period in 2025. The increase was primarily attributable to higher sales of $190 million on strategic and missile defense programs due to increased volume (FBM and NGI).

Current wording

Space’s sales during the quarter ended September 27, 2026 increased $129 million, or 4%, compared to the same period in 2025. The increase was primarily attributable to higher sales of $185 million on strategic and missile defense programs due to higher volume on the FBM and NGI programs, partially offset by lower sales of $115 million for national security space programs due to the program lifecycle on the OPIR mission.

Previous wording

Space’s sales during the six months ended June 28, 2026 increased $412 million, or 6%, compared to the same period in 2025. The increase was primarily attributable to higher sales of $435 million on strategic and missile defense programs due to increased volume (FBM and NGI).

Current wording

Space’s sales during the nine months ended September 27, 2026 increased $541 million, or 5%, compared to the same period in 2025. The increase was primarily attributable to higher sales of $620 million on strategic and missile defense programs due to increased volume (FBM and NGI).

Previous wording

Space’s operating profit during the six months ended June 28, 2026 decreased $89 million, or 12%, compared to the same period in 2025. The decrease was primarily due to favorable performance at completion on certain commercial civil space programs in 2025, partially offset by higher sales volume previously described.

Current wording

Space’s operating profit during the nine months ended September 27, 2026 decreased $89 million, or 8%, compared to the same period in 2025. The decrease was primarily due to favorable performance at completion on certain commercial civil space programs in 2025; partially offset by higher sales volume previously described.

Previous wording

At June 28, 2026, we had cash and cash equivalents of $3.8 billion that was generally available to fund ordinary business operations without significant legal, regulatory or other restrictions. Our principal source of liquidity is our cash from operations and access to credit markets. Access to credit markets includes our revolving credit facilities, and the ability to issue commercial paper. We may, as conditions warrant, issue commercial paper backed by our revolving credit facility to manage the timing of cash flows. There were no borrowings outstanding under the revolving credit facilities or the commercial paper program at June 28, 2026 or December 31, 2025.

Current wording

At September 27, 2026, we had cash and cash equivalents of $6.0 billion that was generally available to fund ordinary business operations without significant legal, regulatory or other restrictions. Our principal source of liquidity is our cash from operations and access to credit markets. Access to credit markets includes our $5.25 billion of unsecured revolving credit facilities and the ability to issue commercial paper. We may, as conditions warrant, issue commercial paper backed by our revolving credit facilities to manage the timing of cash flows. There were no borrowings outstanding under the revolving credit facilities or the commercial paper program at September 27, 2026 or December 31, 2025.

Previous wording

Billing timetables and payment terms on our contracts vary based on a number of factors, including the contract type. We generally bill and collect cash more frequently under cost-reimbursable contracts, which represented approximately 41% of the sales we recorded during the six months ended June 28, 2026, as we are authorized to bill as the costs are incurred. A number of our fixed-price contracts may provide for performance-based payments, which allow us to bill and collect cash as we perform on the contract as we achieve milestones. The amounts of performance-based payments and the related milestones are determined in the negotiation of each contract. The timing of such payments may differ from the timing of the costs incurred related to our contract performance, thereby affecting our cash flows.

Current wording

Billing timetables and payment terms on our contracts vary based on a number of factors, including the contract type. We generally bill and collect cash more frequently under cost-reimbursable contracts, which represented approximately 40% of the sales we recorded during the nine months ended September 27, 2026, as we are authorized to bill as the costs are incurred. A number of our fixed-price contracts may provide for performance-based payments, which allow us to bill and collect cash as we perform on the contract as we achieve milestones. The amounts of performance-based payments and the related milestones are determined in the negotiation of each contract. The timing of such payments may differ from the timing of the costs incurred related to our contract performance, thereby affecting our cash flows.

Previous wording

We seek to maintain a disciplined and dynamic cash deployment strategy to invest in our business and key technologies to provide our customers with enhanced capabilities, enhance stockholder value, and position ourselves to take advantage of new business opportunities when they arise. Consistent with that strategy, we have continued to invest in our business and technologies through capital expenditures, independent research and development, and selective business acquisitions and investments. As we implement our digital and business transformation, which includes implementation of new systems, the timing of certain of our cash flows may be temporarily impacted within a calendar year.

Current wording

We seek to maintain a disciplined and dynamic cash deployment strategy to invest in our business and key technologies to provide our customers with enhanced capabilities, enhance stockholder value, and position ourselves to take advantage of new business opportunities when they arise. Consistent with that strategy, we have continued to invest in our business and technologies through capital expenditures, independent research and development, and selective business acquisitions and investments. We expect to fund the pending $3.45 billion acquisition of Ultra Maritime with cash on hand. See “Note 13 - Other” for additional information. We have guaranteed $750 million of certain United Launch Alliance (ULA) borrowings and expect to provide additional financial support. See “Note 2 - Significant Accounting Policies” included in our Notes to Consolidated Financial Statements for additional information.