Microsoft Excel LibreOffice Calc

Lockheed Martin Corp. (LMT)


Analysis of Operating Leases

High level of difficulty


Present Value of Future Operating Lease Payments (before Adoption of FASB Topic 842)

Lockheed Martin Corp., future operating lease payments (before adoption of FASB Topic 842)

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Total undiscounted future operating lease payments 1,297  623  762  793  856 
Discount rate1 4.34% 4.12% 4.36% 5.16% 6.37%
 
Total present value of future operating lease payments 1,084  557  667  679  709 

Based on: 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-24), 10-K (filing date: 2015-02-09).

1 Weighted-average interest rate for Lockheed Martin Corp.’s debt

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 4.34%
2019 305  2019 305  292 
2020 184  2020 184  169 
2021 147  2021 147  129 
2022 114  2022 114  96 
2023 88  2023 88  71 
2024 and thereafter 459  2024 88  68 
2025 88  65 
2026 88  63 
2027 88  60 
2028 88  58 
2029 19  12 
Total: 1,297  1,297  1,084 

Based on: 10-K (filing date: 2019-02-08).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 4.12%
2018 162  2018 162  156 
2019 154  2019 154  142 
2020 116  2020 116  103 
2021 82  2021 82  70 
2022 54  2022 54  44 
2023 and thereafter 55  2023 54  42 
2024
Total: 623  623  557 

Based on: 10-K (filing date: 2018-02-06).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 4.36%
2017 179  2017 179  172 
2018 150  2018 150  138 
2019 131  2019 131  115 
2020 103  2020 103  87 
2021 78  2021 78  63 
2022 and thereafter 121  2022 78  60 
2023 43  32 
Total: 762  762  667 

Based on: 10-K (filing date: 2017-02-09).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 5.16%
2016 205  2016 205  195 
2017 161  2017 161  146 
2018 128  2018 128  110 
2019 101  2019 101  83 
2020 64  2020 64  50 
2021 and thereafter 134  2021 64  47 
2022 64  45 
2023
Total: 793  793  679 

Based on: 10-K (filing date: 2016-02-24).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 6.37%
2015 228  2015 228  214 
2016 181  2016 181  160 
2017 133  2017 133  111 
2018 95  2018 95  74 
2019 69  2019 69  51 
2020 and thereafter 150  2020 69  48 
2021 69  45 
2022 12 
Total: 856  856  709 

Based on: 10-K (filing date: 2015-02-09).


Adjustments to Financial Statements for Operating Leases

Lockheed Martin Corp., adjustments to financial statements

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Adjustment to Total Assets
Total assets (as reported) 44,876  46,521  47,806  49,128  37,073 
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)1 1,084  557  667  679  709 
Total assets (adjusted) 45,960  47,078  48,473  49,807  37,782 
Adjustment to Total Debt
Total debt (as reported) 14,104  14,263  14,282  15,261  6,169 
Add: Operating lease liability (before adoption of FASB Topic 842)2 1,084  557  667  679  709 
Total debt (adjusted) 15,188  14,820  14,949  15,940  6,878 

Based on: 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-24), 10-K (filing date: 2015-02-09).

1, 2 Equal to total present value of future operating lease payments.


Lockheed Martin Corp., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios for Operating Leases (Summary)

Lockheed Martin Corp., adjusted financial ratios

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Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Total Asset Turnover1
Reported total asset turnover 1.20 1.10 0.99 0.94 1.23
Adjusted total asset turnover 1.17 1.08 0.97 0.93 1.21
Debt to Equity2
Reported debt to equity 10.12 9.45 4.93 1.81
Adjusted debt to equity 10.90 9.89 5.15 2.02
Return on Assets3 (ROA)
Reported ROA 11.24% 4.30% 11.09% 7.34% 9.75%
Adjusted ROA 10.98% 4.25% 10.94% 7.24% 9.57%

Based on: 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-24), 10-K (filing date: 2015-02-09).

Financial ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Lockheed Martin Corp.’s adjusted total asset turnover ratio improved from 2016 to 2017 and from 2017 to 2018.
Adjusted debt to equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Lockheed Martin Corp.’s adjusted ROA deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.

Lockheed Martin Corp., Financial Ratios: Reported vs. Adjusted


Adjusted Total Asset Turnover

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Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
As Reported
Selected Financial Data (US$ in millions)
Net sales 53,762  51,048  47,248  46,132  45,600 
Total assets 44,876  46,521  47,806  49,128  37,073 
Activity Ratio
Total asset turnover1 1.20 1.10 0.99 0.94 1.23
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Net sales 53,762  51,048  47,248  46,132  45,600 
Adjusted total assets 45,960  47,078  48,473  49,807  37,782 
Activity Ratio
Adjusted total asset turnover2 1.17 1.08 0.97 0.93 1.21

Based on: 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-24), 10-K (filing date: 2015-02-09).

2018 Calculations

1 Total asset turnover = Net sales ÷ Total assets
= 53,762 ÷ 44,876 = 1.20

2 Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 53,762 ÷ 45,960 = 1.17

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Lockheed Martin Corp.’s adjusted total asset turnover ratio improved from 2016 to 2017 and from 2017 to 2018.

Adjusted Debt to Equity

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
As Reported
Selected Financial Data (US$ in millions)
Total debt 14,104  14,263  14,282  15,261  6,169 
Stockholders’ equity (deficit) 1,394  (683) 1,511  3,097  3,400 
Solvency Ratio
Debt to equity1 10.12 9.45 4.93 1.81
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Adjusted total debt 15,188  14,820  14,949  15,940  6,878 
Stockholders’ equity (deficit) 1,394  (683) 1,511  3,097  3,400 
Solvency Ratio
Adjusted debt to equity2 10.90 9.89 5.15 2.02

Based on: 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-24), 10-K (filing date: 2015-02-09).

2018 Calculations

1 Debt to equity = Total debt ÷ Stockholders’ equity (deficit)
= 14,104 ÷ 1,394 = 10.12

2 Adjusted debt to equity = Adjusted total debt ÷ Stockholders’ equity (deficit)
= 15,188 ÷ 1,394 = 10.90

Solvency ratio Description The company
Adjusted debt-to-equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
As Reported
Selected Financial Data (US$ in millions)
Net earnings 5,046  2,002  5,302  3,605  3,614 
Total assets 44,876  46,521  47,806  49,128  37,073 
Profitability Ratio
ROA1 11.24% 4.30% 11.09% 7.34% 9.75%
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Net earnings 5,046  2,002  5,302  3,605  3,614 
Adjusted total assets 45,960  47,078  48,473  49,807  37,782 
Profitability Ratio
Adjusted ROA2 10.98% 4.25% 10.94% 7.24% 9.57%

Based on: 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-24), 10-K (filing date: 2015-02-09).

2018 Calculations

1 ROA = 100 × Net earnings ÷ Total assets
= 100 × 5,046 ÷ 44,876 = 11.24%

2 Adjusted ROA = 100 × Net earnings ÷ Adjusted total assets
= 100 × 5,046 ÷ 45,960 = 10.98%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Lockheed Martin Corp.’s adjusted ROA deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.