Lockheed Martin Corporation

07/22/2025 | Press release | Distributed by Public on 07/22/2025 14:21

Quarterly Report for Quarter Ending June 29, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to help the reader understand our results of operations and financial condition. The MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and notes to consolidated financial statements herein and with our Annual Report on Form 10-K for the year ended December 31, 2024 (2024 Form 10-K).
BUSINESS OVERVIEW
We are a global aerospace and defense company principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. We also provide a broad range of management, engineering, technical, scientific, logistics, system integration and cybersecurity services. Our main areas of focus are in defense, space, intelligence, homeland security and information technology, including cybersecurity. We serve both U.S. and international customers with products and services that have defense, civil and commercial applications, with our principal customers being agencies of the U.S. Government. Duringthe six months ended June 29, 2025, 73% of our $36.1 billion in sales were from the U.S. Government, either as a prime contractor or as a subcontractor (including 63% from the Department of Defense (DoD)), 27% were from international customers (including foreign military sales (FMS) contracted through the U.S. Government).
Global Security
We operate in a complex and evolving global security environment. Conflicts or tensions in areas such as Europe, the Middle East, and the Pacific region have heightened tensions and highlighted security requirements globally, including 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 continue to work with the U.S. Government, international partners, and our supply chain to increase capacity and enhance our ability to scale our operations to anticipate potential demand, deliver critical capabilities, and replenish depleted U.S. and allied stockpiles of products that have been used over the past several years.
Global Economic and Geopolitical Environment
Our business and financial performance are impacted by general economic conditions including inflationary pressures, delays and disruptions in supply chains, business slowdowns or shutdowns, workforce challenges and labor shortfalls, and market volatility. These macroeconomic factors have contributed, and may continue to contribute, to increased costs, delays, disruptions and other performance challenges, as well as competing demands for limited resources to address such increased costs and other challenges, for our company, our suppliers and partners, and our customers.
We continue to experience supply chain challenges, including supplier shortages and performance issues. These issues have delayed certain customer deliveries, limited our ability to ramp up production in response to customer demand for certain products and have caused out-of-sequence manufacturing, which increases costs and decreases operational efficiency. In addition, elevated levels of inflation and macroeconomic conditions present risks for us, our suppliers and the stability of the broader defense industrial base. Certain costs, including rising labor rates and supplier costs, have increased as a result of inflation, and have adversely affected our margins on certain programs. In addition, some suppliers are reducing the duration of pricing validity of their proposals to us or seeking to reopen pricing on existing agreements, which is operationally challenging and increases the risk of cost volatility. Supply chain challenges, including both the availability and cost of goods, may be further impacted due to the imposition of tariffs and the availability of rare earth minerals, as discussed below under "Recent Developments in Trade and Regulatory Policies." We continue to work to mitigate challenges caused by the supply chain or current macroeconomic environment on our business, including by supporting small business and at-risk suppliers, deploying resources to work with our supply chain, securing materials and support by executing long-term contracts, enforcing existing contract terms, identifying alternative sources, collaborating with our customers to address industry-wide challenges, and optimizing our supply chain organization through digital transformation and workforce development. If we experience significant supply chain issues or high rates of inflation, and are unable to successfully mitigate the impact, our future profits, margins and cash flows, particularly for existing fixed-price contracts, may be adversely affected. Inflation and higher interest rates can also constrain the overall purchasing power of our customers for our products and services potentially impacting future orders, especially in a budget constrained environment. We remain committed to our ongoing efforts to increase the efficiency of our operations and
improve the cost competitiveness and affordability of our products and services, which may, in part, offset cost increases from inflation.
For additional risks to the company related to the supply chain and availability of materials, see Part I, Item 1A, "Risk Factors" of our 2024 Form 10-K.
Recent Developments in Trade and Regulatory Policies
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. The U.S. Government under the Trump Administration has increased tariffs, imposed additional tariffs, and expanded tariffs on goods imported from various countries. We also export certain products to other countries, and several countries have increased tariffs or imposed additional tariffs in response to U.S. tariffs. The tariff environment has been dynamic over the last several months, with changes occurring on an ongoing basis, and it is likely that additional developments will occur over the next several months, particularly as the U.S. negotiates with trade partners.
The tariffs that have been enacted or expanded by the U.S. or other countries did not materially impact our business or financial results for the six months ended June 29, 2025. We are currently evaluating the potential future impacts of the imposition of the announced tariffs to our business and financial condition. At this time, we do not believe that the tariffs announced by the U.S. or actions taken in response to these tariffs by other countries will have a material adverse effect upon our results of operations, financial condition, or cash flows. However, the actual impact of the new tariffs is subject to a number of factors including the effective date and duration of such tariffs, changes in the amount, scope and nature of the tariffs in the future, any countermeasures that the target countries may take, how our Tier 1 and Tier 2 suppliers react, possible substitution effects, possible duty drawbacks, and any mitigating actions that may become available.
Significant changes in tax, trade, or other policies either in the U.S. or other countries, as well as any fluctuation in foreign exchange rates as a result of such activity, could materially increase our tax burden, the price we pay for materials and component parts, the price our customers pay, and result in delays in products received or non-delivery from our vendors as well as impact the availability of materials (including rare earth minerals), which could materially impact our business and financial results. We are pursuing available options to fully or substantially mitigate the impact of the increased tariffs or any future tariffs, including seeking exclusions, through drawbacks, refunds, recovering the costs in the pricing of our products, securing alternative sources of materials or products, or, in certain cases, qualifying for duty-free treatment. However, these actions may not be successful in fully or substantially mitigating the impact of tariffs, and, even if successful, there could be a near term impact on cash flows due to the timing of when tariffs are paid compared to when such costs may be refunded or recovered.
In addition, recent government actions relating to rare earth minerals that are used in certain of our products, including U.S. Government sourcing prohibitions on the import of such minerals and the imposition of export controls on such minerals by China, had raised concerns about supply availability earlier this year. Although rare earth shipments have resumed under a new U.S.-China framework agreement, exports remain subject to selective licensing and review by Chinese authorities, and the rare earth supply chain continues to be vulnerable to further disruption due to increasing scarcity and constrained capacity.
Lastly, the President has issued multiple Executive Orders, including two that are intended to (i) simplify and accelerate the procurement process through an overhaul of the Federal Acquisition Regulation (FAR), and its supplements and (ii) modernize the defense acquisition process by promoting commercial solutions, use of innovative acquisition authorities, and other existing streamlined processes. Among the actions directed by the President is a review of major defense acquisition programs that are more than 15% behind schedule or over budget, or not aligned with the Administration's priorities, including identifying any programs for potential cancellation. While the impact of these reforms on our business is uncertain, they could potentially lead to changes in the way we interact with the U.S. Government, and we will continue to monitor and assess their effects on our business and financial results. Should the U.S. Government review one or more major defense programs in which we provide products and/or services, and this review leads to a full or partial cancellation of one of these programs, this could have an adverse effect on our business, financial condition, results of operations and cash flows.
For additional risks to the company related to the geopolitical and economic environment, see Part I, Item 1A, "Risk Factors" of our 2024 Form 10-K.
U.S. Government Budget Environment
Our primary customer is the U.S. Government, from which we derived 73% of our sales during the six months ended June 29, 2025, including 63% from the U.S. DoD. 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.
On March 15, 2025, the President signed into law the Full-Year Continuing Appropriations and Extensions Act, 2025 (the Act), which funds the U.S. Government under a continuing resolution through September 30, 2025, its fiscal year (FY) end. In total, the FY 2025 continuing resolution funding is roughly equivalent to the U.S. Government's FY 2024 funding with a few anomalies and other smaller shifts in funding between appropriations titles. The Act increases the DoD FY 2025 base budget by $6 billion to a total of $831.5 billion, while reducing nondefense spending. Unlike other continuing resolution funding measures, the Act provides the DoD conditional authority to permit new program starts as long as they were included in the FY 2025 House or FY 2025 Senate appropriation bills and $8 billion in flexible funding, furthering the flexibility of DoD operating under a continuing resolution.
The Administration published its FY 2026 budget request in June 2025. The budget request includes $848.3 billion in the base budget (discretionary) funding, and $113.3 billion in reconciliation (mandatory) funding. The One Big Beautiful Bill Act passed the Senate and House, and was signed by the President on July 4, 2025. The bill provides more than $150 billion in mandatory funding (inclusive of the $113.3 billion) for DoD available until September 30, 2029.
The legislative process has been delayed due to the late release of the FY 2026 budget request. The House Appropriations Subcommittee on Defense (HAC-D) released its FY 2026 congressional marks using the FY 2025 enacted amounts as its baseline on June 12, 2025. The bill recommends $831.5 billion in discretionary funding for the DoD. The Senate Armed Services Committee marked up its version of the FY 2026 National Defense Authorization Act (FY 2026 NDAA) on July 10, 2025 and included a topline increase of $32.1 billion. The House Armed Services Committee (HASC) also completed their markup of the FY 2026 NDAA on July 15, 2025 and held at the topline of the FY 2026 President's budget request.
We anticipate the federal budget, debt ceiling, additional potential tax law changes and regulatory environment will continue to be subject to debate and compromise shaped by, among other things, the new Administration and Congress, heightened political tensions, the global security environment, inflationary pressures, and macroeconomic conditions. The result may be shifting funding priorities, which could have material impacts on defense spending broadly and our programs. Additionally, the administration continues to take steps to evaluate government-wide and defense-specific staffing and procurement, which includes assessing mission priorities, procurement methods, program performance, and other factors and then potentially taking action based on those assessments. Those actions remain uncertain and could result in impacts to both our current and future business prospects and financial performance.
See also the discussion of U.S. Government funding risks, in Part I, Item 1A, "Risk Factors" of our 2024 Form 10-K.
Portfolio Shaping Activities
On June 26, 2025, we paid $360 million, in cash, to close our acquisition of Amentum's Rapid Solutions business (Rapid Solutions). This acquisition integrates Rapid Solutions' advanced space and airborne mission capabilities, including intelligence, surveillance and reconnaissance technologies, into Lockheed Martin's portfolio. The financial results of Rapid Solutions have been included within our operating results in the period post-acquisition. See "Note 1 - Basis of Presentation" included in our Notes to Consolidated Financial Statements for further information regarding the acquisition of Rapid Solutions.
CONSOLIDATED RESULTS OF OPERATIONS
Our operating cycle is primarily long-term and involves many types of contracts for the design, development and manufacture of products and related activities with varying delivery schedules. Additionally, we close our books and records on the last Sunday of each month, except for the month of December, as our fiscal year ends on December 31, to align our financial closing with our business processes. Because of this, the number of weeks in a reporting quarter may vary slightly during the year and for comparable prior year periods. Consequently, the results of operations of a particular year, or year-to-year comparisons of sales and profits, may not be indicative of future operating results. The following discussions of comparative results should be reviewed in this context. All per share amounts cited in these discussions are presented on a "per diluted share" basis, unless otherwise noted.
Our consolidated results of operations were as follows (in millions, except per share data):
Quarters Ended Six Months Ended
June 29,
2025 		June 30,
2024 		June 29,
2025 		June 30,
2024
Sales $ 18,155 $ 18,122 $ 36,118 $ 35,317
Operating costs and expenses (17,421) (15,992) (33,061) (31,194)
Gross profit 734 2,130 3,057 4,123
Other income, net 14 18 63 54
Operating profit 748 2,148 3,120 4,177
Interest expense (274) (261) (542) (516)
Non-service FAS pension (expense) income (99) 15 (197) 31
Other non-operating income, net 42 46 72 91
Earnings before income taxes 417 1,948 2,453 3,783
Income tax expense (75) (307) (399) (597)
Net earnings $ 342 $ 1,641 $ 2,054 $ 3,186
Diluted earnings per common share $ 1.46 $ 6.85 $ 8.75 $ 13.24
Certain amounts reported in other income, net, including our share of earnings or losses from equity method investees, are included in the operating profit of our business segments. Accordingly, such amounts are included in the discussion of our business segment results of operations.
Sales
We generate sales from the delivery of products and services to our customers. Our consolidated sales were as follows (in millions):
Quarters Ended Six Months Ended
June 29,
2025 		June 30,
2024 		June 29,
2025 		June 30,
2024
Products $ 15,149 $ 15,109 $ 30,085 $ 29,305
% of total sales 83.4 % 83.4 % 83.3 % 83.0 %
Services 3,006 3,013 6,033 6,012
% of total sales 16.6 % 16.6 % 16.7 % 17.0 %
Total sales $ 18,155 $ 18,122 $ 36,118 $ 35,317
Substantially all of our contracts are accounted for using the percentage-of-completion cost-to-cost method. Under the percentage-of-completion cost-to-cost method, we record sales on contracts over time based upon our progress towards completion on a particular contract, as well as our estimate of the profit to be earned at completion. The following discussion of material changes in our consolidated sales should be read in tandem with the subsequent discussion of changes in our consolidated operating costs and expenses and our business segment results of operations because
changes in our sales are typically accompanied by a corresponding change in our operating costs and expenses due to the nature of the percentage-of-completion cost-to-cost method.
Product Sales
Product sales during the quarter ended June 29, 2025 were comparable to the same period in 2024. Higher product sales of approximately $325 million at MFC and $100 million at Space were offset by lower product sales of $375 million at RMS. Higher product sales at MFC were due to production ramp-up on Joint Air-to-Surface Standoff Missile (JASSM), Long Range Anti-Ship Missile (LRASM), and precision fires programs. Higher product sales at Space were due to higher volume on Orion and Next Generation Interceptor (NGI) programs partially offset by lower product sales due to program lifecycle on the Next Generation Overhead Persistent Infrared (Next Gen OPIR)system. Lower product sales at RMS were due to lower volume on radar and the Canadian Surface Combatant (CSC) programs, and the unfavorable cumulative adjustments to sales driven by recognizing a loss on Türkish Utility Helicopter Program (TUHP) as previously described. Product sales for Aeronautics were comparable as higher volume on F-35 production contracts was mostly offset by the unfavorable cumulative adjustment to sales driven by recognizing a loss on a classified contract in the second quarter of 2025. See "Note 10 - Other" included in our Notes to Consolidated Financial Statements for further details about program losses incurred at Aeronautics and RMS.
Product sales increased $780 million, or 3%, during the six months ended June 29, 2025, compared to the same period in 2024. The increase was primarily attributable to higher product sales of approximately $675 million at MFC, $145 million at Aeronautics and $80 million at Space offset by lower product sales of $120 million at RMS. Higher product sales at MFC were due to production ramp-up on JASSM, LRASM, and precision fires programs. Higher product sales at Aeronautics were due to higher volume on F-35 production contracts, partially offset by the unfavorable cumulative adjustment to sales driven by recognizing a loss on a classified contract in the second quarter of 2025. Higher product sales at Space were due to higher volume on NGI and Orion programs partially offset by lower product sales due to program lifecycle on the Next Gen OPIR system. Lower product sales at RMS were due to the unfavorable cumulative adjustment to sales driven by recognizing a loss on TUHP as previously described and lower production volume on Seahawk programs.
Service Sales
Service sales during the quarter ended June 29, 2025 were comparable to the same period in 2024. Lower service sales of approximately $180 million at RMS were offset by higher service sales of approximately $155 million at Aeronautics. Lower service sales at RMS were due to the unfavorable cumulative adjustment to sales driven by recognizing a loss on Canadian Maritime Helicopter Program (CMHP) as previously described. Higher service sales at Aeronautics were due to higher volume on F-35 sustainment contracts.
Service sales during the six months ended June 29, 2025 were comparable to the same period in 2024. Higher service sales of approximately $210 million at Aeronautics were offset by lower service sales of approximately $195 million at RMS. Higher service sales at Aeronautics were due to higher volume on F-35 sustainment contracts. Lower service sales at RMS were due to the unfavorable cumulative adjustment to sales driven by recognizing a loss on CMHP as previously described.
Operating Costs and Expenses
Operating costs and expenses, for both products and services, consist of materials, labor, subcontracting costs and an allocation of indirect costs (overhead and general and administrative), as well as the costs to fulfill our industrial cooperation agreements, sometimes referred to as offset agreements, required under certain contracts with international customers. For each of our contracts, we monitor the nature and amount of costs at the contract level, which form the basis for estimating our total costs to complete the contract.
Our consolidated operating costs and expenses were as follows (in millions):
Quarters Ended Six Months Ended
June 29,
2025 		June 30,
2024 		June 29,
2025 		June 30,
2024
Operating costs and expenses - products $ (14,469) $ (13,520) $ (27,753) $ (26,404)
% of product sales 95.5 % 89.5 % 92.2 % 90.1 %
Operating costs and expenses - services (3,130) (2,582) (5,770) (5,185)
% of service sales 104.1 % 85.7 % 95.6 % 86.2 %
Impairment and other charges (66) (87) (66) (87)
Other unallocated, net 244 197 528 482
Total operating costs and expenses $ (17,421) $ (15,992) $ (33,061) $ (31,194)
The following discussion of material changes in our consolidated operating costs and expenses for products and services should be read in tandem with the preceding discussion of changes in our consolidated sales and our business segment results of operations. Except for potential impacts to our programs resulting from supply chain disruptions, inflation, and tariffs, we have not identified any additional developing trends in operating costs and expenses for products and services that could have a material impact on our future operations.
Product Costs
Product costs increased $949 million, or 7%, during the quarter ended June 29, 2025, compared to the same period in 2024. The increase was primarily attributable to higher product costs of approximately $880 million at Aeronautics and $285 million at MFC, partially offset by lower product costs of approximately $290 million at RMS. Higher product costs at Aeronautics were due to the impact of recognizing a loss on a classified contract in the second quarter of 2025 and higher volume as described above in "Product Sales". Higher product costs at MFC were due to production ramp up as described above in "Product Sales". Lower product costs at RMS were due to lower volume as described above in "Product Sales".
Product costs increased $1.3 billion, or 5%, during the six months ended June 29, 2025, compared to the same period in 2024. The increase was primarily attributable to higher product costs of approximately $995 million at Aeronautics and $485 million at MFC, partially offset by lower product costs of approximately $95 million at RMS. Higher product costs at Aeronautics were due to the impact of recognizing a loss on a classified contract as described above and higher volume as described above in "Product Sales". Higher product costs at MFC were due to production ramp up as described above in "Product Sales". Lower product costs at RMS were due to lower production volume as described above in "Product Sales".
Service Costs
Service costs increased $548 million, or 21%, during the quarter ended June 29, 2025, compared to the same period in 2024. The increase was primarily attributable to higher service costs of approximately $400 million at RMS and $110 million at Aeronautics. Higher service costs at RMS were due to the impact of recognizing losses on CMHP as previously described. Higher service costs at Aeronautics were due to higher volume as described above in "Service Sales".
Service costs increased $585 million, or 11%, during the six months ended June 29, 2025, compared to the same period in 2024. The increase was primarily attributable to higher service costs of approximately $400 million at RMS and $165 million at Aeronautics. Higher service costs at RMS were due to the impact of recognizing losses on CMHP as previously described. Higher service costs at Aeronautics were due to higher volume as described above in "Service Sales".
Impairment and Other Charges
We recorded charges totaling $66 million ($52 million, or $0.22 per share, after-tax) during the quarter ended June 29, 2025 and $87 million ($69 million, or $0.29 per share, after-tax) during the same period in 2024. See "Note 10 - Other" included in our Notes to Consolidated Financial Statements for additional information.
Other Unallocated, Net
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) income), stock-based compensation expense, changes in the fair value of assets and liabilities for deferred compensation plans, intangible asset amortization expense and other corporate costs. These items are not allocated to the business segments and, therefore, are not allocated to operating costs and expenses for products or services. Other unallocated, net reduced operating expenses by $244 million and $528 million during the quarter and six months ended June 29, 2025, compared to $197 million and $482 million during the quarter and six months ended June 30, 2024. The increase in other unallocated, net was primarily due to higher gains from the changes in the fair value of assets and liabilities related to deferred compensation plans during the quarter and six months ended June 29, 2025 compared to the same periods in 2024 and fluctuations in costs associated with various corporate items, none of which were individually significant.
Other Income, Net
Other income, net during the quarter ended June 29, 2025 was comparable to the same period in 2024. Other income, net was $63 million and $54 million during the six months ended June 29, 2025 and June 30, 2024. 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. The increase in other income, net during the six months ended June 29, 2025 resulted primarily from an intellectual property license arrangement.
Interest Expense
Interest expense was $274 million and $542 million during the quarter and six months ended June 29, 2025, compared to $261 million and $516 million during the quarter and six months ended June 30, 2024. The increase in interest expense in 2025 resulted primarily from the issuance of commercial paper and senior unsecured notes in December 2024.
Non-service FAS Pension (Expense) Income
Non-service FAS pension expense was $99 million and $197 million during the quarter and six months ended June 29, 2025, compared to non-service FAS pension income of $15 million and $31 million during the quarter and six months ended June 30, 2024. The increase in expense was primarily due to higher prior service cost amortization and a reduced asset base as detailed in "Note 6 - Postretirement Benefit Plans" included in our Notes to Consolidated Financial Statements.
Other Non-operating Income, net
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 $42 million and $72 million during the quarter and six months ended June 29, 2025, compared to $46 million and $91 million during the quarter and six months ended June 30, 2024. See "Note 8 - Fair Value Measurements" included in our Notes to Consolidated Financial Statements for additional information.
Income Tax Expense
Our effective income tax rates were 18.0% and 16.3% for the quarter and six months ended June 29, 2025 and 15.8% for both the quarter and six months ended June 30, 2024. The higher effective income tax rates for the quarter and six months ended June 29, 2025 were primarily attributable to increased interest expense on our uncertain tax position partially offset by changes in pre-tax earnings due to program losses previously described. The rates for all periods benefited from tax deductions for foreign derived intangible income, research and development tax credits, dividends paid to our defined contribution plans with an employee stock ownership plan feature and employee equity awards.
Changes in U.S. (federal or state) or foreign tax laws and regulations, or their interpretation and application (including those with retroactive effect), could significantly impact our provision for income taxes, the amount of taxes payable, our deferred tax asset and liability balances, and stockholders' equity. In addition to future changes in tax laws, the amount of net deferred tax assets will change periodically based on several factors, including the measurement of our postretirement benefit plan obligations, actual cash contributions to our postretirement benefit plans and the change in the amount or reevaluation of uncertain tax positions.
As a result of an IRS tax audit related to our adoption of Accounting Standards Codification (ASC) 606 for certain manufacturing contracts and the associated changes to the income recognition rules enacted in the 2017 Tax Cuts and Jobs Act, the IRS has proposed adjustments that could result in significant additional federal income tax. We are pursuing administrative and potentially judicial remedies to resolve this matter. We believe our reserves for tax contingencies are adequate; however, the outcome of this matter is uncertain, and if this matter is resolved unfavorably, there could be a material impact on our profitability and future cash flows. See "Note 10 - Other" included in our Notes to Consolidated Financial Statements for additional information.
We are regularly under audit or examination by tax authorities, including U.S. and foreign tax authorities (Australia, Canada, India, Italy, Japan, Poland, the United Kingdom, and other countries). The final resolution of tax audits and any related administrative reviews or litigation could result in unanticipated increases in our tax expense and changes to the timing of required tax payments, which could affect profitability and cash flows for any particular reporting period. These increases or changes could have a material impact on financial condition and results of operations in such period.
Beginning in 2022, the Tax Cuts and Jobs Act of 2017 eliminated the option to deduct research and development (R&D) expenditures immediately in the year incurred and requires taxpayers to amortize such expenditures over five years for tax purposes. On July 4, 2025, the President signed into law the One Big Beautiful Bill Act (the Tax Act). The Tax Act, among other things, reinstates full deduction of R&D expenditures starting in 2025. We are in the process of evaluating the impact of the Tax Act on our consolidated financial statements. However, we expect the Tax Act to decrease our cash tax liability for 2025.
The Organisation for Economic Co-operation and Development (OECD) has established a framework for a global minimum corporate tax of 15%, known as Pillar 2, which will be applied on a country-by-country basis to companies with global revenues and profits above certain thresholds. The implementation of Pillar 2 is phased, with certain aspects effective on January 1, 2024, and others on January 1, 2025. Although the United States has not enacted legislation to adopt Pillar 2, and its future adoption is uncertain, several countries where we operate have enacted such legislation, and others are in the process of doing so. We do not expect Pillar 2 to have a material impact on our effective tax rate or our financial condition and results of operations.
Net Earnings
We reported net earnings of $342 million ($1.46 per share) and $2.1 billion ($8.75 per share) during the quarter and six months ended June 29, 2025 and $1.6 billion ($6.85 per share) and $3.2 billion ($13.24 per share) during the quarter and six months ended June 30, 2024. Net earnings and earnings per share for the quarter and six months ended June 29, 2025 were affected by the factors mentioned above. Earnings per share also benefited from a net decrease of approximately 5.3 million and 5.8 million weighted average common shares outstanding during the quarter and six months ended June 29, 2025, compared to the same periods in 2024. The reduction in weighted average common shares was a result of share repurchases, partially offset by share issuances under our stock-based awards and certain defined contribution plans.
BUSINESS SEGMENT RESULTS OF OPERATIONS
Our operations are organized into four business segments, which also comprise our reportable segments: Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS) and Space. We generally organize our business segments based on the nature of products and services offered.
Business segment operating profit excludes the FAS/CAS pension 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. See "Note 3 - Information on Business Segments - Unallocated Items" included in our Notes to Consolidated Financial Statements for additional information.
Sales and operating profit for each of our business segments were as follows (in millions):
Quarters Ended Six Months Ended
June 29,
2025 		June 30,
2024 		June 29,
2025 		June 30,
2024
Sales
Aeronautics $ 7,420 $ 7,277 $ 14,477 $ 14,122
Missiles and Fire Control 3,433 3,102 6,806 6,095
Rotary and Mission Systems 3,995 4,548 8,323 8,636
Space 3,307 3,195 6,512 6,464
Total sales $ 18,155 $ 18,122 $ 36,118 $ 35,317
Operating profit (loss)
Aeronautics $ (98) $ 751 $ 622 $ 1,430
Missiles and Fire Control 479 450 944 761
Rotary and Mission Systems (172) 495 349 925
Space 362 346 741 671
Total business segment operating profit 571 2,042 2,656 3,787
Unallocated items
FAS/CAS pension operating adjustment 379 406 758 812
Impairment and other charges (a)
(66) (87) (66) (87)
Intangible asset amortization expense (63) (61) (127) (122)
Other, net (73) (152) (101) (213)
Total unallocated items 177 106 464 390
Total consolidated operating profit $ 748 $ 2,148 $ 3,120 $ 4,177
(a)See "Note 10 - Other" included in our Notes to Consolidated Financial Statements for additional information.
Segment results exclude intersegment transactions as these activities are eliminated in consolidation and are not considered in assessing the performance of each segment. 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.
Our business segment results of operations include pension expense as calculated under CAS, which we refer to as CAS pension cost. 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 pension cost in each business segments' sales and operating costs and expenses. Our consolidated financial statements must present pension and other postretirement benefit plan (expense) income calculated in accordance with Financial Accounting Standards (FAS) requirements under U.S. GAAP. The FAS/CAS pension operating adjustment represents the difference between CAS pension cost included in segment operating income and the service cost component of FAS pension (expense) income included in consolidated operating profit. To the extent that CAS pension cost exceeds the service cost component of FAS pension (expense) income we have a favorable FAS/CAS pension operating adjustment. The non-service FAS pension (expense) income components are included in non-service FAS pension (expense) income on our consolidated statements of earnings.
The total FAS/CAS pension adjustments, including the service and non-service cost components of FAS pension (expense) income for our qualified defined benefit pension plans, were as follows (in millions):
Quarters Ended Six Months Ended
June 29,
2025 		June 30,
2024 		June 29,
2025 		June 30,
2024
Total FAS (expense) income and CAS cost
FAS pension (expense) income $ (112) $ - $ (223) $ 1
Less: CAS pension cost 392 421 784 842
Total FAS/CAS pension adjustment $ 280 $ 421 $ 561 $ 843
Service and non-service cost reconciliation
FAS pension service cost $ (13) $ (15) $ (26) $ (30)
Less: CAS pension cost 392 421 784 842
Total FAS/CAS pension operating adjustment 379 406 758 812
Non-service FAS pension (expense) income (99) 15 (197) 31
Total FAS/CAS pension adjustment $ 280 $ 421 $ 561 $ 843
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.
We regularly provide customers with reports of our costs as the contract progresses. The cost information in the reports is accumulated in a manner specified by the requirements of each contract. For example, cost data provided to a customer for a product would typically align to the subcomponents of that product (such as a wing-box on an aircraft) and for services would align to the type of work being performed (such as aircraft sustainment). Our contracts generally allow for the recovery of costs in the pricing of our products and services. Most of our contracts are bid and negotiated with our customers under circumstances in which we are required to disclose our estimated total costs to provide the product or service. This approach for negotiating contracts with our U.S. Government customers generally allows for recovery of our actual costs plus a reasonable profit margin. We also may enter into long-term supply contracts for certain materials or components to coincide with the production schedule of certain products and to ensure their availability at known unit prices.
We have a number of programs that are designated as classified by the U.S. Government, and that cannot be specifically described. The operating results of these classified programs are included in our consolidated and business segment results and are subject to the same oversight and internal controls as our other programs.
Our sales are primarily derived from long-term contracts for products and services provided to the U.S. Government as well as FMS contracted through the U.S. Government. We recognize revenue as performance obligations are satisfied and the customer obtains control of the products and services. For performance obligations to deliver products with continuous transfer of control to the customer, revenue is recognized based on the extent of progress towards completion of the performance obligation, generally using the percentage-of-completion cost-to-cost measure of progress for our contracts because it best depicts the transfer of control to the customer as we incur costs on our contracts. For performance obligations in which control does not continuously transfer to the customer, we recognize revenue at the point in time in which each performance obligation is fully satisfied.
Many of our contracts span several years and include highly complex technical requirements. At the outset of a contract accounted for under the percentage-of-completion cost-to-cost method, we identify and monitor risks to the achievement of the technical, schedule and cost aspects of the contract, as well as our ability to earn variable consideration, and assess the effects of those risks on our estimates of sales and total costs to complete the contract. The estimates consider the technical requirements (e.g., a newly developed product versus a mature product), the schedule and associated tasks (e.g., the number and type of milestone events) and costs (e.g., material, labor, subcontractor, overhead and the estimated costs to fulfill our industrial cooperation agreements, sometimes referred to as offset or localization agreements, required under certain contracts with international customers). The initial profit booking rate of each contract considers risks surrounding the ability to achieve the technical requirements, schedule and costs in the
initial estimated total costs to complete the contract and variable considerations. Profit booking rates may increase during the performance of the contract if we successfully retire risks related to the technical, schedule and cost aspects of the contract, which decreases the estimated total costs to complete the contract or may increase the variable consideration we expect to receive on the contract. Conversely, our profit booking rates may decrease if the estimated total costs to complete the contract increase or our estimates of variable consideration we expect to receive decrease. The profit booking rate may also be adjusted if the total estimated value of the contract changes or there is a contract modification. All of the estimates are subject to change during the performance of the contract and may affect the profit booking rate. For further discussion on fixed-price contracts,see "Note 10 - Other" included in our Notes to Consolidated Financial Statements.
Changes in sales and operating profit generally are expressed in terms of volume, contract mix, and/or performance (referred to as profit booking rate adjustments). Changes in volume refer to increases or decreases in sales or operating profit resulting from varying production activity levels, deliveries or service levels on individual contracts. Volume changes in segment operating profit are typically based on the current profit booking rate for a particular contract. Contract mix primarily refers to changes in the ratio of contract type or life cycle (e.g., cost-type, fixed-price, development, production and/or sustainment) and other cost recoveries.
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.
The following table presents the effect of our consolidated net profit booking rate adjustments on segment operating profit (in millions):
Quarters Ended Six Months Ended
June 29,
2025 		June 30,
2024 		June 29,
2025 		June 30,
2024
Aeronautics $ (730) $ 120 $ (620) $ 210
Missiles and Fire Control 130 155 260 150
Rotary and Mission Systems (550) 60 (465) 100
Space 105 85 260 155
Total business segment operating profit $ (1,045) $ 420 $ (565) $ 615
During the quarter ended June 29, 2025, we recorded losses of $950 million on an ongoing classified program at our Aeronautics business segment, and $570 million on CMHP and $95 million on TUHP at our RMS business segment. 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. During the six months ended June 30, 2024 we recognized a reach-forward loss of $100 million on a classified program at our MFC business segment.
Aeronautics
Summaryoperating results for our Aeronautics business segment were as follows (in millions):
Quarters Ended Six Months Ended
June 29,
2025 		June 30,
2024 		June 29,
2025 		June 30,
2024
Sales $ 7,420 $ 7,277 $ 14,477 $ 14,122
Operating (loss) profit (98) 751 622 1,430
Operating margin (1.3 %) 10.3 % 4.3 % 10.1 %
Aeronautics' sales during the quarter ended June 29, 2025 increased $143 million, or 2%, compared to the same period in 2024. This increase was primarily attributable to higher sales of $470 million on the F-35 program due to higher volume on production contracts. This increase was partially offset by a $360 million unfavorable cumulative adjustment to sales driven by the loss on a classified contract as previously described.
Aeronautics' operating profit during the quarter ended June 29, 2025 decreased $849 million, or 113%, compared to the same period in 2024. The decrease was attributable to the previously described $950 million reach forward loss recognized on a classified contract, which was partially offset by a $90 million increase on the F-35 program due to higher profit booking rate adjustments and volume as described above.
Aeronautics' sales during the six months ended June 29, 2025 increased $355 million, or 3%, compared to the same period in 2024. This increase was primarily attributable to higher sales of $685 million on the F-35 program due to higher volume on production contracts. This increase was partially offset by a $360 million unfavorable cumulative adjustment to sales driven by the loss on a classified contract as previously described.
Aeronautics' operating profit during the six months ended June 29, 2025 decreased $808 million, or 57%, compared to the same period in 2024. The decrease was attributable to the previously described $950 million reach forward loss recognized on a classified contract. This decrease was partially offset by a $110 million increase on the F-35 program due to higher volume as described above and higher profit booking rate adjustments and an $80 million profit booking rate adjustment in the first quarter of 2025 resulting from favorable performance at completion on a classified program.
Missiles and Fire Control
Summary operating results for our MFC business segment were as follows (in millions):
Quarters Ended Six Months Ended
June 29,
2025 		June 30,
2024 		June 29,
2025 		June 30,
2024
Sales $ 3,433 $ 3,102 $ 6,806 $ 6,095
Operating profit 479 450 944 761
Operating margin 14.0 % 14.5 % 13.9 % 12.5 %
MFC's sales during the quarter ended June 29, 2025 increased $331 million, or 11%, compared to the same period in 2024. This increase was primarily attributable to higher sales of $330 million ontactical and strike missile programs due to production ramp-up on JASSM, LRASM and precision fires programs.
MFC's operating profit during the quarter ended June 29, 2025 increased $29 million, or 6%, compared to the same period in 2024. This increase was attributable to three primary factors: a $35 million increase from production ramp up as described above, and a $25 million increase from favorable contract mix; partially offset by a $25 million decrease in profit booking rate adjustments. The decrease in profit booking rate adjustments was primarily due to lower favorable profit adjustments on Patriot Advanced Capability-3 (PAC-3).
MFC's sales during the six months ended June 29, 2025 increased $711 million, or 12%, compared to the same period in 2024. This increase was primarily attributable to higher sales of $700 million ontactical and strike missile programs due to production ramp-up on JASSM, LRASM, and precision fires programs.
MFC's operating profit during the six months ended June 29, 2025 increased $183 million, or 24%, compared to the same period in 2024. This increase was attributable to two primary factors: a $110 million increase in profit booking rate adjustments and a $60 million volume increase driven by production ramp-up as described above. The increase in profit booking rate adjustments was primarily due to a $100 million loss recognized on a classified program and an unfavorable profit adjustment on Hellfire in the first quarter of 2024 that did not recur, partially offset by lower favorable profit adjustments on PAC-3 in 2025.
Rotary and Mission Systems
Summary operating results for our RMS business segment were as follows (in millions):
Quarters Ended Six Months Ended
June 29,
2025 		June 30,
2024 		June 29,
2025 		June 30,
2024
Sales $ 3,995 $ 4,548 $ 8,323 $ 8,636
Operating (loss) profit (172) 495 349 925
Operating margin (4.3 %) 10.9 % 4.2 % 10.7 %
RMS' sales during the quarter ended June 29, 2025 decreased$553 million, or 12%, compared to the same period in
2024. The decrease was primarily attributable to lower net sales of $370 million on Sikorsky helicopter programs due to the unfavorable cumulative adjustments to sales driven by recognizing losses on CMHP and TUHP as previously described, and lower production volume on Seahawk programs; and a $145 million decrease on integrated warfare systems and sensors (IWSS) programs due to lower volume on radar and the CSC programs.
RMS' operating profit during the quarter ended June 29, 2025 decreased $667 million, or 135%, compared to the same period in 2024. This decrease was attributable to a $610 million decrease in profit booking rate adjustments primarily due to a $570 million loss recognized on CMHP and a $95 million loss recognized on TUHP as previously described.
RMS' sales during the six months endedJune 29, 2025 decreased $313 million, or 4%, compared to the same period in 2024. The decrease was primarily attributable to lower net sales of $245 million on Sikorsky helicopter programs due to the unfavorable cumulative adjustments to sales driven by recognizing losses on CMHP and TUHP as previously described.
RMS' operating profit during the six months ended June 29, 2025 decreased $576 million, or 62%, compared to the same period in 2024. This decrease was attributable to a $565 million decrease in profit booking rate adjustments primarily due to a $570 million loss recognized on CMHP and a $95 million loss recognized on TUHP as previously described, partially offset by unfavorable profit adjustments on Seahawk programs in the first quarter of 2024 that did not recur.
Space
Summary operating results for our Space business segment were as follows (in millions):
Quarters Ended Six Months Ended
June 29,
2025 		June 30,
2024 		June 29,
2025 		June 30,
2024
Sales $ 3,307 $ 3,195 $ 6,512 $ 6,464
Operating profit 362 346 741 671
Operating margin 10.9 % 10.8 % 11.4 % 10.4 %
Space's sales during the quarter ended June 29, 2025 increased $112 million, or 4%,compared to the same period in 2024. This increase was primarily attributable to higher sales of $115 million for commercial civil space programs primarily due to higher volume on the Orion program; and $80 million for strategic and missile defense programs due to higher volume on NGI and Fleet Ballistic Missile (FBM) programs. These increases were partially offset by a decrease of $95 million on national security space programs due to program lifecycle on Next Gen OPIR system.
Space's operating profit during the quarter ended June 29, 2025 increased $16 million, or 5%, compared to the same period in 2024. This increase was attributable to a $20 million increase in profit booking rate adjustments primarily due to favorable performance at completion on certain commercial civil space programs.
Space's sales during the six months ended June 29, 2025 increased $48 million, or 1%, compared to the same period in 2024. This increase was primarily attributable to higher sales of $190 million for commercial civil space programs primarily due to favorable performance at completion on certain commercial civil space programs and higher volume on the Orion program; and $90 million for strategic and missile defense programs due to higher volume on the NGI program. These increases were partially offset by a decrease of $250 million on national security space programs due to program lifecycle on Next Gen OPIR system.
Space's operating profit during the six months ended June 29, 2025 increased $70 million, or 10%, compared to the same period in 2024. This increase was attributable to an $105 million increase in profit booking rate adjustments partially offset by $20 million of lower equity earnings driven by lower launch volume from our investment in United Launch Alliance (ULA). The increase in profit booking rate adjustments was primarily due to favorable performance at completion on certain commercial civil space programs.
Total equity earnings (ULA) represented approximately $10 million, or 3%, and $5 million, or 1%, of Space's operating profit during the quarter and six months ended June 29, 2025, compared to approximately $10 million, or 3%, and $25 million, or 4% for the same periods in 2024.
FINANCIAL CONDITION
Liquidity and Capital Resources
At June 29, 2025, we had cash and cash equivalents of $1.3 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 $3.0 billion revolving credit facility, including the ability to issue commercial paper. As of June 29, 2025, we had no borrowings outstanding under the revolving credit facility and $1.4 billion in commercial paper borrowings at a weighted average rate of 4.55%. As of December 31, 2024, there were no borrowings outstanding under the revolving credit facility or the commercial paper program. We may, as conditions warrant, continue to issue commercial paper backed by our revolving credit facility to manage the timing of cash flows.
Cash received from customers is our primary source of cash from operations. However, from time to time, we fund customer programs ourselves pending government appropriations. If we incur costs in excess of funds obligated on the contract or in advance of a contract award, this negatively affects our cash flows, and we may be at risk for reimbursement of the excess costs. In addition, when estimates of total costs to be incurred on a contract exceed total estimates of the transaction price, a provision for the entire loss is determined at the contract level and is recorded in the period in which the loss is evident, which we refer to as a reach-forward loss. These reach-forward losses do not have an immediate cash flow impact, but as future costs are incurred on these contracts, these losses will negatively impact cash flows over the remaining period of performance.
Additionally, increases in costs due to tariffs may impact our cash flows, as we may not be able to fully recover these costs, and even if recovery is possible, it may not occur in the same period as the incurred costs. See "Recent Developments in Trade and Regulatory Policies" included within the "Business Overview" discussion above.
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 29, 2025, 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. 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.
The U.S. Government has indicated that it would consider progress payments as the baseline for negotiating payment terms on fixed-price contracts, rather than performance-based payments. In contrast to negotiated performance-based payment terms, progress payment provisions correspond to a percentage of the amount of costs incurred during the performance of the contract and are invoiced regularly as costs are incurred. Our cash flows may be affected if the U.S. Government changes its payment policies. The U.S. Government from time to time withholds payments on certain of our billings based on contract terms or regulatory provisions. Ultimately, the impact of policy changes or withholding payments may delay the receipt of cash, but the cumulative amount of cash collected during the life of the contract should not vary.
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 continue to return cash to stockholders through dividends and share repurchases. The remaining authorization under our share repurchase program was $8.1 billion as of June 29, 2025. The share repurchase program does not have an expiration date and may be amended or terminated by the Board of Directors at any time. The amount of shares ultimately purchased and the timing of purchases are at the discretion of management and subject to compliance with applicable law and regulation.
We continue to actively manage our debt levels, including maturities and interest rates. We seek to finance our business in a manner that preserves financial flexibility while minimizing borrowing costs to the extent practicable. We review changes in financial market and economic conditions to manage the types, amounts and maturities of our indebtedness. We may at times refinance existing indebtedness, vary our mix of variable-rate and fixed-rate debt or seek alternative financing sources or arrangements for our cash and operational needs.
We also actively manage our pension obligations and expect to continue to opportunistically manage our pension liabilities through the purchase of group annuity contracts or other actions for portions of our outstanding defined benefit pension obligations using assets from the pension trust. Future transactions could be significant and result in us making additional contributions to the pension trust. The required funding of our qualified defined benefit pension plans is determined in accordance with the Employee Retirement Income Security Act of 1974 (ERISA), as amended, and CAS. We could be required to make pension contributions earlier than and/or in excess of what was planned if our return on pension assets is less than our assumptions, which would reduce our free cash flow. We may also make additional contributions at our discretion.
The following table provides a summary of our cash flow information followed by a discussion of the key elements (in millions):
Six Months Ended
June 29,
2025 		June 30,
2024
Cash and cash equivalents at beginning of year $ 2,483 $ 1,442
Operating activities
Net earnings 2,054 3,186
Noncash adjustments 2,057 971
Changes in working capital (2,454) (444)
Other, net (47) (202)
Net cash provided by operating activities 1,610 3,511
Net cash (used for) investing activities (1,145) (744)
Net cash (used for) financing activities (1,655) (1,686)
Net change in cash and cash equivalents (1,190) 1,081
Cash and cash equivalents at end of period $ 1,293 $ 2,523
Operating Activities
Net cash provided by operating activities during the six months ended June 29, 2025 decreased $1.9 billion compared to the same period in 2024. The decrease in cash from operations was primarily due to an increase in working capital, which is defined as receivables, contract assets, and inventories less accounts payable and contract liabilities. This increase in working capital was driven by three main factors: an increase in contract assets as a result of the timing of milestones, primarily related to the F-35 program at Aeronautics; an increase in Sikorsky inventory at RMS; and decreases in contract liabilities related to classified programs at Aeronautics and national security space programs at Space. These increases were partially offset by favorable timing of cash payments related to accounts payable, primarily at Aeronautics.
Non-GAAP Financial Measure - Free Cash Flow
Free cash flow is a non-GAAP financial measure that we define as cash from operations less capital expenditures. Our capital expenditures are comprised of equipment and facilities infrastructure and information technology (inclusive of costs for the development or purchase of internal-use software that are capitalized). We use free cash flow to evaluate our business performance and overall liquidity, and is a performance goal in our annual and long-term incentive plans. We believe free cash flow is a useful measure for investors because it represents the amount of cash generated from operations after reinvesting in the business and that may be available to return to stockholders and creditors (through dividends, stock repurchases and debt repayments) or available to fund acquisitions and other investments. The entire amount of free cash flow is not necessarily available for discretionary expenditures, however, because it does not account for certain mandatory expenditures, such as the repayment of maturing debt and future pension contributions. While management believes that free cash flow as a non-GAAP financial measure may be useful in evaluating our financial
performance and liquidity, it should be considered supplemental to, and not a substitute for, financial information prepared in accordance with GAAP and may not be comparable to similarly titled measures used by other companies.
The following table reconciles net cash provided by operating activities to free cash flow (in millions):
Six Months Ended
June 29,
2025 		June 30,
2024
Cash from operations $ 1,610 $ 3,511
Capital expenditures (805) (748)
Free cash flow $ 805 $ 2,763
Free cash flow during the six months ended June 29, 2025 decreased $2.0 billion compared to the same period in 2024 primarily due to operating cash flow drivers described above and higher software expenditures.
Investing Activities
Net cash used for investing activities during the six months ended June 29, 2025 increased $401 million compared to the same period in 2024, primarily due to a $360 million cash payment for the acquisition of Rapid Solutions. Capital expenditures totaled $805 million and $748 million during the six months ended June 29, 2025 and June 30, 2024. The majority of our capital expenditures are for equipment and facilities infrastructure that generally are incurred to support new and existing programs across all of our business segments. We also incur capital expenditures for information technology to support programs and general enterprise information technology infrastructure, inclusive of costs for the development or purchase of internal-use software.
Financing Activities
Net cash used for financing activities during the six months ended June 29, 2025 decreased $31 million compared to the same period in 2024.
During the six months ended June 29, 2025 and June 30, 2024, we paid dividends totaling $1.6 billion ($6.60 per share) and $1.5 billion ($6.30 per share).
During the six months ended June 29, 2025, we paid $1.3 billion to repurchase 2.7 million shares of our common stock. See "Note 9 - Stockholders' Equity" included in our Notes to Consolidated Financial Statements for additional information. During the six months ended June 30, 2024, we paid $1.9 billion to repurchase 4.2 million shares of our common stock.
During the six months ended June 29, 2025, we received net proceeds of $1.4 billion from the issuance of commercial paper.
During the six months ended June 29, 2025 and June 30, 2024, we repaid $142 million and $168 million of long-term notes with a fixed interest rate of 7.625% and 8.375% according to their scheduled maturities.
OTHER MATTERS
Status of the F-35 Program
The F-35 program primarily consists of production contracts, sustainment activities, and new development efforts. Production of the aircraft is expected to continue for many decades given the U.S. Government's objective of procuring and sustaining 2,456 aircraft for the U.S. Air Force, U.S. Marine Corps, and U.S. Navy. We also have commitments from seven international partner countries and 12 FMS customers. We continue to see strong international demand for the F-35. In February 2025, Singapore signed an LOA for eight F-35As, adding to their prior program of record of 12 F-35Bs. In June 2025, the United Kingdom announced its intent to purchase 12 F-35As adding to its existing fleet of F-35Bs. We expect international interest to continue to expand in the coming years.
During the second quarter of 2025, we delivered 50 aircraft. Since the program inception through June 29, 2025, we delivered 1,199 production F-35 aircraft, including 866 F-35A variants, 221 F-35B variants and 112 F-35C variants, and our backlog as of that date was 311 aircraft, demonstrating the F-35 program's continued progress and longevity.
In December 2024, Lockheed Martin and the Joint Program Office (JPO) reached an agreement for an undefinitized contract action for Lot 18 F-35 Air Vehicle Production Contract for 145 aircraft. The scope includes aircraft for the U.S. Air Force, Navy, and Marines and the International Partners and Foreign Military Sales (FMS) customers, in addition to the required infrastructure for the international Final Assembly and Checkout Facilities (FACOs) and other equipment. Lot 19 was negotiated concurrently with Lot 18, and both Lots are expected to be fully awarded in 2025.
The F-35 program is significant and complex, and we and our customers continually review aircraft performance, program and delivery schedule, cost and supply chain issues, and requirements as part of our internal program management efforts and the DoD, Congressional and international countries' oversight and budgeting processes. Areas of particular focus currently include Lockheed Martin's and supplier performance, Block 4 modernization, flight test execution, cost of life cycle operations, sustainment, inflation-related cost and supply chain-related cost and schedule pressures, and efforts to increase affordability and readiness.
As previously disclosed, deliveries of F-35 aircraft were put on hold in the first half of 2024 due to technology insertion delays in the Lot 15-17 contract. Deliveries resumed in July 2024 after reaching agreement with JPO on a phased approach to inserting such capabilities into the aircraft including timing of the final delivery payments and related withhold liquidations. We continue to make progress on delivering capability while enhancing the air dominance of the F-35 through on-going Block 4 development.
Contingencies
See "Note 7 - Legal Proceedings and Contingencies" included in our Notes to Consolidated Financial Statements for information regarding our contingent obligations, including off-balance sheet arrangements.
Critical Accounting Policies
There have been no significant changes to the critical accounting policies disclosed in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our 2024 Form 10-K.
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