WASHINGTON, Fri Jan 25, 2013 — Lockheed Martin Corp. is challenging the U.S. government in court over $13.6 million in research tax credits in a case that tests the often hazy line between research and production, with future R&D claims by other companies possibly at stake.
The aerospace group argued in December in U.S. District Court that the Internal Revenue Service had wrongly rejected research tax credits Lockheed claimed for two projects: a space rocket launcher and a New York City surveillance system.
The IRS disallowed Lockheed’s claims in May 2012. Lockheed has challenged the IRS’ position that some retroactive R&D credit claims were impermissible because they involved costs not for research, but for making prototypes resulting from research.
Lockheed said in its court filing that some of the credits were claimed for prototypes, but argued that the designs were new and unproven and should qualify as research.
“With Lockheed, you have the actual question of whether this is rocket science,” said William Schmalzl, a partner at the law firm Mayer Brown with clients facing similar issues.
The case also draws attention to the timing of R&D credit claims. Lockheed’s 2012 claims on the rocket launcher and surveillance system projects were both made retroactively for tax years 2004 through 2007, according to its court filing.
While retroactive claims are frequently allowed, they tend to attract closer IRS scrutiny, tax lawyers said.
When a credit is sought retroactively, “you really aren’t relying on it as an incentive” to do research, Schmalzl said.
Maryland-based Lockheed, a top Defense Department supplier, declined to comment. The IRS also declined to comment.
BETHESDA, Md., Thu Jan 24, 2013 — Lockheed Martin Corp., the Pentagon’s biggest supplier, said on Thursday that it expected higher earnings this year despite weakening sales, citing a record backlog and continued efforts to cut costs.
Lockheed, which builds everything from F-35 fighter jets, national security satellites to new coastal warships, said earnings per share had dropped 19 percent to $1.73 in the fourth quarter from $2.14 a year earlier, reflecting a large noncash pension adjustment, higher income tax expenses and a special charge for job cuts in its aeronautics division.
Analysts polled by Thomson Reuters I/B/E/S had expected fourth-quarter earnings of $1.82 a share.
Lockheed said it expected earnings per share to rise to between $8.80 and $9.10 in 2013, noting that its outlook assumed that the U.S. Congress would avert $500 billion in additional Pentagon spending reductions known as “sequestration” that are due to take effect over the next decade, starting in March.
BETHESDA, Md., Wed Oct 24, 2012 – Lockheed Martin Corp., the largest U.S. weapons maker, on Wednesday posted an 11 percent increase in third-quarter earnings, beating expectations by a wide margin, and raised its full-year forecast.
Lockheed warned that revenues would ease slightly in 2013, pulled lower by a mid-single-digit decline in sales at its information systems and global solutions business.
It raised its 2012 earnings forecast to a range of $8.20 to $8.40 from a range of $7.90 to $8.10.
It said business segment operating profit would remain above 11 percent next year.
Lockheed, which receives more than 80 percent of its revenue from the U.S. government, said its preliminary 2013 forecast assumed that Congress and the White House would avert additional defense cuts that are due to take effect next year.
If the cuts go into effect, the company said they would have a material effect on its results.
Net earnings per share rose 11 percent to $2.21 in the third quarter, from $1.99 in the year-earlier period, but they fell from $2.38 in the second quarter.
Analysts surveyed by Thomson Reuters I/B/E/S expected third-quarter earnings per share of $1.85 on revenues of $11.17 billion.
Lockheed, which builds F-35 and F-16 fighter jets, Aegis missiles and new coastal or littoral warships, said revenues dropped 2 percent to $11.87 billion in the third quarter ended Sept. 30, from $12.1 billion in the third quarter of 2011.
WASHINGTON, Mon Oct 8, 2012 – The largest U.S. weapons maker, Lockheed Martin Corp., said it plans to split its electronic systems business into two separate operations focused on missiles and training, a move it said would save $50 million and eliminate 200 jobs.
The change, effective December 31, will give Lockheed five business areas: aeronautics, space systems, information systems, missiles and fire control, and mission systems and training.
Marillyn Hewson, who currently heads the electronic systems business, is scheduled to take over as president and chief operating officer of Lockheed on Jan. 1.
Chris Kubasik, who is set to succeed Bob Stevens as chief executive officer on January 1, said the restructuring would streamline Lockheed operations and strip out a layer of management at a time when the Pentagon is pushing contractors to lower overhead costs.
“This new structure will allow us to better support our customers around the world and positions our company for sustained long-term growth,” Kubasik said in a statement.
Lockheed said the new missiles and fire-control business will be based in Dallas, with 16,000 employees working on programs such as Patriot PAC-3 missiles and missile defense.