Lockheed Martin warns of Sikorsky under-performance

Lockheed Martin warns of Sikorsky under-performance

9-Mar-2016 Source: Lockheed Martin

The following is an extract from a recent 10-K filing with the Stock Exchange Commission:-  [can also be seen on Lockheed Martin website here].  It covers impacts in both civil markets – due to oil prices etc – and military markets, where the US DoD has expressed concerns regarding greater consolidation

The acquired Sikorsky business may underperform relative to our expectations, the transaction may cause our financial results to differ from our expectations or the expectations of the investment community and we may not be able to achieve anticipated cost savings or other anticipated synergies.

On November 6, 2015, we completed the acquisition of Sikorsky Aircraft Corporation (Sikorsky) by purchasing all of the issued and outstanding equity of Sikorsky for $9.0 billion, net of cash acquired. We believe that we will benefit from the integration of our products and technologies with those of the Sikorsky business and realize synergies and potential for long-term growth, as well as expanded capabilities and customer relationships as a result of the acquisition. However, the integration process is complex, costly and time-consuming and we may not be able to capture anticipated synergies, tax benefits, cost savings, and business opportunities in the time frame anticipated, or at all. Sikorsky also may not perform as expected, or demand for its products may be adversely affected by global economic conditions, including oil and gas trends that are outside of its control. The acquisition could also cause disruptions in our and Sikorsky’s business, including potential adverse reactions or changes to business relationships and competitive responses. The DoD has expressed concerns regarding greater consolidation in the defense industry at the prime contractor level in the context of our acquisition of Sikorsky and indicated the potential that they will seek to work with Congress to explore additional legal tools and policy to preserve diversity at the prime contract level. Changes in DoD policy or perception of our size could have adverse impacts on our business, including our success in future contract pursuits. Any of the foregoing could adversely affect our business, financial condition and results of operations.

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