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Lockheed warns of material weakness in Sikorsky financial statements

Attendees take photographs of the Lockheed Martin Corp. F-35
Simon Dawson | Bloomberg | Getty Images
Attendees take photographs of the Lockheed Martin Corp. F-35

Lockheed Martin said on Tuesday it delivered fewer F-35 jets in 2016 than it estimated and also said it expected to report a material weakness in internal control over financial reporting at its Sikorsky helicopters business.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, that could result in misstatement of a company's financial statements.

Lockheed, the Pentagon's No. 1 weapons supplier, said that so far no material errors in the financial results or balances had been identified due to the control deficiencies at Sikorsky.

Lockheed also said there was change in its previously reported financial statements due to the control deficiencies.

Lockheed, whose F-35 fighter jet program has been criticized by President Donald Trump as too expensive, said it delivered 46 F-35s in 2016, less than the 53 it had expected to deliver.

The company's shares were down 1.5 percent at $253.65 in premarket trading.

Lockheed said it expected 2017 net sales to rise 4.6-7.1 percent, compared with a previous forecast of a 7 percent increase. It forecast 2017 earnings of $12.25-$12.55 per share.

Analysts on average were expecting a profit of $12.87 per share on an near 5 percent increase in sales, according to Thomson Reuters I/B/E/S.

Lockheed said net sales rose to $13.75 billion in the fourth quarter ended Dec. 31, from $11.52 billion a year earlier.

Net earnings from continuing operations rose to $959 million, or $3.25 per share, from $817 million, or $2.63 per share.

Analysts on average were expecting a profit of $3.06 per share on revenue of $13.03 billion.