Lockheed Martin entered the second quarter with expectations of solid operating performance, but the results were ultimately significantly eroded by large one-time losses on several major programs. While revenues remained steady at $18.2 billion, operating profit fell by two-thirds year-over-year and net income by nearly 80%. The biggest drags were additional costs on the classified program in the Aeronautics division and two international helicopter contracts, the reassessment of which led to write-downs totaling $1.6 billion. The performance was also negatively impacted by the write-down of investments following the elimination of the US Air Force's new fighter aircraft (NGAD) competition as well as a one-time tax adjustment.

Despite the dramatic hit to quarterly profitability, the company maintained robust operating fundamentals, invested $800 million in capacity and technology in a disciplined manner, and returned $1.3 billion to shareholders in dividends and buybacks. Thus,…