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Lockheed’s British problem…

For the past few weeks, we’ve been posting more actionable information on our partner site, Research Edge on all sorts of things we’ve found buried in the filings. While the plan is to keep footnoted free and open to all, subscribers will have access to some of our posts earlier. You can get access to the footnoted portal on Research Edge by sending a note here. Here’s something we posted on July 28 about Lockheed Martin (LMT) that we found buried in their 10-Q:

Last week, the U.S. Senate handed LMT a big defeat by refusing to fund the F-22. Between that and the second quarter results, the stock is down around 10% over the past week. But far more interesting to us was something buried in LMT’s 10-Q: a disclosure about problems with its Soothsayer project in the UK and that country’s Ministry of Defence. According to the filing, Lockheed is in default on the contract.

While news about the UK canceling the Soothsayer project has gotten some attention in Britain, it hasn’t really been picked up on this side of the pond. And, perhaps more importantly the default issue is new. It’s also the first time that Lockheed has even mentioned Soothsayer in its filings. In our book, that definitely makes it worth paying closer attention to because as we note repeatedly, there are no accidents in the filings.

Granted, the loss of a $238 million contract may seem small, given Lockheed’s size. Still, being in a heated dispute with a large customer — Lockheed says it plans to seek damages for wrongful termination of the contract — is certainly not a positive sign.