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Aerospace and Defense Contract Liabilities

Aerospace and defense contract liabilities are customer payments received before the associated long-term contract revenue has been recognized.

By Lee BaileyPublished Sep 22, 2026
Research context

See what supports this page, how current it is, and where comparable or historical context is available.

Research date
Sep 22, 2026Use the dated article and cited sources for the definition, examples, and stated limitations.
Operating-model context
12 connected conceptsPart of the reviewed Aerospace & Defense Program Economics; issuer definitions remain distinct where disclosed.
Company examples
1 reviewed companyRelationships reflect supported examples, not a normalized cross-company KPI ranking.
  1. $6.3B of the opening liability became revenue during 2025
  2. Contract liabilities are not backlog
  3. Part of the Aerospace & Defense Program Economics
  4. See It in Company Research
  5. Continue Research

Aerospace and defense contract liabilities are advance payments and billings in excess of revenue recognized on existing performance obligations.

Lockheed Martin reported $11.440 billion at year-end 2025, up from $9.795 billion at year-end 2024, an increase of about 16.8%.

$6.3B of the opening liability became revenue during 2025

Lockheed recognized $6.3 billion of the contract-liability balance that existed at the end of 2024 as 2025 revenue. That equals roughly 64% of the opening $9.795 billion balance.

The ending liability still increased because new customer payments and billings exceeded the amount recognized from the opening balance.

Contract liabilities are not backlog

They reflect payment and revenue-recognition timing on existing obligations. Backlog follows a separate firm-order definition and can include both funded and unfunded work.

The two balances answer different questions and should not be combined into a synthetic revenue forecast.

Source:

Part of the Aerospace & Defense Program Economics

Connect backlog funding and conversion, contract and delivery mix, and long-cycle contract balances to understand aerospace and defense program economics.

Browse the full operating model in Company Analysis →
Where this concept fits
  • Contract-balance working capitalCurrent relationship
    Contract assets represent recognized revenue that has not yet been billed, while contract liabilities reflect customer payments ahead of revenue recognition. They describe billing and cash timing on long-cycle work and are not backlog.
    Contract AssetsContract LiabilitiesCurrent concept
  • Backlog funding and conversion
    Total backlog combines funded and unfunded firm orders under the issuer-specific backlog definition. Funded mix separates appropriated work from backlog still dependent on future funding, while 12-month and 24-month conversion estimates add expected revenue timing without turning backlog into guaranteed sales.
    Aerospace & Defense Backlog12-Month Backlog Conversion24-Month Backlog ConversionBacklog Funded MixFunded BacklogUnfunded Backlog
  • Contract and delivery mix
    Fixed-price and cost-reimbursable sales mix show how contract risk is allocated, while product and services sales mix show what type of work is being delivered. These issuer-reported or analyst-derived mix views are not standardized peer profitability measures.
    Cost-Reimbursable Sales MixFixed-Price Sales MixProduct Sales MixServices Sales Mix

See It in Company Research

These companies are examples of how the concept is reported or discussed in public filings. Definitions can differ by issuer; these links open company research rather than a normalized metric comparison.

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Continue from the concept into the Grizzly Bulls research surface that best matches the next question. These links are research continuations, not recommendations or required steps.

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Compare advance-billing liabilities with the amount recognized from the opening balance while keeping the measure distinct from backlog.

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