Lockheed Martin 2007 Annual Report Download

Download and view the complete annual report

Please find the complete 2007 Lockheed Martin annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 118

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118

Lockheed Martin Corporation
2007 Annual Report

Table of contents

  • Page 1
    Lockheed Martin Corporation 2007 Annual Report

  • Page 2
    ... presented above, refer to Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2007 Annual Report on Form 10-K. For additional information concerning return on invested capital, including its definition and use, see Note (g) to the Consolidated Financial Data...

  • Page 3
    ... Executive Officer; Bruce L. Tanner, Executive Vice President and Chief Financial Officer; Linda R. Gooden, Executive Vice President, Information Systems & Global Services; Christopher E. Kubasik, Executive Vice President, Electronic Systems.) LOCKHEED MARTIN CORPORATION 1 2007 ANNUAL REPORT

  • Page 4
    ... Revenue Service, Department of Homeland Security, Department of Defense and intelligence agencies. We acquired 3DSolve Inc., a privately-held company that creates simulation-based learning tools for government, military and corporate customers. 3DSolve complements and reinforces Lockheed Martin...

  • Page 5
    ... U.S. Air Force for the sale of 60 new F-22 Raptor aircraft and achievement of Full Operational Capability. â- We received a ten-year U.S. Air Force contract to train Air Force Special Operations Command crews on a variety of military missions. LOCKHEED MARTIN CORPORATION 3 2007 ANNUAL REPORT

  • Page 6
    ...record of 120 consecutive successful test launches since 1989 - an achievement unmatched by any other large ballistic missile or space launch vehicle. As a Corporation that recognizes the inherent value of strong leadership, we are developing the next generation of leaders. In 2007, Lockheed Martin...

  • Page 7
    ...the people they serve. Meeting those challenges and performing with excellence unites our leadership team, employees, and partners to be the best in the industry. February 28, 2008 Robert J. Stevens Chairman, President and Chief Executive Officer LOCKHEED MARTIN CORPORATION 5 2007 ANNUAL REPORT

  • Page 8
    ...cer Lockheed Martin Corporation James R. Ukropina Chief Executive Officer Directions, LLC (A Management and Consulting Firm) EXECUTIVE OFFICERS James B. Comey Senior Vice President and General Counsel Chief Governance Officer Linda R. Gooden Executive Vice President Information Systems & Global...

  • Page 9
    ..., Bethesda, Maryland 20817-1877 (301/897-6000) (Address and telephone number of principal executive offices) Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Common Stock, $1 par value Name of each exchange on which registered New York Stock Exchange, Inc. Securities...

  • Page 10
    ...14 Directors, Executive Officers and Corporate Governance ...Executive Compensation ...Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ...Certain Relationships and Related Transactions, and Director Independence ...Principal Accountant Fees and Services...

  • Page 11
    ... 1. BUSINESS General Lockheed Martin Corporation principally researches, designs, develops, manufactures, integrates, operates and sustains advanced technology systems and products, and provides a broad range of management, engineering, technical, scientific, logistic and information services. We...

  • Page 12
    ... and international governments as customers. In 2007, U.S. Government customers accounted for approximately 78% of the segment's net sales. Combat Aircraft Our Combat Aircraft business designs, develops, produces and provides systems support for fighter aircraft. Our major fighter aircraft programs...

  • Page 13
    ... extensive ground testing, is expected to fly mid-year 2008. The first flight of the CV aircraft is planned to occur in the 2009 timeframe. Given the size of the F-35 program, we anticipate that there will be a number of studies related to the program schedule and production quantities over time...

  • Page 14
    ... currently in the U.S. fleet, including the three C-5Ms in flight testing. Active duty U.S. Air Force, Air National Guard, and Air Force Reserve Command units operate the C-5. Advanced Research and Development and Other We are involved in advanced development programs incorporating advanced design...

  • Page 15
    ... of operational service and over 250,000 flight hours accomplished, the F-117 fleet is planned to be retired. As winner of the first DoD performance-based logistics award for systems-level support, we are growing that heritage with a program for the sustainment of the F-22 called the Follow-On Agile...

  • Page 16
    ... stealth combat capabilities required for conventional military operations. The U.S. Air Force is the only F-22 customer since international sales of the Raptor are presently prohibited by the U.S. Congress. The F-35 is a cornerstone of future global defense cooperation and is planned to replace...

  • Page 17
    ... tires used on U.S. Air Force and Army aircraft around the world, supporting the tire manufacturer and prime contractor on the program. This performance based contract will leverage our global supply chain management expertise as the U.S. military seeks to integrate the production and the logistics...

  • Page 18
    ... design reviews. Product sustainment and logistic services continue to be a major focus for growth opportunities, resulting in significant orders in support of fire control and tactical missile programs. Platform, Training & Energy Our Platform, Training & Energy (PT&E) business integrates mission...

  • Page 19
    ... programs continue and build on our record of performance in providing logistics and sustainment. Competition Electronic Systems' broad portfolio of products and services competes against the products and services of other large aerospace, defense and information technology companies, as well as...

  • Page 20
    ... Mission Operations Segment (TMOS) and the Warfighter Information Network-Tactical (WIN-T); mission and combat support solutions such as Global Command Support System (GCSS) and the Combatant Commanders Integrated Command & Control Systems (CCICCS); and mission critical civil agency programs...

  • Page 21
    ...&GS was also awarded the Information Technology Network Operations Virtual Alliance (IT NOVA) IDIQ contract with the Department of Homeland Security. Global Services In Global Services, we support mission services, global security and stability operations and provide facility services. In this arena...

  • Page 22
    ... business designs, develops, manufactures and integrates advanced technology satellite systems for government and commercial applications. We are responsible for various classified systems and services in support of vital national security systems. The Space-Based Infrared System (SBIRS) program...

  • Page 23
    ... Shuttle flight, currently scheduled for 2010. Our Space Transportation Systems business also includes a 50% ownership interest in two joint ventures. United Space Alliance, LLC (USA) is responsible for the day-to-day operation and management of the Space Shuttle fleet for NASA. USA also performs...

  • Page 24
    ... Security Administration, and the Departments of Defense, Energy, Justice, Health and Human Services, Homeland Security, State and Transportation. Similar government authorities exist with respect to our international efforts. We must comply with and are affected by laws and regulations relating...

  • Page 25
    ... funds. Our independent research and development costs include basic research, applied research, development, systems and other concept formulation studies, and bid and proposal efforts related to government products and services. These costs are generally allocated among all contracts and programs...

  • Page 26
    ...or terminated. Reductions in our existing programs, unless offset by other programs and opportunities, could adversely affect our ability to grow our sales and profitability. We provide a wide range of defense, homeland security and information technology products and services to the U.S. Government...

  • Page 27
    ... laws, regulations and standards. The U.S. Government also reviews the adequacy of, and a contractor's compliance with, its internal control systems and policies, including the contractor's management, purchasing, property, estimating, compensation, accounting and information systems. Any costs...

  • Page 28
    ... against all operational risks and liabilities. We generally seek, and in certain cases have obtained, limitation of such potential liabilities related to the sale and use of our homeland security products and services through qualification by the Department of Homeland Security under the SAFETY...

  • Page 29
    ... relating to financial market and other economic conditions. Changes in key economic indicators can result in changes in the assumptions we use. The key year-end assumptions used to estimate pension expense for the following year are the discount rate, the expected long-term rate of return on plan...

  • Page 30
    ... transaction. Future acquisitions might require that we issue stock or incur indebtedness. This could dilute returns to existing stockholders, or adversely affect our credit rating or future financial performance. We also may incur unanticipated costs or expenses, including post-closing asset...

  • Page 31
    ...the laws governing environmental matters include criminal provisions. If we were convicted of a violation of the Federal Clean Air Act or the Clean Water Act, our facility or facilities involved in the violation would be placed by EPA on the "Excluded Parties List" maintained by the General Services...

  • Page 32
    ...in the forward-looking statements, see the preceding discussion of Risk Factors beginning on page 18, Government Contracts and Regulation beginning on page 16, Management's Discussion and Analysis beginning on page 32, and Note 1 - Significant Accounting Policies beginning on page 66 of this Form 10...

  • Page 33
    ..., New Mexico; Owego and Syracuse, New York; Akron, Ohio; Grand Prairie, Texas; and Manassas, Virginia. • Information Systems & Global Services-Goodyear, Arizona; San Jose and Sunnyvale, California; Colorado Springs and Denver, Colorado; Gaithersburg and Rockville, Maryland and other locations...

  • Page 34
    ... as Deputy Attorney General of the United States to oversee all operations of the Department of Justice from 2003 to 2005 and U.S. Attorney for the Southern District of New York from 2002 to 2003. Linda R. Gooden (54), Executive Vice President - Information Systems & Global Services Ms. Gooden has...

  • Page 35
    ... since February 2006. Following a career with J.P. Morgan, where she was a Managing Director, she served as Chief Executive Officer of Forte Consulting from 1997 to 2006 and as Executive in Residence at the Robert H. Smith School of Business at the University of Maryland during the same period. 27

  • Page 36
    ... MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES At January 31, 2008, we had 40,026 holders of record of our common stock, par value $1 per share. Our common stock is traded on the New York Stock Exchange, Inc. under the symbol LMT. Information concerning the stock prices as reported on the NYSE...

  • Page 37
    Issuer Purchases of Equity Securities The following table provides information about our repurchases of common stock during the three-month period ended December 31, 2007. Average Price Paid Per Share $108.58 109.07 108.78 Total Number of Shares Purchased as Part of Publicly Announced Program (a) ...

  • Page 38
    ... Income tax expense Net earnings EARNINGS PER COMMON SHARE Basic Diluted CASH DIVIDENDS CONDENSED BALANCE SHEET DATA Cash and cash equivalents Short-term investments Other current assets Property, plant and equipment, net Goodwill Purchased intangibles, net Prepaid pension asset Other assets Total...

  • Page 39
    ...' equity by adding back adjustments related to postretirement benefit plans. We believe that reporting ROIC provides investors with greater visibility into how effectively we use the capital invested in our operations. We use ROIC to evaluate multi-year investment decisions and as a long-term...

  • Page 40
    ... research, design, develop, manufacture, integrate, operate and sustain advanced technology systems and products, and provide a broad range of management, engineering, technical, scientific, logistic and information services. We mainly serve customers in domestic and international defense, civil...

  • Page 41
    ... policies: Contract accounting/revenue recognition Postretirement benefit plans Environmental matters Goodwill Stock-based compensation Discussion of business segments Liquidity and cash flows Capital structure and resources Legal proceedings, commitments and contingencies Income taxes Location...

  • Page 42
    ..., including the Air Operations Center Weapons System Integrator, the Warfighter Information Network - Tactical, the Combatant Commanders Integrated Command and Control System, and the Global Communications Support System - Air Force. We will continue to perform on contracts to develop and deliver...

  • Page 43
    ... intelligence, knowledge management and e-Government solutions for our customers, including the Social Security Administration and the EPA, as well for the DoD. We also provide program management, business strategy and consulting, complex systems development and maintenance, complete life-cycle...

  • Page 44
    ... vehicles, and a 50% equity interest in United Space Alliance, LLC (USA) which provides ground processing and other operational services to the Space Shuttle program. Certain of our business arrangements include international partners. The conduct of international business introduces other risks...

  • Page 45
    ... on the ratio of costs incurred to our estimate of total costs at completion. As examples, we use this methodology for our F-22 Raptor program and the AEGIS Weapon System program. In some instances, long-term production programs may require a significant level of development and/or a low rate of...

  • Page 46
    ..., generally at the date of award. Other Contract Accounting Considerations The majority of our sales are driven by pricing based on costs incurred to produce products or perform services under contracts with the U.S. Government. Cost-based pricing is determined under the Federal Acquisition...

  • Page 47
    ...and changes in long-term bond rates over the past year. At the close of 2007, the annualized Merrill Lynch index for long-term AA corporate bonds (15+ years) was 6.37%. We also calculate the approximate average yields on securities that were selected to match our projected pension-related cash flows...

  • Page 48
    ... prices of our products and services. As a result, a substantial amount of the expenditures we incur are being included in our Net sales and Cost of sales according to U.S. Government agreement or regulation. At the end of 2007, the total amount of liabilities recorded on our Balance Sheet...

  • Page 49
    ... of, among others, Management Systems Designers Inc. (MSD), a provider of information technology (IT) and scientific solutions supporting government life science, national security, and other civil agency missions. The amount also includes certain payments related to acquisitions completed in prior...

  • Page 50
    ...analysis services (included in our Electronic Systems segment); and Coherent Technologies, Inc., a supplier of high-performance, laser-based remote sensing systems (included in the Space Systems segment). The aggregate cash paid for the 2006 acquisitions, as well as for amounts paid in 2006 related...

  • Page 51
    ... for managing the performance of our business, and generally focus the discussion of our results of operations around major lines of business versus distinguishing between products and services. Product sales are predominantly generated in the Aeronautics, Electronic Systems and Space Systems...

  • Page 52
    ...segment is engaged in the design, research and development, systems integration, production, sustainment, support and upgrade of advanced military aircraft, air vehicles and related technologies, primarily for U.S. and allied country military services. Combat aircraft programs include the F-35, F-22...

  • Page 53
    ...information technology solutions to government agencies. The Space Systems business segment is engaged in the design, research, development, engineering and production of satellites for both government and commercial customers, strategic and defensive missile systems and space transportation systems...

  • Page 54
    ...contract for design, development and production activities. Changes in segment Operating profit are also expressed in terms of performance. Performance generally refers to changes in contract profit rates at completion. These changes on our contracts for products usually relate to profit recognition...

  • Page 55
    ... programs and Air Mobility. Combat Aircraft operating profit increased $326 million mainly due to improved performance on F-22 and F-16 programs. Air Mobility and Other Aeronautics programs declined $77 million due to lower operating profit in support and sustainment activities. Operating profit...

  • Page 56
    ... activities. Operating profit increased $15 million in Global Services primarily due to the acquisition of PAE. The increase in backlog during 2007 over 2006 was due to increased orders in Mission Support activities and Information Systems programs. Space Systems Space Systems' operating results...

  • Page 57
    ...Khrunichev State Research and Production Space Center (Khrunichev) providing the contracted launch services or, in the event the launch services are not provided, ILS' ability to refund the advance. Our Balance Sheet at December 31, 2007 included current assets relating to LKEI and ILS totaling $132...

  • Page 58
    ... or investments managed by Corporate, as well as certain other Corporate activities, are not considered by management in evaluating the operating performance of business segments. Therefore, for purposes of segment reporting, the following items were included in Unallocated Corporate income (expense...

  • Page 59
    ... growth strategy to enhance shareholder value and position ourselves to take advantage of new business opportunities when they arise. Consistent with that strategy, we have invested in our business (e.g., capital expenditures, independent research and development), made selective acquisitions...

  • Page 60
    ... in interest expense. The New Notes are included on our Balance Sheet net of the unamortized discount under the caption Long-term debt, net. The expenses associated with the exchange, net of state income tax benefits, totaled $16 million and were recorded in Other non-operating income (expense), net...

  • Page 61
    ... equity by adding back amounts related to postretirement benefit plans, including unrecognized prior service costs, unrecognized actuarial gains and losses, the adjustment for the adoption of FAS 158 in 2006 and minimum pension liability adjustments recorded in prior years. We believe that reporting...

  • Page 62
    ... are expected to be sufficient to meet anticipated operating, capital expenditure and debt service requirements, as well as acquisition and other discretionary investment needs, projected over the next three years. Contractual Commitments and Off-Balance Sheet Arrangements At December 31, 2007, we...

  • Page 63
    ... cash for such activities as purchasing supplies from in-country vendors, providing financial support for in-country projects, and building or leasing facilities for in-country operations. We do not commit to offset agreements until orders for our products or services are definitive. Offset programs...

  • Page 64
    ... the interest rate swap agreement is adjusted at each Balance Sheet date, with a corresponding adjustment to Other comprehensive income (loss). At December 31, 2007, the fair value of the interest rate swap agreement was not material. We use forward foreign exchange contracts to manage our exposure...

  • Page 65
    ... that we maintain an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, consolidating the activities of two or more business units, and migrating certain processes to our Shared Services centers. In addition, when we acquire...

  • Page 66
    ... fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK See Management's Discussion and Analysis of Financial Condition and Results of Operations under...

  • Page 67
    ... the Board of Directors approved, that the audited consolidated financial statements be included in the Corporation's Annual Report on Form 10-K for filing with the Securities and Exchange Commission. ROBERT J. STEVENS Chairman, President and Chief Executive Officer BRUCE L. TANNER Executive Vice...

  • Page 68
    ... accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Lockheed Martin Corporation as of December 31, 2007 and 2006, and the related consolidated statements of earnings, stockholders' equity, and cash flows for each of the...

  • Page 69
    ...Financial Statements Board of Directors and Stockholders Lockheed Martin Corporation We have audited the accompanying consolidated balance sheets of Lockheed Martin Corporation as of December 31, 2007 and 2006, and the related consolidated statements of earnings, stockholders' equity, and cash flows...

  • Page 70
    Lockheed Martin Corporation Consolidated Statement of Earnings (In millions, except per share data) Net sales Products Services Cost of sales Products Services Unallocated Corporate costs 2007 Year ended December 31, 2006 2005 $33,863 5,757 39,620 30,572 5,118 496 36,186 3,434 336 3,770 361 183 3,...

  • Page 71
    Lockheed Martin Corporation Consolidated Balance Sheet (In millions) Assets Current assets Cash and cash equivalents Short-term investments Receivables Inventories Deferred income taxes Other current assets Total current assets Property, plant and equipment, net Goodwill Purchased intangibles, net ...

  • Page 72
    ... Sale (purchase) of short-term investments, net Other Net cash used for investing activities Financing Activities Issuances of common stock Excess tax benefits on stock-based compensation Repurchases of common stock Common stock dividends Repayments of long-term debt Premium and transaction costs...

  • Page 73
    Lockheed Martin Corporation Consolidated Statement of Stockholders' Equity Accumulated CompreAdditional Other Total hensive Common Paid-In Retained Comprehensive Stockholders' Income Stock Capital Earnings (Loss) Income Other Equity (Loss) (In millions, except per share data) Balance at December ...

  • Page 74
    ... - Lockheed Martin Corporation is engaged in the research, design, development, manufacture, integration, operation and sustainment of advanced technology systems and products, and provides a broad range of management, engineering, technical, scientific, logistic and information services. As...

  • Page 75
    ... value. Costs on long-term contracts and programs in progress represent recoverable costs incurred for production or contract-specific facilities and equipment, allocable operating overhead, advances to suppliers and, in the case of contracts with the U.S. Government, research and development...

  • Page 76
    ...-to-date effect of the changes on current and prior periods. We record sales of products and services provided under essentially commercial terms and conditions upon delivery and passage of title. We consider incentives or penalties related to performance on design, development and production...

  • Page 77
    ... compensation plans using the intrinsic value method of accounting as prescribed under Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations, but disclosed the pro forma effects on Net earnings and Earnings per share as if compensation cost...

  • Page 78
    ..., Management Systems Designers Inc., a provider of information technology (IT) and scientific solutions supporting government life science, national security, and other civil agency missions. The amount also includes certain payments related to acquisitions completed in prior years. We account for...

  • Page 79
    ... support military readiness, peacekeeping missions, nation-building activities, and disaster relief services; • Savi Technology, Inc., a developer of active radio frequency identification solutions; • Aspen Systems Corporation, an information management company that delivers a range of business...

  • Page 80
    ... the liabilities relate primarily to advances we have received from customers for future launches. Land In the first quarter of 2007, we sold certain land in California for $36 million in cash. The transaction resulted in a gain, net of state income taxes, of $25 million which we recorded in Other...

  • Page 81
    ... of equity investees in Other income (expense), net on the Statement of Earnings and in the Operating profit of the Space Systems business segment for segment reporting purposes (see Note 15) since its activities are closely aligned with the operations of Space Systems. Our investment in ULA totaled...

  • Page 82
    ... governments and commercial Amounts billed Unbilled costs and accrued profits Less customer advances We expect to bill substantially all of the December 31, 2007 unbilled costs and accrued profits during 2008. Note 5 - Inventories (In millions) Work in process, primarily related to long-term...

  • Page 83
    ... Long-term debt, net. The expenses associated with the exchange, net of state income tax benefits, totaled $16 million and were recorded in Other non-operating income (expense), net. They reduced Net earnings by $11 million ($0.03 per share) in 2006. We have outstanding $1.0 billion in floating rate...

  • Page 84
    ... to purchase shares of common stock at less than market price during a specified period; distributions we make consisting exclusively of cash to all holders of our common stock, excluding any quarterly cash dividend that does not exceed $0.12 per share. We have irrevocably elected and agreed to pay...

  • Page 85
    ... in our operations as general and administrative costs and, under U.S. Government regulations, are allowable in establishing prices for the products and services we sell to the U.S. Government. Therefore, a substantial portion of state income taxes is included in our Net sales and Cost of sales. As...

  • Page 86
    ... our federal and foreign deferred income tax assets and liabilities at December 31 were as follows: (In millions) Deferred tax assets related to: Contract accounting methods Accrued compensation and benefits Accumulated postretirement benefit obligations Pensions (a) Foreign company operating losses...

  • Page 87
    ... Common stock issued and outstanding, 409 million shares were considered outstanding for Balance Sheet presentation purposes; the remaining shares were held in trusts we established to pay future benefits to eligible retirees and dependents under certain benefit plans. No preferred stock shares were...

  • Page 88
    ... investment returns to changes in value of our common stock with dividends reinvested, options to purchase common stock or a combination of the two. Under the Directors Plan, options to purchase common stock have an exercise price of not less than 100% of the market value of the underlying stock...

  • Page 89
    ... of the stock option, historical trends in employee exercise activity and post-vesting employment termination trends. We base the risk-free interest rate on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life assumed at the date of grant. We estimate forfeitures at the...

  • Page 90
    ... for 2005 include $33 million ($0.08 per share) as an inception-to-date adjustment of fair value-based, pro forma compensation expense related to retirement eligible employees with outstanding and unvested stock option awards. This adjustment reflects the service period as one year rather than the...

  • Page 91
    ... certain health care and life insurance benefits to eligible retirees. Non-union represented employees hired after January 1, 2006 do not participate in our defined benefit pension plans, but are eligible to participate in a defined contribution plan in addition to our other retirement savings plans...

  • Page 92
    ... Fair value of plan assets at end of year Unfunded status of the plans Amounts recognized in the balance sheet Prepaid pension asset Accrued postretirement benefit liabilities Accumulated other comprehensive loss (pre-tax) related to: Unrecognized net actuarial losses Unrecognized prior service cost...

  • Page 93
    ...Pensions, related to our plans include the following components: (In millions) Defined benefit pension plans Service cost Interest cost Expected return on plan assets Recognized net actuarial losses Amortization of prior service cost Total net pension expense Retiree medical and life insurance plans...

  • Page 94
    ... benefit pension plans and retiree medical and life insurance plans. LMIMCO's investment objectives for the assets of the defined benefit pension plans are to minimize the net present value of expected funding contributions and to meet or exceed the rate of return assumed for plan funding purposes...

  • Page 95
    ...of the retiree medical and life insurance plans included less than $1 million (less than 0.03% of total plan assets) of our issued and outstanding common stock at both December 31, 2007 and 2006. We generally refer to U.S. Government Cost Accounting Standards (CAS) and Internal Revenue Code rules in...

  • Page 96
    ... from the U.S. Air Force, as authorized by Public Law 85-804. On August 31, 2004, the United States denied the claim. Our appeal of that decision is pending with the Armed Services Board of Contract Appeals. On August 28, 2003, the Department of Justice (the DoJ) filed complaints in partial...

  • Page 97
    ... recorded at December 31, 2007 included estimated costs associated with this regulatory limit. With respect to solvents, we have implemented a plan of well-head treatment on new and existing wells which has served both to remediate the plume of contamination and to assure the public water supplies...

  • Page 98
    ... a new business segment named Information Systems & Global Services (IS&GS). In addition, the following changes were made as part of this realignment: • • Transportation and Security Solutions, which was previously reported in Electronic Systems, is now part of IS&GS; Our contract to manage the...

  • Page 99
    ...design, research and development, systems integration, production, sustainment, support and upgrade of advanced military aircraft, air vehicles and related technologies. Customers include various government agencies and the military services of the United States and allied countries around the world...

  • Page 100
    ...purchased intangibles Aeronautics Electronic Systems Information Systems & Global Services Space Systems Total business segments Corporate activities Total Expenditures for property, plant and equipment Aeronautics Electronic Systems Information Systems & Global Services Space Systems Total business...

  • Page 101
    ... $ 1,523 1,457 223 1,128 $ 4,331 Operating profit included equity in net earnings (losses) of equity investees as follows: (In millions) Aeronautics Electronic Systems Information Systems & Global Services Space Systems Total business segments Corporate activities Total 2007 $ 25 58 6 134 223 (20...

  • Page 102
    Net Sales by Customer Category (In millions) U.S. Government Aeronautics Electronic Systems Information Systems & Global Services Space Systems Total Foreign governments (a) (b) Aeronautics Electronic Systems Information Systems & Global Services Space Systems Total Commercial and Other (b) ...

  • Page 103
    ...of transaction-related reserves recorded in connection with our sale of the Aerospace Electronics Systems business which increased Net earnings by $19 million ($0.04 per share). ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ITEM 9A. CONTROLS AND...

  • Page 104
    ... may be obtained, without charge, by contacting Investor Relations, Lockheed Martin Corporation, 6801 Rockledge Drive, Bethesda, Maryland 20817. We are required to disclose any change to, or waiver from, our Code of Ethics and Business Conduct for our senior financial officers. We intend to use our...

  • Page 105
    ... Systems, Inc., and First Trust of Illinois, National Association as Trustee (incorporated by reference to Exhibit 4 to Lockheed Martin Corporation's Form 8-K filed with the SEC on May 20, 1996). Indenture dated as of August 13, 2003, between Lockheed Martin Corporation and The Bank of New York...

  • Page 106
    ... Lockheed Martin Corporation's Current Report on Form 8-K filed with the SEC on December 8, 2006). Amendment to Terms of Outstanding Stock Option Relating to Exercise Period for Employees of Divested Business (incorporated by reference to Exhibit 10(dd) to Lockheed Martin Corporation's Annual Report...

  • Page 107
    ...). Lockheed Martin Corporation Nonqualified Capital Accumulation Plan, effective January 1, 2007 (incorporated by reference to Exhibit 10.34 of Lockheed Martin Corporation's Annual Report on Form 10-K for the year ended December 31, 2006 filed with the SEC February 26, 2007). Long-Term Performance...

  • Page 108
    ... Stock Unit Award Agreements under the Lockheed Martin Corporation 2003 Incentive Performance Award Plan as approved by the Management Development and Compensation Committee on January 24, 2008. The Lockheed Martin Severance Benefit Plan For Certain Management Employees. Computation of ratio...

  • Page 109
    ... or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized. LOCKHEED MARTIN CORPORATION MARTIN T. STANISLAV Vice President and Controller (Chief Accounting Officer) Date: February 28, 2008...

  • Page 110
    ... of the Securities Exchange Act of 1934, this Form 10-K has been signed below by the following persons on behalf of the registrant and in the capabilities and on the dates indicated. Signatures /s/ Robert J. Stevens* ROBERT J. STEVENS /s/ Bruce L. Tanner BRUCE L. TANNER /s/ E.C. "Pete" Aldridge...

  • Page 111
    ...in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who...

  • Page 112
    ... record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. 3. 4. Date: February 28, 2008 BRUCE L. TANNER Executive...

  • Page 113
    ... 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation. ROBERT J. STEVENS Chairman, President and Chief Executive Officer Date: February 28, 2008...

  • Page 114
    ... with the Annual Report of Lockheed Martin Corporation (the "Corporation") on Form 10-K for the period ended December 31, 2007 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Bruce L. Tanner, Executive Vice President and Chief Financial Officer of the...

  • Page 115
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 116
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 117
    ...our direct stock purchase and dividend reinvestment plan, provides new investors and current stockholders with a convenient, cost-effective way to purchase Lockheed Martin common stock, increase holdings and manage the investment. For more information about Lockheed Martin Direct Invest, contact our...

  • Page 118
    Lockheed Martin Corporation 6801 Rockledge Drive Bethesda, MD 20817 www.lockheedmartin.com Printed on recycled paper