Lockheed Martin 2008 Annual Report Download - page 41

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Financial Section Roadmap
The financial section of our Form 10-K includes management’s discussion and analysis, our consolidated financial
statements, the notes to those financial statements and a five year summary of financial information. We have prepared the
following summary, or “roadmap,” to assist in your review of the financial section. It is designed to give you an overview of
our Company and summarize some of the more important activities and events that occurred this year.
Our Business
Lockheed Martin is a global security company that principally is engaged in the research, design, development,
manufacture, integration, and sustainment of advanced technology systems and products. We provide a broad range of
management, engineering, technical, scientific, logistic, and information services. We serve both domestic and international
customers with products and services that have defense, civil and commercial applications, with our principal customers
being agencies of the U.S. Government. In 2008, 2007 and 2006, 84% of our net sales were made to the U.S. Government,
either as a prime contractor or as a subcontractor. Our U.S. Government sales were made to both Department of Defense
(DoD) and non-DoD agencies. Of the remaining 16% of net sales, approximately 13% related to sales to foreign government
customers (including foreign military sales funded, in whole or in part, by the U.S. Government), with the remainder
attributable to commercial and other customers. Our main areas of focus are in defense, space, intelligence, homeland
security, and government information technology.
We operate in four principal business segments: Electronic Systems, Information Systems & Global Services (IS&GS),
Aeronautics, and Space Systems. As a lead systems integrator, our products and services range from electronics and
information systems (including integrated net-centric solutions), to missiles, aircraft, and spacecraft. We organize our
business segments based on the nature of the products and services offered.
Financial Section Overview
The financial section includes the following:
Management’s discussion and analysis, or MD&A (pages 33 through 59) – provides our management’s view about
industry trends, risks, uncertainties, accounting policies that we view as critical in light of our business, our results of
operations (including discussion of the key performance drivers of each of our business segments), our financial position,
cash flows, commitments and contingencies, important events, transactions that have occurred over the last three years, and
forward-looking information, as appropriate.
Reports related to the financial statements and internal control over financial reporting (pages 60 through 62)
include the following:
• A report from management indicating our responsibility for financial reporting, the financial statements, and the
system of internal control over financial reporting, including an assessment of the effectiveness of those controls;
• A report from Ernst & Young LLP, an independent registered public accounting firm, which includes their opinion on
the effectiveness of our system of internal control over financial reporting; and
• A report from Ernst & Young LLP which includes their opinion on the fair presentation of our financial statements
based on their audits.
Financial statements (pages 63 through 66) – include our Consolidated Statements of Earnings, Cash Flows and
Stockholders’ Equity for each of the last three years, and our Consolidated Balance Sheet as of the end of the last two years.
Our financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP).
Notes to the financial statements (pages 67 through 96) – provide insight into and are an integral part of our financial
statements. The notes contain explanations of our significant accounting policies, details about certain of the captions on the
financial statements, information about significant events or transactions that have occurred, discussions about legal
proceedings, commitments and contingencies, and selected financial information relating to our business segments. The notes
to the financial statements also are prepared in accordance with GAAP.
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