Lockheed Martin 2008 Annual Report Download - page 86

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Note 6 – Inventories
Inventories consisted of the following components:
(In millions) 2008 2007
Work-in-process, primarily related to long-term contracts and programs in progress $ 4,631 $ 4,039
Less customer advances and progress payments (3,396) (2,839)
1,235 1,200
Other inventories 667 518
$ 1,902 $ 1,718
Work-in-process inventories at December 31, 2008 and 2007 included general and administrative costs of $434 million
and $303 million. For the years ended December 31, 2008, 2007 and 2006, general and administrative costs incurred and
recorded in inventories totaled $2,344 million, $2,077 million and $1,894 million, and general and administrative costs
charged to cost of sales from inventories totaled $2,213 million, $2,103 million and $1,863 million.
Note 7 – Property, Plant and Equipment
Property, plant and equipment consisted of the following components:
(In millions) 2008 2007
Land $ 109 $ 112
Buildings 4,756 4,574
Machinery and equipment 6,034 5,619
10,899 10,305
Less accumulated depreciation and amortization (6,411) (5,985)
$ 4,488 $ 4,320
During the year ended December 31, 2008, we wrote off $314 million of cost and accumulated depreciation related to
certain plant and equipment that had been fully depreciated or amortized.
Note 8 – Income Taxes
Our provision for federal and foreign income tax expense consisted of the following components:
(In millions) 2008 2007 2006
Federal income taxes
Current $1,385 $1,199 $ 979
Deferred 72 107 73
Total federal income taxes 1,457 1,306 1,052
Foreign income taxes
Current 28 26 9
Deferred —32
Total foreign income taxes 28 29 11
Income tax expense $1,485 $1,335 $1,063
State income taxes are included 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 a result, the impact of certain
transactions on our operating profit and other matters disclosed in these financial statements is disclosed net of state income
taxes. Our total net state income tax expense was $221 million for 2008, $199 million for 2007, and $113 million for 2006.
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