Lockheed Martin 2010 Annual Report Download - page 4

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2
We generated more than $3.5 billion in operating cash for the
year, even after making more than $2.2 billion in discretionary
contributions to our pension plans. We also announced a new
share repurchase program of up to $3 billion. This step, coupled
with a 19 percent dividend increase, is indicative of our
commitment to further enhance shareholder value.
These results are most impressive when you consider the
velocity of change in the global security and economic
environments. That
F-35C Carrier Variant of the Joint Strike Fighter
speaks volumes to the passion, teamwork and, above all, the
leadership qualities of the men and women of Lockheed Martin.
Their laser-sharp focus on our customers’ priorities and their
steadfast integrity has positioned our company for continued
success.
Our New Reality
While we are proud of our 2010 accomplishments, we recognize
that Lockheed Martin is operating in a demanding business
climate, and it will only get more demanding. Increasingly
complex global security issues combined with constrained
government resources continue to put enormous pressure on our
customers.
The Department of Defense is committed to fundamentally
changing the way it conducts business, incorporating
affordability as a firm requirement for each new program. We
support the efforts of the Defense Department and all
government agencies we serve to make every taxpayer dollar
count. We are driving value into every level and function of this
Corporation. We are relentlessly managing program costs,
shortening cycle times, and allocating resources efficiently.
Additionally, we must maintain a consistent tempo of
operational excellence.
This is our new reality, and in 2010 we took measures that will
sustain and strengthen Lockheed Martin’s competitive edge.
Our Approach to Delivering Value
In 2010, almost 600 executives elected to participate in our
Voluntary Executive Separation Program. This 26 percent
reduction in our top-level management ranks contributes to a
leaner operation and benefits talented individuals in the
company who can expect expanded opportunities for growth
and development.
In addition, we further shaped Lockheed Martin’s portfolio of
businesses to better match our strengths and resources with the
needs of our customers.
In 2010, we completed the divestiture of Enterprise Integration
Group (EIG) for $815 million in cash. Our decision to divest
EIG was based, in part, on the U.S. Government’s increased
concerns about perceived organizational conflicts of interest. In
February 2011, we announced that we entered into a definitive
agreement to divest Pacific Architects and Engineers, Inc.
(PAE). When we acquired PAE several years ago, we
envisioned it as an entry point to a new customer set requiring
information technology and systems integration services. In the
current market, however, customers are seeking a