Lockheed Martin 2010 Annual Report Download - page 65

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57
dispute was resolved by the Armed Services Board of Contract Appeals, which determined that our accounting for the land sales was
in accordance with the Federal Acquisition Regulation and CAS. We reached a settlement with the U.S. Government in 2008, and the
previously recorded reserves were no longer required. Resolution of this matter increased our net earnings by $56 million ($.14 per
share).
Note 4 – Earnings Per Share
We compute basic and diluted per share amounts based on net earnings for the periods presented. We use the weighted average
number of common shares outstanding during the period to calculate basic earnings per share. Our calculation of diluted per share
amounts includes the dilutive effects of stock options and restricted stock units based on the treasury stock method in the weighted
average number of common shares.
Unless otherwise noted, we present all per share amounts cited in these consolidated financial statements on a “per diluted
share” basis.
The calculations of basic and diluted earnings per share are as follows:
(In millions, except per share data)
2010
2009
2008
Net earnings:
Earnings from continuing operations
$ 2,645
$ 2,999
$ 3,167
Earnings from discontinued operations
281
25
50
Net earnings for basic and diluted computations
$ 2,926
$ 3,024
$ 3,217
Weighted average common shares outstanding:
Average number of common shares outstanding for basic computations
364.2
384.8
399.7
Dilutive stock options and restricted stock units
4.1
4.1
9.7
Average number of common shares outstanding for diluted computations
368.3
388.9
409.4
Earnings per common share:
Basic
Continuing operations
$ 7.26
$ 7.79
$ 7.92
Discontinued operations
.77
.07
.13
Basic earnings per common share
$ 8.03
$ 7.86
$ 8.05
Diluted
Continuing operations
$ 7.18
$ 7.71
$ 7.74
Discontinued operations
.76
.07
.12
Diluted earnings per common share
$ 7.94
$ 7.78
$ 7.86
Stock options to purchase 11.0 million, 11.2 million, and 3.5 million shares of common stock outstanding at December 31,
2010, 2009, and 2008 had exercise prices that were in excess of the average market price of our common stock at the respective dates.
As such, we did not include these stock options in our calculation of diluted earnings per share, as their effect would have been anti-
dilutive.
Note 5 – Information on Business Segments
We operate in four principal business segments: Aeronautics, Electronic Systems, IS&GS, and Space Systems. We organize our
business segments based on the nature of the products and services offered. The following is a brief description of the activities of the
principal business segments:
• Aeronautics – Engaged in the research, design, development, manufacture, integration, sustainment, support, and upgrade of
advanced military aircraft, including combat and air mobility aircraft, unmanned air vehicles, and related technologies. Major
products and programs include design, development, production and sustainment of the F-35 international multi-role, stealth
fighter; the F-22 air dominance and multi-mission stealth fighter; the F-16 international multi-role fighter; the C-130J tactical
transport aircraft; the C-5M strategic airlifter modernization program; and support for the P-3 maritime patrol aircraft and the U-2
high-altitude reconnaissance aircraft. Our Advanced Development Programs organization, which includes the Skunk Works,
provides next generation innovative system solutions using rapid prototype applications and advanced technologies.