Lockheed Martin 2011 Annual Report Download - page 68

In 2010, we recorded a charge of $178 million, net of state tax benefits, related to the Voluntary Executive Separation
Program (VESP). The charge, which included lump-sum special payments for qualifying executives, reduced our net
earnings by $116 million ($.31 per share). The amounts of the VESP attributable to our business segments were $25 million
at Aeronautics, $38 million at Electronic Systems, $42 million at IS&GS, and $41 million at Space Systems. The remaining
$32 million was attributable to our Corporate Headquarters. The effective date of termination of employment for most
participants was February 1, 2011, with the lump-sum special payments to be made within 90 days from separation of
service. As of December 31, 2011, all payments under the VESP have been made.
In 2010, our Electronic Systems business segment decided to consolidate certain of its operations, including the closure
of a facility in Eagan, Minnesota. Accordingly, we recorded a charge to cost of sales, net of state tax benefits, of $42 million
which reduced our net earnings for 2010 by $27 million ($.07 per share). The majority of the charge was associated with the
accrual of severance payments to employees, with the remainder associated with impairment of assets. We expect to
complete these activities by 2013.
Note 3 – 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. Basic and diluted weighted average shares outstanding were as follows:
(In millions) 2011 2010 2009
Average number of common shares outstanding for basic computations 335.9 364.2 384.8
Dilutive stock options and restricted stock units 4.0 4.1 4.1
Average number of common shares outstanding for diluted computations 339.9 368.3 388.9
Stock options to purchase 13.4 million, 14.7 million, and 11.5 million shares of common stock outstanding at
December 31, 2011, 2010, and 2009 were not included in the computation of diluted weighted average shares outstanding, as
their effect would have been anti-dilutive.
Note 4 – Information on Business Segments
We operate in four 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 our 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.
Aeronautics also provides logistics support, sustainment, and upgrade modification services for its aircraft. Aeronautics’
major programs include the F-35 Lightning II Joint Strike Fighter, F-16 Fighting Falcon, F-22 Raptor, C-130J Hercules,
and the C-5M Super Galaxy.
•Electronic Systems – Provides surface ship and submarine combat systems; sea-based missile defense systems; ship
systems integration; littoral combat ships; nuclear instrumentation and control systems for naval submarines, aircraft
carriers, and surface warships; air and defense missile systems; air-to-ground precision strike weapons systems; tactical
missiles; munitions; fire control and navigation systems for rotary and fixed-wing aircraft; manned and unmanned ground
vehicles; mission operations support, readiness, engineering support, and integration services; simulation and training
services; and energy programs. Electronic Systems’ major programs include the Aegis Combat System, Patriot Advanced
Capability-3, Terminal High Altitude Area Defense, Multiple Launch Rocket System, Hellfire, Joint Air-to-Surface
Standoff Missile, Apache Fire Control System, Littoral Combat Ship, and Special Operations Forces Contractor Logistics
Support Services.
•Information Systems & Global Solutions – Provides management services, Information Technology (IT) solutions, and
advanced technology expertise across a broad spectrum of applications. IS&GS supports the needs of customers in human
capital planning, data protection and sharing, cyber-security, financial services, health care, energy and environment,
security, space exploration, biometrics, and transportation. IS&GS provides network-enabled situation awareness, delivers
communications and command and control capability through complex mission solutions for defense applications, and
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