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Lockheed Martin Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
52
The following table sets forth the computations of basic
and diluted earnings (loss) per share:
(In millions, except per share data) 2003 2002 2001
NET EARNINGS (LOSS):
Continuing operations $ 1,053 $ 533 $ 43
Discontinued operations:
Results of operations from
discontinued businesses —(33) (62)
Charges related to discontinued
businesses, net of IMS gain ——(1,027)
Net earnings (loss) for basic and
diluted computations $ 1,053 $500 $ (1,046)
AVERAGE COMMON SHARES
OUTSTANDING:
Average number of common shares
outstanding for basic computations 446.5 445.1 427.4
Dilutive stock options — based on the
treasury stock method 3.5 6.9 5.1
Average number of common shares
outstanding for diluted computations 450.0 452.0 432.5
EARNINGS (LOSS) PER
COMMON SHARE:
Basic:
Continuing operations $ 2.36 $1.20 $ 0.10
Discontinued operations:
Results of operations from
discontinued businesses —(0.07) (0.15)
Charges related to discontinued
businesses, net of IMS gain ——(2.40)
$ 2.36 $1.13 $ (2.45)
Diluted:
Continuing operations $ 2.34 $1.18 $ 0.10
Discontinued operations:
Results of operations from
discontinued businesses —(0.07) (0.14)
Charges related to discontinued
businesses, net of IMS gain ——(2.38)
$ 2.34 $1.11 $ (2.42)
NOTE 5 — RECEIVABLES
(In millions) 2003 2002
U.S. Government:
Amounts billed $ 1,421 $ 1,048
Unbilled costs and accrued profits 2,351 2,116
Less customer advances and progress payments (470) (422)
Commercial and foreign governments:
Amounts billed 335 483
Unbilled costs and accrued profits 448 474
Less customer advances (46) (44)
$ 4,039 $ 3,655
Less than 10% of the December 31, 2003 unbilled costs
and accrued profits are expected to be recovered after 1 year.
NOTE 6 — INVENTORIES
(In millions) 2003 2002
Work in process, primarily related to long-term
contracts and programs in progress $ 5,434 $ 6,221
Less customer advances and progress payments (3,396) (4,272)
2,038 1,949
Other inventories 310 301
$ 2,348 $ 2,250
Inventories included amounts advanced to Khrunichev
State Research and Production Space Center (Khrunichev), the
Russian manufacturer of Proton launch vehicles and provider of
related launch services, of $327 million and $391 million at
December 31, 2003 and 2002, respectively, to provide launch
services. These amounts are net of a reserve recorded in 2002
related to the Corporation’s assessment of the probability of ter-
mination of certain launches under contract, as well as amounts
related to advances for launches not under contract. Advances
for launches not under contract are subject to an agreement
which provides for reduced future payments from Lockheed
Martin to Khrunichev on launches contingent on the receipt of
new orders as well as a minimum number of actual launches
each year, in lieu of the requirement to provide launch services.
The charge related to the reserve, net of state income tax bene-
fits, was $173 million, and reduced 2002 net earnings by $112
million ($0.25 per diluted share). In addition, commercial