Lockheed Martin 2005 Annual Report Download

Download and view the complete annual report

Please find the complete 2005 Lockheed Martin annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 82

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82

LOCKHEED MARTIN CORPORATION
2005 Annual Report

Table of contents

  • Page 1
    LoCkheed MARtin CoRpoRAtion 2005 Annual Report

  • Page 2
    ..., see Note (f) to the Consolidated Financial Data-Five Year Summary on page 74 of this Annual Report. Condition and Results of Operations on pages 17 through 40 of this Annual Report. 2 On the Cover: Lockheed Martin's Center for innovation: defining the networked World, delivering the Future

  • Page 3
    ... the highest priorities of our customers in defense, homeland security and civil government agencies. As one company and one team, the 135,000 men and women of Lockheed Martin take pride in delivering the advanced technologies that protect liberty and promote progress for people worldwide. PAGE 1

  • Page 4
    PAGE 2

  • Page 5
    ... in place a comprehensive strategy of disciplined growth as well as a culture of operational excellence, the ability to flex with dynamic market conditions and a leadership team that is focused squarely on making Lockheed Martin the preeminent global security enterprise. in 2005, we achieved sales...

  • Page 6
    ...to capture new business. As we continue to transform Lockheed Martin into a fully networked global security enterprise, we can point with great pride to the opening of our Center for innovation in April 2005. Located in Suffolk, Virginia, the Center for innovation is an advanced laboratory dedicated...

  • Page 7
    ...technology and technical support services to the department of defense and other federal agencies. SYteX, which specializes in information warfare, network security solutions and integrated logistics, offers access to new customers and should provide appropriate financial returns to the shareholders...

  • Page 8
    » » F-35 Simulator: the Virtual Battlespace. partners in homeland Security. Joint Force protection: Achieving information Superiority. PAGE 6

  • Page 9
    ... women of Lockheed Martin are driven by a passion for invention in both technology and business. in April 2005, we opened the Center for innovation, an advanced laboratory dedicated to experimentation, information integration and analysis. At the Center for innovation, we are collaborating with our...

  • Page 10
    ... Skies: the FAA's Automated Flight Services Station. digital Speed: it Services for the Social Security Administration. preserving our heritage: national Archives and Records Administration. Forward Thinking With extensive Systems & information technology capabilities, Lockheed Martin has earned...

  • Page 11
    PAGE 9

  • Page 12
    » » the high Ground: the Mobile User objective System (MUoS) satellite will transmit vital data to mobile forces worldwide. PAGE 10 London police: Utilizing networks to protect the public. Sniper XR: providing pilots with the most capable and maintainable targeting system in the world.

  • Page 13
    ...the United States and our allies require a global security enterprise that understands how to respond and operate in a net-centric battlespace. As a dynamic systems integrator, Lockheed Martin delivers networked systems that link assets on land, at sea, in the air and in space. in an uncertain world...

  • Page 14
    ... customer service for the U.k. Royal Mail. F-22 Support Center: Building a net-centric platform for air dominance in the 21st century. Horizontal Integration » » » As a company that takes horizontal integration seriously, we combine talented people across the breadth of Lockheed Martin...

  • Page 15

  • Page 16
    » » in partnership with the USo, Lockheed Martin employees prepare much appreciated care packages for our troops overseas. We bring our skills back to the communities in which we live and work through mentoring and other educational initiatives. We support local math, science, engineering and ...

  • Page 17
    ... by a commitment to ethical business conduct and superlative corporate governance at every level of the organization. there also is a steadfast belief at Lockheed Martin that we are a company of 135,000 individuals working to build a better world through support for education, our communities, and...

  • Page 18
    ... Lockheed Martin Corporation, 2005 Annual Report 2005 Financial highlights inside Front Cover 17 41 Management's discussion and Analysis of Financial Condition and Results of operations Management's Report on the Financial Statements and internal Control over Financial Reporting Report of ernst...

  • Page 19
    Lockheed฀Martin฀Corporation MANAGEMENT'S฀DISCUSSION฀AND฀ANALYSIS฀OF฀ FINANCIAL฀CONDITION฀AND฀RESULTS฀OF฀OPERATIONS December฀31,฀2005 FINANCIAL฀SECTION฀ROADMAP฀ The฀financial฀section฀of฀our฀Annual฀Report฀includes฀management's฀discussion฀and฀...

  • Page 20
    Lockheed฀Martin฀Corporation MANAGEMENT'S฀DISCUSSION฀AND฀ANALYSIS฀OF฀ FINANCIAL฀CONDITION฀AND฀RESULTS฀OF฀OPERATIONS December฀31,฀2005 Highlights The฀ financial฀ section฀ of฀ our฀ Annual฀ Report฀ describes฀ our฀ ongoing฀ operations,฀ including฀ ...

  • Page 21
    ...to฀our฀customers,฀mainly฀the฀U.S.฀Government. Non-Department฀of฀Defense฀Business฀ We฀provide฀products฀and฀services฀to฀a฀number฀of฀government฀ agencies฀ other฀ than฀ the฀ DoD,฀ including฀ the฀ Departments฀ of฀ Homeland฀ Security,฀ Justice...

  • Page 22
    ...฀enabled฀by฀ rule฀changes฀for฀public/private฀competitions.฀Such฀a฀competition฀led฀to฀the฀selection฀in฀2005฀of฀Lockheed฀Martin฀to฀operate฀ the฀ Federal฀ Aviation฀ Administration's฀ Automated฀ Flight฀ Services฀Station฀Network.฀In฀addition...

  • Page 23
    ... Services฀ (ILS),฀ a฀ joint฀ venture฀ between฀ Lockheed฀ Martin฀and฀LKEI.฀We฀consolidate฀the฀results฀of฀operations฀of฀ LKEI฀and฀ILS฀into฀our฀financial฀statements฀based฀on฀our฀controlling฀ financial฀ interest.฀ We฀ received฀ four฀ new...

  • Page 24
    Lockheed฀Martin฀Corporation MANAGEMENT'S฀DISCUSSION฀AND฀ANALYSIS฀OF฀ FINANCIAL฀CONDITION฀AND฀RESULTS฀OF฀OPERATIONS December฀31,฀2005 As฀discussed฀above,฀commercial฀satellite฀sales฀have฀continued฀to฀experience฀pricing฀pressures฀due฀to฀excess...

  • Page 25
    Lockheed฀Martin฀Corporation method฀ to฀ measure฀ progress฀ toward฀ completion.฀ Under฀ the฀ cost-to-cost฀ method฀ of฀ accounting,฀ we฀ recognize฀ sales฀ based฀ on฀the฀ratio฀of฀costs฀incurred฀to฀our฀estimate฀of฀total฀costs฀at฀ completion...

  • Page 26
    Lockheed฀Martin฀Corporation MANAGEMENT'S฀DISCUSSION฀AND฀ANALYSIS฀OF฀ FINANCIAL฀CONDITION฀AND฀RESULTS฀OF฀OPERATIONS December฀31,฀2005 Services฀ contracts฀ primarily฀ include฀ operations฀ and฀ maintenance฀contracts,฀and฀outsourcing-type฀arrangements...

  • Page 27
    Lockheed฀Martin฀Corporation effects฀ of฀ the฀ actual฀ return฀ on฀ plan฀ assets฀ over฀ the฀ past฀ few฀ years,฀ resulted฀ in฀ our฀ projecting฀ that฀ the฀ amount฀ of฀ pension฀ expense฀for฀2006฀will฀decrease฀by฀approximately฀15%฀to฀20...

  • Page 28
    Lockheed฀Martin฀Corporation MANAGEMENT'S฀DISCUSSION฀AND฀ANALYSIS฀OF฀ FINANCIAL฀CONDITION฀AND฀RESULTS฀OF฀OPERATIONS December฀31,฀2005 flows฀for฀a฀few฀years฀beginning฀in฀2007.฀Absent฀other฀changes,฀ the฀subsequent฀annual฀funding฀requirements...

  • Page 29
    ...฀ Corporation's฀ information฀ technology฀ solutions฀ and฀ technical฀ support฀ services฀ businesses฀ with฀ the฀ DoD฀ and฀ other฀ federal฀ agencies.฀ The฀ operations฀ of฀ SYTEX฀ are฀ included฀ in฀ the฀ Information฀&฀Technology฀Services฀business...

  • Page 30
    Lockheed฀Martin฀Corporation MANAGEMENT'S฀DISCUSSION฀AND฀ANALYSIS฀OF฀ FINANCIAL฀CONDITION฀AND฀RESULTS฀OF฀OPERATIONS December฀31,฀2005 In฀ November฀ 2004,฀ a฀ private฀ equity฀ firm฀ purchased฀ the฀ outstanding฀shares฀of฀New฀Skies฀Satellites...

  • Page 31
    ...฀Systems Integrated฀Systems฀&฀Solutions Information฀&฀Technology฀Services OPERATING฀PROFIT Aeronautics Electronic฀Systems Space฀Systems Integrated฀Systems฀&฀Solutions Information฀&฀Technology฀Services ฀ Total฀business฀segments Net฀unallocated฀Corporate...

  • Page 32
    Lockheed฀Martin฀Corporation MANAGEMENT'S฀DISCUSSION฀AND฀ANALYSIS฀OF฀ FINANCIAL฀CONDITION฀AND฀RESULTS฀OF฀OPERATIONS December฀31,฀2005 not฀ include฀ unexercised฀ options฀ or฀ task฀ orders฀ to฀ be฀ issued฀ under฀ indefinite-delivery/indefinite-...

  • Page 33
    Lockheed฀Martin฀Corporation Electronic฀Systems฀ Electronic฀Systems'฀operating฀results฀included฀the฀following: (In฀millions) Space฀Systems Space฀Systems'฀operating฀results฀included฀the฀following: (In฀millions) 2005 $10,580 1,113 19,932 2004 $฀ 9,729 969 18,...

  • Page 34
    Lockheed฀Martin฀Corporation MANAGEMENT'S฀DISCUSSION฀AND฀ANALYSIS฀OF฀ FINANCIAL฀CONDITION฀AND฀RESULTS฀OF฀OPERATIONS December฀31,฀2005 Operating฀profit฀for฀the฀segment฀increased฀21%฀in฀2004฀as฀ compared฀to฀2003.฀Launch฀Services'฀operating฀...

  • Page 35
    ...฀about฀Segments฀of฀an฀Enterprise฀and฀ Related฀Information.฀For฀example,฀gains฀and฀losses฀related฀to฀ the฀ disposition฀ of฀ businesses฀ or฀ investments฀ managed฀ by฀ Corporate,฀as฀well฀as฀other฀Corporate฀activities฀such฀as฀charges...

  • Page 36
    $40 35 Lockheed฀Martin฀Corporation 30 MANAGEMENT'S฀DISCUSSION฀AND฀ANALYSIS฀OF฀ 25 FINANCIAL฀CONDITION฀AND฀RESULTS฀OF฀OPERATIONS 20 December฀31,฀2005 15 10 5 I&TS IS&S Space Systems Electronic Systems Aeronautics The฀increase฀in฀the฀"Other,฀net"฀component฀...

  • Page 37
    ...฀ liability฀ balance.฀ We฀ believe฀ that฀ reporting฀ ROIC฀ provides฀ investors฀ with฀ greater฀ visibility฀ into฀ how฀ effectively฀ Lockheed฀ Martin฀ uses฀ the฀ capital฀ invested฀ in฀ its฀ operations.฀ We฀ use฀ ROIC฀ to฀ evaluate฀ multi...

  • Page 38
    Lockheed฀Martin฀Corporation MANAGEMENT'S฀DISCUSSION฀AND฀ANALYSIS฀OF฀ FINANCIAL฀CONDITION฀AND฀RESULTS฀OF฀OPERATIONS December฀31,฀2005 performance฀measure.฀We฀also฀use฀ROIC฀as฀a฀factor฀in฀evaluating฀management฀performance฀under฀certain฀of฀...

  • Page 39
    ...฀supplies฀from฀incountry฀ vendors,฀ providing฀ financial฀ support฀ for฀ in-country฀ projects,฀and฀building฀or฀leasing฀facilities฀for฀in-country฀operations.฀We฀do฀not฀commit฀to฀offset฀agreements฀until฀orders฀for฀ our฀products฀or฀services...

  • Page 40
    Lockheed฀Martin฀Corporation MANAGEMENT'S฀DISCUSSION฀AND฀ANALYSIS฀OF฀ FINANCIAL฀CONDITION฀AND฀RESULTS฀OF฀OPERATIONS December฀31,฀2005 five฀ years.฀ The฀ amounts฀ ultimately฀ applied฀ against฀ our฀ offset฀ agreements฀ are฀ based฀ on฀ negotiations...

  • Page 41
    ... Lockheed฀ Martin฀ Amended฀ and฀ Restated฀ 2003฀ Incentive฀ Performance฀ Award฀ Plan฀ provides฀ for฀ the฀ grant฀ of฀ various฀ types฀ of฀ stockbased฀ incentive฀ awards,฀ including฀ options฀ to฀ purchase฀ common฀stock,฀stock฀appreciation฀rights...

  • Page 42
    Lockheed฀Martin฀Corporation MANAGEMENT'S฀DISCUSSION฀AND฀ANALYSIS฀OF฀ FINANCIAL฀CONDITION฀AND฀RESULTS฀OF฀OPERATIONS December฀31,฀2005 CONTROLS฀AND฀PROCEDURES We฀ maintain฀ disclosure฀ controls฀ and฀ procedures,฀ including฀ internal฀ control฀ over฀...

  • Page 43
    ...by฀Ernst฀&฀Young฀ LLP,฀as฀stated฀in฀their฀report฀included฀herein. Essential฀to฀the฀Corporation's฀internal฀control฀system฀is฀management's฀dedication฀to฀the฀highest฀standards฀of฀integrity,฀ethics฀ and฀ social฀ responsibility.฀ To฀ support...

  • Page 44
    ...฀ 31,฀ 2005฀ of฀ Lockheed฀ Martin฀ Corporation฀ and฀ our฀ report฀ dated฀ February฀ 22,฀ 2006฀ expressed฀ an฀ unqualified฀ opinion฀thereon. ฀ ฀ /s/฀Ernst฀&฀Young฀LLP ERNST฀&฀YOUNG฀LLP Baltimore,฀Maryland February฀22,฀2006 PAGE ฀ 42

  • Page 45
    ...statements฀referred฀to฀above฀present฀fairly,฀in฀all฀material฀respects,฀the฀consolidated฀financial฀ position฀of฀Lockheed฀Martin฀Corporation฀and฀subsidiaries฀at฀December฀31,฀2005฀and฀2004,฀and฀the฀consolidated฀results฀of฀their฀ operations...

  • Page 46
    Lockheed฀Martin฀Corporation CONSOLIDATED฀STATEMENT฀OF฀EARNINGS Year฀Ended฀December฀31, (In฀millions,฀except฀per฀share฀data) NET฀SALES 2005 $31,518 5,695 37,213 2004 $30,202 5,324 35,526 27,879 4,765 914 33,558 1,968 121 2,089 425 1,664 398 $฀ 1,266 $฀ 2.86 $฀ 2....

  • Page 47
    Lockheed฀Martin฀Corporation CONSOLIDATED฀BALANCE฀SHEET December฀31, (In฀millions) ASSETS 2005 2004 Current฀assets ฀ Cash฀and฀cash฀equivalents ฀ Short-term฀investments ฀ Receivables ฀ Inventories ฀ Deferred฀income฀taxes ฀ Other฀current฀assets ฀ ฀ ...

  • Page 48
    Lockheed฀Martin฀Corporation CONSOLIDATED฀STATEMENT฀OF฀CASH฀FLOWS Year฀Ended฀December฀31, (In฀millions) OPERATING฀ACTIVITIES 2005 $฀1,825 555 150 24 (390) (39) 239 296 534 3,194 (865) (564) 935 (33) 28 (499) (133) - (12) 406 (1,310) (462) (1,511) 1,184 1,060 $฀2,244 ...

  • Page 49
    Lockheed฀Martin฀Corporation CONSOLIDATED฀STATEMENT฀OF฀STOCKHOLDERS'฀EQUITY (In฀millions,฀except฀per฀share฀data) Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive (Loss)฀Income Other Total Stockholders' Equity Comprehensive ...

  • Page 50
    ... Organization- Lockheed฀ Martin฀ Corporation฀ (Lockheed฀ Martin฀or฀the฀Corporation)฀is฀engaged฀in฀the฀research,฀design,฀ development,฀manufacture,฀integration,฀operation฀and฀sustainment฀of฀advanced฀technology฀systems,฀products฀and฀services.฀ As...

  • Page 51
    ...฀for฀buildings฀and฀five฀ to฀15฀years฀for฀machinery฀and฀equipment. Investments฀in฀equity฀securities- Investments฀in฀equity฀securities฀ include฀ the฀ Corporation's฀ ownership฀ interests฀ in฀ affiliated฀ companies฀ that฀ it฀ does฀ not฀ control...

  • Page 52
    Lockheed฀Martin฀Corporation NOTES฀TO฀CONSOLIDATED฀FINANCIAL฀STATEMENTS December฀31,฀2005 Environmental฀ matters-The฀ Corporation฀ records฀ a฀ liability฀ for฀ environmental฀ matters฀ when฀ it฀ is฀ probable฀ that฀ a฀ liability฀ has฀ been฀ incurred...

  • Page 53
    Lockheed฀Martin฀Corporation Restructuring฀ activities- Under฀ existing฀ U.S.฀ Government฀ regulations,฀certain฀costs฀incurred฀for฀consolidation฀or฀restructuring฀activities฀that฀can฀be฀demonstrated฀to฀result฀in฀savings฀ in฀excess฀of฀the฀cost฀...

  • Page 54
    Lockheed฀Martin฀Corporation NOTES฀TO฀CONSOLIDATED฀FINANCIAL฀STATEMENTS December฀31,฀2005 The฀ Corporation's฀ reported฀ and฀ pro฀ forma฀ earnings฀ per฀ share฀information฀follows: (In฀millions,฀except฀per฀share฀data) NET฀EARNINGS 2005 $฀ 1,825 2004...

  • Page 55
    ... The฀ acquisition฀expands฀the฀Corporation's฀information฀technology฀ solutions฀ and฀ technical฀ support฀ services฀ businesses฀ with฀ the฀ U.S.฀ Department฀ of฀ Defense฀ and฀ other฀ federal฀ agencies.฀ The฀ operations฀ of฀ SYTEX฀ are฀ included...

  • Page 56
    Lockheed฀Martin฀Corporation NOTES฀TO฀CONSOLIDATED฀FINANCIAL฀STATEMENTS December฀31,฀2005 related฀ to฀ a฀ covenant฀ not฀ to฀ compete฀ that฀ will฀ be฀ amortized฀ over฀five฀years,฀an฀intangible฀asset฀of฀approximately฀$55฀million฀ related฀ to...

  • Page 57
    Lockheed฀Martin฀Corporation NOTE฀4-RECEIVABLES (In฀millions) 2005 $1,364 2,858 (563) 3,659 2004 $1,529 2,394 (594) 3,329 408 402 (45) 765 $4,094 U.S.฀Government ฀ Amounts฀billed ฀ Unbilled฀costs฀and฀accrued฀profits ฀ ฀ Less฀customer฀advances฀and฀฀ ฀ ...

  • Page 58
    Lockheed฀Martin฀Corporation NOTES฀TO฀CONSOLIDATED฀FINANCIAL฀STATEMENTS December฀31,฀2005 NOTE฀7-INVESTMENTS฀IN฀EQUITY฀SECURITIES (In฀millions) 2005 2004 Equity฀method฀investments฀(ownership฀interest฀฀ ฀ at฀December฀31,฀2005): ฀ ฀ Intelsat,฀Ltd...

  • Page 59
    ...during฀ a฀ quarter,฀ or฀ unless฀ certain฀ events฀ occur฀ including,฀ among฀ others:฀ Lockheed฀ Martin฀ calling฀ the฀ debentures฀ for฀ redemption;฀ Lockheed฀ Martin฀ distributing฀ to฀ all฀ holders฀ of฀ its฀ common฀ stock฀ certain฀ rights฀ to...

  • Page 60
    Lockheed฀Martin฀Corporation NOTES฀TO฀CONSOLIDATED฀FINANCIAL฀STATEMENTS December฀31,฀2005 In฀2003,฀the฀Corporation฀completed฀the฀purchase฀of฀a฀total฀ principal฀ amount฀ of฀ $1.4฀ billion฀ of฀ notes฀ and฀ debentures฀ through฀a฀combination฀...

  • Page 61
    Lockheed฀Martin฀Corporation The฀reduction฀in฀income฀tax฀expense฀of฀$144฀million฀in฀ 2004฀ from฀ the฀ closure฀ of฀ an฀ IRS฀ examination฀ primarily฀ resulted฀ from฀ the฀ examination฀ of฀ tax฀ periods฀ through฀ December฀31,฀2002. Current฀...

  • Page 62
    ...฀director's฀annual฀compensation฀is฀ awarded฀under฀the฀Directors฀Plan.฀Directors฀of฀the฀Corporation฀ may฀ elect฀ to฀ receive฀ such฀ compensation฀ in฀ the฀ form฀ of฀ stock฀ units฀which฀track฀investment฀returns฀to฀changes฀in฀value฀of...

  • Page 63
    ... by฀ the฀ stockholders฀ of฀ the฀ Corporation.฀ At฀ December฀ 31,฀ 2005,฀ the฀ number฀ of฀ shares฀ of฀ Lockheed฀ Martin฀ common฀ stock฀ reserved฀for฀issuance฀under฀the฀Corporation's฀stock฀option฀and฀ award฀plans฀totaled฀55.7฀million. The...

  • Page 64
    Lockheed฀Martin฀Corporation NOTES฀TO฀CONSOLIDATED฀FINANCIAL฀STATEMENTS December฀31,฀2005 The฀Lockheed฀Martin฀Corporation฀Salaried฀Savings฀Plan฀ is฀ a฀ defined฀ contribution฀ plan฀ with฀ a฀ 401(k)฀ feature฀ that฀ includes฀an฀ESOP.฀The฀ESOP...

  • Page 65
    Lockheed฀Martin฀Corporation Defined฀Benefit฀ Pension฀Plans (In฀millions) CHANGE฀IN฀PLAN฀ASSETS Retiree฀Medical and฀Life฀฀ Insurance฀Plans 2005 2004 2005 2004 Fair฀value฀of฀plan฀assets฀฀ ฀ at฀beginning฀of฀year $22,139 $20,913 $฀ 1,480 $฀ 1,135 ...

  • Page 66
    Lockheed฀Martin฀Corporation NOTES฀TO฀CONSOLIDATED฀FINANCIAL฀STATEMENTS December฀31,฀2005 the฀ remaining฀ service฀ lives฀ of฀ the฀ employees฀ eligible฀ for฀ the฀ benefit.฀The฀impact฀of฀adoption฀of฀the฀FSP฀was฀a฀reduction฀of฀ the฀ FAS฀ ...

  • Page 67
    Lockheed฀Martin฀Corporation Lockheed฀ Martin฀ Investment฀ Management฀ Company฀ (LMIMCO),฀ a฀ wholly-owned฀ subsidiary฀ of฀ the฀ Corporation,฀ has฀ the฀ fiduciary฀ responsibility฀ for฀ making฀ investment฀ decisions฀related฀to฀the฀assets฀of฀the฀...

  • Page 68
    Lockheed฀Martin฀Corporation NOTES฀TO฀CONSOLIDATED฀FINANCIAL฀STATEMENTS December฀31,฀2005 NOTE฀14-LEASES Total฀rental฀expense฀under฀operating฀leases฀was฀$324฀million,฀ $318฀ million฀ and฀ $301฀ million฀ for฀ 2005,฀ 2004฀ and฀ 2003,฀ ...

  • Page 69
    ... operations.฀ The฀ Corporation฀ believes฀ that฀ its฀ satellites฀ do฀ not฀ infringe฀the฀patent฀and฀is฀vigorously฀defending฀the฀case. As฀ described฀ in฀ the฀ "Environmental฀ Matters"฀ discussion฀ below,฀Lockheed฀Martin฀is฀subject฀to฀federal...

  • Page 70
    Lockheed฀Martin฀Corporation NOTES฀TO฀CONSOLIDATED฀FINANCIAL฀STATEMENTS December฀31,฀2005 The฀ Corporation฀ has฀ been฀ in฀ litigation฀ with฀ certain฀ residents฀of฀Redlands,฀California฀since฀1997฀regarding฀allegations฀ of฀personal฀injury,฀...

  • Page 71
    ...฀ integration฀ systems;฀ homeland฀ security฀ systems;฀ surveillance฀ and฀ reconnaissance฀ systems;฀ advanced฀ aviation฀ management฀ solutions;฀ security฀ and฀ information฀ technology฀ solutions;฀ and฀simulation฀and฀training฀systems. •฀ PAGE ฀ 69

  • Page 72
    ...฀ engine฀ maintenance฀ and฀ modification฀ services;฀ management,฀operation,฀maintenance,฀training฀and฀logistics฀support฀for฀military,฀homeland฀security฀and฀civilian฀systems;฀ launch,฀mission฀and฀analysis฀services฀for฀military,฀classified฀ and...

  • Page 73
    ...฀business฀segments Corporate฀activities $฀ 130 182 134 44 14 504 51 $฀ 105 162 134 28 40 469 42 $฀ 89 160 120 29 42 440 40 Aeronautics Electronic฀Systems Space฀Systems Integrated฀Systems฀&฀Solutions Information฀&฀Technology฀Services $฀ 8,447 CUSTOMER฀ADVANCES...

  • Page 74
    Lockheed฀Martin฀Corporation NOTES฀TO฀CONSOLIDATED฀FINANCIAL฀STATEMENTS December฀31,฀2005 Net฀Sales฀by฀Customer฀Category (In฀millions) U.S.฀GOVERNMENT 2005 $฀ 8,883 8,504 6,409 4,016 3,816 $฀31,628 2004 $฀ 7,876 7,909 5,180 3,742 3,589 $฀28,296 2003 $฀ 6,613...

  • Page 75
    Lockheed฀Martin฀Corporation CONSOLIDATED฀FINANCIAL฀DATA-FIVE฀YEAR฀SUMMARY (In฀millions,฀except฀per฀share฀data฀and฀ratios) OPERATING฀RESULTS 2005(a) ...'฀equity Total COMMON฀SHARES฀AT฀YEAR-END RETURN฀ON฀INVESTED฀CAPITAL (f) CASH฀FLOW฀DATA ฀ $฀27,744...

  • Page 76
    ... to฀ management฀ performance.฀ Further,฀ the฀ Corporation฀ believes฀ that฀ reporting฀ ROIC฀ provides฀ investors฀ with฀ greater฀visibility฀into฀how฀effectively฀Lockheed฀Martin฀uses฀the฀capital฀invested฀in฀its฀operations.฀The฀Corporation฀uses...

  • Page 77
    ...฀฀ Speaker's฀Bureau) Robert฀J.฀Stevens Chairman,฀President฀and฀฀ Chief฀Executive฀Officer฀ Lockheed฀Martin฀Corporation Management฀Development฀and฀ Compensation฀Committee฀and฀฀ Stock฀Option฀Subcommittee Mr.฀Archibald,฀Chairman฀฀ Mrs.฀King,฀Ms...

  • Page 78
    ...฀D.฀Sloane Executive฀Vice฀President฀ Integrated฀Systems฀&฀Solutions Michael฀F.฀Camardo Executive฀Vice฀President฀ Information฀&฀Technology฀Services Marillyn฀A.฀Hewson Senior฀Vice฀President Martin฀T.฀Stanislav Vice฀President฀and฀Controller Joseph...

  • Page 79
    ...Locator:฀ http://www.lockheedmartin.com/investor. Lockheed฀Martin฀Shareholder฀Direct฀ 1-800-568-9758 Earnings & Dividend Information Stock Quote Printed Material Requests Internet & E-Mail Shareholder Services High Low Close 2005฀Quarters 1st 2nd 3rd 4th 2004฀Quarters 1st 2nd 3rd...

  • Page 80
    ...฀and฀producing฀operationally฀advanced฀technology฀systems;฀ the฀ timing฀ and฀ customer฀ acceptance฀ of฀ product฀ deliveries;฀ performance฀ issues฀ with฀ key฀ suppliers,฀ subcontractors฀ and฀ customers;฀return฀on฀pension฀plan฀assets,฀interest...

  • Page 81
    Our Vision powered by innovation, Guided by integrity, We help our Customers Achieve their Most Challenging Goals Our Value Statements do What's Right Respect others perform With excellence designed by curran & connors, inc. / www.curran-connors.com Photography: Eric Schulzinger

  • Page 82
    Lockheed Martin Corporation 2005 Annual Report Lockheed Martin Corporation 6801 Rockledge Drive Bethesda, MD 20817 www.lockheedmartin.com