Lockheed Martin 2005 Annual Report Download - page 35

   
Lockheed฀Martin฀Corporation

The฀following฀table฀shows฀the฀components฀of฀net฀unallocated฀
Corporate฀(expense)฀income.฀
(In฀millions)  2004 2003
FAS/CAS฀pension฀adjustment  $(595) $(300)
Items฀not฀considered฀in฀segment฀฀
฀ operating฀performance  (215) (153)
Other,฀net (77) 4
 $(887) $(449)
The฀ FAS/CAS฀ pension฀ adjustment฀ represents฀ the฀ differ-
ence฀ between฀ pension฀ costs฀ calculated฀ and฀ funded฀ in฀ accor-
dance฀with฀CAS฀and฀pension฀expense฀determined฀in฀accordance฀
with฀FAS฀87.฀That฀difference฀is฀not฀included฀in฀segment฀oper-
ating฀results฀and฀therefore฀is฀a฀reconciling฀item฀between฀oper-
ating฀ profit฀ from฀ the฀ business฀ segments฀ and฀ consolidated฀
operating฀profit.฀The฀CAS฀funding฀amount฀is฀allocated฀among฀
the฀ business฀ segments฀ and฀ is฀ included฀ as฀ an฀ expense฀ item฀ in฀
the฀segments’฀cost฀of฀goods฀sold.฀A฀majority฀of฀the฀cost฀is฀also฀
passed฀along฀to฀our฀customers฀through฀contract฀pricing,฀and฀is฀
consequently฀included฀in฀the฀segments’฀sales.
The฀ following฀ table฀ shows฀ the฀ CAS฀ funding฀ that฀ is฀
included฀ as฀ expense฀ in฀ the฀ segments’฀ operating฀ results,฀ the฀
related฀ FAS฀ (expense)฀ income,฀ and฀ the฀ resulting฀ FAS/CAS฀
pension฀adjustment:
(In฀millions)  2004 2003
FAS฀87฀expense  $(884) $(484)
Less:฀CAS฀expense฀and฀funding  (289) (184)
฀ FAS/CAS฀pension฀adjustment—฀
฀ ฀ expense   $(595) $(300)
As฀disclosed฀in฀Note฀13฀to฀the฀financial฀statements,฀FAS฀
87฀expense฀ increased฀primarily฀due฀to฀ higher฀recognized฀net฀
actuarial฀losses฀and฀higher฀service฀cost฀in฀2005,฀and฀due฀to฀a฀
lower฀expected฀return฀on฀plan฀assets฀in฀addition฀to฀these฀other฀
two฀factors฀in฀2004.฀
Certain฀items฀are฀excluded฀from฀segment฀results฀as฀part฀of฀
senior฀management’s฀evaluation฀of฀segment฀ operating฀perfor-
mance฀consistent฀with฀the฀management฀approach฀promulgated฀
by฀FAS฀131,฀Disclosures฀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฀
recorded฀ related฀ to฀ the฀ early฀ repayment฀ of฀ debt,฀ are฀ not฀
considered฀by฀management฀in฀evaluating฀the฀operating฀perfor-
mance฀ of฀ business฀ segments.฀ Therefore,฀ for฀ purposes฀ of฀
segment฀ reporting,฀ the฀ following฀ items฀ were฀ included฀ in฀
“Unallocated฀Corporate฀(expense)฀income,฀net”฀for฀2005,฀2004฀
and฀2003:
(In฀millions,฀except฀per฀share฀data)
Operating฀
Profit฀
(Loss)฀
Net฀
Earnings฀
(Loss)
Earnings฀
(Loss)฀
Per฀Share

Gains฀related฀to฀Inmarsat฀฀
฀ transactions    
Gain฀on฀sale฀of฀interest฀in฀฀
฀ Intelsat   
Gain฀on฀sale฀of฀interest฀in฀฀
฀ NeuStar   
Impairment฀charge฀related฀฀
฀ to฀a฀satellite฀   
  

Charge฀for฀Pit฀9฀litigation $(180) $(117) $(0.26)
Charge฀for฀early฀retirement฀฀
฀ of฀debt (154) (100) (0.22)
Gain฀on฀sale฀of฀interest฀in฀฀
฀ New฀Skies 91 59 0.13
Gain฀on฀sale฀of฀COMSAT฀฀
฀ General฀business 28 4 0.01
Benefit฀from฀closure฀of฀an฀฀
฀ IRS฀examination — 144 0.32
$(215) $฀ (10) $(0.02)

Charge฀for฀early฀retirement฀฀
฀ of฀debt $(146) $฀ (96) $(0.21)
Charge฀related฀to฀exit฀from฀the฀฀
฀ commercial฀mail฀sorting฀฀
฀ business (41) (27) (0.06)
Gain฀on฀partial฀reversal฀of฀฀
฀ Space฀Imaging฀charge 19 13 0.03
Gain฀on฀sale฀of฀the฀commercial฀฀
฀ IT฀business 15 8 0.02
$(153) $(102) $(0.22)