Lockheed Martin 2005 Annual Report Download - page 38
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performancemeasure.WealsouseROICasafactorinevalu-
atingmanagementperformanceundercertainofourincentive
compensation plans. The adjustment to add back the mini-
mumpensionliabilityisarevisiontoourcalculationin2005
which we believe more closely links ROIC to management
performance.
ROICisnotameasureoffinancialperformanceundergen-
erallyacceptedaccountingprinciplesintheU.S.,andmaynot
bedefinedandcalculatedbyothercompaniesinthesameman-
ner.ROICshouldnotbeconsideredinisolationorasanalterna-
tivetonetearningsasanindicatorofperformance.SeeNote(f)
to the Consolidated Financial Data—Five Year Summary on
page74foradditionalinformationconcerninghowwecalculate
ROIC.Thatinformationreflectstherevisiontothecalculationas
discussedintheprecedingparagraphforallperiodspresented.
At December 31, 2005, we had in place a $1.5 billion
revolvingcreditfacilitywhichexpiresinJuly2010.Therewere
noborrowingsoutstandingunderthefacilityatDecember31,
2005.Borrowingsunderthecreditfacilitywouldbeunsecured
andbearinterestatratesbased,atouroption,ontheEurodollar
rateorabankBaseRate(asdefined).Eachbank’sobligation
to make loans under the credit facility is subject to, among
other things, our compliance with various representations,
warranties and covenants, including covenants limiting our
abilityandtheabilityofcertainofoursubsidiariestoencum-
berourassets,andacovenantnottoexceedamaximumlever-
age ratio. We cancelled our $500 million 364-day credit
facilityonJune17,2005.
Wehaveagreementsinplacewithbankinginstitutionsto
providefortheissuanceofcommercialpaper.Therewereno
commercial paper borrowings outstanding at December 31,
2005. If we were to issue commercial paper, the borrowings
wouldbesupportedbythe$1.5billioncreditfacility.
We have an effective shelf registration statement on file
withtheSecuritiesandExchangeCommissiontoprovidefor
theissuanceofupto$1billionindebtsecurities.Ifwewere
toissuedebtunderthisshelfregistration,wewouldexpectto
use the net proceeds for general corporate purposes. These
purposes may include repayment of debt, working capital
needs,capitalexpenditures,acquisitionsandanyothergeneral
corporatepurpose.
Weactivelyseektofinanceourbusinessinamannerthat
preserves financial flexibility while minimizing borrowing
costs to the extent practicable. Our management continually
reviewschangesinfinancial,marketandeconomicconditions
tomanagethetypes,amountsandmaturitiesofourindebted-
ness. We may at times refinance existing indebtedness, vary
our mixofvariable-rateand fixed-rate debt,or seekalterna-
tivefinancingsourcesforourcashandoperationalneeds.
Cash and cash equivalents, short-term investments, cash
flowfromoperationsandotheravailablefinancingresources
are expected to be sufficient to meet anticipated operating,
capital expenditureanddebtservicerequirements,as wellas
acquisitionandotherdiscretionaryinvestmentneeds,projected
overthenextthreeyears.
LockheedMartinCorporation
MANAGEMENT’SDISCUSSIONANDANALYSISOF
FINANCIALCONDITIONANDRESULTSOFOPERATIONS
December31,2005
Net Sales
(In billions)
Net Sales
(In billions)
0
5
10
15
20
25
30
35
40
0
5
10
15
20
25
30
35
$40
Operating Profit
(In millions)
0
500
1000
1500
2000
2500
3000
3500
0
500
1,000
1,500
2,000
2,500
3,000
$3,500
Net Cash Provided by Operating Activities
(In millions)
0
500
1000
1500
2000
2500
3000
3500
0
500
1,000
1,500
2,000
2,500
3,000
$3,500
2004 2003
Aeronautics
Electronic Systems
Space Systems
IS&S
I&TS
Segment Operating Profit
(In millions)
2004 2003
Aeronautics
Electronic Systems
Space Systems
IS&S
I&TS
Net Cash Provided By Operating Activities
(In millions)
2004 2003
Debt-To-Total Capital Ratio
(In percent)
0.0
0.1
0.2
0.3
0.4
0.5
0%
10%
20%
30%
40%
50%
Debt-To-Total Capital Ratio
2004 2003
0%
3%
6%
9%
12%
15%
Revised Return On Invested Capital Ratio(1)
2004 2003
Return On Invested Capital
(In percent)
0.00
0.03
0.06
0.09
0.12
0.15
Negotiated Backlog
(In billions)
Negotiated Backlog
(In billions)
0
10
20
30
40
50
60
70
80
0
10
20
30
40
50
60
70
$80
2004 2003
Aeronautics
Electronic Systems
Space Systems
IS&S
I&TS
(1) Calculation was revised in 2005. See Note (f) to
the Consolidated Financial Data—Five Year
Summary on page 74 for additional information
on the calculation.