Lockheed Martin 2005 Annual Report Download - page 42

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   

We฀ maintain฀ disclosure฀ controls฀ and฀ procedures,฀ including฀
internal฀control฀over฀ financial฀ reporting,฀that฀ are฀ designed฀ to฀
ensure฀ that฀ information฀ required฀ to฀ be฀ disclosed฀ in฀ our฀ peri-
odic฀filings฀with฀the฀SEC฀is฀reported฀within฀the฀time฀periods฀
specified฀in฀the฀SEC’s฀rules฀and฀forms,฀and฀to฀provide฀reason-
able฀assurance฀that฀assets฀are฀safeguarded฀and฀transactions฀are฀
properly฀ executed฀ and฀ recorded.฀ Our฀ disclosure฀ controls฀ and฀
procedures฀ are฀ also฀ designed฀ to฀ ensure฀ that฀ information฀ is฀
accumulated฀and฀communicated฀to฀our฀management,฀including฀
our฀Chief฀Executive฀Officer฀(CEO)฀and฀Chief฀Financial฀Officer฀
(CFO),฀ as฀ appropriate,฀ to฀ allow฀ timely฀ decisions฀ regarding฀
required฀disclosure.฀In฀designing฀and฀evaluating฀such฀controls฀
and฀procedures,฀we฀recognize฀that฀any฀controls฀and฀procedures,฀
no฀ matter฀ how฀ well฀ designed฀ and฀ operated,฀ can฀ provide฀ only฀
reasonable฀ assurance฀ of฀ achieving฀ the฀ desired฀ control฀ objec-
tives,฀and฀management฀necessarily฀is฀required฀to฀use฀its฀judg-
ment฀ in฀ evaluating฀ the฀ cost-benefit฀ relationship฀ of฀ possible฀
controls฀and฀procedures.฀Also,฀we฀have฀investments฀in฀certain฀
unconsolidated฀entities.฀As฀we฀do฀not฀control฀or฀manage฀these฀
entities,฀our฀controls฀and฀procedures฀with฀respect฀to฀those฀enti-
ties฀ are฀ necessarily฀ substantially฀ more฀ limited฀ than฀ those฀ we฀
maintain฀with฀respect฀to฀our฀consolidated฀subsidiaries.
We฀ routinely฀ review฀ our฀ system฀ of฀ internal฀ control฀ over฀
financial฀ reporting฀ and฀ make฀ changes฀ to฀ our฀ processes฀ and฀
systems฀ to฀ improve฀ controls฀ and฀ increase฀ efficiency,฀ while฀
ensuring฀ that฀ we฀ maintain฀ an฀ effective฀ internal฀ control฀ envi-
ronment.฀Changes฀may฀include฀such฀activities฀as฀implementing฀
new,฀more฀efficient฀systems,฀consolidating฀the฀activities฀of฀two฀
or฀more฀business฀units,฀and฀migrating฀certain฀processes฀to฀our฀
Shared฀ Services฀ centers.฀ In฀ addition,฀ when฀ we฀ acquire฀ new฀
businesses,฀ we฀ review฀ the฀ controls฀ and฀ procedures฀ of฀ the฀
acquired฀business฀as฀part฀of฀our฀integration฀activities.
We฀ performed฀ an฀ evaluation฀ of฀ the฀ effectiveness฀ of฀ our฀
disclosure฀controls฀and฀procedures,฀including฀internal฀control฀
over฀financial฀reporting,฀as฀of฀December฀31,฀2005.฀The฀evalua-
tion฀ was฀ performed฀ with฀ the฀ participation฀ of฀ senior฀ manage-
ment฀of฀each฀business฀segment฀and฀key฀Corporate฀functions,฀
and฀under฀the฀supervision฀of฀the฀CEO฀and฀CFO.฀Based฀on฀our฀
evaluation,฀we฀concluded฀that฀our฀disclosure฀controls฀and฀pro-
cedures฀were฀effective฀as฀of฀December฀31,฀2005.฀
During฀2005,฀we฀also฀performed฀a฀separate฀evaluation฀of฀
our฀ internal฀ control฀ over฀ financial฀ reporting฀ in฀ accordance฀
with฀Section฀404฀of฀the฀Sarbanes-Oxley฀Act,฀including฀perform-
ing฀self-assessment฀and฀monitoring฀procedures.฀Based฀on฀those฀
activities฀ and฀ other฀ evaluation฀ procedures,฀ our฀ management,฀
including฀ the฀ CEO฀ and฀ CFO,฀ concluded฀ that฀ internal฀ control฀
over฀ financial฀ reporting฀ was฀ effective฀ as฀ of฀ December฀ 31,฀
2005.฀ Management’s฀ report฀ on฀ our฀ financial฀ statements฀ and฀
internal฀control฀over฀financial฀reporting฀appears฀on฀page฀41.฀
In฀addition,฀both฀our฀assessment฀and฀the฀effectiveness฀of฀inter-
nal฀control฀over฀financial฀reporting฀were฀audited฀by฀our฀inde-
pendent฀registered฀public฀accounting฀firm.฀Their฀report฀appears฀
on฀page฀42.
There฀were฀no฀changes฀in฀our฀internal฀control฀over฀finan-
cial฀reporting฀during฀the฀most฀recently฀completed฀fiscal฀quar-
ter฀ that฀ materially฀ affected,฀ or฀ are฀ reasonably฀ likely฀ to฀
materially฀affect,฀our฀internal฀control฀over฀financial฀reporting.
Lockheed฀Martin฀Corporation
MANAGEMENT’S฀DISCUSSION฀AND฀ANALYSIS฀OF฀
FINANCIAL฀CONDITION฀AND฀RESULTS฀OF฀OPERATIONS
December฀31,฀2005