Lockheed Martin 2005 Annual Report Download - page 71

Download and view the complete annual report

Please find page 71 of the 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

   

The฀ Corporation฀ operates฀ in฀ five฀ business฀ segments:฀
Aeronautics,฀ Electronic฀ Systems,฀ Space฀ Systems,฀ Integrated฀
Systems฀&฀Solutions฀(IS&S),฀and฀Information฀&฀Technology฀
Services฀(I&TS).฀The฀business฀segments฀have฀been฀organized฀
based฀on฀the฀nature฀of฀the฀products฀and฀services฀offered.฀In฀the฀
following฀ tables฀ of฀ financial฀ data,฀ the฀ total฀ of฀ the฀ operating฀
results฀of฀these฀ business฀ segments฀ is฀ reconciled,฀ as฀appropri-
ate,฀to฀the฀corresponding฀consolidated฀amount.฀With฀respect฀to฀
the฀ caption฀ “Operating฀ profit,”฀ the฀ reconciling฀ item฀
“Unallocated฀Corporate฀expense,฀net”฀includes฀the฀FAS/CAS฀
pension฀ adjustment฀ (see฀ discussion฀ below),฀ earnings฀ and฀
losses฀from฀equity฀investments,฀interest฀income,฀costs฀for฀cer-
tain฀stock-based฀compensation฀programs,฀the฀effects฀of฀items฀
not฀ considered฀ part฀ of฀ management’s฀ evaluation฀ of฀ segment฀
operating฀ performance,฀ Corporate฀ costs฀ not฀ allocated฀ to฀ the฀
operating฀ segments฀ and฀ other฀ miscellaneous฀ Corporate฀
activities.฀ For฀ financial฀ data฀ other฀ than฀ “Operating฀ profit”฀
where฀amounts฀are฀reconciled฀to฀consolidated฀totals,฀all฀activ-
ities฀other฀than฀those฀pertaining฀to฀the฀principle฀business฀seg-
ments฀are฀included฀in฀“Corporate฀activities.”฀
The฀ FAS/CAS฀ pension฀ adjustment฀ represents฀ the฀ differ-
ence฀between฀pension฀expense฀or฀income฀calculated฀for฀finan-
cial฀reporting฀purposes฀under฀GAAP฀in฀accordance฀with฀FAS฀
87,฀ and฀ pension฀ costs฀ calculated฀ and฀ funded฀ in฀ accordance฀
with฀ U.S.฀ Government฀ Cost฀ Accounting฀ Standards฀ (CAS),฀
which฀are฀reflected฀in฀the฀business฀segment฀results.฀CAS฀is฀a฀
major฀factor฀in฀determining฀pension฀funding฀requirements฀for฀
the฀ Corporation,฀ and฀ governs฀ the฀ extent฀ of฀ allocability฀ and฀
recoverability฀ of฀pension฀costs฀on฀government฀contracts.฀The฀
CAS฀ expense฀ is฀ recovered฀ through฀ the฀ pricing฀ of฀ the฀
Corporation’s฀products฀and฀services฀on฀U.S.฀Government฀con-
tracts,฀ and฀ therefore฀ recognized฀ in฀ segment฀ net฀ sales.฀ The฀
results฀of฀operations฀of฀the฀Corporation’s฀segments฀only฀include฀
pension฀expense฀as฀determined฀and฀funded฀in฀accordance฀with฀
CAS฀rules.฀
Transactions฀ between฀ segments฀ are฀ generally฀ negotiated฀
and฀accounted฀for฀under฀terms฀and฀conditions฀similar฀to฀other฀
government฀ and฀ commercial฀ contracts;฀ however,฀ these฀ inter-
company฀transactions฀are฀eliminated฀in฀consolidation฀and฀for฀
purposes฀of฀the฀presentation฀of฀“Net฀sales”฀in฀the฀related฀table฀
that฀ follows.฀ Other฀ accounting฀ policies฀ of฀ the฀ business฀ seg-
ments฀are฀the฀same฀as฀those฀described฀in฀Note฀1—Significant฀
Accounting฀Policies.
Following฀ is฀ a฀ brief฀ description฀ of฀ the฀ activities฀ of฀ the฀
principal฀business฀segments:
•฀ ฀
Aeronautics—Engaged฀in฀the฀design,฀research฀and฀devel-
opment,฀ systems฀ integration,฀ production,฀ sustainment,฀
support฀ and฀ upgrade฀ of฀ advanced฀ military฀ aircraft฀ and฀
related฀ technologies.฀ Its฀ customers฀ include฀ the฀ military฀
services฀of฀the฀United฀States฀and฀allied฀countries฀through-
out฀ the฀ world.฀ Major฀ products฀ and฀ programs฀ include฀ the฀
5TH฀ Generation฀ F-35฀ Joint฀ Strike฀ Fighter฀ and฀ F-22฀ air฀
dominance฀ attack฀and฀multi-mission฀combat฀aircraft;฀the฀
F-16฀ multi-role฀ fighter;฀ the฀ C-130J฀ tactical฀ transport฀ air-
craft;฀the฀C-5฀strategic฀airlift฀aircraft;฀and฀support฀for฀the฀
F-117฀ stealth฀ fighter฀ and฀ special฀ mission฀ and฀ reconnais-
sance฀aircraft฀(e.g.,฀P-3฀Orion,฀S-3฀Viking฀and฀U-2).฀The฀
Corporation฀also฀produces฀major฀components฀for฀the฀F-2฀
fighter฀ and฀ is฀ a฀co-developer฀ of฀ the฀C-27J฀tactical฀ trans-
port฀aircraft฀and฀the฀T-50฀advanced฀jet฀trainer.฀
•฀ ฀
Electronic฀ Systems—Engaged฀ in฀ the฀ design,฀ research,฀
development,฀ integration,฀ production฀ and฀ sustainment฀ of฀
high฀ performance฀ systems฀ for฀ undersea,฀ shipboard,฀ land฀
and฀ airborne฀ applications.฀ Major฀ product฀ lines฀ include:฀
missiles฀and฀fire฀control฀systems;฀ air฀and฀theater฀missile฀
defense฀systems;฀surface฀ship฀and฀submarine฀combat฀sys-
tems;฀anti-submarine฀and฀undersea฀warfare฀systems;฀avi-
onics฀ and฀ ground฀ combat฀ vehicle฀ integration;฀ systems฀
integration฀and฀program฀management฀for฀fixed฀and฀rotary-
wing฀ aircraft฀ systems;฀ radars;฀ platform฀ integration฀ sys-
tems;฀ homeland฀ security฀ systems;฀ surveillance฀ and฀
reconnaissance฀ systems;฀ advanced฀ aviation฀ management฀
solutions;฀security฀ and฀information฀technology฀ solutions;฀
and฀simulation฀and฀training฀systems.
Lockheed฀Martin฀Corporation