Lockheed Martin 2007 Annual Report Download - page 25

Backlog
At December 31, 2007, our total negotiated backlog was $76.7 billion compared with $75.9 billion at the end of 2006.
Of our total 2007 year-end backlog, approximately $48.5 billion, or 63%, is not expected to be filled within one year.
These amounts include both funded backlog (unfilled firm orders for our products and services for which funding has
been both authorized and appropriated by the customer – Congress, in the case of U.S. Government agencies) and unfunded
backlog (firm orders for which funding has not been appropriated). We do not include unexercised options or potential
indefinite-delivery/ indefinite-quantity (IDIQ) orders in our backlog. If any of our contracts are terminated by the U.S.
Government, our backlog would be reduced by the expected value of the remaining terms of such contracts. Funded backlog
was $42.3 billion at December 31, 2007. The backlog for each of our business segments is provided as part of Management’s
Discussion and Analysis – “Discussion of Business Segments” beginning on page 44 of this Form 10-K.
Research and Development
We conduct research and development activities under customer-funded contracts and with our own independent
research and development funds. Our independent research and development costs include basic research, applied research,
development, systems and other concept formulation studies, and bid and proposal efforts related to government products
and services. These costs are generally allocated among all contracts and programs in progress under U.S. Government
contractual arrangements. Corporation-sponsored product development costs not otherwise allocable are charged to expense
when incurred. Under certain arrangements in which a customer shares in product development costs, our portion of the
unreimbursed costs is generally expensed as incurred. Total independent research and development costs charged to costs of
sales, including costs related to bid and proposal efforts, were $1.2 billion in 2007, $1.1 billion in 2006 and $1.0 billion in
2005. See “Research and development and similar costs” in Note 1 – Significant Accounting Policies on page 68 of this
Form 10-K.
Employees
At December 31, 2007, we had approximately 140,000 employees, the majority of whom were located in the U.S. We
have a continuing need for numerous skilled and professional personnel to meet contract schedules and obtain new and
ongoing orders for our products. The majority of our employees possess a security clearance. The demand for workers with
security clearances who have specialized engineering, information technology and technical skills within the aerospace,
defense and information technology industries is likely to remain high for the foreseeable future, while growth of the pool of
trained individuals with those skills has not matched demand. As a result, we are competing with other companies with
similar needs in hiring skilled employees. Management considers employee relations to be good.
Approximately 15% of our employees are covered by any one of nearly one hundred separate collective bargaining
agreements with various unions. A number of our existing collective bargaining agreements expire in any given year.
Historically, we have been successful in renegotiating expiring agreements without any material disruption of operating
activities.
Forward-Looking Statements
This Form 10-K contains statements which, to the extent they are not recitations of historical fact, constitute forward-
looking statements within the meaning of federal securities law. The words believe, estimate, anticipate, project, intend,
expect, plan, outlook, scheduled, forecast and similar expressions are intended to help identify forward-looking statements.
Statements and assumptions with respect to future sales, income and cash flows, program performance, the outcome of
litigation, environmental remediation cost estimates, and planned acquisitions or dispositions of assets are examples of
forward-looking statements. Numerous factors, including potentially the risk factors described in the following section, could
affect our forward-looking statements and actual performance.
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