Lockheed Martin 2007 Annual Report Download - page 99

profit where amounts are reconciled to consolidated totals, all activities other than those pertaining to the principal business
segments are included in “Corporate activities.”
The FAS/CAS pension adjustment represents the difference between pension expense or income calculated for financial
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 our business segment results. CAS is a major
factor in determining our pension funding requirements, and governs the extent of allocability and recoverability of pension
costs on government contracts. The CAS expense is recovered through the pricing of our products and services on U.S.
Government contracts, and therefore recognized in segment Net sales. The results of operations of our 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 intercompany 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 segments
are the same as those described in Note 1.
Following is a brief description of the activities of the principal business segments:
•Aeronautics – Engaged in the design, research and development, systems integration, production, sustainment, support
and upgrade of advanced military aircraft, air vehicles and related technologies. Customers include various government
agencies and the military services of the United States and allied countries around the world. Major products and programs
include design, development, production and sustainment of the F-35 stealth multi-role international coalition fighter; the
F-22 air dominance and multi-mission stealth fighter; the F-16 international multi-role fighter; the C-130J tactical
transport aircraft; the C-5 strategic airlifter modernization; and support for the F-117 stealth fighter, P-3 maritime patrol
aircraft, S-3 multi-mission aircraft and U-2 high-altitude reconnaissance aircraft. We also produce major components for
Japan’s F-2 fighter and are a co-developer of the T-50 advanced jet trainer. The Skunk Works®advanced development
organization provides next generation innovative system solutions using rapid prototyping and advanced technologies.
•Electronic Systems – Engaged in the design, research, development, integration, production and sustainment of high
performance systems and subsystems for undersea, shipboard, land and airborne applications. Major product lines include:
tactical missiles and weapon fire control systems; air and sea-based missile defense systems; surface ship and submarine
combat systems; anti-submarine and undersea warfare systems; ground combat vehicle integration; avionics, systems
integration and program management for fixed and rotary-wing aircraft systems; radars; surveillance and reconnaissance
systems; and simulation and training systems.
•Information Systems & Global Services – Engaged in providing federal services, Information Technology (IT) solutions
and advanced technology expertise across a broad spectrum of applications and customers. Provides full life cycle support
and highly specialized talent in the areas of software and systems engineering, including capabilities in space, air and
ground systems, and also provides logistics, mission operations support, peacekeeping and nation-building services for a
wide variety of U.S. defense and civil government agencies in the U.S. and abroad.
•Space Systems – Engaged in the design, research, development, engineering and production of satellites, strategic and
defensive missile systems and space transportation systems. Satellite product line includes both government and
commercial satellites. Strategic & Defensive Missile Systems includes missile defense technologies and systems and fleet
ballistic missiles. Space Transportation Systems includes the next generation human space flight system known as the
Orion crew exploration vehicle, as well as the Space Shuttle’s external tank and commercial launch services using the
Atlas V launch vehicle. Through ownership interests in two joint ventures, Space Transportation Systems also includes
Space Shuttle processing activities and expendable launch services for the U.S. Government.
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