Lockheed Martin 2011 Annual Report Download - page 73

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Note 6 – Inventories, net
Inventories consisted of the following components:
(In millions) 2011 2010
Work-in-process, primarily related to long-term contracts and programs in progress $ 7,129 $ 6,508
Less: customer advances and progress payments (5,425) (4,788)
1,704 1,720
Other inventories 777 643
Total inventories, net $ 2,481 $ 2,363
Work-in-process inventories at December 31, 2011 and 2010 included general and administrative costs of $592 million
and $518 million. During 2011, 2010, and 2009, general and administrative costs incurred and recorded in inventories totaled
$2.3 billion, $2.3 billion, and $2.4 billion, and general and administrative costs charged to cost of sales from inventories
totaled $2.2 billion, $2.4 billion, and $2.1 billion.
Note 7 – Property, Plant and Equipment, net
Property, plant and equipment consisted of the following components:
(In millions) 2011 2010
Land $98 $ 111
Buildings 5,159 5,005
Machinery and equipment 6,408 6,172
Construction in progress 805 670
12,470 11,958
Less: accumulated depreciation and amortization (7,859) (7,404)
Total property, plant and equipment, net $ 4,611 $ 4,554
Note 8 – Income Taxes
Our provision for federal and foreign income tax expense for continuing operations consisted of the following
components:
(In millions) 2011 2010 2009
Federal income taxes:
Current $912 $ 600 $ 677
Deferred 9561 557
Total federal income taxes 921 1,161 1,234
Foreign income taxes:
Current 38 8 (4)
Deferred 5(5) (15)
Total foreign income taxes 43 3 (19)
Income tax expense $964 $1,164 $1,215
State income taxes are included in our operations as general and administrative costs and, under U.S. Government
regulations, are allowable in establishing prices for the products and services we sell to the U.S. Government. Therefore, a
substantial portion of state income taxes is included in our net sales and cost of sales. As a result, the impact of certain
transactions on our operating profit and of other matters disclosed in these financial statements is disclosed net of state
income taxes. Our total net state income tax expense was $149 million for 2011, $168 million for 2010 (including state
income taxes related to the sale of EIG), and $144 million for 2009.
The amount of net interest and penalties recognized as a component of income tax expense during 2011, 2010, and
2009, as well as the amount of interest and penalties accrued at December 31, 2011 and 2010, was not material.
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