Lockheed Martin 2015 Annual Report Download - page 86

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2015 and 2014 was $1.5 billion and $1.3 billion. The aggregate notional amount of our outstanding foreign currency hedges
at December 31, 2015 and 2014 was $4.1 billion and $804 million. Derivative instruments did not have a material impact on
net earnings and comprehensive income during 2015, 2014 and 2013. Substantially all of our derivatives are designated for
hedge accounting. See Note 16 for more information on the fair value measurements related to our derivative instruments.
Recent Accounting Pronouncements – In May 2014, the FASB issued a new standard that will change the way we
recognize revenue and significantly expand the disclosure requirements for revenue arrangements. On July 9, 2015, the
FASB approved a one-year deferral of the effective date of the standard to 2018 for public companies, with an option that
would permit companies to adopt the standard in 2017. Early adoption prior to 2017 is not permitted. The new standard may
be adopted either retrospectively or on a modified retrospective basis whereby the new standard would be applied to new
contracts and existing contracts with remaining performance obligations as of the effective date, with a cumulative catch-up
adjustment recorded to beginning retained earnings at the effective date for existing contracts with remaining performance
obligations. In addition, the FASB is contemplating making additional changes to certain elements of the new standard. We
are currently evaluating the methods of adoption allowed by the new standard and the effect the standard is expected to have
on our consolidated financial statements and related disclosures. As the new standard will supersede substantially all existing
revenue guidance affecting us under GAAP, it could impact revenue and cost recognition on thousands of contracts across all
our business segments, in addition to our business processes and our information technology systems. As a result, our
evaluation of the effect of the new standard will extend over future periods.
In September 2015, the FASB issued a new standard that simplifies the accounting for adjustments made to preliminary
amounts recognized in a business combination by eliminating the requirement to retrospectively account for those
adjustments. Instead, adjustments will be recognized in the period in which the adjustments are determined, including the
effect on earnings of any amounts that would have been recorded in previous periods if the accounting had been completed at
the acquisition date. We adopted the standard on January 1, 2016 and will prospectively apply the standard to business
combination adjustments identified after the date of adoption.
In November 2015, the FASB issued a new standard that simplifies the presentation of deferred income taxes and
requires that deferred tax assets and liabilities, as well as any related valuation allowance, be classified as noncurrent in our
consolidated balance sheets. The standard is effective January 1, 2017, with early adoption permitted. The standard may be
applied either prospectively from the date of adoption or retrospectively to all prior periods presented. We are currently
evaluating when we will adopt the standard and the method of adoption.
Note 2 – Earnings Per Share
The weighted average number of shares outstanding used to compute earnings per common share were as follows
(in millions):
2015 2014 2013
Weighted average common shares outstanding for basic computations 310.3 316.8 320.9
Weighted average dilutive effect of equity awards 4.4 5.6 5.6
Weighted average common shares outstanding for diluted computations 314.7 322.4 326.5
We compute basic and diluted earnings per common share by dividing net earnings by the respective weighted average
number of common shares outstanding for the periods presented. Our calculation of diluted earnings per common share also
includes the dilutive effects for the assumed vesting of outstanding restricted stock units and exercise of outstanding stock
options based on the treasury stock method.
The computation of diluted earnings per common share excluded 2.4 million stock options for the year ended
December 31, 2013 because their inclusion would have been anti-dilutive, primarily due to their exercise prices exceeding
the average market prices of our common stock during the respective periods. There were no anti-dilutive equity awards for
the years ended December 31, 2015 and 2014.
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