Lockheed martin REPORTS 2003 RESULTS

In 2003, the Corporation continued to generate strong cash flow from operations and deploy cash to enhance long-term shareholder value. The Corporation reduced its debt and restructured its debt portfolio to lower interest expense. The Corporation also repurchased its common shares, doubled its dividend and pursued selective acquisitions to strengthen its capabilities in providing information technology services to defense, intelligence and other government customers. 
 
Cash provided by operating activities for 2003 was $1.8 billion, after a December 2003 discretionary contribution of $450 million to pre-fund the 2004 defined benefit pension plan CAS contribution. 
 
During the year, the Corporation used $2.4 billion for the early retirement of debt and related costs and the payment of scheduled debt maturities.  The Corporation also completed the sale of $1.0 billion of convertible floating rate senior debentures. These actions reduced the Corporation's long-term debt by $1.4 billion from the year-end 2002 balance, lowered annual interest costs and improved the ratio of debt-to-total capitalization to 48%, compared to 56% at December 31, 2002.  
 
Cash of $482 million was used to repurchase 10.7 million of the Corporation's common shares during 2003. 
 
Capital expenditures for the quarter and year ended December 31, 2003 were $320 million and $687 million, compared to the $266 million and $662 million expended in the 2002 periods. At December 31, 2003, the Corporation's cash and cash equivalents balance was $1.0 billion, and its short-term investments were $240 million.
 
SEGMENT RESULTS
 
Consistent with the manner in which the Corporation's business segment operating performance is evaluated, unusual items are excluded from segment earnings before interest and taxes (operating profit) and included in "Unallocated corporate income (expense), net." 
 
"Unallocated corporate income (expense), net" includes earnings and losses from equity investments (mainly telecommunications), interest income, corporate costs not allocated to the operating segments, the FAS/CAS pension adjustment, costs for stock-based compensation programs, unusual items not considered in the evaluation of segment operating performance, and other miscellaneous corporate activities.
 
The FAS/CAS pension adjustment represents the difference between pension costs calculated and funded in accordance with Cost Accounting Standards (CAS), which are reported in the business segment operating performance, and pension expense or income determined in accordance with FAS 87.  CAS is a major factor in determining our pension funding requirements and governs the extent to which our pension costs are allocable to and recoverable under contracts with the U.S. Government.  The CAS amount is recovered over time through pricing of products and services on U.S. Government contracts. 
 
The Corporation operates in five principal business segments.  The Corporation changed the name of its Technology Services business segment to "Information & Technology Services" to better reflect the full scope of its business activities. The following table presents the operating results of the five business segments and reconciles these amounts to the Corporation's consolidated net sales and operating profit as determined by GAAP.

Unallocated corporate (expense) income, net is summarized below: