1995 Annual Report - Lockheed Martin

Notes to Consolidated Financial Statements ContinuedGeneral Electric Company (GE) to combine theaerospace and certain other businesses of GE (collectively,the GE Aerospace businesses) with thebusinesses of the Corporation in the form of affiliatedcorporations. The exchange consideration ofapproximately $3 billion for the GE Transactionconsisted of approximately $900 million in cash,convertible preferred stock (valued at $1 billion),retention by GE of certain accounts receivable andthe assumption of payment obligations related tocertain GE indebtedness ($750 million). The GETransaction was recorded under the purchasemethod of accounting. The GE Aerospace operationshave been included in the Corporation's resultsof operations since the closing date. If the GETransaction were presented on an unaudited proforma basis as if it had occurred as of January 1,1993, the Corporation's 1993 net sales wouldincrease by approximately $1 billion and net earningswould increase by less than 1.5%.Effective February 28, 1993, the Corporationacquired the tactical military aircraft business ofGeneral Dynamics Corporation (formerly, the GDFort Worth Division) for approximately $1.5 billionin cash, plus the assumption of certain liabilitiesrelated to the business. The acquisition wasrecorded under the purchase method of accounting.Pro forma financial data for 1993 related to thistransaction has not been presented based onmateriality considerations.Note 5 - ReceivablesReceivables consisted of the following components:(In millions)U.S. Government:Amounts billedUnbilled costs andaccrued profitsCommercial and foreigngovernments:Amounts billedUnbilled costs andaccrued profits,primarily relatedto commercial contracts1995$ 9251,622654675$3,876Unbilled costs and accrued profits consistedprimarily of revenues on long-term contractsthat had been recognized for accounting purposes1994$ 9841,383662444$3,473but not yet billed to customers. Approximately$185 million of the December 31, 1995 unbilledcosts and accrued profits are not expected to bebilled within one year.Note 6 - InventoriesInventories consisted of the following components:(In millions)Work in process, primarily onlong-term contracts andprograms in progressLess customer advances andprogress paymentsOther inventoriesCustomer advances and progress paymentsapplied above are those where the customer hastitle to, or a security interest in, inventories identifiedwith the related contracts. Other customeradvances are classified as current liabilities.Inventories include unamortized deferred costs ofapproximately $300 million at December 31, 1995which are anticipated to be recovered throughfuture contracts.An analysis of general and administrative costs,including research and development costs, includedin work in process inventories follows:(In millions)Beginning of yearIncurred during the yearCharged to costs andexpenses duringthe year:Research anddevelopmentOther general andadministrativeEnd of year1995$ 4801,704(548)(1,205)$ 4311995$3,721(1,772)1,949855$2,8041994$ 4991,761(659)(1,121)$ 4801994$4,291(1,785)2,506653$3,1591993$ 2431,882(696)(930)$ 499In addition, included in costs and expenses in1995, 1994 and 1993 were general and administrativecosts, including research and development costs, ofapproximately $230 million, $154 million and $155million, respectively, incurred by commercial businessunits or programs.66