Lockheed Martin 1999 Annual Report Download - page 22

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Lockheed Martin Corporation
table below. This information also corresponds to the seg-
ment information presented in Note 17 of the Notes to
Consolidated Financial Statements.
(In millions) 1999 1998 1997
Operating Profit (Loss)
Systems Integration $ 967 $ 949 $ 843
Space Systems 474 954 1,090
Aeronautical Systems 247 649 561
Technology Services 137 135 187
Corporate and Other 184 (165) 98
$2,009 $2,522 $2,779
The following table displays the pretax impact of the
nonrecurring and unusual items discussed earlier and the
related effects on each segment’s operating profit (loss) for
each of the three years presented:
(In millions) 1999 1998 1997
Nonrecurring and Unusual Items—
Profit (Loss):
Consolidated Effects
Sale of remaining interest in L-3 $155 $ — $ —
Sales of surplus real estate 57 35 19
Divestitures and other
portfolio shaping items 37 18 69
Initial public offering of L-3 —18 —
Charge for shutdown of CalComp —(233) —
GE Transaction —— 311
Charges for exit from businesses and
impairment of assets —— (457)
$249 $(162) $ (58)
Segment Effects
Systems Integration $ 13 $ 4 $ (65)
Space Systems 21 — (60)
Aeronautical Systems —— (31)
Technology Services —— (12)
Corporate and Other 215 (166) 110
$249 $(162) $ (58)
In an effort to make the following discussion of sig-
nificant operating results of each business segment more
understandable, the effects of these nonrecurring and
unusual items discussed earlier have been excluded. The
Space Systems and Aeronautical Systems segments gener-
ally include programs that are substantially larger in terms of
sales and operating results than those included in the other
segments. Accordingly, due to the significant number of
smaller programs in the Systems Integration and Technology
Services segments, the impacts of performance by individual
programs typically are not as material to these segments’
overall results of operations.
Systems Integration
Net sales of the Systems Integration segment increased
by one percent in 1999 compared to 1998, and also
increased by one percent in 1998 compared to 1997.
The increase in 1999 was comprised of an $80 million
increase in volume on tactical training systems and a $65
million increase in postal systems activities. These increases
were partially offset by a decrease of $100 million in
classified activities and space electronics programs. The
remaining increase is primarily attributable to increased
electronics activities in the United Kingdom. The 1998
increase resulted from an increase in production deliveries
of postal systems equipment of $180 million and a $170
million increase in volume on surface ship systems. These
increases were partially offset by a $215 million decrease
in fire control systems, air defense systems and defense
information systems program activities. An additional $70
million decrease related to the absence in 1998 of sales
associated with the segment’s Commercial Electronics busi-
ness, which was divested early in 1998. The remaining
decrease is attributable to a decline in volume on various
other systems integration activities.
Operating profit for the segment increased by one per-
cent in 1999 compared to 1998, and increased by four
percent in 1998 compared to 1997. The 1999 increase
is comprised of a $50 million increase related to the tacti-
cal training systems and postal systems volume increases
discussed in the preceding paragraph as well as improved
performance on missile and fire control programs. These
increases were partially offset by a $15 million penalty
on the Theater High Altitude Area Defense (THAAD)
program booked in the second quarter and the absence
in 1999 of a $16 million favorable arbitration resolution