Lockheed Martin 1999 Annual Report Download - page 25

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
December 31, 1999
approximately 13 percent of the decrease is due to
the absence in 1998 of net sales resulting from the
Corporation’s repositioning of 10 business units to form
L-3 effective in March 1997. Excluding the impact of these
divestitures, the segment’s net sales for 1998 would have
increased 62 percent compared to 1997. Approximately
$155 million of this increase resulted from higher sales vol-
ume on state and municipal programs, with the remainder
primarily due to increases in net sales related to various
information technology outsourcing programs.
Operating profit for this segment decreased by $32
million in 1999 compared to 1998 after having increased
by $13 million in 1998 compared to 1997. The decrease
in 1999 reflects $103 million in operating losses on Global
Telecommunications partially offset by the absence of the
1998 operating losses of $70 million on CalComp and
Real 3D. Adjusting the 1997 results for the effects of Access
Graphics and L-3 divestitures discussed in the preceding
paragraph, on a comparable basis, operating profit for
1998 would have decreased by $13 million. The operating
profit decrease from 1997 to 1998 resulted from unfavor-
able performance in the segment’s commercial products
businesses, primarily CalComp, partially offset by increases
related to state and municipal programs and information
technology outsourcing programs.
Backlog
Total negotiated backlog of $45.9 billion at December 31,
1999 included both unfilled firm orders for the Corporation’s
products for which funding has been authorized and appro-
priated by the customer (Congress, in the case of U.S.
Government agencies) and firm orders for which funding
has not been appropriated.
The following table shows total backlog by segment at
the end of each of the last three years:
(In millions) 1999 1998 1997
Backlog
Systems Integration $15,220 $14,025 $14,126
Space Systems 14,749 15,829 16,380
Aeronautical Systems 9,003 10,265 13,019
Technology Services 4,399 3,503 2,107
Corporate and Other 2,542 1,723 1,427
$45,913 $45,345 $47,059
Total Systems Integration backlog increased by
nine percent in 1999 compared to 1998, after having
decreased by one percent in 1998 compared to 1997.
Approximately one half of the 1999 increase was com-
prised of new orders for missile systems, with the remain-
ing increase primarily attributable to increased orders
for various platform integration activities and increased
surface ship system awards. During 1998, backlog
decreased due to a reduction of orders for missile
systems and increased deliveries related to air traffic
control programs. These decreases were partially offset
by increased orders for certain radar electronics and
surface ship systems.
Total Space Systems backlog decreased by seven per-
cent in 1999 compared to 1998, and decreased by three
percent in 1998 compared to 1997. The decrease in 1999
was mainly attributable to a significant decrease in launch
vehicle backlog as a result of decreases in new orders as
well as a decrease in backlog associated with military
satellites and classified activities. Approximately one half
of these decreases were offset by new orders for commer-
cial and civil satellites. The decrease in 1998 resulted
’96
’97
’98
Negotiated Backlog
$0
$20,000
$30,000
$40,000
$50,000
(In millions)
$10,000
’99’98’97