Lockheed Martin 1999 Annual Report Download - page 26

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Lockheed Martin Corporation
principally from a decrease in backlog on military and
classified satellite programs in addition to decreases
related to contract modifications to the Titan IV program.
These reductions were partially offset by increased orders
on commercial launch vehicle and satellite programs.
During 1998, the Corporation entered into an agreement
with the U.S. Government that provides $500 million of
funding to develop the Evolved Expendable Launch Vehicle.
The Corporation will use its best efforts to design a proto-
type to comply with the launch capability requirements
included in the agreement. Since this agreement does not
constitute a procurement contract, funding has been
excluded from backlog for 1998 and 1999.
Total Aeronautical Systems backlog decreased by
12 percent in 1999 compared to 1998, and decreased
by 21 percent in 1998 compared to 1997. The decline
in 1999 backlog was comprised of approximately equal
decreases on the F-16 tactical fighter program and C-130J
airlift aircraft program related to the timing of new orders
and sales recorded during 1999. An increase in orders
associated with the F-22 tactical fighter program offset
approximately one-third of the aforementioned decreases.
In January 2000, the Corporation received orders from the
government of Israel for F-16 fighter aircraft in an agree-
ment estimated to be worth approximately $1.5 billion.
During 1998, the government of the United Arab Emirates
(UAE) selected the Corporation’s F-16 as its advanced
fighter aircraft. In March 2000, an agreement was reached
for the sale of 80 F-16 fighter aircraft with an estimated
value of $6.4 billion, pending various government approvals.
The segment’s 1998 backlog was impacted by a significant
decrease in new order activity from the prior year, princi-
pally related to the decrease in backlog on F-16 tactical
fighter programs due to the timing of new orders. An addi-
tional decrease resulted from decreases in backlog on the
C-130J airlift aircraft and F-22 tactical fighter programs.
Total Technology Services backlog increased by 26
percent in 1999 compared to 1998, after having increased
significantly, over 66 percent, in 1998 compared to 1997.
The increase in 1999 was attributable to the booking of
new orders associated with the 1999 award of an aircraft
engine maintenance contract by the United States Air Force
which was partially offset by sales on existing information
management service contracts. The increase from 1997 to
1998 is primarily attributed to the 1998 award of the
Consolidated Space Operations Contract by the National
Aeronautics and Space Administration, and increases
related to the receipt of new information management
services contracts.
Total Corporate and Other backlog increased by
48 percent in 1999 compared to 1998, and increased
by 21 percent in 1998 compared to 1997. Slightly more
than one half of the 1999 increase was primarily due to
new orders on information outsourcing contracts with the
remainder of the increase reflecting new orders associated
with the Corporation’s Global Telecommunications line of
business. The 1998 increase was mainly attributable to
an increase on various information services and state and
municipal services programs.
Liquidity and Cash Flows
Operating Activities
Operating activities provided $1.1 billion in cash during
1999, compared to $2.0 billion and $1.2 billion provided
in 1998 and 1997, respectively. The significant decrease
Net Cash Provided By
Operating Activities
’96
’97
’98
$0
$1,000
$1,500
$2,000
$2,500
(In millions)
$500
’99’98’97