Lockheed Martin 2011 Annual Report Download - page 43

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of about $330 million related to the SOF CLSS program, which began late in the quarter ended September 26, 2010, and the
LCS program of approximately $165 million. These increases partially were offset by a decline in volume of approximately
$375 million for certain ship and aviation programs (primarily Maritime Patrol Aircraft and PTDS), about $200 million for
various logistics and training services, and approximately $115 million for tactical missile and fire control programs.
Net sales for the Electronic Systems segment increased by $769 million, or 6%, in 2010 compared to 2009. Contributing
to the increases were higher volume of about $430 million on various training and logistics activities (including the SOF
CLSS program), increased deliveries on tactical missile programs (including MLRS and JASSM) of approximately
$250 million, increased volume on various surface naval warfare programs (the Aegis Combat System) of about
$140 million, and higher volume of about $100 million on air defense programs (including PAC-3). These increases partially
were offset by lower volume of approximately $185 million on undersea warfare programs.
Operating profit for the Electronic Systems segment increased $40 million, or 2%, compared to the corresponding
period in 2010. Operating profit increased by about $60 million due to higher volume and retirement of risks on air defense
programs (including PAC-3 and THAAD) and approximately $35 million primarily due to the recognition of reserves on
certain undersea warfare programs in 2010. These increases partially were offset by approximately $55 million of reserves
for contract cost matters on various ship and aviation programs (including the terminated presidential helicopter program).
Operating profit for the Electronic Systems segment increased by $100 million, or 6%, in 2010 compared to 2009. The
increase primarily was attributable to volume and retirement of risk on various training and logistics services programs of
about $50 million, approximately $65 million on tactical missiles programs (including MLRS and JASSM) due to volume
and the retirement of risks, and about $40 million due to the retirement of risks on fire control programs. These increases
partially were offset by a decline in operating profit of approximately $75 million on undersea warfare programs due to lower
volume and recognition of reserves.
Backlog increased in 2011 compared to 2010 primarily due to orders exceeding sales on air defense programs (including
THAAD and PAC-3), partially offset by higher sales volume on various training and logistics activities and surface naval
warfare programs. Backlog increased in 2010 compared to 2009 primarily from increased orders for air defense and tactical
missile programs and on various training and logistics services programs. These increases partially were offset by higher
sales volume on ship and aviation systems and surface naval warfare programs.
We expect Electronic Systems’ net sales for 2012 will be comparable with 2011. We expect flat to low single digit
percentage growth in key programs such as the LCS, offset by a decline in volume on logistics and training services
contracts. Operating profit and margin are expected to be comparable with 2011 results.
Information Systems & Global Solutions
Our IS&GS business segment provides management services, Information Technology (IT) solutions, and advanced
technology expertise across a broad spectrum of applications. IS&GS supports the needs of customers in human capital
planning, data protection and sharing, cyber-security, financial services, health care, energy and environment, security, space
exploration, biometrics, and transportation. IS&GS provides network-enabled situation awareness, delivers communications
and command and control capability through complex mission solutions for defense applications, and integrates complex
global systems to help our customers gather, analyze, and securely distribute critical intelligence data. IS&GS has a portfolio
of many smaller contracts as compared to our other business segments. IS&GS’ major programs include the Command and
Control, Battle Management, and Communications contract, En-Route Automation Modernization (ERAM) contract, the
Hanford Mission Support contract, and the National Science Foundation’s U.S. Antarctic Support program.
We have classified PAE and EIG as discontinued operations (Note 14) and, therefore, financial information related to
these businesses has been excluded from the segment information below. IS&GS’ operating results included the following:
(In millions) 2011 2010 2009
Net sales $9,381 $9,921 $ 9,599
Operating profit 874 814 874
Operating margin 9.3% 8.2% 9.1%
Backlog at year-end 9,300 9,700 10,700
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