Lockheed Martin 2002 Annual Report Download - page 32

THIRTY-NINE
This table shows net sales and operating profit of the busi-
ness segments and reconciles to the consolidated total.
(In millions) 2002 2001 2000
NET SALES
Systems Integration $ 9,603 $ 9,014 $ 9,647
Space Systems 7,384 6,836 7,339
Aeronautics 6,471 5,355 4,885
Technology Services 3,104 2,763 2,649
Total business segments 26,562 23,968 24,520
Other 16 22 21
$26,578 $23,990 $24,541
OPERATING PROFIT (LOSS)
Systems Integration $ 952 $ 906 $ 981
Space Systems 443 360 345
Aeronautics 448 329 280
Technology Services 177 114 106
Total business segments 2,020 1,709 1,712
Unallocated Corporate
expense, net (862) (602) (310)
Impact of FAS 142 adoption —(274) (297)
$ 1,158 $ 833 $ 1,105
The Space Systems and Aeronautics segments generally
include fewer programs that have much larger sales and oper-
ating results than programs included in the other segments.
Therefore, due to the large number of comparatively smaller
programs in the Systems Integration and Technology Services
segments, the discussions of the results of operations of these
business segments generally focus on lines of business within
the segments.
Systems Integration
Systems Integration’s operating results included the following:
(In millions) 2002 2001 2000
Net sales $9,603 $9,014 $9,647
Operating profit 952 906 981
Net sales for Systems Integration increased 7% in 2002
as compared to 2001. Sales increased as a result of higher
volume in three of the segment’s four lines of business.
Increased sales at Missiles & Fire Control (M&FC) of $285
million were mainly due to higher volumes on the Theater
High Altitude Area Defense (THAAD) missile program and
on certain tactical missile programs. Command, Control,
Communication, Computers and Intelligence (C4I) sales
increased by $275 million mainly as a result of volume on infor-
mation superiority programs. Naval Electronics & Surveillance
Systems (NE&SS) sales increased by $145 million primarily
due to higher volumes on surface systems and radar systems
programs. These increases were partially offset by a $115
million decrease in sales related to volume declines on plat-
form integration programs in the Systems Integration-Owego
line of business.
Net sales for the segment declined by 7% in 2001 compared
to 2000. Sales would have increased 4% for 2001 compared to
2000 had the sales attributable to the segment’s Aerospace
Electronic Systems (AES) and Control Systems businesses,
which were divested in the second half of 2000, and the trans-
fer of the Payload Launch Vehicle (PLV) contract to the Space
Systems segment at the start of 2001, been excluded from the
comparisons. Sales increased by $270 million as a result of
volume increases in NE&SS, primarily on tactical systems and
surface systems programs, and undersea and radar systems
activities. M&FC sales increased by $235 million, mainly due
to higher volume on certain tactical missile programs and the
THAAD missile program. C4I sales increased slightly year-
over-year. These increases were partially offset by a $275 mil-
lion decrease in sales related to volume declines on platform
integration programs at Systems Integration-Owego.
Operating profit for the segment increased by 5% in 2002
compared to 2001. Increased operating profit of $60 million
from the sales growth at M&FC, C4I and NE&SS more than
offset lower operating profit of $14 million at Systems
Integration-Owego. Overall, a decline in volume on mature
production programs (at Owego and M&FC) and higher volume
on development programs (at NE&SS and M&FC) contributed
to the slight decline in margins.
Operating profit for the segment decreased 8% in 2001
compared to 2000. Operating profit would have increased by
4% for 2001 from the previous year had the operating profit
related to the divested AES and Control Systems businesses,
as well as the PLV contract transfer, been excluded from the
comparisons. Increased operating profit of $85 million from
the sales growth at NE&SS, C4I, and M&FC more than offset
the decrease resulting from the volume decline at Systems
Integration-Owego.
Lockheed Martin Corporation