Lockheed Martin 2002 Annual Report Download - page 34

FORTY-ONE
Aeronautics
Aeronautics’ operating results included the following:
(In millions) 2002 2001 2000
Net sales $6,471 $5,355 $4,885
Operating profit 448 329 280
Net sales for Aeronautics increased by 21% in 2002 com-
pared to 2001. The higher sales were primarily driven by vol-
ume increases of $860 million on the F-35 Joint Strike Fighter
program, $475 million on F/A-22 production contracts and a
combined increase of $340 million from higher volume on the
F-16 and C-5 programs. These increases were partially offset
by a $335 million decline resulting from seven fewer C-130J
deliveries compared to 2001 and a $140 million decrease due
to lower volume on F/A-22 Engineering, Manufacturing and
Development (EMD) activities.
Net sales for the segment increased by 10% in 2001 com-
pared to 2000. During 2001, sales increased by $400 million
primarily due to the initial ramp up on F/A-22 production
contracts and increased volume on F-16 programs. Volume
increases from F-16 and C-130 support activities also increased
sales by $230 million. These increases were partially offset by
declines in sales of $260 million resulting from fewer F-16
and C-130J deliveries in 2001.
Operating profit for the segment increased by 36% in
2002 compared to 2001. Increased operating profit of $119
million primarily resulted from the higher volume on the pro-
grams noted in the discussion of sales. Operating profit for
2002 was negatively affected by a $15 million charge recorded
in the third quarter for performance issues on an aircraft mod-
ification contract and by a $15 million change in estimate
adjustment recorded in the fourth quarter related to cost
growth on F/A-22 EMD activities. Margins in 2002 were
favorably affected by having seven fewer C-130J deliveries in
the year as compared to 2001. The C-130J deliveries do not
impact operating profit due to the previously disclosed suspen-
sion of earnings recognition on the program.
Operating profit for the segment increased by 18% for
2001 compared to 2000. For the year, operating profit
increased by $49 million due to increased volume and per-
formance on the F/A-22 program, development activities on
F-16 and other aeronautical programs. This increase was par-
tially offset by a decline in F-16 deliveries. Margins in 2001
were favorably affected by having five fewer C-130J deliveries
as compared to 2000.
Technology Services
Technology Services’ operating results included the following:
(In millions) 2002 2001 2000
Net sales $3,104 $2,763 $2,649
Operating profit 177 114 106
Net sales for Technology Services increased by 12% in 2002
compared to 2001. For the year, the increase in sales was prima-
rily attributable to growth of $335 million in the government
information technology line of business, due to increased volume
on existing programs and the acquisition of OAO Corporation
effective December 1, 2001, and $155 million in the defense
line of business. This growth was partially offset by a combined
$160 million decline in sales related to volume on the commer-
cial information technology and NASA lines of business.
Net sales for the segment increased by 4% in 2001 com-
pared to 2000. Excluding the sales attributable to Lockheed
Martin Energy Technologies and Retech, two business units
that were divested in 2000, and the acquisition of OAO
Corporation, sales would have increased 7% for the year. Sales
increased $190 million primarily due to increased volume in
the government information technology and military aircraft
lines of business. This growth was partially offset by lower
sales volume associated with the segment’s energy-related
contracts due to program completions.
Operating profit for the segment increased by 55% in
2002 compared to 2001. The increase is mainly due to
improved performance in commercial information technology
and the higher volume in government information technology,
which together, increased operating profit by $100 million.
These increases were partially offset by a combined decrease
in operating profit of $30 million on the military aircraft,
NASA, defense and energy lines of business.
Operating profit for the segment increased by 8% for 2001
compared to 2000. Operating profit increased by $30 million in
2001 from higher volumes in the government information tech-
nology and military aircraft lines of business. This improvement
was partially offset by a $20 million reduction in operating
profit due to the completion of energy-related contracts.
Lockheed Martin Corporation