Lockheed Martin 2003 Annual Report Download - page 33

driven by higher volumes at M&FC and PT&TS as noted in the
preceding discussion of sales.
The increase in backlog during 2003 over 2002 resulted from
increased orders on development programs which more than offset
declines in orders on mature production programs.
Space Systems
Space Systems’ operating results included the following:
(In millions) 2003 2002 2001
Net sales $ 6,021 $ 5,287 $ 4,801
Operating profit 403 279 225
Backlog at year-end 12,813 10,701 10,797
Net sales for Space Systems increased by 14% in 2003 com-
pared to 2002. Sales increased by $570 million in Satellites and
$140 million in Strategic & Defensive Missile Systems (S&DMS)
compared to 2002. The growth in Satellites is due to higher volume
on government satellite programs. The growth in S&DMS is attrib-
utable to increases in both fleet ballistic missile and missile defense
activities. In Launch Services, increased Titan activities offset lower
sales resulting from a decline in Proton deliveries (2 in 2003 and 4
in 2002). There were 5 Atlas launches in both 2003 and 2002.
Net sales for Space Systems increased by 10% in 2002 com-
pared to 2001. The increase in sales for 2002 resulted from higher
volume in Satellites of $520 million, due to government satellite
activities. This growth was partially offset by sales declines in both
S&DMS and Launch Services.
Operating profit for the segment increased 44% in 2003 as
compared to 2002. Satellites’ operating profit increased by $70
million over the 2002 period mainly due to improved performance
on commercial satellite activities and volume increases on gov-
ernment satellite programs, including the impact of a $30 million
charge recorded in 2003 related to a handling incident on a
NASA satellite program. In Launch Services, operating profit
increased by $35 million. The increase was primarily due to
improved performance and risk retirement activities on the matur-
ing Titan program, which were partially offset by the impact of a
decline in Proton launches in 2003. S&DMS’ operating profit
increased by $20 million due to the impact of the volume increas-
es discussed above.
Operating profit for the segment increased 24% in 2002 as
compared to 2001. Satellites’ operating profit increased $150 mil-
lion due to reduced commercial satellite losses and the impact of
volume increases in government satellite programs when com-
pared to 2001. The commercial satellite manufacturing losses
declined $100 million in 2002 as operating performance improved
(including the benefit of closing out certain manufacturing con-
tracts) and satellite deliveries increased. Also, in the first quarter of
2001, a $40 million loss provision was recorded on certain com-
mercial satellite manufacturing contracts. The Satellites increase
was partially offset by an $85 million decline in profitability in
Launch Services. Reduced volume on government launch vehicle
programs, primarily driven by a decrease in Titan activities,
accounted for almost all of the decrease in year-over-year operat-
ing profit. In 2002, operating profit on Atlas and Proton launch
vehicles declined $10 million when compared to 2001. This
decrease was primarily due to lower profitability of $55 million on
the 3 additional launches in 2002, additional charges of $60 mil-
lion (net of a favorable contract adjustment of $20 million) for
market and pricing pressures and included the adverse effect of a
$35 million adjustment for commercial launch vehicle contract
Lockheed Martin Corporation
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