Lockheed Martin 2003 Annual Report Download - page 34

settlement costs. The 2001 results included charges for market and
pricing pressures, which reduced that year’s operating profit by
$145 million.
The increase in backlog during 2003 as compared to 2002 was
mainly due to an increase in orders for launch services, commercial
satellites, and missile defense and classified activities.
Integrated Systems & Solutions
Integrated Systems & Solutions’ operating results included the fol-
lowing:
(In millions) 2003 2002 2001
Net sales $3,420 $3,015 $2,970
Operating profit 291 241 225
Backlog at year-end 4,350 3,556 3,874
Net sales for IS&S increased by 13% in 2003 as compared to
2002 and by 2% for 2002 over 2001. For both comparative periods,
the sales increases were primarily attributable to a higher volume of
intelligence, defense and information assurance activities.
Operating profit for the segment increased 21% in 2003 as
compared to 2002 and by 7% for 2002 over 2001. The increases in
operating profit for both comparative periods were primarily attrib-
utable to higher volume and performance improvements on the
activities described above.
Information & Technology Services
Information & Technology Services’ operating results included the
following:
(In millions) 2003 2002 2001
Net sales $3,174 $3,104 $2,763
Operating profit 226 177 114
Backlog at year-end 4,817 4,617 5,116
Net sales for I&TS increased by 2% in 2003 as compared to
2002. The sales increase for the year was mainly the result of vol-
ume increases of $110 million in Information Technology, which
more than offset lower sales volume totaling $40 million on
Defense Services and NASA programs. Information Technology’s
results included the net impact of our purchase of the ACS federal
government IT business and the concurrent sale of our commercial
IT business in November 2003.
Net sales for I&TS increased by 12% in 2002 compared to
2001. For the year, the increase in sales was primarily attributable to
growth of $240 million in Information Technology, due to increased
volume on existing programs and the acquisition of OAO
Corporation in December 2001, and $160 million in Defense
Services. This growth was partially offset by a decline in sales relat-
ed to volume on NASA programs.
Operating profit for the segment increased by 28% in 2003 as
compared to 2002. The operating profit increase was mainly due to
the higher volume in Information Technology and improved per-
formance across all lines of business.
Operating profit for the segment increased by 55% in 2002
compared to 2001. The increase is mainly due to higher volumes
and improved performance (primarily on commercial programs) in
Information Technology. These increases were partially offset by a
combined decrease in operating profit of $30 million on NASA and
Defense Services programs.
Backlog increased mainly due to the fourth quarter 2003 ACS
acquisition and as a result of a higher volume of Information
Technology orders.
The I&TS segment has a business unit that provides services
to the government of Argentina. At December 31, 2003, we had net
investments in and advances totaling about $20 million. While we
expect that these amounts will be recoverable, there is always the
potential that further devaluation of the Argentine peso, deteriora-
tion in the Argentine economy or other factors could adversely
affect our ability to recover those amounts.
Unallocated Corporate (Expense) Income, Net
The following table shows the components of Unallocated
Corporate (expense) income, net. For a discussion of the FAS/CAS
pension adjustment and other types of items included in
Unallocated Corporate (expense) income, net, see Note 16 to the
financial statements. For information about items not considered in
segment operating performance, see the table under the previous
discussion of continuing operations.
Lockheed Martin Corporation
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
December 31, 2003
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