Lockheed Martin 2005 Annual Report Download - page 32
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not include unexercised options or task orders to be issued
under indefinite-delivery/indefinite-quantity (IDIQ) con-
tracts. Funded backlog was approximately $35 billion at
December31,2005.
The Aeronautics segment generally includes fewer pro-
grams thathavemuchlargersalesandoperatingresultsthan
programsincludedintheothersegments.Therefore,duetothe
largenumberofcomparativelysmallerprogramsintheremain-
ing segments, the discussions of the results of operations of
these business segments generally focus on lines of business
withinthesegmentsratherthanonspecificprograms.Thefol-
lowingtablesoffinancialinformationandrelateddiscussions
oftheresultsofoperationsofourbusinesssegmentsarecon-
sistentwiththepresentationofsegmentinformationinNote16
tothefinancialstatements.
Aeronautics’operatingresultsincludedthefollowing:
(Inmillions) 2004 2003
Netsales $11,785 $10,206
Operatingprofit 899 690
Backlogatyear-end 30,489 37,580
Net sales for Aeronautics decreased by $113 million, or
1%,in2005comparedto2004.Thedecreasewasmainlydue
to anticipated declines in Combat Aircraft, which were par-
tiallyoffsetbygrowthinAirMobility.CombatAircraftsales
decreased by $480 million for the year primarily due to
declinesin F-16 volume,whichmorethanoffsethigherF-35
andF-22volume.ThesalesgrowthinAirMobilitywasdueto
additional C-130J deliveries (15 in 2005 compared to 13 in
2004)andhighervolumeonotherAirMobilityprograms.
Net sales for Aeronautics increased by 15% in 2004
comparedto2003.Themajorityoftheincreaseinsales,$1.5
billion,wasduetohighervolumeontheF-35,F-16andF-22
CombatAircraftprograms.In2004,83F-16sweredelivered,
21morethan in2003. Theremainingincrease in sales was
mainly due to higher C-5 activities in Air Mobility. There
were13C-130Jdeliveriesin2004comparedto15deliveries
in2003.
Operatingprofitforthesegmentincreasedby11%in2005
comparedto2004.TheincreasewasduetohigherAirMobility
operating profit that exceeded a decline in Combat Aircraft
operatingprofit.AirMobilityoperatingprofitincreased$100
million mainly due to improved performance and increased
deliveriesontheC-130Jprogram.CombatAircraftoperating
profit declined due to decreased F-16 deliveries (69 in 2005
compared to 83 in 2004) and reduced earnings on the F-35
developmentprogram, whichmore thanoffsetincreased vol-
umeandimprovedperformanceontheF-22program.
Operating profit for the segment increased by 30% in
2004 compared to 2003. Combat Aircraft operating profit
increased$95millionprimarilyasaresultofhighersalesvol-
ume on the programs discussed above and improved perfor-
mance on the F-22 program. The remaining increase was
primarilyattributableto$85millioninoperatingprofitrecog-
nizedontheC-130Jsdeliveredin2004.TheCorporationbegan
recognizingprofitsonC-130Jdeliveriesin2004uponresolu-
tionofcertaintechnicalaircraftperformancerisks,manufac-
turing performance improvements and the achievement of
stableproductionasaresultofsecuringamulti-yearcontract
in2003.
Backlogdecreasedin2005ascomparedto2004primar-
ilyasaresultofsalesvolumeontheF-35andF-16programs
aswellasdeliveriesofC-130Jaircraft.
LockheedMartinCorporation
MANAGEMENT’SDISCUSSIONANDANALYSISOF
FINANCIALCONDITIONANDRESULTSOFOPERATIONS
December31,2005
Net Sales
(In billions)
Net Sales
(In billions)
0
5
10
15
20
25
30
35
40
0
5
10
15
20
25
30
35
$40
Operating Profit
(In millions)
0
500
1000
1500
2000
2500
3000
3500
0
500
1,000
1,500
2,000
2,500
3,000
$3,500
Net Cash Provided by Operating Activities
(In millions)
0
500
1000
1500
2000
2500
3000
3500
0
500
1,000
1,500
2,000
2,500
3,000
$3,500
2004 2003
Aeronautics
Electronic Systems
Space Systems
IS&S
I&TS
Segment Operating Profit
(In millions)
2004 2003
Aeronautics
Electronic Systems
Space Systems
IS&S
I&TS
Net Cash Provided By Operating Activities
(In millions)
2004 2003
Debt-To-Total Capital Ratio
(In percent)
0.0
0.1
0.2
0.3
0.4
0.5
0%
10%
20%
30%
40%
50%
Debt-To-Total Capital Ratio
2004 2003
0%
3%
6%
9%
12%
15%
Revised Return On Invested Capital Ratio(1)
2004 2003
Return On Invested Capital
(In percent)
0.00
0.03
0.06
0.09
0.12
0.15
Negotiated Backlog
(In billions)
Negotiated Backlog
(In billions)
0
10
20
30
40
50
60
70
80
0
10
20
30
40
50
60
70
$80
2004 2003
Aeronautics
Electronic Systems
Space Systems
IS&S
I&TS
(1) Calculation was revised in 2005. See Note (f) to
the Consolidated Financial Data—Five Year
Summary on page 74 for additional information
on the calculation.