Lockheed Martin 2005 Annual Report Download - page 34

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Operating฀profit฀for฀the฀segment฀increased฀21%฀in฀2004฀as฀
compared฀to฀2003.฀Launch฀Services’฀operating฀profit฀increased฀
$65฀ million.฀ This฀ increase฀ was฀ primarily฀ due฀ to฀ U.S.฀
Government฀ support฀ of฀ the฀ Atlas฀ program฀ and฀ the฀ benefit฀
resulting฀from฀the฀first฀quarter฀termination฀of฀a฀launch฀vehicle฀
contract฀ by฀ a฀ commercial฀ customer,฀ offset฀ by฀ a฀ decline฀ in฀
activities฀on฀the฀Titan฀launch฀vehicle฀program.฀Satellites’฀oper-
ating฀profit฀increased฀$20฀million฀due฀to฀commercial฀satellite฀
deliveries,฀partially฀offset฀ by฀lower฀profitability฀on฀ a฀ govern-
ment฀satellite฀program.฀In฀2003,฀government฀satellites฀operat-
ing฀ profit฀ reflected฀ a฀ $30฀ million฀ charge฀ related฀ to฀ a฀ NASA฀
satellite฀program.
The฀ decrease฀ in฀ backlog฀ during฀ 2005฀ as฀ compared฀ to฀
2004฀was฀mainly฀due฀to฀sales฀related฀to฀government฀satellite฀
programs.

Integrated฀Systems฀&฀Solutions’฀operating฀results฀included฀the฀
following:
(In฀millions)  2004 2003
Net฀sales  $3,851 $3,422
Operating฀profit  334 291
Backlog฀at฀year-end  4,586 4,350
Net฀sales฀for฀IS&S฀increased฀by฀7%฀in฀2005฀as฀compared฀
to฀2004฀ and฀by฀13%฀in฀2004฀as฀compared฀ to฀ 2003.฀For฀both฀
comparative฀periods,฀the฀sales฀increases฀were฀primarily฀attrib-
utable฀to฀a฀higher฀volume฀of฀intelligence,฀defense฀and฀informa-
tion฀assurance฀activities.฀
Operating฀profit฀for฀the฀segment฀increased฀9%฀in฀2005฀as฀
compared฀to฀2004฀and฀by฀15%฀in฀2004฀as฀compared฀to฀2003.฀
The฀increases฀in฀operating฀profit฀for฀both฀comparative฀periods฀
were฀primarily฀attributable฀to฀higher฀volume฀and฀performance฀
improvements฀on฀the฀activities฀described฀above.฀
The฀ decrease฀in฀ backlog฀during฀2005฀compared฀to฀2004฀
was฀due฀to฀the฀U.S.฀Army’s฀termination฀for฀convenience฀of฀the฀
Aerial฀Common฀Sensor฀contract.

Information฀&฀Technology฀Services’฀operating฀results฀included฀
the฀following:
(In฀millions)  2004 2003
Net฀sales  $3,802 $3,176
Operating฀profit  285 226
Backlog฀at฀year-end  4,560 4,817
Net฀sales฀for฀I&TS฀increased฀by฀5%฀in฀2005฀as฀compared฀
to฀ 2004.฀ The฀ increase฀ in฀ sales฀ was฀ primarily฀ attributable฀ to฀
higher฀ volumes฀ of฀ $460฀ million฀ in฀ Information฀ Technology฀
and฀Defense฀Services,฀which฀more฀than฀offset฀a฀sales฀decline฀
of฀$250฀million฀in฀NASA฀programs.฀Information฀Technology’s฀
sales฀ increase฀ includes฀the฀ impact฀of฀organic฀growth฀ and฀the฀
purchase฀of฀SYTEX฀in฀March฀2005.
Net฀ sales฀ for฀ I&TS฀ increased฀ by฀ 20%฀ in฀ 2004฀ as฀ com-
pared฀to฀2003.฀The฀increase฀in฀sales฀was฀primarily฀attributable฀
to฀higher฀volume฀of฀$510฀million฀in฀Information฀Technology.฀
Information฀ Technology’s฀ sales฀ improved฀ due฀ to฀ organic฀
growth,฀as฀well฀as฀the฀net฀impact฀of฀our฀purchase฀of฀Affiliated฀
Computer฀ Services’฀ federal฀ government฀ IT฀ business฀ and฀ the฀
concurrent฀ sale฀ of฀ our฀ commercial฀ IT฀ business฀ in฀ November฀
2003.฀ The฀ remaining฀ increase฀ in฀ sales฀ of฀ $120฀ million฀ was฀
primarily฀ attributable฀ to฀ higher฀ volume฀ in฀ Defense฀ Services,฀
which฀offset฀a฀decline฀in฀NASA฀sales.
Operating฀ profit฀ for฀ the฀ segment฀ increased฀ by฀ 23%฀ in฀
2005฀as฀compared฀to฀2004.฀The฀operating฀profit฀increase฀was฀
mainly฀ due฀ to฀ higher฀ volume฀ and฀ improved฀ performance฀
฀
in฀Information฀Technology฀and฀Defense฀Services.฀
Operating฀ profit฀ for฀ the฀ segment฀ increased฀ by฀ 26%฀ in฀
2004฀as฀compared฀to฀2003.฀The฀operating฀profit฀increase฀was฀
mainly฀ due฀ to฀ Information฀ Technology฀ volume฀ and฀ program฀
performance.
The฀increase฀in฀backlog฀was฀attributable฀to฀growth฀in฀our฀
Information฀Technology฀line฀of฀business.
Lockheed฀Martin฀Corporation
MANAGEMENT’S฀DISCUSSION฀AND฀ANALYSIS฀OF฀
FINANCIAL฀CONDITION฀AND฀RESULTS฀OF฀OPERATIONS
December฀31,฀2005