Lockheed Martin 2007 Annual Report Download - page 53

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as a leading systems integrator. Some of its more significant programs, including the Terminal High Altitude Area Defense
(THAAD) system, the VH-71 Presidential helicopter, the AEGIS weapon system and the Arrowhead fire control system for
the Apache helicopter, demonstrate the diverse products and services Electronic Systems provides.
The IS&GS business segment combines a full range of information competencies with a global delivery capability. The
segment provides full life cycle support and expertise in the areas of software and systems engineering, including in space,
air and ground systems, and provides logistics, mission operations support, peacekeeping and nation-building services for a
wide variety of U.S. defense and civil government agencies. Key programs and activities include the Transformational
Communications MILSATCOM Mission Operations Segment (TMOS) program, the FAA Automated Flight Service Station
(AFSS) program and a number of task order vehicles (indefinite-delivery/indefinite-quantity (IDIQ) contracts) in our
Information Technology line of business. We expect continued strong growth in providing information technology solutions
to government agencies.
The Space Systems business segment is engaged in the design, research, development, engineering and production of
satellites for both government and commercial customers, strategic and defensive missile systems and space transportation
systems. Through ownership interests in two joint ventures, the segment also includes Space Shuttle processing activities and
expendable launch services for the U.S. Government. Government satellite programs include the Advanced Extremely High
Frequency (AEHF) system, the Mobile User Objective System (MUOS), the Global Positioning System (GPS) and the
Space-Based Infrared System (SBIRS). Strategic and missile defense programs include the Targets and Countermeasures
Program and the Fleet Ballistic Missile program. Space transportation includes the NASA Orion program.
In the following table of financial data, total Operating profit of the business segments is reconciled to the
corresponding consolidated amount. The reconciling item “Unallocated Corporate expense, net” includes the FAS/CAS
pension adjustment (see the discussion of “Postretirement Benefit Plans” under “Critical Accounting Policies”), costs for
stock-based compensation programs, the effects of items not considered part of management’s evaluation of segment
operating performance, and Corporate costs not allocated to the operating segments, as well as other miscellaneous Corporate
activities. Since the activities of the investees in which certain business segments hold equity interests are closely aligned
with the operations of those segments, the equity earnings (losses) from those investees are included in the Operating profit
of the respective segments.
This table shows Net sales and Operating profit of the business segments and reconciles to the consolidated total. For all
years presented, interest income has been reclassified from segment Operating profit and Unallocated Corporate income
(expense), net to Other non-operating income (expense), net to conform to the 2007 consolidated Statement of Earnings
presentation (see Note 1). In 2006, we reclassified $199 million, including $182 million from Unallocated Corporate
expense, net and $17 million from across the business segments. In 2005, we reclassified $143 million, including $132
million from Unallocated Corporate expense, net and $11 million from across the business segments. The impact on the
individual segments’ operating results was not material. In addition, we reclassified $16 million in expenses associated with
the debt exchange in 2006 and $10 million related to a charge for the early repayment of debt in 2005, each from Unallocated
Corporate expense, net to Other non-operating income (expense), net in the respective years.
(In millions) 2007 2006 2005
Net sales
Aeronautics $12,303 $12,188 $12,349
Electronic Systems 11,143 10,519 9,811
Information Systems & Global Services 10,213 8,990 8,233
Space Systems 8,203 7,923 6,820
Total $41,862 $39,620 $37,213
Operating profit
Aeronautics $ 1,476 $ 1,221 $ 1,018
Electronic Systems 1,410 1,264 1,078
Information Systems & Global Services 949 804 720
Space Systems 856 742 605
Total business segments 4,691 4,031 3,421
Unallocated Corporate expense, net (164) (261) (568)
Total $ 4,527 $ 3,770 $ 2,853
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