Lockheed Martin 2007 Annual Report Download - page 54

Download and view the complete annual report

Please find page 54 of the 2007 Lockheed Martin annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 118

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118

The following segment discussions also include information relating to negotiated backlog for each segment. Total
negotiated backlog was approximately $76.7 billion and $75.9 billion at December 31, 2007 and 2006. This amount included
both funded backlog (unfilled firm orders for which funding has been both authorized and appropriated by the customer –
Congress in the case of U.S. Government agencies) and unfunded backlog (firm orders for which funding has not yet been
appropriated). Negotiated backlog does not include unexercised options or task orders to be issued under indefinite-delivery/
indefinite-quantity (IDIQ) contracts. Funded backlog was approximately $42.3 billion at December 31, 2007.
The Aeronautics segment generally includes fewer programs that have much larger sales and operating results than
programs included in the other segments. Therefore, due to the large number of comparatively smaller programs in the
remaining segments, the discussions of the results of operations of these business segments generally focus on lines of
business within the segments rather than on specific programs. The following tables of financial information and related
discussions of the results of operations of our business segments are consistent with the presentation of segment information
in Note 15 to the financial statements.
In our discussions of comparative results, changes in Net sales and Operating profit are generally expressed in terms of
volume and/or performance. Volume refers to increases (or decreases) in sales resulting from varying production activity
levels, deliveries or service levels on individual contracts. Volume changes typically include a corresponding change in
Operating profit based on the estimated profit rate at completion for a particular contract for design, development and
production activities. Changes in segment Operating profit are also expressed in terms of performance. Performance
generally refers to changes in contract profit rates at completion. These changes on our contracts for products usually relate
to profit recognition associated with revisions to total estimated costs at completion of the contract that reflect improved (or
deteriorated) operating or award fee performance on a particular contract. Changes in estimates of Net sales and Operating
profit on contracts for products are recognized by recording adjustments in the current period for the inception-to-date effect
of the changes on current and prior periods.
Segment Operating Profit
(In millions)
Aeronautics
Aeronautics’ operating results included the following:
(In millions) 2007 2006 2005
Net sales $12,303 $12,188 $12,349
Operating profit 1,476 1,221 1,018
Backlog at year-end 26,300 26,900 31,100
Net sales for Aeronautics increased by 1% in 2007 compared to 2006. The increase in Net sales was due to growth in
Other Aeronautics programs and Combat Aircraft, which were offset partially by declines in Air Mobility. Other Aeronautics
programs increased $106 million primarily due to higher volume in sustainment services activities. Combat Aircraft sales
increased $43 million mainly due to volume increases on the F-22 program that more than offset declines on F-16 programs.
These increases were offset partially by a $34 million decline in Air Mobility sales due to lower volume on C-130 programs.
Net sales for Aeronautics decreased by 1% in 2006 compared to 2005. The anticipated decline in Net sales was due to a
decline in Air Mobility sales that was offset partially by increases in Combat Aircraft and Other Aeronautics programs sales.
46