Lockheed Martin 2011 Annual Report Download - page 44

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Net sales for the IS&GS segment decreased $540 million, or 5%, in 2011 compared to 2010. The decrease primarily was
attributable to lower volume of approximately $665 million due to the absence of the DRIS program that supported the 2010
U.S. census and a decline in activities on the JTRS program. This decrease partially was offset by increased net sales on
numerous programs.
Net sales for the IS&GS segment increased $322 million, or 3%, in 2010 compared to 2009. The increase primarily was
attributable to higher volume of $620 million on the DRIS program and the Hanford Mission Support contract. These
increases partially were offset by lower volume on numerous smaller programs.
Operating profit for the IS&GS segment increased $60 million, or 7%, in 2011 compared to 2010. Operating profit
increased approximately $180 million due to volume and the retirement of risks in 2011 and the absence of reserves
recognized in 2010 on numerous programs (including among others, the NASA Outsourcing Desktop Initiative (ODIN)
(about $60 million) and Transportation Worker Identification Credential and Automated Flight Service Station programs).
The increases in operating profit partially were offset by the absence of the DRIS program and a decline in activities on the
JTRS program of about $120 million.
Operating profit for the IS&GS segment decreased $60 million, or 7%, in 2010 compared to 2009. The decrease
primarily was attributable to the recognition of reserves of about $55 million on several programs (including, among others,
the ODIN program). Lower volume on numerous programs offset increased operating profit from the DRIS program.
The decrease in backlog during 2011 compared to 2010 mainly was due to declining activities on the JTRS program and
several other smaller programs. The decrease in backlog during 2010 compared to 2009 mainly was due to higher sales
volume associated with the DRIS program, the Hanford Mission Support contract, and several other smaller programs.
We expect IS&GS will experience a decrease in net sales in the mid to upper single digit percentage range for 2012 as
compared to 2011. The decline is primarily due to the completion of various programs including ODIN, the U.K. Census, and
JTRS, and we do not expect that this work will be replaced by other contracts due to the fiscal pressures constraining
government purchases of IT and other products and services. Operating profit is expected to decline in 2012 in the upper
single digit percentage range as a result of the lower sales volume, resulting in a slight decline in operating margins between
the years.
Space Systems
Our Space Systems business segment is engaged in the design, research and development, engineering, and production
of satellites, strategic and defensive missile systems, and space transportation systems, including activities related to the
planned replacement of the Space Shuttle. Space Systems is responsible for various classified systems and services in support
of vital national security systems. Space Systems’ major programs include the Trident II D5 Fleet Ballistic Missile, Space-
Based Infrared System (SBIRS), Orion, Advanced Extremely High Frequency (AEHF) system, Global Positioning Satellite
(GPS) III system, and Mobile User Objective System (MUOS). Space Systems has an ownership interest in United Launch
Alliance (ULA), which provides expendable launch services for the U.S. Government, and in United Space Alliance (USA),
which provides processing activities for the Space Shuttle program, which is winding down following the completion of the
last mission in 2011. Space Systems’ operating results included the following:
(In millions) 2011 2010 2009
Net sales $ 8,134 $ 8,242 $ 8,650
Operating profit 989 968 967
Operating margin 12.2% 11.7% 11.2%
Backlog at year-end 16,000 17,800 16,800
Net sales for the Space Systems segment decreased $108 million, or 1%, in 2011 compared to 2010. The decrease in net
sales was attributable to a decline of about $90 million related to the NASA External Tank program, which ended in
connection with the completion of the last Space Shuttle mission in July 2011, a decline in volume of about $90 million
related to the Orion program, and lower volume of approximately $30 million related to government satellites. These
decreases partially were offset by higher volume for fleet ballistic and defensive missile systems of about $80 million and
commercial satellites of approximately $45 million (one commercial satellite delivery in both 2011 and 2010).
Net sales for the Space Systems segment decreased $408 million or 5% in 2010 compared to 2009. The decline
principally was due to lower volume on defensive missile systems of approximately $150 million, the NASA External Tank
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