Lockheed Martin 2015 Annual Report Download - page 52

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Aeronautics
Our Aeronautics business segment is engaged in the research, design, development, manufacture, integration,
sustainment, support and upgrade of advanced military aircraft, including combat and air mobility aircraft, unmanned air
vehicles and related technologies. Aeronautics’ major programs include the F-35 Lightning II Joint Strike Fighter,
C-130 Hercules, F-16 Fighting Falcon, C-5M Super Galaxy and F-22 Raptor. Aeronautics’ operating results included the
following (in millions):
2015 2014 2013
Net sales $15,570 $14,920 $14,123
Operating profit 1,681 1,649 1,612
Operating margins 10.8% 11.1% 11.4%
Backlog at year-end $31,800 $27,600 $28,000
2015 compared to 2014
Aeronautics’ net sales in 2015 increased $650 million, or 4%, compared to 2014. The increase was attributable to higher
net sales of approximately $1.4 billion for F-35 production contracts due to increased volume on aircraft production and
sustainment activities; and approximately $150 million for the C-5 program due to increased deliveries (nine aircraft
delivered in 2015 compared to seven delivered in 2014). The increases were partially offset by lower net sales of
approximately $350 million for the C-130 program due to fewer aircraft deliveries (21 aircraft delivered in 2015, compared
to 24 delivered in 2014), lower sustainment activities and aircraft contract mix; approximately $200 million due to decreased
volume and lower risk retirements on various programs; approximately $195 million for the F-16 program due to fewer
deliveries (11 aircraft delivered in 2015, compared to 17 delivered in 2014); and approximately $190 million for the
F-22 program as a result of decreased sustainment activities.
Aeronautics’ operating profit in 2015 increased $32 million, or 2%, compared to 2014. Operating profit increased by
approximately $240 million for F-35 production contracts due to increased volume and risk retirements; and approximately
$40 million for the C-5 program due to increased risk retirements. These increases were offset by lower operating profit of
approximately $90 million for the F-22 program due to lower risk retirements; approximately $70 million for the
C-130 program as a result of the reasons stated above for lower net sales; and approximately $80 million due to decreased
volume and risk retirements on various programs. Adjustments not related to volume, including net profit booking rate
adjustments and other matters, were approximately $100 million higher in 2015 compared to 2014.
2014 compared to 2013
Aeronautics’ net sales increased $797 million, or 6%, in 2014 as compared to 2013. The increase was primarily
attributable to higher net sales of approximately $790 million for F-35 production contracts due to increased volume and
sustainment activities; about $55 million for the F-16 program due to increased deliveries (17 aircraft delivered in 2014
compared to 13 delivered in 2013) partially offset by contract mix; and approximately $45 million for the F-22 program due
to increased risk retirements. The increases were partially offset by lower net sales of approximately $55 million for the
F-35 development contract due to decreased volume, partially offset by the absence in 2014 of the downward revision to the
profit booking rate that occurred in 2013; and about $40 million for the C-130 program due to fewer deliveries (24 aircraft
delivered in 2014 compared to 25 delivered in 2013) and decreased sustainment activities, partially offset by contract mix.
Aeronautics’ operating profit increased $37 million, or 2%, in 2014 as compared to 2013. The increase was primarily
attributable to higher operating profit of approximately $85 million for the F-35 development contract due to the absence in
2014 of the downward revision to the profit booking rate that occurred in 2013; about $75 million for the F-22 program due
to increased risk retirements; approximately $50 million for the C-130 program due to increased risk retirements and contract
mix, partially offset by fewer deliveries; and about $25 million for the C-5 program due to the absence in 2014 of the
downward revisions to the profit booking rate that occurred in 2013. The increases were partially offset by lower operating
profit of approximately $130 million for the F-16 program due to decreased risk retirements, partially offset by increased
deliveries; and about $70 million for sustainment activities due to decreased risk retirements and volume. Operating profit
was comparable for F-35 production contracts as higher volume was offset by lower risk retirements. Adjustments not related
to volume, including net profit booking rate adjustments and other matters, were approximately $105 million lower for 2014
compared to 2013.
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