Lockheed Martin 2015 Annual Report Download - page 92

Note 5 – Information on Business Segments
We operate in five business segments: Aeronautics, Information Systems & Global Solutions (IS&GS), Missiles and
Fire Control (MFC), Mission Systems and Training (MST) and Space Systems. We organize our business segments based on
the nature of products and services offered.
During the fourth quarter of 2015, we realigned certain programs among our business segments in connection with the
strategic review of our government IT and technical services businesses. As part of the realignment, command, control,
communications, computers, intelligence, surveillance and reconnaissance (C4ISR) and government cyber programs were
transferred from the IS&GS business segment to the MST business segment, energy solutions programs were transferred
from the IS&GS business segment to the MFC business segment, space ground station programs were transferred from the
IS&GS business segment to Space Systems business segment, and substantially all technical services programs were
transferred from the MFC business segment to the IS&GS business segment. Subsequent to the program realignment, our
IS&GS business segment which we plan to divest in the third or fourth quarter of 2016 represents the government IT and
technical services businesses that were under strategic review.
The amounts, discussion and presentation of our business segments as set forth in our consolidated financial statements
have been reclassified from prior year presentation to reflect the program realignment described above for all years
presented. The realignment did not impact the Corporation’s previously reported consolidated financial statements.
Following is a brief description of the activities of our business segments:
•Aeronautics – 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.
•Information Systems & Global Solutions – Provides advanced technology systems and expertise, integrated information
technology solutions and management services across a broad spectrum of applications for civil, defense, intelligence and
other government customers. IS&GS’ technical services business provides a comprehensive portfolio of technical and
sustainment services.
•Missiles and Fire Control – Provides air and missile defense systems; tactical missiles and air-to-ground precision strike
weapon systems; logistics; fire control systems; mission operations support, readiness, engineering support and integration
services; manned and unmanned ground vehicles; and energy management solutions.
•Mission Systems and Training – Provides design, manufacture, service and support for a variety of military and civil
helicopters; ship and submarine mission and combat systems; mission systems and sensors for rotary and fixed-wing
aircraft; sea and land-based missile defense systems; radar systems; the Littoral Combat Ship; simulation and training
services; and unmanned systems and technologies. In addition, MST supports the needs of customers in cybersecurity and
delivers communications and command and control capability through complex mission solutions for defense
applications. The results of the acquired Sikorsky business have been included in our consolidated results of operations
from the November 6, 2015 acquisition date through December 31, 2015. Accordingly, the consolidated results of
operations for the year ended December 31, 2015 do not reflect a full year of Sikorsky operations.
•Space Systems – Engaged in the research and development, design, engineering and production of satellites, strategic and
defensive missile systems and space transportation systems. Space systems provides network-enabled situational
awareness and integrates complex global systems to help our customers gather, analyze and securely distribute critical
intelligence data. Space Systems is also responsible for various classified systems and services in support of vital national
security systems. Operating profit for our Space Systems business segment includes our share of earnings for our
investment in ULA, which provides expendable launch services to the U.S. Government.
The financial information in the following tables includes the results of businesses we have acquired during the past
three years (Note 3) from their respective dates of acquisition. The business segment operating results in the following tables
exclude businesses included in discontinued operations (Note 3) for all years presented. Net sales of our business segments
exclude intersegment sales as these activities are eliminated in consolidation.
Operating profit of our business segments includes our share of earnings or losses from equity method investees as the
operating activities of the equity method investees are closely aligned with the operations of our business segments. United
Launch Alliance (ULA), which is part of our Space Systems business segment, is our primary equity method investee.
Operating profit of our business segments excludes the FAS/CAS pension adjustment described below; expense for stock-
based compensation; the effects of items not considered part of management’s evaluation of segment operating performance,
such as charges related to significant severance actions (Note 15) and goodwill impairments; gains or losses from
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