Lockheed Martin pushes forward with realignment

Editor's Note: This article was corrected to state that Lockheed Martin's Information Systems and Global Solutions business earned $5.03 billion in sales during the first six months of 2010.

Lockheed Martin Corp. continues to make what it deems are necessary adjustments to its internal structure with key changes to its Information Systems and Global Solutions unit, according to a second quarter 2010 financial report issued today.

The company announced last month that it plans to sell two parts of its business to cut costs. In addition, Lockheed executives also have realigned several IS&GS businesses, according to today's report. They’re merging Readiness and Stability Operations and Savi Technology, Inc., with the Simulation, Training and Support business. They also will form the Global Training and Logistics line of business inside the Electronic Systems unit.

The company posted a 3 percent increase in net sales, reaching $11.44 billion in the second quarter of 2010, while earnings from continuing operations fell by a percentage point, the report states. The corporation’s net sales rose from $11.1 billion from the second quarter of 2009 to $11.4 billion.

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Lockheed’s continuing operations for this year’s second quarter earned $727 million, compared to $731 million in 2009, according to the report.

Its Information Systems and Global Solutions (IS&GS) business had $2.69 billion in net sales, increasing by 6 percent for the quarter compared to last year. In the first six months of this year, IS&GS has had $5.03 billion in sales, which is 3 percent higher than last year.

In both periods, sales to civilian agencies increased but sales to defense and intelligence agencies declined. Civilian agencies purchased more enterprise services. On the defense side, Lockheed had a lower volume of sales on mission and combat systems. Intelligence agencies bought fewer security solutions, although the decreases were partially offset by an increase in enterprise integration services, the report states.

In Lockheed’s Electronic Systems unit, net sales increased by 4 percent compared to last year, reaching $3.52 million in sales the second quarter this year, the report states.

Company executives plan to sell Lockheed’s Enterprise Integration Group (EIG) and Pacific Architects and Engineers, Inc., as announced in June. The decision comes as Lockheed sees the federal government’s increased concerns about organizational conflicts of interest inside the defense contracting community, the report states.

The potential for a conflict arises when a contractor provides certain advisory services to the government and is on the systems development side as well. EIG provides systems engineering, architecture, and integration services and support to various agencies.

In April, the Defense Department proposed new organizational conflict of interest regulations.

Lockheed Martin, of Bethesda, Md., ranks No. 1 on Washington Technology's 2010 Top 100 list.