2005 investor conference conf.pdf · 2013-02-02 · 2005 investor conference november 8, 2005 our...

2005 Investor ConferenceNovember 8, 2005


Jim RyanVice President

Investor Relations2

Welcome andIntroduction


Our presentation contains “forward-looking” statements or projections based on current expectations. These statements are not guarantees of future performance and are subject to risks and uncertainties. Actual results may differ materially due to: the availability of government funding; changes in customer priorities; the impact of continuedhostilities in Iraq; budgetary constraints; program and contractperformance; the timing and availability of future government awards; the outcome of legal proceedings; economic, business and regulatory conditions and other factors. We disclaim any duty to update forward-looking statements to reflect new developments.

Our SEC filings (found at www.lockheedmartin.com or at www.sec.gov), including our 2004 Form 10-K and 2005 Form 10-Qs, contain more information on the types of risks and other factors that could adversely affect these statements.

2005 Financial Results are Preliminary and Unaudited.

Forward Looking Statements

3

http://www.lockheedmartin.com/


Agenda

7:00 to 8:00 am Registration / Breakfast

8:00 to 8:05 am Welcome and Introduction Jim Ryan

8:05 to 8:35 am Strategy to Create Value Bob Stevens

8:35 to 9:50 am Systems & Information Technology Mike CamardoThe Hidden Value Bob Coutts

Stan Sloane9:50 to 10:00 am BREAK (Webcast Continues)

10:00 to 11:30 am Focus Topics:Horizontal Integration: Ted Campbell

Network Centric Warfare / Missile Defense Dave Kier

Adjacent Markets: Frank Meyer Rotary Wing Aircraft / Civil Government Judy Marks

Government Information Technology Linda Gooden

11:30 to 12:20 pm Networking Lunch with Lockheed Martin Management

Webcast Paused

Morning Session

4


Agenda Afternoon Session

12:30 to 1:00 pm Space Systems: Information Superiority Tom Marsh

1:00 to 1:30 pm Aeronautics for the 21st Century Ralph Heath

1:30 to 1:45 pm BREAK (Webcast Continues)

1:45 to 2:10 pm US & International Government: Steve CorteseAttractive Markets Rick Kirkland

2:10 to 3:00 pm Office of Chief Financial Officer

Share Repurchase / Dividends / Credit Rating Jerry VanSchaickIndependent Cost Evaluation (ICE) Dick JandaReturn on Invested Capital (ROIC) Marty StanislavAcquisition Strategy / Focus Jeff MacLauchlanDriving Value Chris Kubasik

3:00 pm ADJOURN Chris Kubasik

Webcast Completed

5


Bob StevensChairman, President & Chief Executive Officer

Strategy to Create Value

Through Innovation & Integrity

6


Global Security Company• Changing Environment

– Traditional and Emerging Threats– At Home and Abroad– U.S. and Allies– Services for Citizens– Globalized Economy– Fiscal Stress

• Evolving Demands– Anticipate; Invent; Deliver; Sustain– Capabilities and Effects– Today and Tomorrow– Global Solutions over Lifecycle

7


Key Success Factors to Superiority

• Global Security Company– Competencies and Experience– Creative Combinations

(Horizontal Integration)– Portfolio of Business Models

Network-Driven Lifecycle ModelThrough Disciplined Growth Strategy

8


Competencies and Experience

• Diversified Portfolio• Solid Business Base• Leading Market Positions• Deep Talent Pool• Continuous Learning• Horizontal Integration Culture• Passion for Invention• Commitment to Execution

9


Creative Combinations(Horizontal Integration)

• Understand Nature of Customers Challenges

• Mobilize Talent, Technology, and Industrial Base

• Leverage Value• Minimize Risk

10


Portfolio of Business Models

• Industry Partner of Choice• Expanded Services Business• Initiated Integrated Systems and Solutions

Organization• “Ship-Less” Ship Company• “Helicopter-Less” Helicopter Company• LCS, VH-71, CSAR-X, AFSS, NARA, MTA,

Census, MEADS, JSF, …

Further Possibilities

11


Results• Extension of Existing product Lines

• Successful Pursuit of Adjacent Markets

• Solid Top Line Growth

• Continuous Margin Improvement

• Increasing ROIC

• Cash Flow > Earnings

• Prudent Investments

12


Systems & Information TechnologyElectronicSystems

ElectronicElectronicSystemsSystems

Information & Technology Services

Information & Information & Technology ServicesTechnology Services

IntegratedSystems & Solutions

IntegratedIntegratedSystems & SolutionsSystems & Solutions

Systems & Systems & InformationInformationTechnologyTechnology

Space Space SystemsSystems

AeronauticsAeronautics

13

Michael CamardoExecutive Vice President


Stan SloaneExecutive Vice President

Integrated Systems & Solutions

Bob CouttsExecutive Vice President

Electronic Systems

Systems & Information Systems & Information Technology Technology

Systems & IT Markets

14

Systems & IT MarketsSystems & IT Markets

Command, High performance

sea, land, & airborne systems

IT, logistics,

ElectronicElectronicSystemsSystems I&TSI&TSIS&SIS&SElectronicElectronicSystemsSystems I&TSI&TSIS&SIS&S

surveillance, &

computer,intelligence,

control, comm,

recon systems

& engineeringservices


LM Government IT VerticalLM Government IT Vertical

I&TS: DoD & CivilI&TS: DoD & CivilGenerallyGenerally•• Commercial Off The Commercial Off The ShelfShelf

•• Time & Material, Fixed Time & Material, Fixed Unit Price, Firm Fixed Unit Price, Firm Fixed PricePrice

•• Minimal DevelopmentMinimal Development•• Soft DiscriminatorsSoft DiscriminatorsFunding SourceFunding Source•• IT BudgetIT Budget•• O&M BudgetO&M Budget

GenerallyGenerally•• Requires R&DRequires R&D•• Cost PlusCost Plus……some some Firm Fixed PriceFirm Fixed Price

•• New DevelopmentNew Development•• Hard DiscriminatorsHard Discriminators

Funding SourceFunding Source•• Separate Line ItemSeparate Line Item•• IT BudgetIT Budget•• O&M BudgetO&M Budget

IS&S & ESBA: DoD, IS&S & ESBA: DoD, Intel & CivilIntel & Civil

ConsultingConsulting

Mission Mission SystemsSystems

COTSCOTS--DrivenDriven

Systems Systems IntegrationIntegration

ArchitectureArchitecture

InfrastructureInfrastructure

BusinessBusinessSystemsSystems

R&DR&D--DrivenDriven

BBPPOO

BBPPRR

Lockheed Martin Lockheed Martin …… A Full Service ProviderA Full Service Provider

ITIT--Enabled Enabled ServicesServices


Systems and ITSystems and ITNew Business OpportunitiesNew Business Opportunities

DHS EAGLEDHS EAGLE FBI SentinelFBI Sentinel Army Core of Army Core of EngineersEngineersAA--76 Outsourcing76 Outsourcing

CSARCSAR--XX American Shield American Shield InitiativeInitiative

Air & Space Operations Air & Space Operations Center Weapon System Center Weapon System IntegratorIntegrator

Airborne, Maritime, Airborne, Maritime, Fixed Station Joint Fixed Station Joint Tactical Radio SystemTactical Radio System

Integrated Integrated Wireless NetworkWireless Network

17

Merlin Capability Sustainment Program (MCSP)

IWNIWN


IT Capability






Electronic Systems18

What Sets Us Apart . . .Capability What Sets Us Apart . . .Capability Domain Knowledge/ Breadth People

Development Facilities

>50 Years of Domain Expertise in Critical >50 Years of Domain Expertise in Critical Mission AreasMission Areas

More Platforms & Systems For National Security More Platforms & Systems For National Security Than any other Company WorldwideThan any other Company Worldwide

Vertical Integration Across Full Sys Integration Vertical Integration Across Full Sys Integration & IT Range of Products & Services& IT Range of Products & Services

> 60,000 Scientists & Engineers> 60,000 Scientists & Engineers> 30,000 Software /IT Engineers> 30,000 Software /IT Engineers> 25,000 Advanced Degrees> 25,000 Advanced DegreesThe Majority of Employees Have The Majority of Employees Have ClearancesClearancesCustomer Intimacy/LocationCustomer Intimacy/Location

Center for InnovationSuffolk, VA

Advanced Technology Labs

Cherry Hill, NJ

Sites Connected through GVSites Connected through GV--NETNETTMTM

Connected: 29Nodes/17 Sites; incl. Gov’t ConnectionsFuture Connections 20 Nodes

• Ft. Worth, TX

• Sunnyvale, CA• Palo Alto, CA

• Dallas, TX

• Eagan, MN

• Owego, NY • Syracuse, NY

•Akron, OH

• Orlando, FL- GV-NET

Operations Center

• Manassas, VA• Fairfax, VA

• Arlington, VAGateway to Government Networks - DREN (to Ft., Worth)- DISN (to Ft. Worth)

• Suffolk, VA

• Rockville, MD

• Bethesda, MD• Gaithersburg, MD

• Baltimore, MD• Burlington, MA

• Valley Forge, PA• Cherry Hill, NJ• Moorestown, NJ

• Marietta, GA

• Denver, CO• Colorado Springs, CO

Customer Connectivity Customer Connectivity …… is Established through is Established through Defense Research Engineering Network & Defense Information SystDefense Research Engineering Network & Defense Information Systems Networkems Network

• Omaha, NE

• Sandia

• Huntsville, AL

• Palmdale, CA• El Segundo, CA• San Diego

Connectivity

LMIT Innovation & LMIT Innovation & Collaboration CenterCollaboration Center

19

What Sets Us Apart . . .Technology What Sets Us Apart . . .Technology •• IT Management IT Management -- Information AssuranceInformation Assurance

-- Enterprise Mgmt SuiteEnterprise Mgmt Suite-- Security to Quality of Service for Defense, Intel & Civil Security to Quality of Service for Defense, Intel & Civil

AgenciesAgencies

•• Electro Optical, Radar, RF Sensor Integration for Electro Optical, Radar, RF Sensor Integration for National SecurityNational Security-- First in Targeting Sensors/Software First in Targeting Sensors/Software

Lantirn SniperLantirn Sniper-- First Demonstrated Foliage Penetration CapabilityFirst Demonstrated Foliage Penetration Capability

•• Advanced Networking Advanced Networking -- COTS CompatibilityCOTS Compatibility-- Horizon NextHorizon Next--Gen Satellite CommandGen Satellite Command

-- Teamed w/ Microsoft for laptop Satellite Command CapabilityTeamed w/ Microsoft for laptop Satellite Command Capability-- Intelligent Information Factory Intelligent Information Factory -- IIFIIF

-- Accessing Multiple Data Bases for Enhanced National SecurityAccessing Multiple Data Bases for Enhanced National Security

....

OBPI Filter

xy

Fringe-encoded image

Polarization encoded

wavefronts

Input PI information

First Spatially-VaryingLinear Retarder

Second Spatially-VaryingLinear Retarder

Linear Polarizer

• SimulationSimulation-- Virtual Combat Trainer/ Convoy SimulationVirtual Combat Trainer/ Convoy Simulation

-- Trained > 20,000 OIF Bound TroopsTrained > 20,000 OIF Bound Troops20



People & Horizontal Integration






Electronic Systems21

Superior, Innovative Talent Recruitment and Development

Processes

A Boundaryless, Inclusive Culture with the Right Talent Assuring Mission and

Customer Success

Building the Pipeline

DevelopingTalent

Sustaining the Culture

Differentiating Leadership Programs

Maximizing LMCO Leadership Institute

Leveraging Talent Management Process

Managing Employee/Customer Relationships

Embracing Full Spectrum LeadershipCreating Strategic Relationships

Guided by Ethics…Powered by Innovation22

Recruiting Critical Skills


Success Through TeamworkSuccess Through Teamwork

VH-71

AKO

F/A-22

MKV

NARA

JTRS

AFSS

THAAD

F-35

Program AeronauticsElectronicSystems Space IS&S I&TS

Enhanced by C4I Complex= Lead= Assist 23

2005 Investor ConferenceNovember 8, 2005 24


Break

10 minutes

Every letter and every package that gets sent through the US Postal Service will be scanned and sorted by systems Lockheed Martin developed and delivered to the USPS.

Lockheed MartinHorizontal Integration Team

Vice President &Managing DirectorFocused Logistics

Peter M. Cuviello (Pete)

Vice President & Managing DirectorForce Application

Paul C. Bavitz (Paul)

Vice President NetCentric Integration

James J. Kohlhaas (Jim)

Vice President & Managing Director Situational Awareness

Jeffrey K. Harris (Jeff)

Vice President &Managing Director C3 & Information Operations

Frank B. Campbell (Ted)

Vice PresidentUnmanned Aerial Systems

Richard O’Lear (Rich)

Vice President &Managing Director Protection

David A. Kier (Dave)


Ted CampbellVice President and Managing Director

Command, Control, Communications andInformation Operations

Dave KierVice President and Managing Director

Force Protection

Horizontal Integration

Network Centric Capabilities

Missile Defense

27

A Changing EnvironmentA Changing Environment

Future Dynamic and Shared Information Environment

– Seamless Ops - Intel– Assured Services– Infrastructure Transparency

• Asynchronous Information Transactions

• Capabilities Based Solutions

FutureFuture Dynamic and Shared Information Environment

– Seamless Ops - Intel– Assured Services– Infrastructure Transparency

• Asynchronous Information Transactions

• Capabilities Based Solutions

Today Integration of Stovepipes• National and DoD Services• Interfaces, Handoffs, Coordination• Managed Interoperability

TodayToday Integration of Stovepipes• National and DoD Services• Interfaces, Handoffs, Coordination• Managed Interoperability

28

Horizontal Integration PrinciplesHorizontal Integration Principles

Leveraging Cross-Corporate Capabilities to Win New Business

Shape the Game--Be the Recognized Solution Provider

Adapting our Platforms and Programs to a Net-Centric World

Leveraging Cross-Corporate Capabilities to Win New Business

Shape the Game--Be the Recognized Solution Provider

Adapting our Platforms and Programs to a Net-Centric World

Horizontal Integration . .Horizontal Integration . .Agent of TransformationAgent of Transformation


The Center for Innovation Will Help Prove that Lockheed Martin iThe Center for Innovation Will Help Prove that Lockheed Martin is the Preferred s the Preferred Partner to Achieve Network Centric SolutionsPartner to Achieve Network Centric Solutions

Center for InnovationCenter for Innovation Mission:Mission:Work with our Customers and Partners to enable stakeholders Work with our Customers and Partners to enable stakeholders

to experience their futureto experience their futureCoCo--Evolve the Operational Concepts and TechnologiesEvolve the Operational Concepts and TechnologiesBring the Net to the National SecurityBring the Net to the National Security

Lockheed Martin VisionLockheed Martin VisionTo Be The WorldTo Be The World’’s Best s Best Advanced Technology Advanced Technology

Systems IntegratorSystems Integrator

Center for Innovation Vision & MissionCenter for Innovation Vision & Mission

Center for Innovation VisionCenter for Innovation VisionA World Class Networked FocalA World Class Networked Focal

Point For Collaborative Integration, Point For Collaborative Integration, Visualization, Experimentation and Visualization, Experimentation and

AssessmentAssessment

30

Global Vision Network (GV-Net™) is our Collaborative EnvironmentGlobal Vision Network (GV-Net™) is our Collaborative Environment

Connected: 27; incl. Gov’t Connections2005 Connections +10Future Site Connections

• Ft. Worth, TX (2 + 2)

• Palmdale, CA• El Segundo, CA• San Diego

• Sunnyvale, CA• Palo Alto, CA

• Dallas, TX

• Eagan, MN• Owego, NY•Syracuse, NY

• Akron, OH

• Orlando, FL (5)− GV-Net™ Operations Center

• Manassas, VA• Fairfax, VA

• Arlington, VA (1 + 1)

• Suffolk, VA (2+2+2)Center for Innovation

• Rockville, MD

• Bethesda, MD• Gaithersburg, MD

• Baltimore, MD

• Burlington, MA

• Valley Forge, PA• Cherry Hill, NJ• Moorestown, NJ (2)

• Marietta, GA

• Denver, CO (2)• Colorado Springs, CO (2)

Focus the Depth and Breadth of Lockheed Martin and our Industry Partners on Customer Solutions

• Omaha, NE

• Huntsville, AL

• Sandia

Gateway to Government Networks - DREN (to Ft., Worth)- DISN (to Ft. Worth)

31

Horizontal Integration for ProtectionHorizontal Integration for Protection

Protection defined as:Force ProtectionAir and Missile DefenseHomeland DefenseNuclear, Biological and Chemical Defense

Illustrate two functionsFocusing Lockheed Martin Capabilities to winThought-Leadership to shape or create new opportunities

Protection defined as:Force ProtectionAir and Missile DefenseHomeland DefenseNuclear, Biological and Chemical Defense

Illustrate two functionsFocusing Lockheed Martin Capabilities to winThought-Leadership to shape or create new opportunities


Focusing LM to Win – Missile DefenseFocusing LM to Win – Missile Defense

9 Wins vs 1 Loss ≈ $10 B Multi-Year Contracts Plus Large Upside Potential

9 Wins vs 1 Loss ≈ $10 B Multi-Year Contracts Plus Large Upside Potential

LM Business Area

Integrated Missile Defense Testbed WIN

Program ISS/IT Electronic Space Aero Result

Missile Defense Agency

Command and Control WIN

Targets & Countermeasures WIN

KEI LOSS

High Altitude Airship WIN

Engineering Support WIN

JNIC Support WIN

Space Propulsion Demo WIN

Multiple Kill Vehicle WIN

Kwajalien Management WIN

33

ThoughtThought--Leadership to Shape or Leadership to Shape or Create New OpportunitiesCreate New Opportunities

Example 1:Example 1:Asymmetric Threat to US HomelandAsymmetric Threat to US Homeland

Process to Define IssueProcess to Define IssueAssess threat Assess threat –– Includes cruise missileIncludes cruise missileEstimate impact of attackEstimate impact of attackDevelop solutionsDevelop solutionsConduct rigorous analysis, modeling & simulationConduct rigorous analysis, modeling & simulation

Shaping the OpportunityShaping the OpportunityConvince Executive Branch of issueConvince Executive Branch of issueExpose Congress to problem & solutionExpose Congress to problem & solutionEngage mediaEngage media

Results to dateResults to dateMissile Defense Agency now has a number 3 priorityMissile Defense Agency now has a number 3 priorityCongress added $20 M as startCongress added $20 M as start--up funding up funding US Army has established cruise missile defense officeUS Army has established cruise missile defense officeSupporting need for other LM programs Supporting need for other LM programs –– High Altitude Airship, PACHigh Altitude Airship, PAC--3, Aegis, 3, Aegis, THAAD, etc.THAAD, etc.

Cross-Corporate Focused ActivityCross-Corporate Focused Activity


ThoughtThought--LeadershipLeadershipExample 2:Example 2:

US Border Security InitiativeUS Border Security InitiativeProcess Process

Define Problem Define Problem –– air, land, sea, space, cyberair, land, sea, space, cyberAssess ongoing activities Assess ongoing activities Develop Develop soluitionssoluitionsIdentify white space & uncovered areasIdentify white space & uncovered areasDevelop solutionsDevelop solutionsConduct rigorous analysis, modeling Conduct rigorous analysis, modeling

& simulation& simulationResults to dateResults to date

DHS & DOD (NORTHCOM) supporting Integrated approaches DHS & DOD (NORTHCOM) supporting Integrated approaches Preliminary comprehensive architecturePreliminary comprehensive architectureEstablishing Stakeholder relationshipsEstablishing Stakeholder relationships

Cross-Corporate Focused ActivityCross-Corporate Focused Activity


SummarySummaryInternal CrossInternal Cross--Business Collaboration Has Become Part of Our CultureBusiness Collaboration Has Become Part of Our Culture

Win Percentages ExcellentWin Percentages Excellent

Established Lockheed Martin as Thought Leader in Homeland DefensEstablished Lockheed Martin as Thought Leader in Homeland Defense e Against Asymmetric Missile ThreatsAgainst Asymmetric Missile Threats

Becoming the Thought Leader for Integrated Border SecurityBecoming the Thought Leader for Integrated Border Security

Concentrating efforts at Center For InnovationConcentrating efforts at Center For Innovation

Horizontal Integration Is Harnessing Full Might of Lockheed Martin Capabilities

Horizontal Integration Is Harnessing Full Might of Lockheed Martin Capabilities



Judy MarksPresident

Transportation & Security Solutions

Frank MeyerPresident

Systems Integration - Owego

Adjacent Markets

Civil Government

Rotary Winged Aircraft

38


DoDDoD

InternationalInternationalU.S. Civil Government U.S. Civil Government

& Non & Non -- DoDDoD

25%25% 17%17%

58%58%

2004 Sales and Civil Customers

Serving all US Government DepartmentsServing all US Government Departments39

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Transportation & Security Solutions

FAAFAACustomsCustomsCensusCensus

CIACIAFBIFBI

ERAMERAM

ATOPATOP

AFSSAFSS

ASIASI

NGATSNGATS

UK CensusUK Census

Next Gen IAFISNext Gen IAFIS

HeritageHeritage

NARANARA

DRIS 2010DRIS 2010

NYC MTANYC MTA

PresentPresentFutureFuture

Mission Critical Systems Providing Services Mission Critical Systems Providing Services to Our Citizensto Our Citizens

40


Access to essential evidence documenting:• Rights of American citizens• Actions of federal officials• National experience

• Customer:National Archives and RecordsNational Archives and RecordsAdministration (NARA)Administration (NARA)

• Scope: Preserve and Ensure Access to Electronic Preserve and Ensure Access to Electronic Federal Records for the Life of the RepublicFederal Records for the Life of the Republic-- $300M$300M-- September 2005 September 2005 –– September 2012September 2012

• Strategic Importance / Highlights: ““Standards SettingStandards Setting””in Digital Preservation and Authenticityin Digital Preservation and Authenticity

NARA Electronic Records Archives

Establishes Lockheed Martin as the Leader in Digital Archive Offerings

41


• Customer:U.S. Census BureauU.S. Census Bureau

• Scope: Integrates the Collection of Census Data via Paper, Integrates the Collection of Census Data via Paper, Telephone and Internet Channels with Extremely High Data Telephone and Internet Channels with Extremely High Data Accuracy and Quality RequirementsAccuracy and Quality Requirements-- $500M$500M-- October 2005 October 2005 -- October 2011October 2011

• Strategic Importance / Highlights: Positions Lockheed Martin as Positions Lockheed Martin as the Premier Provider of Complex Census Data Capture Solutionsthe Premier Provider of Complex Census Data Capture Solutions

Decennial Response Integration System 2010

Positions Lockheed Martin for Additional (U.K., Canada, Other) Census Opportunities

42


• Customer: New York City Metropolitan New York City Metropolitan Transportation AuthorityTransportation Authority

• Scope: Electronic Security System for Surveillance Electronic Security System for Surveillance and Access Control of Key Transit Systems and Access Control of Key Transit Systems

•• $200M $200M

•• August 2005 August 2005 –– August 2008August 2008

• Strategic Importance: First Significant Critical First Significant Critical Infrastructure Protection Award in Transit Industry Infrastructure Protection Award in Transit Industry Since 9/11Since 9/11

NYC MTA Security System

Highly Visible Transit Security Role Opening a New Market

43


2006 and Beyond: Game Changing Pursuits

AmericaAmerica’’s Shield Initiatives Shield Initiative24X7 Surveillance of all US24X7 Surveillance of all USBorders for DHSBorders for DHS

NGATSNGATSNew National Airspace System to Bridge to 2025 Demand

Biometrics & CredentialingBiometrics & CredentialingNext Generation IAFISNext Generation IAFIS

44


Path of Continuing Success

HeritageHeritage PresentPresent FutureFuture

Leveraged Core Capabilities in Air Traffic, Security, Census Heritage

NYC MTA (Homeland Security), NARA ERA (New Market), DRIS 2010, AFSS,

ERAM, ATOP

Expand Homeland SecurityShape/Develop Future Air Transportation Sys

Electronic Records Solutions

Technology

Com

plex

ity/In

tegr

atio

n

Balanced Strategy Providing an Balanced Strategy Providing an Engine for GrowthEngine for Growth

45


Well Positioned ForIncreased Opportunities

Recapitalization and ConsolidationWorld Events Drive Increased Demand for Complex Helo Systems

Evolution to Net Centric /

Joint Operations

Evolution to Evolution to Net Centric / Net Centric /

Joint OperationsJoint Operations

IntegratedWeapons Systems

IntegratedIntegratedWeapons Weapons SystemsSystems

Platform MissionSystem

Sustainment

US Navy Helo Master Plan

Air Force Recapitalization

46


LM Is Well Positionedto Meet Market Demand

• Established Prime Contractor

• Mission Suite Technology

• Integrated Support

• US101 Combat Search & Rescue• US101 Common Vertical Lift• MH-60R Production• MH-60 Performance Based Logistics

Requirements LM Positioning

SystemsIntegration

SystemsSystemsIntegrationIntegration

ProvenPlatforms

ComplexMissionSuites

IntegratedSustainment

& Support

SystemsIntegration

SystemsSystemsIntegrationIntegration

Postured for Growth

Posturedfor

Mission SystemsMission Systems

SupportSupport

PlatformPlatform

Life Cycle Costs

47


Mission Equipment SupportPlatform Alliances

Prime Contractor &Systems IntegrationPrime Contractor &Systems Integration

Systems PrimeSystems Prime

−Performance Based Logistics

−Flight / Mission Training

−Sensors−Weapons−Cockpit−Electronic Warfare (EW)−FLIR−Radar

48

Experience • Depth Innovative Business Model


>$10B

1980 1990 2000 2005

Sustained PerformanceDelivering Complex Integration

• Complex Systems• Platform Independent• Responsive to

Customers Needs

MarineOne

MH-60R/S• Complex System

Development

• Complex ASW Suite• Integrated Training & Support

EH-101 Merlin

Special Operations Helicopters• Avionics Integration• Sensor Fusion

SH-60BDEVELOPMENT PRODUCTION PERFORMANCE BASED LOGISTICS

49


2006 2007 2008 2009 2010

Large Base and Strategic Opportunitiesin Complex Systems Integration

Other US101 DoD Opportunities

MH-60 International

Unmanned Rotary Wing

CSAR-X Development Production Long Term Support

Marine One Production Long Term Support

Merlin Upgrades Long Term Support

MH-60R/S Production Long Term Support Spiral Development

SH-60B Performance Based Logistics

>$10B

>$20B

50


• Sustainable Business Base

• Incremental Growth Opportunities

• Strong ROIC

• Large Scale Systems Integration Skills

• Domain Expertise / Experience

• Leverage Teammate Investments

51

Market DrivenPoised for Continued Growth


Linda GoodenPresident

Information Technology – I&TS53

GovernmentInformationTechnology

An Engine for Growth


Government IT OverviewGovernment IT Overview

Business SystemsBusiness Systems

Consulting / ArchitectureConsulting / Architecture


Broad Market Requirement Broad Market Requirement ……Full Spectrum ITFull Spectrum IT

IT InfrastructureIT Infrastructure

Engineering ServicesEngineering Services

•• Substantial MarketSubstantial Market

•• Consistent GrowthConsistent Growth

•• Mature Buying Mature Buying PatternsPatterns

•• Attractive Adjacent Attractive Adjacent MarketsMarkets……BPSBPSB

usin

ess

Proc

ess

Serv

ices

Bus

ines

s Pr

oces

s Se

rvic

esB

usin

ess

Proc

ess

Serv

ices

54


Government IT CharacteristicsGovernment IT Characteristics




Market Requires Adaptable Market Requires Adaptable Business ModelsBusiness Models



Bus

ines

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•• COTSCOTS

•• T&M, FUP, FFPT&M, FUP, FFP

•• Minimal DevelopmentMinimal Development

•• Soft DiscriminatorsSoft Discriminators

Funding Source:Funding Source:

•• Government ITGovernment IT

•• O&M BudgetO&M Budget

•• Cost PlusCost Plus……some FFPsome FFP

•• New DevelopmentNew Development

•• Hard DiscriminatorsHard Discriminators


•• Separate Line ItemSeparate Line Item



55


Government IT CharacteristicsGovernment IT Characteristics






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•• COTSCOTS

•• T&M, FUP, FFPT&M, FUP, FFP

•• Minimal DevelopmentMinimal Development

•• Soft DiscriminatorsSoft Discriminators




•• Cost PlusCost Plus……some FFPsome FFP

•• New DevelopmentNew Development

•• Hard DiscriminatorsHard Discriminators


•• Separate Line ItemSeparate Line Item



Market Requires Adaptable Market Requires Adaptable Business ModelsBusiness Models 56


Government IT DynamicsGovernment IT Dynamics

Dynamics Drive Increased OpportunityDynamics Drive Increased Opportunity

Source: Input

0102030405060708090

100

2004 2005 2006 2007 2008 2009

$ Billions Budget$ Billions Budget % Contracted Out% Contracted Out

Average Days RFP to AwardAverage Days RFP to Award $ Billions Through $ Billions Through GWACGWAC’’ss

DefenseDefense

CivilCivil

BPSBPS

70

75

80

85

90

95

100

2004 2005 2006 2007 2008 2009

7595

115135155175195215235

1996 1997 1998 1999 2000 2001 2002 2003 20040

5

10

15

20

25

30

1996 1997 1998 1999 2000 2001 2002 2003 2004

57


IT EvolutionIT Evolution

Buying Patterns Favor Adaptable, Buying Patterns Favor Adaptable, Full Service ProvidersFull Service Providers

ProprietaryProprietaryTurnkeyTurnkey

SolutionsSolutions

$ Billions Budget

$ Billions Budget

$ Billions Budget

OpenOpenCOTSCOTS

ComponentsComponents

ProprietaryTurnkey

Solutions


SolutionsSolutions

PerformancePerformance--basedbasedBusinessBusinessOutcomesOutcomes

OpenCOTS

Components

OpenOpenCOTSCOTS

ComponentsComponents

ProprietaryTurnkey

Solutions


SolutionsSolutions

19951995 20002000 20052005

58


Lockheed Martin IT PositioningLockheed Martin IT Positioning

Balanced Customer and Capability PortfolioBalanced Customer and Capability Portfolio

Civil27%

HLS9%

DOD and Intel64%

CustomerCustomer

Engineering11%

Business11%

Mission42%

Architecture9%

BPS5%

Infrastructure22%OfferingsOfferings

59


Lockheed Martin CapabilitiesLockheed Martin Capabilities

Capability and Capacity to DeliverCapability and Capacity to Deliver

PeoplePeople•• 30,000 IT Professionals30,000 IT Professionals•• 70% Degreed70% Degreed•• 50% Clearances50% Clearances

FacilitiesFacilities•• Customer AlignedCustomer Aligned•• Center for Innovation Center for Innovation ––

LighthouseLighthouse•• Enterprise Solution Enterprise Solution

Center (ESC)Center (ESC)

TechnologyTechnology•• IRADIRAD•• COTS IntegrationCOTS Integration•• IT ServicesIT Services

PartnershipsPartnerships•• LongLong--term term

CustomersCustomers•• Industry AlliancesIndustry Alliances•• Horizontal Horizontal

CollaborationCollaboration

60


Government IT StrategyGovernment IT Strategy

Clear Strategy Clear Strategy ……Innovative Business ModelsInnovative Business Models






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61








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• Maintain Technology Discriminator

• Invention Drives Advantage

• Capitalize on Brand

•• Maintain Technology Maintain Technology DiscriminatorDiscriminator

•• Invention Drives Invention Drives AdvantageAdvantage

•• Capitalize on BrandCapitalize on Brand


62








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•• Capitalize on BrandCapitalize on Brand

• Maintain Competitiveness

• Flexible Business Models

• Optimize Industry Alliances

•• Maintain Maintain CompetitivenessCompetitiveness

•• Flexible Business Flexible Business ModelsModels

•• Optimize Industry Optimize Industry AlliancesAlliances


63








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•• Capitalize on BrandCapitalize on Brand• Leverage Customer & Domain Expertise

• Extend Current Leadership Position

• Horizontal Integration

•• Leverage Customer & Leverage Customer & Domain ExpertiseDomain Expertise

•• Extend Current Extend Current Leadership PositionLeadership Position

•• Horizontal IntegrationHorizontal Integration• Maintain Competitiveness

• Flexible Business Models

• Optimize Industry Alliances

•• Maintain Maintain CompetitivenessCompetitiveness

•• Flexible Business Flexible Business ModelsModels

•• Optimize Industry Optimize Industry AlliancesAlliances


64


Government IT PipelineGovernment IT Pipeline•• 550+ Targets550+ Targets

•• $50 Billion Total Value$50 Billion Total Value

•• Full Spectrum of Full Spectrum of CustomersCustomers

•• Diverse IT RequirementsDiverse IT Requirements

•• Targets Aligned to Targets Aligned to Business ModelsBusiness Models

Strong, Diverse Pipeline Strong, Diverse Pipeline ……Focused CampaignsFocused Campaigns

DoD

Civil

Classified

DHS

International

State&Local GSA Alliant GSA Alliant AmericaAmerica’’s Shield Initiatives Shield InitiativeTSAT Mission Operations System TSAT Mission Operations System DHS EAGLEDHS EAGLEIRS A76 IRS A76 Integrated Wireless Network (IWN) Integrated Wireless Network (IWN) Next Generation IAFIS Next Generation IAFIS

PipelinePipelinePipeline

65


#1 IT Provider* to Government for Last Decade#1 IT Provider* to Government for Last Decade……Lockheed MartinLockheed Martin

Strategy Executed Strategy Executed …… Achieving Results Achieving Results …… Positioned for FuturePositioned for Future

66* Washington Technology


Lunch LMT Management &

GuestsPause in Webcast

Webcast to Resume @ 12:30 pm Eastern

Thank You

68

Every flight that people take within the US will be guided by systems designed and installed by Lockheed Martin at FAA facilities across the country.


Tom BradleyVice President

Business Management

Tom MarshExecutive Vice President

Space Systems

Space Systems

Information Superiority

69


Back In Time

15 Years Of Nasa’s Hubble Space Telescope Taking More Than 700,000 Photos Showing Hundreds Of Never-seen-before Galaxies

Cygnus Loop Supernova Blast Wave Taken by Hubble

Nebula Taken by Hubble

Looking Back 12 Billion YearsLooking Back 12 Billion Years70


The Fastest Man “Out” of the World

1984 1984 -- Traveling at 17,500 MPH using the Traveling at 17,500 MPH using the Manned Maneuvering Unit Built By Manned Maneuvering Unit Built By

Lockheed MartinLockheed Martin71


What I Did On My Summer Vacation

Viking 2 Arrived On Mars September 3, 1976

Over 30 Years of Planetary Exploration72

Viking 1 Arrived On Mars June 19, 1976


Global Positioning System

Over An Eightfold Increase In Precision Guided Weapons

Accuracy In Iraq Through GPS73


Our Neighbors

Venus Western Eistla Region 1991

Magellan

Magellan Orbited Venus For Five Years Magellan Orbited Venus For Five Years Mapping More Than One Trillion BytesMapping More Than One Trillion Bytes

74


A View From Space

Gyza Pyramids

IKONOS

Transforming Visual Information Transforming Visual Information Into Visible ResultsInto Visible Results 75


Exemplary On Orbit Experience

900+ Satellites With Over 1,600 Years Of Operations

TIROSTIROS

SkylabSkylabLandsatLandsat

DSCSDSCSHubble Hubble Space Space

TelescopeTelescope

UARSUARS

EchoStarEchoStar

TerraTerra

LunarLunarProspectorProspector

IKONOSIKONOS

AEHFAEHFGravityGravityProbeProbe--BB

Spitzer Space Spitzer Space TelescopeTelescope

CoronaCorona

TRACETRACESBIRSSBIRSHighHigh

GEGE--44

AgenaAgena

SCATHASCATHADMSPDMSP

GPSGPS

MilstarMilstar

MMUMMU

MagellanMagellan

CassiniCassini

StardustStardust

GenesisGenesis

PathfinderPathfinder

MarsMarsOdysseyOdyssey

VikingViking

Mars Global Mars Global SurveyorSurveyor

RainbowRainbow--11

76


Built on a Heritage of Over 50 Years Built on a Heritage of Over 50 Years 1,110 Successes1,110 Successes

LM Expendable Launch Vehicles

77


Lines of BusinessSatellites Satellites –– 60%60%

Civil SpaceCivil Space

Strategic and Defensive Missile Systems Strategic and Defensive Missile Systems –– 16%16%

Military Military SpaceSpace

ABLABL

THAADTHAAD

MKVMKV

BV+BV+TargetsTargets

MannedManned Launch ServicesLaunch Services

Launch Services Launch Services –– 24%24%

CommercialCommercialSpaceSpace

FBMFBM

Based upon 2004 SalesBased upon 2004 Sales 78


Space Systems Company

Space Imaging*Thornton, CO—300 Employees

United Space Alliance**Houston, TX—10,000 Employees

International Launch ServicesMcLean, VA—80 Employees

~18,000 Employees; 2004 Revenue of $6.4B~18,000 Employees; 2004 Revenue of $6.4B

Sunnyvale, CA8,500 Employees

Commercial Space SystemsNewtown, PA—720 Employees

Denver, CO6,700 Employees

Michoud OperationsNew Orleans, LA—2,000 Employees

* Joint Venture with Raytheon Company ** Joint Venture LLC w* Joint Venture with Raytheon Company ** Joint Venture LLC with Boeing Companyith Boeing Company 79


9/26 Cobra Dane Target Launch 9/26 Cobra Dane Target Launch 9/27 SBIRS HEO9/27 SBIRS HEO--2 Payload Delivery2 Payload Delivery

GPS IIRGPS IIR--14 (M) (Delta 2)14 (M) (Delta 2)FBM (1) Trident II (UK)FBM (1) Trident II (UK)Titan IV BTitan IV B--26 (NROL26 (NROL--20)20)

THAAD FltTHAAD Flt--1 Launch 1 Launch FTM 04FTM 04--22

SXI FM1 Instrument (GOES N)SXI FM1 Instrument (GOES N)FBM (2) Trident IIFBM (2) Trident II

Proton LaunchProton Launch

1/6 ET1/6 ET--120 Delivery to Cape120 Delivery to Cape1/14 DISR (Huygens Probe) Landing on Titan1/14 DISR (Huygens Probe) Landing on Titan

2/1 AMC2/1 AMC--16 complete IOC 16 complete IOC 2/3 Atlas IIIB AC2/3 Atlas IIIB AC--206 (MLV206 (MLV--15)15)

2/3 Proton (AMC2/3 Proton (AMC--12)12)3/1 FBM (2) Trident II3/1 FBM (2) Trident II

3/11 Atlas V 431 AV3/11 Atlas V 431 AV--004 Inmarsat 4004 Inmarsat 44/11 XSS4/11 XSS--11 (Minotaur)11 (Minotaur)

4/29 Titan IV B4/29 Titan IV B--30 (NROL30 (NROL--16)16)5/20 NOAA5/20 NOAA--N (Delta 2)N (Delta 2)

5/21 Proton (DirecTV5/21 Proton (DirecTV--8)8)7/26 ET7/26 ET--121/STS121/STS--114 ISS114 ISS--17 (LF1)17 (LF1)

8/12 Atlas V 401 AV8/12 Atlas V 401 AV--007 (MRO)007 (MRO)9/9 Proton (Anik F1R) 9/9 Proton (Anik F1R)

31 Critical Events31 Critical Events

Titan IV 2Titan IV 2Titan IV 2

2005 Significant Events

Atlas 3Atlas 3Atlas 3

Proton 4Proton 4Proton 4

Commercial 1Commercial 1Commercial 1 Military Space 2Military Space 2Military Space 2

Missile Defense 3Missile Defense 3Missile Defense 3

Strategic Missiles 5 Strategic Missiles 5 Strategic Missiles 5

External Tank 2External Tank 2External Tank 2

Civil Space 3Civil Space 3Civil Space 3

80


DoD Market

TCMTCM

JTRSJTRSACSACS FAFA--22/ F22/ F--3535

SRSR GPSGPS SBIRSSBIRSAEHFAEHFClassifiedClassified

C2BMCC2BMCCCIC2SCCIC2S

TBMCSTBMCS

WINWIN--TTDCGSDCGS--AFAF

Classified Ground & Geo IntelClassified Ground & Geo Intel

DMSDMSGCSSGCSS--AFAF

Global Information GridGlobal Information Grid

ISPANISPAN

NETCENTSNETCENTS

GEOSCOUTGEOSCOUT

AtlasAtlas

Space Systems Provides A Key Role In The GIGSpace Systems Provides A Key Role In The GIG81

http://images.google.com/imgres?imgurl=www.dallasnews.com/sharedcontent/iraq/dailyimages/052703tank2.jpg&imgrefurl=http://www.dallasnews.com/sharedcontent/iraq/dispatches/timms/052803cciraqtimms2.62205dd7.html&h=203&w=300&sz=22&tbnid=GXZNZVCEgQ0J:&tbnh=75&tbnw=110&start=17&prev=/images%3Fq%3DBradley%2BIraq%26hl%3Den%26lr%3D%26ie%3DUTF-8%26sa%3DG

http://images.google.com/imgres?imgurl=www.15meu.usmc.mil/images/Westpac 2003/Iraq/030323-M-6270B-045.jpg&imgrefurl=http://www.15meu.usmc.mil/pages/Iraq_UQ_AZ.htm&h=1152&w=1728&sz=212&tbnid=6fFmSYpmC94J:&tbnh=100&tbnw=150&start=6&prev=/images%3Fq%3DMarines%2BIraq%26hl%3Den%26lr%3D%26ie%3DUTF-8%26sa%3DG

http://photo.global.lmco.com/photo/dpc/LM/PhotoGallery/PD098-002.html


Advanced EHF

Transformational Satellite

UHF Follow-On

DSCS II

Mobile User Objective System

GPS IGPS IIIGPS IIR-M

SBIRS GEOSBIRS HEODSP-I

(Improved)

DSCS III

DSP

GPS IIR GPS IIFGPS II

WidebandGapfillerFLTSATCOM

Legend: Legend: Lockheed MartinLockheed Martin, , Competition, Future Program

Milstar I & II

Space Radar

Military Space Evolution

82


Space Exploration

Spitzer

MROPhoenix

Hubble Servicing

ISS Servicing

CEV

Lunar Lander

New Frontiers - Juno

Human/RoboticMars

Continuing The Tradition Of Exploration Outside Our BordersContinuing The Tradition Of Exploration Outside Our Borders

Human/Robotic Lunar

83


Long Term Missile Defense Partnership

Payload Launch Payload Launch VehicleVehicle

Targets & Targets & CountermeasuresCountermeasures

RadarsRadars

AEGIS CombatAEGIS CombatSystemSystem

ISCISC22

Airborne LaserAirborne Laser

PACPAC--33

MEADSMEADS

THAAD*THAAD*

SBIRS HighSBIRS High

KE Boost*KE Boost* MKVMKV

Boost VehicleBoost Vehicle--PlusPlus

Outstanding Support to U.S. Outstanding Support to U.S. and International Customersand International Customers

84


New Business Focus

Transformational Comm (TCS) GPS III

GOES-R

Crew Exploration Vehicle (CEV)

ISS Cargo

Classified

Space Radar

85


Summary•Space Business Is Healthy…~2.5 Years Of Backlog

•Essential To National Security

•Leader in Intelligence, Surveillance and Reconnaissance Missions

•Integral Part Of Global Information Grid (GIG)

•Providing Our Nation Assured Access To Space

Over 18,000 Employees Dedicated Over 18,000 Employees Dedicated To Mission SuccessTo Mission Success

86


Ralph HeathExecutive Vice President

Aeronautics

Aeronautics for the 21st Century


John McCarthyVice President

Business Management

89

Solution Provider of Solution Provider of WarfightingWarfighting CapabilityCapabilityThe Business We Are in . . . The Business We Are in . . .

NTNT--ISRISR MBMSMBMS

WarfightingWarfighting CONOPsCONOPs

SOS ArchitecturesSOS Architectures

Discriminating Discriminating TechnologiesTechnologies

Joint ManeuverJoint ManeuverGroupGroup

89 89

90

HeadquartersHeadquartersFort Worth, TXFort Worth, TX

Marietta, GAMarietta, GAPalmdale, CAPalmdale, CA

Lockheed Martin AeroLockheed Martin Aero

Pinellas, FLPinellas, FL

Clarksburg, WVClarksburg, WVJohnstown, PAJohnstown, PA

Meridian, MSMeridian, MS

90

27,30027,300EmployeesEmployees

2004 Sales2004 Sales$11.8B$11.8B

67%Domestic

33% Int’l

90

91

Diversified Product PortfolioDiversified Product Portfolio

Air MobilityAir Mobility

Reconnaissance/SurveillanceReconnaissance/Surveillance

C-5

C-130J

C-27J

Combat AircraftCombat Aircraft

F-35

F-16

F/A-22

F-2

F-117

T-50

Advanced Development ProgramsAdvanced Development Programs

U-2

P-3

S-3

UCAV Morphing

LRS

Network Centric

Walrus

91 91

92

Three Aircraft in FullThree Aircraft in Full--Rate ProductionRate Production

92 92

93

Achieving Customer SatisfactionAchieving Customer Satisfaction

93

““GroundGround--based systems couldnbased systems couldn’’t engaget engage. . . no adversary aircraft survived. . . no adversary aircraft survived. . . . . . they never knew we were there.they never knew we were there.””USAF USAF MajMaj Gen Rick Lewis, Gen Rick Lewis, F/AF/A--22 Program Executive Officer22 Program Executive Officer

““The capability of our armed forces The capability of our armed forces will be significantly enhanced with will be significantly enhanced with this aircraft.this aircraft.””Sheikh Mohammed bin Sheikh Mohammed bin ZayedZayed Al Al NahyanNahyan, , Crown Prince of Abu Dhabi and Deputy Supreme Crown Prince of Abu Dhabi and Deputy Supreme Commander UAE Armed ForcesCommander UAE Armed Forces

““(In Iraq) the Super Hercules proved to be a (In Iraq) the Super Hercules proved to be a force multiplier . . . A move this size would force multiplier . . . A move this size would have required three Chave required three C--130E or C130E or C--130H 130H aircraft. We were able to accomplishaircraft. We were able to accomplishthe move with only two Cthe move with only two C--130Js.130Js.””Col. Lawrence P. Col. Lawrence P. GalloglyGallogly, , Commander, 143rd Airlift WingCommander, 143rd Airlift Wing

93

94

Driving Performance and ExecutionDriving Performance and Execution

Indirect Headcount % to TotalIndirect Headcount % to Total

Sales per EmployeeSales per Employee

2000 2001 2002 2003 2004 2005 Est

Overhead $Overhead $’’s as % to Total Costs as % to Total Cost

Inventory TurnoverInventory Turnover

2000 2001 2002 2003 2004 2005 Est 2000 2001 2002 2003 2004 2005 Est

2000 2001 2002 2003 2004 2005 Est

94 94

95

F/AF/A--22 and F22 and F--35 35 –– WorldWorld’’s Only s Only 5th Generation Fighters5th Generation Fighters

95

•• 1st Jets1st Jets•• SubsonicSubsonic

•• SupersonicSupersonic•• 1st Radar1st Radar

•• SupersonicSupersonic•• MissilesMissiles

•• MultiroleMultirole•• Adv WeaponsAdv Weapons

•• Adv AvionicsAdv Avionics•• Limited StealthLimited Stealth

•• Stealth (VLO)Stealth (VLO)•• Sensor FusionSensor Fusion

LegacyFighters

SupportAircraft

F/A-22andF-35

IncreasedIncreasedCapabilities/Capabilities/Lower TotalLower TotalOwnershipOwnership

CostsCosts

Cos

tSupportAircraft

95Legacy Optimum Mix

96

F/AF/A--22 and F22 and F--35 Capabilities 35 Capabilities Are ComplementaryAre Complementary

96

F/AF/A--22 Key Capability for 22 Key Capability for AirAir--toto--Air DominanceAir Dominance•• SpeedSpeed•• AgilityAgility

FF--35 35 Key Capability for Key Capability for AirAir--toto--Ground DominanceGround Dominance•• Range/PayloadRange/Payload•• Basing FlexibilityBasing Flexibility

Common CapabilitiesCommon Capabilities•• VLO StealthVLO Stealth•• Data Fusion and Data Fusion and

Situational AwarenessSituational Awareness•• Aerodynamic Aerodynamic

PerformancePerformance•• Integrated LogisticsIntegrated Logistics

AirAir--toto--GroundGround

AirAir--toto--AirAir

A Mix of F/AA Mix of F/A--22 and F22 and F--35 Aircraft Ensures Critical 35 Aircraft Ensures Critical WarfightingWarfightingCapability Across the Full Range of Air Dominance MissionsCapability Across the Full Range of Air Dominance Missions

96

97

TacticalTactical StrategicStrategic

Hea

vyH

eavy

Ligh

tLi

ght

Range ClassRange Class

Payl

oad

Cla

ssPa

yloa

d C

lass

CC--27J27JKCKC--130J130J

CC--130J130J

CC--5M5M

Full Range of Airlift CapabilitiesFull Range of Airlift CapabilitiesTactical, Tanking, Humanitarian, StrategicTactical, Tanking, Humanitarian, Strategic

97 97

98

Investing in Facilities, Technology Investing in Facilities, Technology and Our Peopleand Our People

98 98

99

NearNear--Term Growth Opportunities Term Growth Opportunities in Global in Global SustainmentSustainment

PlatformAvailability

SubsystemAvailability

PartsAvailability

Parts andEngineeringServices

Risk Focus

Industry

Gov’t

Increasing Industrial Performance

Mar

gin

%

99

100

Projecting Significant LongProjecting Significant Long--Term Term Growth PotentialGrowth Potential

MultiserviceMultiservice, , Multinational ProgramMultinational Program

100

Originally < 1,000 Originally < 1,000 ProjectedProjected

100

101

FF--1616

F/AF/A--1818

DenmarkDenmarkNorwayNorway

NetherlandsNetherlandsItalyItaly

TurkeyTurkey

AustraliaAustraliaCanadaCanada

AustraliaAustralia FF--111111

ItalyItaly

AMXAMX

HarrierHarrier

TornadoTornado

USAFUSAF

USNUSN

USMCUSMC

RN/RAFRN/RAFHarrier GR7Harrier GR7

Sea HarrierSea Harrier

AVAV--8B8B

F/AF/A--1818

AA--1010

F/AF/A--1818

FF--1616

Domestic and U.K.Domestic and U.K. InternationalInternationalFF--3535

Joint Strike Joint Strike FighterFighter

FF--35 Enables True Joint/Coalition 35 Enables True Joint/Coalition OperationsOperations

LOCKHEED MARTIN PROPRIETARY INFORMATION/INTERNAL USE ONLY101 101

102

Skunk Works Pursuing Emerging Skunk Works Pursuing Emerging Opportunities With Innovative SolutionsOpportunities With Innovative Solutions

102 102

103

Focused on Delivering Superior ValueFocused on Delivering Superior Value

•• Excellent Position in Fighter and Airlift Markets Excellent Position in Fighter and Airlift Markets

•• Solid Program Performance Solid Program Performance

•• Investing for Future Opportunities Investing for Future Opportunities

•• Strong Backlog Strong Backlog

•• Projecting Continued Margin Expansion Projecting Continued Margin Expansion

103 103


Break

10 Minutes

As you hear and read about the 2010 Census, remember that Lockheed Martin is preparing for the 2010 Census after having conducted the 2000 Census, the 2001 UK Census and the 2006 Canadian Census.

105


Steve CorteseVice President

Washington Operations

Rick KirklandVice President

International Business Development

U.S.and International

Government

An Engine for Growth

106

U.S. Gov’t Departments & Agencies with which LM Does Business

DoD FY 2006 Spending DoD FY 2006 Spending ––$444B$444B

HHSHHS HUDHUD HLSHLS EnergyEnergy

AgricultureAgriculture JusticeJustice NASANASA TransportationTransportation

EPAEPA SSASSA CommerceCommerce National National ArchivesArchives

Domestic FY 2006 Spending Domestic FY 2006 Spending -- $477B$477B107

http://www.epa.gov/

Federal Budget Projections

EntitlementEntitlementProgramsPrograms(Medicare(MedicareMedicaidMedicaidSoc. Sec.)Soc. Sec.)

55%55% DomesticDomesticProgramsPrograms

19%19%

InterestInterest8%8%

DefenseDefense17%17%

FY 2006 Federal Outlays($2.6 Trillion)

Projected FY 2010 Federal Outlays($3.0 Trillion)


58%58%



DomesticDomesticProgramsPrograms16%16%

Source: Office of Management & Budget

SupplementalSupplemental1%1%

108

Federal Budget Projections


55%55% DomesticDomesticProgramsPrograms

19%19%



FY 2006 Federal Outlays($2.6 Trillion)

Projected FY 2010 Federal Outlays($3.0 Trillion)


58%58%



DomesticDomesticProgramsPrograms16%16%

DoD$444BDoDDoD

$444B$444B

DoD$502BDoDDoD

$502B$502B

$971B$971B$971B

Domestic$477B

DomesticDomestic$477B$477B

Domestic$470B

DomesticDomestic$470B$470B

$921B$921B$921B

Source: Office of Management & Budget

SupplementalSupplemental1%1%

109

Federal Revenue Growth Exceeding ForecastFederal Revenue Growth Exceeding ForecastFederal Revenue Growth Exceeding Forecast110

2006-2011 Outlook

• DoD Will Report Quadrennial Defense Review in February 2006--Will Influence FY 2008-12 Program

• Congressional Spending Roadmap Will Sustain Modest Growth in Defense and Homeland Security Spending

• Bush Administration Will Aggressively Pursue Competitive Sourcing Agenda Across All Federal Agencies

Lockheed Martin Uniquely Positioned to Leverage Opportunities in Defense and Non-Defense SectorsLockheed Martin Uniquely Positioned to Leverage Lockheed Martin Uniquely Positioned to Leverage

Opportunities in Defense and NonOpportunities in Defense and Non--Defense SectorsDefense Sectors

111


International Business Activities

• Export Markets Remain Strong

• New Market Opportunities

• Global Industrial Base

112

Our Global Presence• 2004 International Sales of $6B• Over 300 Partnerships• Global Products for Global Markets

113

Lockheed Martin Cross Border Relationships

CC--27J Spartan:27J Spartan:Partnership with Alenia

CC--130J: 130J: 20% UK-owned Content, 2500 UK Jobs

ATLAS V:ATLAS V:Russian RD-180 Engine MEADS: MEADS: Joint Development

Among US, Germany, and Italy

FF--310 Norwegian Frigate: 310 Norwegian Frigate: Spanish Shipbuilder (IZAR),

US Weapon System (AEGIS)

JSF: JSF: 8 Partner Nations

Littoral Combat Ship: Littoral Combat Ship: 21% International Content

USUS--101: 101: LM/Bell/Agusta Westland Team

Deepwater:Deepwater:EADS/CASA CN-235

TT--50: 50: Joint Program with Korea

Aerospace Industries (KAI)

114

http://imagebank.orl.lmco.com/dev/4D.acgi$DisplayLR?E/Drive6/PI/LR/PD063/PD063-067.gif


Chris KubasikExecutive Vice President &

Chief Financial Officer116

Driving Value

CFO’s Perspective


Lockheed Martin Finance….Driving Value

• People

• Focus ROIC

• Processes ICE

• Execution Cash Deployment

• M&A

117


Excellent Team .. And TeamworkExcellent Team .. And Teamwork

People

118

Marty StanislavVice President & Controller


FocusFocusReturn on Invested Capital

ProcessesIndependent Cost Evaluation

ExecutionCash Deployment

M&AFinancial Strategies

119

Return on Invested Capital CalculationReturn on Invested Capital Calculation($M)($M)

120Business Areas Measured On ROIC ImprovementBusiness Areas Measured On ROIC ImprovementBusiness Areas Measured On ROIC Improvement

ActualActual20042004

Net EarningsNet Earnings $1,266$1,266Interest Exp x .65Interest Exp x .65 276276

ReturnReturn $1,542$1,542

Debt (Average)Debt (Average) $5,932$5,932Equity (Average)Equity (Average) 7,0157,015

Invested CapitalInvested Capital $12,947$12,947

ROICROIC 11.9%11.9%

Return on Invested Capital (ROIC)(%)

* Targeted Improvement

0

5

10

15

20

2002 2003 2004 2005*

6.1%

10.7%11.9%

≥ 15.0%

121See Appendix for Calculation Methodology

Management Focus on ROICManagement Focus on ROIC

Bob StevensBob Stevens’’ Letter to Shareholders Letter to Shareholders 2004 Annual Report2004 Annual Report

2004 4th Quarter and 2004 4th Quarter and YearYear--end Results end Results Earnings CallEarnings Call

Chris KubasikChris Kubasik’’s Letter to 8,500 LMT Leaderss Letter to 8,500 LMT Leaders

“During 2004, we continued using ROIC as one of our key metrics for measuring financial performance, showing an improvement to 11.9%. In 2005, the ROIC performance metric will be a significant part of the evaluation measures for executive incentive compensation.”

“ROIC provides a quantitative measure of our financial performance that can be compared against various investor benchmarks. Simply put, ROIC helps us to measure how effectively we use the capital that has been provided to us.”

“Management believes that ROIC provides greater visibility into how effectively Lockheed Martin deploys capital. Management uses ROIC at a target level to help ensure that overall performance is understood and acceptable when capital is invested.”

ROIC Is Part Of LMT CultureROIC Is Part Of LMT CultureROIC Is Part Of LMT Culture122

Levers For ROIC ImprovementLevers For ROIC Improvement

Focus On Both Returns and Investment BaseFocus On Both Returns and Investment BaseFocus On Both Returns and Investment Base

New BusinessNew BusinessNew Business Higher MarginsHigher MarginsHigher Margins

Working CapitalWorking CapitalWorking CapitalFacilitiesFacilitiesFacilities

123

Segment EBIT*Segment EBIT*

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

2000 2001 2002 2003 2004 2005

8.4 8.4 %%

7.87.8%%

7.67.6%%

7.17.1%%

* See Appendix for Reconciliation to Total EBIT

Days of Working Capital

-6

-4

-2

0

2

4

6

1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05

124

SummarySummary

•• ROIC Is Easy To Calculate And UnderstandROIC Is Easy To Calculate And Understand

•• All LMC Employees Focused On ROIC All LMC Employees Focused On ROIC

•• Senior Leadership Team Committed To ROIC Senior Leadership Team Committed To ROIC Improvement Improvement

•• Substantial ROIC Improvement AchievedSubstantial ROIC Improvement Achieved

125

Appendix

Non-GAAP Measures DefinitionsNon-GAAP Financial Measures DisclosureThis presentation contains non-GAAP financial measures (as defined by SEC Regulation G). While we believe that these non-GAAP financial measures may be useful in evaluating Lockheed Martin, this information should be considered supplemental and is not a substitute for financial information prepared in accordance with generally accepted accounting principles (GAAP). Our definitions for the non-GAAP measures used in this presentation (see below) may differ from similarly titled measures used by other companies or analysts.

Segment EBITSegment Earnings Before Interest and Taxes (Segment EBIT), or segment operating profit, represents the total earnings from our business segments before interest, taxes and unallocated corporate expense, net. This measure is used by our senior management in evaluating the performance of our business segments. The caption “Unallocated Corp. Expense” reconciles Segment EBIT to consolidated operating profit or earnings before interest and taxes.

2000 2001 2002 2003 2004 2005E*Sales $24,541 $23,990 $26,578 $31,824 $35,526 $37,250Segment EBIT 1,712 1,709 2,020 2,468 2,976 3,375Unallocated Corp. Expense (607) (876) (862) (449) (887) (463)Earnings Before Interest & Taxes 1,105 833 1,158 2,019 2,089 2,912Segment Margins 7.0% 7.1% 7.6% 7.8% 8.4% 9.1%

* At Mid-Point of Estimate Range

ActualActual ActualActual ActualActual OutlookOutlook20022002 20032003 20042004 20052005

Net EarningsNet Earnings $500$500 $1,053$1,053 $1,266$1,266Interest Exp x .65Interest Exp x .65 378378 317317 276276

ReturnReturn $878$878 $1,370$1,370 $1,542$1,542 ≥≥ $1,965$1,965

Debt (Average)Debt (Average) $7,491$7,491 $6,612$6,612 $5,932$5,932Equity (Average)Equity (Average) 6,8536,853 6,1706,170 7,0157,015

Invested CapitalInvested Capital $14,344$14,344 $12,782$12,782 $12,947$12,947 ≤≤ $13,100$13,100

ROICROIC 6.1%6.1% 10.7%10.7% 11.9%11.9% ≥≥ 15.0%15.0%

Return on Invested Capital CalculationReturn on Invested Capital Calculation($M)($M)

We define Return on Invested Capital (ROIC) as net earnings plus after-tax interest expense divided by average invested capital (shareholders' equity plus debt). Management believes that ROIC provides greater visibility into how effectively Lockheed Martin deploys capital. Management uses ROIC as a target level to help ensure that overall performance is understood and acceptable when capital is invested. ROIC is not a measure of financial performance under generally accepted accounting principles (GAAP), and may not be defined and calculated by other companies in the same manner. ROIC should not be considered in isolation or as an alternative to net earnings as an indicator of company performance.

Combined

Combined


Dick JandaVice President

Program Assessment & Evaluation

FocusReturn on Invested Capital

ProcessesProcessesIndependent Cost Evaluation



129


What Is Independent Cost Evaluation What Is Independent Cost Evaluation (ICE)?(ICE)?

•• An independent (separate from the program) cost An independent (separate from the program) cost analysis used to support the business decision analysis used to support the business decision processprocess

•• Management Review of BidsManagement Review of Bids-- Proposal pricing/cost credibilityProposal pricing/cost credibility-- NegotiationsNegotiations

•• Management Review of OnManagement Review of On--going Businessgoing Business-- Profit bookings Profit bookings –– Quarterly ReviewQuarterly Review-- Long Range Plan Long Range Plan –– Annual Assessment withAnnual Assessment withQuarterly UpdatesQuarterly Updates-- Cost ReductionCost Reduction

A check and balance process to strengthen the assessment of risk

130


Enterprise Enterprise RiskRisk

Executive Proposal Reviews

External Audit

Continuous Accounting

Monitoring ProcessInternal Audit

Contract Status Reviews

Ethics Program

Independent Non-Advocate

ReviewsProgram Risk Management/Earned ValueManagement

Independent Cost Evaluation

Defense Contract Audit Agency / Defense

Contract Management Agency

What Is ICE?What Is ICE?

ICE Is An Integral Part of Enterprise Risk Management

131


Who Is ICE?Who Is ICE?ICE ICE -- OrganizationOrganization

•• Single Corporate Focal Point Reporting to Single Corporate Focal Point Reporting to the CFOthe CFO

•• 75 Independent Estimators / Analysts 75 Independent Estimators / Analysts Spread Across the Business Units Spread Across the Business Units

–– Reviews over 400 Contracts Quarterly Reviews over 400 Contracts Quarterly –– Independently Assesses Over $150B of Independently Assesses Over $150B of

Bids Per YearBids Per Year

132


*

100%

80%

60%

40%

20%

0%0 10 20 30 40 50 60

20 / 80Optimistic

80 / 20Conservative

50 / 50Nominal

BidCost

65 / 35Mid-Point

BidPrice

CU

M P

roba

bilit

y (%

)

Cost Outcome Range

What Does ICE DO? What Does ICE DO? ––Establishing ICE Risk RangeEstablishing ICE Risk Range

•• AGGRESSIVE (20/80)AGGRESSIVE (20/80)•• 80% Chance of an overrun80% Chance of an overrun NOMINAL (50/50)

• Equal chance to underrun or overrun.

CONSERVATIVE (80/20)• Will be underrun 4 out

of 5 occurrences• Not worse-case

**

*

133


How Is ICE Used?How Is ICE Used?Provides A Standard For Evaluation Against Provides A Standard For Evaluation Against Corporate GuidelinesCorporate Guidelines

Lockheed Martin Corporate Philosophy Is to Lockheed Martin Corporate Philosophy Is to Protect Shareholder Value by Balancing Protect Shareholder Value by Balancing Risks/RewardsRisks/Rewards

•• Under Normal Circumstances, Will Not Bid a Program Under Normal Circumstances, Will Not Bid a Program Under CostUnder Cost

•• Will Only Bid With a Reasonable Chance of Profitability Will Only Bid With a Reasonable Chance of Profitability •• Will Not Bid to Buy Base/Backlog at a LossWill Not Bid to Buy Base/Backlog at a Loss•• Immediate Recognition of Actual and Forecasted Immediate Recognition of Actual and Forecasted

Program LossProgram Loss•• No Accrual of Unlikely or Unearned ProfitNo Accrual of Unlikely or Unearned Profit

134


ICE is Measured Over the Program ICE is Measured Over the Program Life CycleLife Cycle

Bids

• Root Cause • Process Refinement

OngoingContractUpdates

Completed Contracts

ICE ReportCard Metrics

135


Jerry VanSchaickVice President and

Corporate Treasurer136






Execution: Balanced Cash Deployment

• Debt Repayment• Dividends• Internal Investment• M&A• Share Repurchase

137


Committed to a Competitive Dividend

$0.00

$0.05

$0.10

$0.15

$0.20

$0.25

$0.30

$0.35

Mar

-00

Jun-

00

Sep-

00

Dec

-00

Mar

-01

Jun-

01

Sep-

01

Dec

-01

Mar

-02

Jun-

02

Sep-

02

Dec

-02

Mar

-03

Jun-

03

Sep-

03

Dec

-03

Mar

-04

Jun-

04

Sep-

04

Dec

-04

Mar

-05

Jun-

05

Sep-

05

Dec

-05

Div

iden

d Pe

r Sha

re

$0.11$0.11 $0.12$0.12

$0.22$0.22$0.25$0.25

$0.30$0.30

138


Share Repurchase HistoryShares

Shares (M) Cost ($M) Outstanding (M)

2003 10.7 $ 482 446.72004 14.7 774 440.4YTD Sept ‘05 14.9 936 436.1

Total 40.3 $2,192

Shares Authorized for Repurchase 46.7M

Committed to Reducing the Shares Outstanding

139


Committed to Credit Strength

Long Term Credit Ratings

Moody’s S&P FitchBaa2 BBB+ BBB+Positive Stable Positive

Target Ratings: BBB+/Baa1 to A-/A3

140


Jeffrey MacLauchlan Vice President

Financial Strategies





141


Financial Strategies MissionFinancial Strategies Mission

• To provide value-creative leadership of the merger, acquisition and divestiture process through the identification of targets, negotiation and execution of transactions and post-transaction support

• To manage the corporation’s investments to maximize returns and accomplish strategic objectives

142


Transaction MultiplesTransaction Multiples

A Disciplined, Opportunistic Buyer…..

Note: Excludes Leigh Aerosystems, Soflinx, and Coherent

Ente

rpris

e Va

lue

/ EB

ITD

A

4Q01 4Q051Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 1Q06

LM Transactions

Est. Industry Transactions

Est. IndustryAverage


Investment MonetizationInvestment Monetization

……..while generating value (and cash) as a seller..while generating value (and cash) as a seller

IntelsatIntelsatInmarsatInmarsatNew SkiesNew SkiesOtherOtherTotalTotal

$ 750$ 750450450150150150150

$ 1,500$ 1,500

($M)($M)


Operating Concept

OpportunityIdentification

AndQualification

OpportunityOpportunityIdentificationIdentification

AndAndQualificationQualification

EngagementEngagementAuthorityAuthority

Expression of Interest,

Due DiligenceAnd Negotiate

Expression of Expression of Interest,Interest,

Due DiligenceDue DiligenceAnd NegotiateAnd Negotiate

Final Approval,Announcement

AndSigning-to-closing

activities

Final Approval,Final Approval,AnnouncementAnnouncement

AndAndSigningSigning--toto--closingclosing

activitiesactivities

IntegrateAnd

Post-ClosingActivities

IntegrateIntegrateAndAnd

PostPost--ClosingClosingActivitiesActivities

• Focused on ProcessFocused on Process•• Avoid AuctionsAvoid Auctions•• Fast, Fair and QuietFast, Fair and Quiet•• Diligence TemplateDiligence Template

•• Corporate Team Corporate Team ““at the readyat the ready””

•• Driven by Driven by OperationsOperations

•• Responsibility = Responsibility = AccountabilityAccountability

•• Acquisition Model Acquisition Model becomes becomes CommitmentCommitment

•• FollowFollow--upup

• Gap AnalysisGap Analysis•• ProductsProducts•• ServicesServices•• CustomersCustomers

•• Fit CheckFit Check••StrategicStrategic••OperationalOperational••FinancialFinancial

Acquisitions Are the Result of a Focused, Managed Process

Acquisitions Are the Result of a Acquisitions Are the Result of a Focused, Managed ProcessFocused, Managed Process

145


What’s Next?

• Robust pipeline means more deal flow– Manageable size and complexity– Greater number of smaller deals

• Continued focus on transaction process• Focus on the “sweet spot”

– Government oriented– Technology driven

146


Lockheed Martin Team Creating Shareholder Value

Lockheed Martin Team Lockheed Martin Team Creating Shareholder ValueCreating Shareholder Value

147


Conference Adjourned148

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