TSX-SGI September 2005 Investor Presentation September 2005.
2005 Investor Conference Conf.pdf · 2013-02-02 · 2005 Investor Conference November 8, 2005 Our...
Transcript of 2005 Investor Conference Conf.pdf · 2013-02-02 · 2005 Investor Conference November 8, 2005 Our...
2005 Investor ConferenceNovember 8, 2005
2005 Investor ConferenceNovember 8, 2005
Jim RyanVice President
Investor Relations2
Welcome andIntroduction
2005 Investor ConferenceNovember 8, 2005
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
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2005 Investor ConferenceNovember 8, 2005
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
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2005 Investor ConferenceNovember 8, 2005
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
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2005 Investor ConferenceNovember 8, 2005
Bob StevensChairman, President & Chief Executive Officer
Strategy to Create Value
Through Innovation & Integrity
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2005 Investor ConferenceNovember 8, 2005
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
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2005 Investor ConferenceNovember 8, 2005
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
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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
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Creative Combinations(Horizontal Integration)
• Understand Nature of Customers Challenges
• Mobilize Talent, Technology, and Industrial Base
• Leverage Value• Minimize Risk
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2005 Investor ConferenceNovember 8, 2005
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
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2005 Investor ConferenceNovember 8, 2005
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
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2005 Investor ConferenceNovember 8, 2005
Systems & Information TechnologyElectronicSystems
ElectronicElectronicSystemsSystems
Information & Technology Services
Information & Information & Technology ServicesTechnology Services
IntegratedSystems & Solutions
IntegratedIntegratedSystems & SolutionsSystems & Solutions
Systems & Systems & InformationInformationTechnologyTechnology
Space Space SystemsSystems
AeronauticsAeronautics
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Michael CamardoExecutive Vice President
Information & Technology Services
Stan SloaneExecutive Vice President
Integrated Systems & Solutions
Bob CouttsExecutive Vice President
Electronic Systems
Systems & Information Systems & Information Technology Technology
Systems & IT Markets
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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
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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
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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
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Merlin Capability Sustainment Program (MCSP)
IWNIWN
Systems & Information Systems & Information Technology Technology
IT Capability
Michael CamardoExecutive Vice President
Information & Technology Services
Stan SloaneExecutive Vice President
Integrated Systems & Solutions
Bob CouttsExecutive Vice President
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
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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
2005 Investor ConferenceNovember 8, 2005
Systems & Information Systems & Information Technology Technology
People & Horizontal Integration
Michael CamardoExecutive Vice President
Information & Technology Services
Stan SloaneExecutive Vice President
Integrated Systems & Solutions
Bob CouttsExecutive Vice President
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
2005 Investor ConferenceNovember 8, 2005
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
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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)
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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
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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
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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
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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
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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)
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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
322005 Investor ConferenceNovember 8, 2005
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
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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
342005 Investor ConferenceNovember 8, 2005
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
352005 Investor ConferenceNovember 8, 2005
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
362005 Investor ConferenceNovember 8, 2005
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2005 Investor ConferenceNovember 8, 2005
Judy MarksPresident
Transportation & Security Solutions
Frank MeyerPresident
Systems Integration - Owego
Adjacent Markets
Civil Government
Rotary Winged Aircraft
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2005 Investor ConferenceNovember 8, 2005
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
2005 Investor ConferenceNovember 8, 2005
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
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2005 Investor ConferenceNovember 8, 2005
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
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2005 Investor ConferenceNovember 8, 2005
• 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
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2005 Investor ConferenceNovember 8, 2005
• 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
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2005 Investor ConferenceNovember 8, 2005
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
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2005 Investor ConferenceNovember 8, 2005
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
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2005 Investor ConferenceNovember 8, 2005
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
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2005 Investor ConferenceNovember 8, 2005
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
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2005 Investor ConferenceNovember 8, 2005
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
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Experience • Depth Innovative Business Model
2005 Investor ConferenceNovember 8, 2005
>$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
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2005 Investor ConferenceNovember 8, 2005
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
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2005 Investor ConferenceNovember 8, 2005
• 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
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Linda GoodenPresident
Information Technology – I&TS53
GovernmentInformationTechnology
An Engine for Growth
2005 Investor ConferenceNovember 8, 2005
Government IT OverviewGovernment IT Overview
Business SystemsBusiness Systems
Consulting / ArchitectureConsulting / Architecture
Mission SystemsMission Systems
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
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Government IT CharacteristicsGovernment IT Characteristics
Business SystemsBusiness Systems
Consulting / ArchitectureConsulting / Architecture
Mission SystemsMission Systems
Market Requires Adaptable Market Requires Adaptable Business ModelsBusiness Models
IT InfrastructureIT Infrastructure
Engineering ServicesEngineering Services
Bus
ines
s Pr
oces
s Se
rvic
esB
usin
ess
Proc
ess
Serv
ices
Bus
ines
s Pr
oces
s Se
rvic
es
•• 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
Funding Source:Funding Source:
•• Separate Line ItemSeparate Line Item
•• Government ITGovernment IT
•• O&M BudgetO&M Budget
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2005 Investor ConferenceNovember 8, 2005
Government IT CharacteristicsGovernment IT Characteristics
Business SystemsBusiness Systems
Consulting / ArchitectureConsulting / Architecture
Mission SystemsMission Systems
IT InfrastructureIT Infrastructure
Engineering ServicesEngineering Services
Bus
ines
s Pr
oces
s Se
rvic
esB
usin
ess
Proc
ess
Serv
ices
Bus
ines
s Pr
oces
s Se
rvic
es
•• 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
Funding Source:Funding Source:
•• Separate Line ItemSeparate Line Item
•• Government ITGovernment IT
•• O&M BudgetO&M Budget
Market Requires Adaptable Market Requires Adaptable Business ModelsBusiness Models 56
2005 Investor ConferenceNovember 8, 2005
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
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2005 Investor ConferenceNovember 8, 2005
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
ProprietaryProprietaryTurnkeyTurnkey
SolutionsSolutions
PerformancePerformance--basedbasedBusinessBusinessOutcomesOutcomes
OpenCOTS
Components
OpenOpenCOTSCOTS
ComponentsComponents
ProprietaryTurnkey
Solutions
ProprietaryProprietaryTurnkeyTurnkey
SolutionsSolutions
19951995 20002000 20052005
58
2005 Investor ConferenceNovember 8, 2005
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
2005 Investor ConferenceNovember 8, 2005
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
2005 Investor ConferenceNovember 8, 2005
Government IT StrategyGovernment IT Strategy
Clear Strategy Clear Strategy ……Innovative Business ModelsInnovative Business Models
Business SystemsBusiness Systems
Consulting / ArchitectureConsulting / Architecture
Mission SystemsMission Systems
IT InfrastructureIT Infrastructure
Engineering ServicesEngineering Services
Bus
ines
s Pr
oces
s Se
rvic
esB
usin
ess
Proc
ess
Serv
ices
Bus
ines
s Pr
oces
s Se
rvic
es
61
2005 Investor ConferenceNovember 8, 2005
Government IT StrategyGovernment IT Strategy
Business SystemsBusiness Systems
Consulting / ArchitectureConsulting / Architecture
Mission SystemsMission Systems
IT InfrastructureIT Infrastructure
Engineering ServicesEngineering Services
Bus
ines
s Pr
oces
s Se
rvic
esB
usin
ess
Proc
ess
Serv
ices
Bus
ines
s Pr
oces
s Se
rvic
es
• Maintain Technology Discriminator
• Invention Drives Advantage
• Capitalize on Brand
•• Maintain Technology Maintain Technology DiscriminatorDiscriminator
•• Invention Drives Invention Drives AdvantageAdvantage
•• Capitalize on BrandCapitalize on Brand
Clear Strategy Clear Strategy ……Innovative Business ModelsInnovative Business Models
62
2005 Investor ConferenceNovember 8, 2005
Government IT StrategyGovernment IT Strategy
Business SystemsBusiness Systems
Consulting / ArchitectureConsulting / Architecture
Mission SystemsMission Systems
IT InfrastructureIT Infrastructure
Engineering ServicesEngineering Services
Bus
ines
s Pr
oces
s Se
rvic
esB
usin
ess
Proc
ess
Serv
ices
Bus
ines
s Pr
oces
s Se
rvic
es
• Maintain Technology Discriminator
• Invention Drives Advantage
• Capitalize on Brand
•• Maintain Technology Maintain Technology DiscriminatorDiscriminator
•• Invention Drives Invention Drives AdvantageAdvantage
•• 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
Clear Strategy Clear Strategy ……Innovative Business ModelsInnovative Business Models
63
2005 Investor ConferenceNovember 8, 2005
Government IT StrategyGovernment IT Strategy
Business SystemsBusiness Systems
Consulting / ArchitectureConsulting / Architecture
Mission SystemsMission Systems
IT InfrastructureIT Infrastructure
Engineering ServicesEngineering Services
Bus
ines
s Pr
oces
s Se
rvic
esB
usin
ess
Proc
ess
Serv
ices
Bus
ines
s Pr
oces
s Se
rvic
es
• Maintain Technology Discriminator
• Invention Drives Advantage
• Capitalize on Brand
•• Maintain Technology Maintain Technology DiscriminatorDiscriminator
•• Invention Drives Invention Drives AdvantageAdvantage
•• 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
Clear Strategy Clear Strategy ……Innovative Business ModelsInnovative Business Models
64
2005 Investor ConferenceNovember 8, 2005
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
2005 Investor ConferenceNovember 8, 2005
#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
2005 Investor ConferenceNovember 8, 2005 67
2005 Investor ConferenceNovember 8, 2005
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.
2005 Investor ConferenceNovember 8, 2005
Tom BradleyVice President
Business Management
Tom MarshExecutive Vice President
Space Systems
Space Systems
Information Superiority
69
2005 Investor ConferenceNovember 8, 2005
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
2005 Investor ConferenceNovember 8, 2005
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
2005 Investor ConferenceNovember 8, 2005
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
2005 Investor ConferenceNovember 8, 2005
Global Positioning System
Over An Eightfold Increase In Precision Guided Weapons
Accuracy In Iraq Through GPS73
2005 Investor ConferenceNovember 8, 2005
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
2005 Investor ConferenceNovember 8, 2005
A View From Space
Gyza Pyramids
IKONOS
Transforming Visual Information Transforming Visual Information Into Visible ResultsInto Visible Results 75
2005 Investor ConferenceNovember 8, 2005
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
2005 Investor ConferenceNovember 8, 2005
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
2005 Investor ConferenceNovember 8, 2005
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
2005 Investor ConferenceNovember 8, 2005
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
2005 Investor ConferenceNovember 8, 2005
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
2005 Investor ConferenceNovember 8, 2005
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
2005 Investor ConferenceNovember 8, 2005
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
2005 Investor ConferenceNovember 8, 2005
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
2005 Investor ConferenceNovember 8, 2005
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
2005 Investor ConferenceNovember 8, 2005
New Business Focus
Transformational Comm (TCS) GPS III
GOES-R
Crew Exploration Vehicle (CEV)
ISS Cargo
Classified
Space Radar
85
2005 Investor ConferenceNovember 8, 2005
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
2005 Investor ConferenceNovember 8, 2005 87
2005 Investor ConferenceNovember 8, 2005
Ralph HeathExecutive Vice President
Aeronautics
Aeronautics for the 21st Century
2005 Investor ConferenceNovember 8, 2005 88
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
2005 Investor ConferenceNovember 8, 2005 104
2005 Investor ConferenceNovember 8, 2005
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
2005 Investor ConferenceNovember 8, 2005
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
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)
EntitlementEntitlementProgramsPrograms(Medicare(MedicareMedicaidMedicaidSoc. Sec.)Soc. Sec.)
58%58%
DefenseDefense16%16%
InterestInterest10%10%
DomesticDomesticProgramsPrograms16%16%
Source: Office of Management & Budget
SupplementalSupplemental1%1%
108
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)
EntitlementEntitlementProgramsPrograms(Medicare(MedicareMedicaidMedicaidSoc. Sec.)Soc. Sec.)
58%58%
DefenseDefense16%16%
InterestInterest10%10%
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
2005 Investor ConferenceNovember 8, 2005
International Business Activities
• Export Markets Remain Strong
• New Market Opportunities
• Global Industrial Base
112
Our Global Presence• 2004 International Sales of $6B• Over 300 Partnerships• Global Products for Global Markets
113
Lockheed Martin Cross Border Relationships
CC--27J Spartan:27J Spartan:Partnership with Alenia
CC--130J: 130J: 20% UK-owned Content, 2500 UK Jobs
ATLAS V:ATLAS V:Russian RD-180 Engine MEADS: MEADS: Joint Development
Among US, Germany, and Italy
FF--310 Norwegian Frigate: 310 Norwegian Frigate: Spanish Shipbuilder (IZAR),
US Weapon System (AEGIS)
JSF: JSF: 8 Partner Nations
Littoral Combat Ship: Littoral Combat Ship: 21% International Content
USUS--101: 101: LM/Bell/Agusta Westland Team
Deepwater:Deepwater:EADS/CASA CN-235
TT--50: 50: Joint Program with Korea
Aerospace Industries (KAI)
114
2005 Investor ConferenceNovember 8, 2005 115
2005 Investor ConferenceNovember 8, 2005
Chris KubasikExecutive Vice President &
Chief Financial Officer116
Driving Value
CFO’s Perspective
2005 Investor ConferenceNovember 8, 2005
Lockheed Martin Finance….Driving Value
• People
• Focus ROIC
• Processes ICE
• Execution Cash Deployment
• M&A
117
2005 Investor ConferenceNovember 8, 2005
Excellent Team .. And TeamworkExcellent Team .. And Teamwork
People
118
Marty StanislavVice President & Controller
2005 Investor ConferenceNovember 8, 2005
FocusFocusReturn on Invested Capital
ProcessesIndependent Cost Evaluation
ExecutionCash Deployment
M&AFinancial Strategies
119
Return on Invested Capital CalculationReturn on Invested Capital Calculation($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
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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
2005 Investor ConferenceNovember 8, 2005
Dick JandaVice President
Program Assessment & Evaluation
FocusReturn on Invested Capital
ProcessesProcessesIndependent Cost Evaluation
ExecutionCash Deployment
M&AFinancial Strategies
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2005 Investor ConferenceNovember 8, 2005
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
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2005 Investor ConferenceNovember 8, 2005
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
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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
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*
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
**
*
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2005 Investor ConferenceNovember 8, 2005
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
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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
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Jerry VanSchaickVice President and
Corporate Treasurer136
FocusReturn on Invested Capital
ProcessesIndependent Cost Evaluation
ExecutionCash Deployment
M&AFinancial Strategies
2005 Investor ConferenceNovember 8, 2005
Execution: Balanced Cash Deployment
• Debt Repayment• Dividends• Internal Investment• M&A• Share Repurchase
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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$0.30
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2005 Investor ConferenceNovember 8, 2005
Share Repurchase HistoryShares
Shares (M) Cost ($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
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2005 Investor ConferenceNovember 8, 2005
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
2005 Investor ConferenceNovember 8, 2005
Jeffrey MacLauchlan Vice President
Financial Strategies
FocusReturn on Invested Capital
ProcessesIndependent Cost Evaluation
ExecutionCash Deployment
M&AFinancial Strategies
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2005 Investor ConferenceNovember 8, 2005
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
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2005 Investor ConferenceNovember 8, 2005
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
2005 Investor ConferenceNovember 8, 2005
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)
2005 Investor ConferenceNovember 8, 2005
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
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2005 Investor ConferenceNovember 8, 2005
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
2005 Investor ConferenceNovember 8, 2005
Lockheed Martin Team Creating Shareholder Value
Lockheed Martin Team Lockheed Martin Team Creating Shareholder ValueCreating Shareholder Value
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2005 Investor ConferenceNovember 8, 2005
Conference Adjourned148