Lockheed Martin Corporation principally researches, designs, develops, manufactures,
integrates, operates and supports advanced technology systems, products and services.
We serve customers in domestic and international defense, civil and commercial
markets, with our principal customers being agencies of the U.S. Government. Lockheed
Martin was formed in March 1995 by combining the businesses of Lockheed Corporation
and Martin Marietta Corporation. We are a Maryland corporation.
We operate in five principal business segments: Aeronautics; Electronic Systems;
Space Systems; Integrated Systems & Solutions (IS&S); and Information
& Technology Services.
Aeronautics ' Engaged in the design, research and development, systems integration,
production, support and upgrade of advanced military aircraft and related technologies.
Our customers include the military services of the United States and allied
countries throughout the world. Major products and programs include the F-16
multi-role fighter, F/A-22 air dominance and multi-mission combat aircraft,
F-35 Joint Strike Fighter, Japanese F-2 combat aircraft, Korean T-50 advanced
trainer, C-130 tactical airlift aircraft, C-5 strategic airlift aircraft, C-27J
medium transport aircraft and support for the F-117 stealth fighter and special
mission and reconnaissance aircraft (e.g., P-3 Orion, S-3 Viking, U-2 and Big
Safari modifications).
Electronic Systems ' Engaged in the design, research, development, integration
and production of high performance systems for undersea, shipboard, land and
airborne applications. Major product lines include: missiles and fire control
systems; air and theater missile defense systems; surface ship and submarine
combat systems; anti-submarine and undersea warfare systems; avionics and ground
combat vehicle integration; radars; platform integration systems; homeland security
systems; surveillance and reconnaissance systems; advanced aviation management;
security and information technology solutions; simulation and training systems;
and postal automation systems.
Space Systems ' Engaged in the design, research, development, engineering and
production of satellites, strategic and defensive missile systems and launch
services. The satellite product line includes both government and commercial
satellites. Strategic and defensive missile systems include airborne and missile
defense technologies and fleet ballistic missiles. Launch services include launches
on Titan IV, Atlas and Proton launch vehicles, and also include the Space Shuttle's
external tank. In addition, the segment has investments in joint ventures that
are principally engaged in businesses that complement and enhance other activities
of the segment.
Integrated Systems & Solutions (IS&S)' Engaged in the design, research,
development, integration and management of net-centric solutions supporting
the command, control, communications, computers, intelligence, reconnaissance
and surveillance (C4ISR) activities of the U.S. Department of Defense (DoD),
intelligence agencies, other federal agencies and allied countries. IS&S
provides technology, full life-cycle support and highly specialized talent in
the areas of software and systems engineering, including expertise in space,
air and ground systems. IS&S serves as the Corporation's focal point for
customers with joint and net-centric operations requiring overarching architectures,
horizontal systems integration, and inter-connected capabilities for the gathering,
processing, storage and delivery of on-demand information for mission management,
modeling, simulation and large-scale systems integration.
Information & Technology Services ' Engaged in a wide array of information
technology (IT), IT-related, and other technology services to federal agencies
and other customers. Major product lines include: information technology integration
and management; enterprise solutions; application development, maintenance,
and consulting for strategic programs for the DoD and civil government agencies;
aircraft and engine maintenance and modification services; management, operation,
maintenance, training and logistics support for military, homeland security
and civilian systems; launch, mission and analysis services for military, classified
and commercial satellites; engineering, science and information services for
NASA; and research, development, engineering and science in support of nuclear
weapons stewardship and naval reactor programs.
Aspects of our business require relatively scarce raw materials. We generally
have not experienced difficulty in our ability to obtain raw materials and other
supplies needed in our manufacturing processes. We seek to manage raw materials
supply risk through long-term contracts and by maintaining a stock of key materials
in inventory.
Aluminum and titanium are important raw materials used in certain of our Aeronautics
and Space programs. Aluminum and titanium generally have been in good supply.
Carbon fiber is an important ingredient in the composite material that is used
in our Aeronautics programs, such as the F/A-22 and F-35. Nicalon fiber also
is a key material used on the F/A-22 aircraft. One type of carbon fiber and
the nicalon fiber that we use are currently only available from single-source
suppliers. Aluminum lithium, which we use in the producing the Space Shuttle's
external tank and for F-16 structural components, also is currently only available
from limited sources. While we do not anticipate material problems regarding
the supply of our raw materials, it is possible that the unavailability of key
materials in the future could delay one or more of our programs, result in increased
costs or reduce award fees.
No material portion of our business is considered to be seasonal. Various factors
can affect the distribution of our revenue between accounting periods, including
the timing of government awards, the availability of government funding, product
deliveries and customer acceptance.
Government Contracts and Regulation
Our businesses are heavily regulated in most of our fields of endeavor. We
deal with numerous U.S. Government agencies and entities, including all of the
branches of the U.S. military, NASA, the U.S. Postal Service, the Social Security
Administration, the Patent and Trademark Office, and the Departments of Energy,
Justice, Health and Human Services, Homeland Security, State and Transportation.
Similar government authorities exist with respect to our international efforts.
The U.S. Government, and other governments, may terminate any of our government
contracts and, in general, subcontracts, at their convenience as well as for
default based on performance. If any of our government contracts were to be
terminated for convenience, we generally would be entitled to receive payment
for work completed and allowable termination or cancellation costs.
Upon termination for convenience of a fixed-price type contract, we normally
are entitled to receive the purchase price for delivered items, reimbursement
for allowable costs for work-in-process and an allowance for profit on the contract
or adjustment for loss if completion of performance would have resulted in a
loss. Upon termination for convenience of a cost reimbursement contract, we
normally are entitled to reimbursement of allowable costs plus a portion of
the fee. The amount of the fee recovered, if any, is related to the portion
of the work accomplished prior to termination and is determined by negotiation.
We derive approximately 78% of our revenue from sales to the U.S. Government.
We expect that U.S. Government sales will be the primary source of our revenue
for the foreseeable future. Our ability to successfully compete for and retain
business is highly dependent on technical excellence, management proficiency,
strategic alliances, cost-effective performance and the ability to recruit and
retain key personnel. U.S. Government programs are subject to uncertain future
funding levels that can result in the extension or termination of programs.
Our business is also highly sensitive to changes in national and international
priorities and U.S. Government budgets.
With respect to military aircraft, we compete with both domestic and international
companies. Some or all of these companies are competing, or preparing to compete
for unmanned military aircraft sales. Our military aircraft programs also face
potential competition from the application of derivatives of commercial aircraft
to missions that require large aircraft and the application of unmanned vehicles
to missions that are now served by tactical-bomber capabilities.
With respect to tactical fighters, the F-16 remains a formidable competitor,
especially on the basis of price. It competes less effectively where stealth
is a major determinant, but otherwise the ability to update its capabilities
with changes in sensor and weapon systems makes the F-16 a strong competitor.
Electronic Systems' broad portfolio of products and services forces it to compete
against other large aerospace and defense companies and numerous smaller competitors.
Electronic Systems' business units often form teams with other companies that
are competitors in other areas. The principal factors of competition include
technical and management capability, price, past performance and our ability
to provide solutions to our customers' requirements on a timely basis.
We compete worldwide for satellites, launch services and strategic and defensive
missile systems against numerous competitors.
I&TS competes against other aerospace and defense firms, IT service providers
and other service companies. The competitive landscape is highly fragmented
with no single company or small group of companies in dominant positions. The
principal factors of competition include price, technical and management capability,
past performance and, increasingly, the ability to develop and implement complex,
integrated solutions to meet the challenges facing government customers across
their entire enterprise.