Lockheed Martin 2010 Annual Report Download - page 30

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To date, Congress has funded U.S. military operations in Afghanistan and Iraq, and other unforeseeable contingency or
peacekeeping operations, through a separate Overseas Contingency Operations (OCO) funding outside of the base DoD budget. The
OCO funding for fiscal year 2011 totaled $159 billion, and the Administration requested $118 billion in fiscal year 2012. Our sales
historically have not been significantly dependent on overseas contingency or supplemental funding requests, and therefore we
continue to focus our attention on the DoD’s base budget for support and funding of our programs.
In December 2010, Congress passed a continuing resolution funding measure for fiscal year 2011 to finance all U.S.
Government activities through March 4, 2011. Under this continuing resolution, partial-year funding at amounts consistent with
appropriated levels for fiscal year 2010 are available, subject to certain restrictions, but new spending initiatives are not authorized.
Our key programs continue to be supported and funded despite the continuing resolution financing mechanism. However, during
periods covered by continuing resolutions (or until the regular appropriation bills are passed), we may experience delays in
procurement of products and services due to lack of funding, and those delays may affect our sales and profit during the period. The
current continuing resolution has not had a material effect on our results of operations, financial position, or cash flows. The arrival of
a new Congress in January 2011 with the House of Representatives and Senate under control of different political parties creates the
potential for some uncertainty as to whether the government will continue to operate under a continuing resolution for the remainder
of the fiscal year or will be able to enact appropriations legislation.
We believe our broad mix of programs and capabilities continues to position us favorably to support the current and future needs
of the DoD. As the DoD increases its emphasis on affordability in the current fiscal environment and continues to respond to the
increasingly complex and dynamic global security environment, many of our products remain well-positioned to meet the needs of the
military services. For example, while Secretary Gates proposed changes to our F-35 program which will affect the aircraft’s
development and transition to production (see the F-35 discussion under the caption “Other Business Considerations” in this section),
the aircraft remains a national priority. Additionally, the U.S. Navy plans to evolve the Aegis air and missile defense system through
modernization programs to derive maximum utility over the long service lives of these systems. The Navy also recently decided to
procure up to ten additional Littoral Combat Ships from us over the next five years.
The need for more affordable logistics and sustainment, expansive use of information technology and knowledge-based
solutions, and vastly improved levels of network and cybersecurity, all appear to continue to be national priorities. To address these
priorities, we have been growing our portfolio in these areas, diversifying our business, and expanding into adjacent businesses and
programs that include surface naval vessels, rotary wing aviation, and land vehicles.
We have expanded production of the C-130J Super Hercules tactical airlifter to meet the needs of the U.S. Government and
international customers. Despite recent proposed changes, we continue to prepare for increased production of the F-35 Lightning II
Joint Strike Fighter for the U.S. Navy, Air Force, and Marine Corps, and international partners in future years. This program continues
to be a significant element of a broader U.S. effort to build the capacity of alliance partners throughout the world. In the areas of
space-based intelligence and information superiority, we are the prime contractor on programs such as the Global Positioning Satellite
program, Mobile User Objective System, the Advanced Extremely High Frequency system, the Space-Based Infrared System-High,
and classified programs.
Our products are represented in almost every aspect of land, sea, air, and space-based missile defense, including the Aegis, the
Patriot Advanced Capability (PAC) missile program, and the Terminal High Altitude Area Defense (THAAD) transportable defensive
missile system. We continue to perform on contracts to develop and deliver essential munitions, missile, and other systems, such as
Hellfire, Guided Multiple Launch Rocket Systems, and EQ-36 radar systems. We also have unmanned systems capabilities, including
air, ground, and underwater systems.
In the area of command, control, communications, computers, intelligence, surveillance, and reconnaissance (C4ISR) programs,
our capabilities include the Airborne Maritime Fixed Joint Tactical Radio System, the Warfighter Information Network – Tactical, the
Combatant Commanders Integrated Command and Control System, and the Global Communications Support System – Air Force.
We have a significant presence in the support and modernization of the DoD’s information technology systems. We see
opportunities for expansion of our sustainment and logistical support activities to enhance the longevity and cost-effectiveness of the
systems procured by our customers, and for improving global supply chain management.
Non-Department of Defense Business
Our experience in the defense arena, together with our core information technology and services expertise, has enabled us to
provide products and services to a number of government agencies, including the Departments of Homeland Security, Justice,
Commerce, Health and Human Services, Transportation, and Energy, the U.S. Postal Service, the Social Security Administration, the
Federal Aviation Administration, the National Aeronautics and Space Administration (NASA), the Environmental Protection Agency
(EPA), the National Archives, and the Library of Congress.