Lockheed Martin 2005 Annual Report Download - page 21

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estimated฀to฀increase฀from฀$84฀billion฀in฀2007฀to฀$118฀billion฀
in฀ 2011.฀ Research,฀ Development,฀ Test฀ and฀ Engineering฀
(RDT&E)฀spending฀will฀remain฀roughly฀the฀same฀during฀this฀
period,฀ ranging฀ from฀ $73฀ billion฀ in฀ 2007฀ to฀ $75฀ billion฀ in฀
2009,฀declining฀then฀to฀$71฀billion฀in฀2011.
While฀subject฀to฀change฀in฀future฀specific฀budget฀submis-
sions฀ and฀ annual฀ appropriation฀ by฀ Congress,฀ these฀ estimates฀
continue฀the฀Administration’s฀long฀stated฀intent฀to฀modernize฀
the฀Armed฀Forces฀while฀prosecuting฀the฀war฀on฀terrorism.฀The฀
differing฀ trends฀ in฀ Procurement฀ and฀ RDT&E฀ budgets฀ reflect฀
the฀ maturation฀ of฀ programs฀ emerging฀ from฀ RDT&E฀ funding฀
into฀procurement,฀such฀as฀the฀F-35฀program.
In฀the฀past฀two฀years,฀Congress฀provided฀for฀supplemental฀
appropriations฀to฀defray฀costs฀for฀Operation฀Iraqi฀Freedom฀and฀
Operation฀Enduring฀Freedom฀in฀Afghanistan.฀Approximately฀
$50฀ billion฀ has฀ already฀ been฀ provided฀ relative฀ to฀ 2006฀ and฀
another฀ $70฀ billion฀ has฀ been฀ requested.฀ These฀ supplemental฀
appropriations฀ have฀ enabled฀ the฀ DoD฀ to฀ proceed฀ on฀ critical฀
modernization฀and฀acquisition฀programs,฀versus฀using฀amounts฀
available฀for฀those฀programs฀to฀pay฀for฀the฀Iraq฀and฀Afghanistan฀
missions.฀ While฀there฀is฀no฀assurance฀ that฀additional฀supple-
mental฀ appropriations฀ will฀ be฀ approved฀ by฀ Congress,฀ we฀ do฀
not฀believe฀that฀sustained฀operations฀in฀Iraq฀and฀Afghanistan฀
will฀ materially฀ impact฀ the฀ procurement฀ and฀ research฀ and฀
development฀budget฀in฀the฀near฀term.
We฀believe฀that฀our฀broad฀mix฀of฀programs฀and฀capabili-
ties฀ positions฀ us฀ favorably฀ to฀ support฀ the฀ future฀ needs฀ of฀ the฀
various฀agencies฀of฀the฀U.S.฀Government฀in฀defense฀and฀infor-
mation฀ technology.฀ Our฀ major฀ programs฀ and฀ capabilities฀
include:฀ missile฀ defense;฀ space฀ intelligence;฀ command,฀ con-
trol,฀ communications,฀ computers,฀ intelligence,฀ surveillance฀
and฀ reconnaissance฀ (C4ISR);฀ air฀ mobility฀ aircraft;฀ and฀ air-
power฀ projection/precision-strike฀ capability.฀ In฀ terms฀ of฀ size฀
and฀ long-term฀ potential฀ impact,฀ two฀ of฀ our฀ more฀ significant฀
programs฀are฀the฀F-22฀Raptor฀and฀the฀F-35฀Joint฀Strike฀Fighter.฀
The฀ Air฀ Force฀ approved฀ the฀ F-22฀ for฀ full฀ rate฀ production,฀
declared฀initial฀operational฀capability฀and฀rated฀the฀F-22฀“mis-
sion฀ capable”฀ based฀ on฀ successful฀ completion฀ of฀ operational฀
testing.฀ The฀ DoD฀ plans฀ to฀ continue฀ production฀ of฀ the฀ F-22฀
through฀2011฀to฀coincide฀with฀the฀anticipated฀production฀of฀the฀
F-35฀ to฀ avoid฀ a฀ gap฀ in฀ 5TH฀ Generation฀ fighter฀ stealth฀ and฀
advanced฀avionics฀capabilities.฀While฀the฀ultimate฀number฀of฀
F-35s฀to฀be฀produced฀will฀continue฀to฀be฀subject฀to฀debate,฀the฀
QDR฀and฀budget฀indicate฀support฀for฀the฀program.฀
We฀ are฀ also฀ represented฀ in฀ almost฀ every฀ aspect฀ of฀ land,฀
sea,฀air฀and฀space-based฀missile฀defense,฀including฀the฀AEGIS฀
Weapon฀System฀program,฀the฀Medium฀Extended฀Air฀Defense฀
System฀ (MEADS),฀ the฀ Patriot฀ Advanced฀ Capability฀ (PAC-3)฀
missile฀ program,฀ the฀ Terminal฀ High฀ Altitude฀ Area฀ Defense฀
(THAAD)฀system,฀and฀the฀Multiple฀Kill฀Vehicle฀program.฀In฀the฀
areas฀ of฀ space฀ intelligence฀ and฀ information฀ superiority,฀ we฀
have฀ leadership฀ positions฀ on฀ programs฀ such฀ as฀ the฀ TSAT฀
Mission฀ Operations฀ System฀ (TMOS),฀ Mobile฀ User฀ Objective฀
System฀ (MUOS),฀ the฀ Advanced฀ Extremely฀ High฀ Frequency฀
(AEHF)฀ system,฀ and฀ the฀ Space-Based฀ Infrared฀ System-High฀
(SBIRS-H),฀and฀in฀classified฀programs฀and฀battle฀management฀
command฀and฀control฀capabilities.฀In฀airlift,฀we฀have฀the฀C-130J฀
program฀ and฀ are฀ under฀ contract฀ to฀ upgrade฀ the฀ C-5฀ strategic฀
airlift฀aircraft.฀Many฀of฀the฀aforementioned฀programs฀require฀
funding฀over฀several฀budget฀cycles.฀There฀is฀always฀an฀inher-
ent฀ risk฀ that฀ these฀ and฀ other฀ large,฀ highly฀ visible฀ programs฀
which฀are฀ subject฀to฀annual฀appropriation฀by฀Congress฀could฀
become฀ potential฀ targets฀ for฀ future฀ reductions฀ or฀ elimination฀
of฀funding฀to฀pay฀for฀other฀programs.
We฀continually฀explore฀opportunities฀to฀expand฀into฀adja-
cent฀product฀lines฀utilizing฀our฀existing฀advanced฀technology฀
products฀ and฀ services,฀ and฀ have฀ been฀ successful฀ in฀ doing฀ so฀
through฀such฀programs฀as฀the฀Littoral฀Combat฀Ship฀and฀Marine฀
One฀U.S.฀Presidential฀ Helicopter฀programs.฀We฀also฀are฀con-
tinuing฀to฀pursue฀opportunities฀to฀expand฀our฀sustainment฀and฀
logistical฀support฀activities฀to฀enhance฀the฀longevity฀of฀the฀sys-
tems฀procured฀by฀our฀customers.฀In฀addition,฀we฀have฀focused฀
our฀efforts฀on฀select฀acquisitions,฀cost฀savings฀and฀improving฀
efficiency.฀Through฀these฀activities,฀we฀have฀been฀able฀to฀pass฀
along฀savings฀to฀our฀customers,฀mainly฀the฀U.S.฀Government.

We฀provide฀products฀and฀services฀to฀a฀number฀of฀government฀
agencies฀ other฀ than฀ the฀ DoD,฀ including฀ the฀ Departments฀ of฀
Homeland฀ Security,฀ Justice,฀ Commerce,฀ Health฀ and฀ Human฀
Services฀ 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)฀ and฀the฀Library฀
of฀ Congress.฀ Although฀ our฀ lines฀ of฀ business฀ addressing฀ civil฀
government฀needs฀are฀not฀dependent฀on฀defense฀budgets,฀they฀
share฀many฀of฀the฀same฀risks฀as฀our฀defense฀businesses,฀as฀well฀
as฀other฀risks฀unique฀to฀the฀particular฀programs.฀
Lockheed฀Martin฀Corporation