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   
Lockheed฀Martin฀Corporation
On฀ June฀ 10,฀ 2003,฀ Lockheed฀ Martin฀ filed฀ a฀ civil฀ com-
plaint฀ in฀ the฀ United฀ States฀ District฀ Court฀ for฀ the฀ Middle฀
District฀ of฀ Florida฀ in฀ Orlando฀ against฀ The฀ Boeing฀ Company฀
(Boeing)฀ and฀ various฀ individuals.฀ On฀ May฀ 24,฀ 2004,฀ the฀
Corporation฀ filed฀ an฀ amended฀ and฀ supplemental฀ complaint,฀
which฀presently฀alleges฀that฀the฀defendants฀solicited,฀acquired฀
and฀ used฀ Lockheed฀ Martin’s฀ proprietary฀ information฀ during฀
the฀competition฀for฀awards฀under฀the฀U.S.฀Air฀Force’s฀Evolved฀
Expendable฀ Launch฀ Vehicle฀ (EELV)฀ programs฀ and฀ others฀ in฀
violation฀of฀Federal฀and฀state฀laws.฀On฀August฀9,฀2004,฀Boeing฀
filed฀ a฀ six-count฀ counterclaim.฀ The฀ counterclaim฀ alleges฀ tor-
tious฀interference฀with฀business฀and฀contract,฀unfair฀and฀decep-
tive฀ trade฀ practices฀ under฀ Florida฀ law,฀ and฀ false฀ advertising฀
under฀the฀Lanham฀Act,฀based฀on฀the฀Corporation’s฀purported฀
disclosure฀to฀the฀U.S.฀Air฀Force฀and฀the฀government฀of฀Boeing’s฀
possession฀ and฀ use฀ of฀ Lockheed฀ Martin’s฀ documents฀ in฀ the฀
EELV฀and฀other฀competitions.฀In฀connection฀with฀the฀proposed฀
formation฀ of฀ United฀ Launch฀ Alliance฀ (see฀ Note฀ 2),฀ Boeing฀
and฀ Lockheed฀ Martin฀ have฀ agreed,฀ simultaneous฀ with฀ the฀
closing฀of฀the฀transaction,฀that฀they฀will฀immediately฀dismiss฀
all฀claims฀against฀each฀other.฀On฀May฀5,฀2005,฀upon฀motions฀
of฀ Boeing฀ and฀ the฀ Corporation,฀ the฀ U.S.฀ District฀ Court฀
฀
suspended฀ all฀ activity฀ in฀ the฀ cases฀ pending฀ the฀ outcome฀ of฀฀
the฀transaction.
On฀ July฀28,฀ 2003,฀BAE฀ SYSTEMS฀ North฀America,฀ Inc.฀
and฀ BAE฀ SYSTEMS฀ Information฀ and฀ Electronic฀ Systems฀
Integration,฀Inc.฀filed฀a฀lawsuit฀against฀the฀Corporation฀in฀the฀
Chancery฀Court฀for฀New฀Castle฀County฀in฀Delaware,฀seeking฀
damages฀of฀not฀less฀than฀$40฀million.฀BAE฀sought฀indemnifi-
cation฀ from฀ Lockheed฀ Martin฀ for฀ BAE’s฀ payment฀ of฀ a฀ civil฀
judgment฀entered฀in฀2001฀and฀related฀costs฀arising฀from฀a฀law-
suit฀involving฀one฀of฀the฀Aerospace฀Electronics฀Systems฀busi-
nesses฀purchased฀by฀BAE฀from฀the฀Corporation฀in฀November฀
2000.฀ As฀ a฀ result฀ of฀ a฀ settlement฀ reached฀ by฀ the฀ parties฀ on฀
November฀18,฀2005,฀the฀lawsuit฀was฀dismissed.฀
Nine฀lawsuits฀were฀filed฀against฀the฀Corporation฀as฀a฀result฀
of฀an฀incident฀in฀July฀2003฀at฀its฀aircraft฀parts฀manufacturing฀
facility฀in฀Meridian,฀Mississippi,฀which฀resulted฀in฀ the฀deaths฀
of฀seven฀of฀its฀employees฀and฀the฀wounding฀of฀eight฀others.฀Six฀
of฀ the฀ lawsuits฀ were฀ filed฀ in฀ the฀ U.S.฀ District฀ Court฀ for฀ the฀
Southern฀District฀of฀Mississippi,฀and฀three฀lawsuits฀were฀filed฀
in฀ the฀ Circuit฀ Court฀ of฀ Lauderdale฀ County,฀ Mississippi.฀
The฀ lawsuits฀ allege฀ various฀ torts,฀ including฀ wrongful฀ death,฀
intentional฀ infliction฀ of฀ injury,฀ negligent฀ supervision,฀ inten-
tional฀ infliction฀ of฀ emotional฀ distress฀ and,฀ in฀ the฀ case฀ of฀ the฀
federal฀ actions,฀ racial฀ or฀ gender฀ discrimination.฀ On฀ July฀ 14,฀
2005,฀the฀U.S.฀Court฀of฀Appeals฀for฀the฀Fifth฀Circuit฀reversed฀
the฀ District฀ Court’s฀ decision฀ denying฀ our฀ motion฀ for฀ partial฀
summary฀ judgment฀ in฀ the฀ Erica฀ Willis฀ Tanks฀ v.฀ Lockheed฀
Martin฀ lawsuit฀ and฀ dismissed฀ the฀ wrongful฀ death฀ and฀ other฀
state฀tort฀claims.฀On฀August฀26,฀2005,฀the฀District฀Court฀dis-
missed฀ the฀ wrongful฀ death฀ and฀ other฀ state฀ tort฀ claims฀ in฀ the฀
other฀five฀lawsuits฀pending฀before฀it.฀One฀of฀the฀lawsuits฀filed฀
in฀state฀court,฀Fitzgerald฀v.฀Lockheed฀Martin,฀has฀settled.฀
In฀a฀lawsuit฀filed฀in฀the฀U.S.฀District฀Court฀for฀the฀Northern฀
District฀ of฀ California,฀ Space฀ Systems฀ Loral฀ alleges฀ that฀ the฀
Corporation’s฀series฀A2100,฀3000,฀4000,฀5000฀and฀7000฀satel-
lites฀ infringe฀ a฀ patent฀ relating฀ to฀ a฀ method฀ and฀ apparatus฀ to฀
minimize฀ attitude฀ changes฀ resulting฀ from฀ satellite฀ thruster฀
operations.฀The฀Corporation฀believes฀that฀its฀satellites฀do฀not฀
infringe฀the฀patent฀and฀is฀vigorously฀defending฀the฀case.
As฀ described฀ in฀ the฀ “Environmental฀ Matters”฀ discussion฀
below,฀Lockheed฀Martin฀is฀subject฀to฀federal฀and฀state฀require-
ments฀ for฀ protection฀ of฀ the฀ environment,฀ including฀ those฀ for฀
discharge฀of฀hazardous฀materials฀and฀remediation฀of฀contami-
nated฀sites.฀As฀a฀result,฀the฀Corporation฀is฀a฀party฀to฀or฀has฀its฀
property฀ subject฀ to฀ various฀ other฀ lawsuits฀ or฀ proceedings฀
involving฀environmental฀matters.฀Due฀in฀part฀to฀their฀complex-
ity฀and฀pervasiveness,฀such฀requirements฀have฀resulted฀in฀the฀
Corporation฀ being฀ involved฀ with฀ related฀ legal฀ proceedings,฀
claims฀and฀remediation฀obligations.฀