Today’s Challenges in Acquisition Management Marcy Palus VP, Contracts, Electronic Systems

Understanding the Challenges Environment Who We Are 2007 Sales by Business Area 2007 Sales by Customer Domestic Evolution International Growth Domestic / International Comparison Demographics Complicate the Challenges

Lockheed Martin Business Areas Space Systems Aeronautics Information Systems & Global Services Electronic Systems Our Four Business Areas

Information Systems & Global Services 2007 Sales by Business Area Electronic Systems $11.2B Aeronautics $12.3B 27% 29% 24% Information Systems & Global Services $10.2B 20% Delivering Disciplined Performance In today’s competitive global marketplace, there is no substitute for meeting commitments and expectations – whether that’s operational or financial performance. Disciplined Performance means striving to be the partner of choice, supplier of choice, and employer of choice. We have a well-balanced portfolio of businesses that enables us to help our customers meet their most challenging goals… In defense and security … In delivering vital government services to the public… Space Systems $8.2B Total Sales - $41.9B

Civil Government/ Homeland Security/ Intelligence and Other 2007 Sales by Customer Civil Government/ Homeland Security/ Intelligence and Other Defense 27% 58% 15% Defense = $24,302 Million Civil Government /HLS/Intelligence = $11,313 Million International = Direct Foreign Sales + FMS + Commercial Export = $6,285 Million Lockheed Martin typically accounts for about 19 percent of global defense exports and about 40 percent of all U.S. defense exports. International Air Force 23% Navy/USMC 23% Army 9% Other DoD 3% Total Sales - $41.9B

We Never Forget Who We’re Working For  Our Customers Departments of Defense Homeland Security Commerce Energy Health & Human Services Housing & Urban Development Justice State Transportation NASA Social Security Administration Environmental Protection Agency U.S. Postal Service Intelligence Communities Foreign Governments Defense/Intelligence The U.S. Armed Services and those of allied nations apply cutting-edge technologies to address their mission-critical requirements. Servicemen and women serving the cause of freedom must have assets in space, the air, on land and at sea as well as the technologies that provide them a seamless integrated picture of the battlespace. Homeland Security The United States must secure a homeland with 429 commercial airports; more than 4,000 miles of coastline, 300 seaports and 7,500 miles of land borders; as well as six million shipping containers that cross points of entry into our country a year. Government Information Technology & Services As a leader in E-Government solutions, Lockheed Martin applies extensive Information Technology (IT) capability across the breadth of more than a dozen federal agencies that serve the American people. Lockheed Martin’s affinity with vital institutions has made this Corporation a valued and trusted partner. We Never Forget Who We’re Working For 

Did You Know? Missiles & Fire Control Produced the 5,000th GMLRS Delivered the 20,000th Hellfire missile Exceeded 30,000 Javelin missile deliveries Achieved 212 consecutive months of ahead-of-schedule ATACMS deliveries Systems Integration - Owego Surpassed 5,200 test miles on two JLTV prototypes Exceeded 700 flight test hours on VH-71 test aircraft Converted 120th A-10 to the A-10C Precision Engagement configuration Maritime Systems & Sensors Shipped 55,000 aircraft tires to Air Force, Army, Navy and Marine Corps since Sept 2007 Delivered 6,000th AN/UYQ-70 console to the Navy Aegis Firsts: Operational Use (Satellite shootdown) Dual ballistic missile intercept in exo-atmosphere Simulation, Training & Support Trained 2,300 Special Operations Forces during 1Q08 under the ATARS II program Delivered 55th convoy trainer Trained 50,000 warfighters on convoy trainers during 2007 Delivered 6,000th AN/UYQ-70 console to the Navy – The AN/UYQ-70 program is the first fully implemented standard combat computer system resource using a state-of-the-art open system architecture. This flexible, tactical workstation is configured using high performance COTS modules housed in militarized enclosures. The Q-70 can be installed in airborne, surface and submarine platforms to fulfill multiple combat system tasks. Delivered 55th Convoy Trainer Missile Intercept by a Japanese navy ship supporting MDA – On Dec 17 2007 a medium-range ballistic missile target was fired from the U.S. Navy’s Pacific Missile Range Facility on Kauai, Hawaii. JS Kongo responded by tracking it and launching an SM-3 missile. It destroyed the missile about 100 miles above the ocean, achieving a first for Japan and the 12th successful intercept overall for the SM-3 ABM program.

Domestic Evolution Before After Progress Payments Performance Based Rights in Tech Data Evaluated Low Cost Best Value Small Business Comprehensive Plan Single Plan OCI Greater Probability Through M&A Activity Customer Develop New Systems No Offset Adm. Costs Partner NDI – COTS Now Recognized

Our Global Presence Over $6B International Sales in 2007 More than 300 Partnerships Global Products for Global Markets Lockheed Martin serves customers around the globe. With 2007 international sales greater than $6B and over 300 partnerships worldwide, LM develops global products for global markets. About 30,000 of LM’s 140,000 employees (20%) are working on international programs and international business represents about 15% of annual revenues. Shown here: HIMARS HC-144A (EADS CASA) Apache Longbow T-50 Battlefield Management Center (top right) C-130J Presidential Helicopter VH-71 Aegis UK Merlin Helicopter

Domestic / International Comparison Payment – Never an Issue Government Financed Financial Instrument Vs Open Account Private Financing Intellectual Property US-Developed Background is Issue Export Restrictions Warranty Shorter Duration More Restrictive Cost Type No Development – Mature Product Familiar Regulation Uncharted Waters Offsets Can Complicate The Transaction

Prospectively Graying of Population Work Life Balance Dual Income Families Travel Work Hours Experience Without Moving Empowerment – Rolling Back Reform

Actions Improved Training Geographic Rotation Executive Counsels for High Potentials Guidebooks for Problematic Terms Mentoring Executive Roundtables Full Spectrum Leadership

Building a Better Workforce Recognized as “Employer of Choice” and Industry “Diversity Leader” “Top Corporations for Multicultural Business” (Diversity Business) “Ideal Employers” (Universum Undergraduate Survey) “Best Places to Work” (Woman Engineer) “Best Leadership Development Programs” (Fortune) “Best Places to Launch a Career” (Business Week) “Most Admired Employers” (Black Engineer) Employer of Choice: DiversityBusiness online voting named LM a top corporation for multicultural business opportunities for the sixth straight year in 2007. LM was picked number one “ideal employer” in the 2006 Universum Undergraduate Survey of engineering and science students. Woman Engineer Magazine 2005 survey rated LM #1 best to work for. Business Week Magazine in 2007 listed LM as #9 (and only A&D industry) in their “Best Places to Launch a Career” ratings. Career Communications Group (US Black Engineer, Hispanic Engineer, and Women of Color magazines) listed LM number two in their Fall 2006 “Most Admired Employers” list. The Black Collegian awarded LM Number 4 of Top 100 Employers in 2006. Training Magazine “Training Top 125” list April 2007. LM number 11, praised as a “champion of systems engineering.” in promoting employee development. Minority Engineer Magazine listed LM as its number 5 company in 2005. Workforce Diversity Reader Preference Survey in October 2006 ranked LM first for engineering and information technology professionals. Chief Executive Magazine and Hay Group consulting firm included LM in its 2006 “Top Best Companies for Leaders.” IntelligenceCareers.com in 2007 lists LM as the number one company for defense industry professionals with clearances. Fortune Magazine lists LM as #13 corporation with best leadership development. Military Spouse Magazine in 2007 listed LM #9 “Top Ten Military Spouse Friendly.”