LOCKHEED MARTIN WINS $65 MILLION PAVEWAY II DUAL MODE LASER GUIDED BOMB CONTRACT

ARCHBALD, PA, November 8, 2005

Lockheed Martin [NYSE: LMT] has been selected to develop, qualify and produce the Paveway II Dual Mode Laser Guided Bomb (DMLGB), the next-generation precision-guided weapon system for the U.S. Navy. The contract calls for a 2006 procurement worth $65 million and a five-year procurement with a potential value of $266 million.

The program will upgrade the Navy’s inventory of legacy Paveway II kits by replacing an existing Computer Control Group (CCG) system with an Inertial Navigation System/Global Positioning System (INS/GPS), an all-weather guidance system that provides dual-mode guidance capability.

“We are pleased to continue this relationship with Lockheed Martin by having the opportunity to enhance our existing inventory with the Paveway II DMLGB kits. The DMLGB weapon provides increased flexibility to warfighters by combining the proven technology of laser terminal guidance with all-weather fire-and-forget capabilities. By upgrading the current Paveway II weapon, the reduced timeline for development and qualification of the weapon will allow us to answer the urgent and compelling needs of the warfighter,” said U.S. Navy Capt. Dave Dunaway, program manager, PMA-201.

“Our partnership with the Navy began in 1991 with the joint development of the Paveway II Laser Guided Training Round, and in 2001 the development of the Laser Guided Bombs and we’re pleased to continue building on this partnership with the Paveway II Dual Mode Laser Guided Bomb,” said Cynthia Sailar, vice president and general manager at Lockheed Martin in Archbald, PA. “The DMLGB meets all the Navy’s requirements for a versatile precision-strike weapon and will deliver important new capabilities to warfighters.”

The DMLGB minimizes collateral damage and improves mission effectiveness by providing precision strike capabilities in all weather at extended standoff ranges. The DMLGB is a Commercial-Off-The-Shelf (COTS)-based retrofit solution to the Navy’s current Paveway II LGB inventory, easily converting the legacy LGBs to the dual mode configuration using common components.

“We’re building on the Paveway II LGB’s proven performance to improve response time and meet other critical needs of our U.S. Navy customer,” said John Pericci, Business Development director at Lockheed Martin in Archbald. “We’re meeting the customer’s urgent and compelling needs, while providing best-value performance and capability. Although the Navy’s immediate requirement is only to retrofit its current inventory, Lockheed Martin has full capability to produce new kits for our U.S. and international customers.”

Lockheed Martin has been one of the top qualified sources to produce the Paveway II kits for the Navy and the Air Force with its Laser Guided Bomb (LGB) and Laser Guided Training Round (LGTR) since 1991.

The DMLGB will be manufactured at Lockheed Martin Missiles and Fire Control in Archbald, where the LGB kits, LGTR, specialized instrumentation and control systems, and manufacturing services -- such as state-of-the-art metal crafting and electro-mechanical assemblies -- are produced for the U.S. Air Force and U.S. Navy.

In March 2005, Lockheed Martin’s Missiles and Fire Control operations in Archbald was awarded the Shingo Prize for Manufacturing. Referred to by BusinessWeek magazine as the “Nobel prize of manufacturing,” the Shingo Prize for Excellence in Manufacturing is awarded annually to companies that demonstrate world-class business results through the implementation of Lean Manufacturing principles and practices. The Archbald facility was also nominated one of 25 finalists of North America’s Best Plant competition in the July 2005 issue of Industry Week magazine.

The 350,000-square-foot facility, located in northeastern Pennsylvania, designs, develops, manufactures, tests and fields products for the U.S. Department of Defense, allied nations and industrial customers.

Headquartered in Bethesda, MD, Lockheed Martin employs about 135,000 people worldwide and is principally engaged in the research, design, development, manufacture and integration of advanced technology systems, products and services.

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Media Contact: Jennifer Allen, 407-356-5351; e-mail, jennifer.l.allen@lmco.com 

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