Memorandum

DATE:              October 8, 2012
TO:                  All Lockheed Martin Employees
FROM:            Bob Stevens, Chairman and Chief Executive Officer
                        Chris Kubasik, Vice Chairman, President and Chief Operating
                        Officer       

SUBJECT:      Reorganizing Electronic Systems for Greater Efficiency

In our continuing effort to streamline operations and enhance customer alignment, we are announcing a reorganization of the Electronic Systems business area.  

Effective December 31, Electronic Systems, currently led by Marillyn Hewson, will be reorganized into two new business areas: Missiles and Fire Control (MFC) and Mission Systems and Training (MST).  This brings the company’s total number of business areas to five including Aeronautics, Information Systems & Global Solutions, and Space Systems.  As we announced in April, Marillyn will take on the role of President and Chief Operating Officer on January 1.

This change reflects our ongoing focus on maximizing value for our customers and shareholders by examining all aspects of our business to ensure lean and efficient operations.  The new structure will speed decision-making by reducing management layers, save approximately $50 million a year, and better position us to grow integrated services and support for our products.  We anticipate approximately 200 jobs will be affected. 

The organizational changes include the following:

• The Electronic Systems management layer will be eliminated and the Global Training and Logistics (GTL) lines of business will be split between the two new business areas, allowing for greater customer alignment and efficiency.

• The MFC business area will have 16,000 employees and be headquartered in Dallas.  It will include the following lines of business from GTL: Technical Services, SOF Contractor Logistics Support Services and Mission Support.

• The MST business area will have 19,000 employees and be headquartered in Washington, D.C.  It will include the following lines of business from GTL: Training Solutions, Enterprise Logistics Solutions, F-35 Sustainment and Sim-Industries.

• Sandia National Laboratories, currently managed by Electronic Systems, will transfer to Space Systems, as will our responsibilities in the U.K. Atomic Weapons Establishment joint venture. 

• The Advanced Technology Laboratories, part of Electronic Systems, will begin reporting to Corporate Engineering & Technology.

Rick Edwards and Dale Bennett have been elected Executive Vice Presidents, effective December 31, to lead MFC and MST, respectively.  Both executives have significant experience in these businesses, having served in a number of roles over some three decades and assuming increasingly responsible positions of leadership.

Rick has spent the past 29 years at MFC, most recently overseeing its program and technology execution. Prior to that, he led MFC’s Tactical Missiles and Combat Maneuver Systems line of business for seven years.  Dale, currently president of the Mission Systems & Sensors business, has been with Lockheed Martin for 31 years and previously served as president of the GTL business for six years.

We also want to thank Jim Berry, the current president of the MFC business, who has announced his plan to retire in February 2013.  Jim has been a distinguished leader, both at Lockheed Martin and in the aerospace and defense industry for more than 40 years.  Under his leadership, the MFC business has consistently delivered outstanding performance for customers and shareholders.

A number of other executive changes will result across the organization. While many will be announced later today by functional and business leaders, some decisions are still being finalized and will be communicated at the appropriate time.  

Thank you for your support in our ongoing effort to position our company for sustained long-term growth.  Your continued strong performance, combined with more efficient operations, will keep our company strong and growing for years to come.