ORLANDO/MUNICH/ROME, 01/16/2008 --

The NATO Medium Extended Air Defense System (MEADS) Management Agency awarded a $66 million contract to incorporate the Lockheed Martin [NYSE:LMT] PAC-3 Missile Segment Enhancement (MSE) Missile as the baseline interceptor for the tri-national program. The new interceptor increases the system's range and lethality over the baseline PAC-3 Missile, which was selected as the primary missile for MEADS when the design and development program began in 2004.

The PAC-3 MSE Missile, under development by Lockheed Martin Missiles and Fire Control, is an even more powerful version of the combat-proven hit-to-kill missile now in production. The MSE Missile increases the engagement envelope and defended area by using more responsive control surfaces and a more powerful rocket motor.

The PAC-3 MSE Missile provides MEADS with significant performance benefits, saidJim Cravens, president of MEADS International (MI). With added thrust and its ability to handle more sophisticated threat missiles, it offers extended reach and protection for the Soldiers and Airmen who defend us.

MEADS is a mobile air and missile defense system being developed to replace Patriot systems in the United States and Nike Hercules systems in Italy and to supplement Patriot systems in Germany.

Changing the baseline interceptor during our Preliminary Design Review keeps risk to a minimum and keeps us on track to provide the three nations with the 21^st century air and missile defense system they have requested, said MI Technical Director Claudio Ponzi.

The MEADS Steering Committee, composed of one government representative from each of the participating nations, recommended the change following submittal of a study by MI that identified the design effects and benefits of adopting the PAC-3 MSE Missile.

Our study assessed the principal technical, schedule, cost, contract and program implications of integrating the PAC-3 MSE Missile into MEADS, said MEADS International Vice President Axel Widera. We found that each of these issues could be managed and that the MSE would be a worthwhile change for the safety of our troops.

MEADS will incorporate the hit-to-kill PAC-3 MSE Missile in a system that includes 360-degree surveillance and fire control sensors, netted-distributed battle management/communication centers and high-firepower launchers. The system will combine superior battlefield protection with extensive flexibility, allowing it to protect forces and to provide selected critical assets for homeland defense against tactical ballistic missiles, cruise missiles, unmanned aerial vehicles and aircraft.

When completed, MEADS will be the only air and missile defense system able to roll off tactical transports with the troops and begin operations almost immediately. More importantly, its open architecture will provide for 21st century air and missile defense system-of-system integration capabilities that allow operational mission-tailoring for homeland defense or defense of maneuver forces. MEADS is intended to provide significant operation and support cost savings.

In May 2005, MEADS International signed a definitized contract valued at $2 billion plus €1.4 billion for the program's design and development.

A multinational joint venture headquartered in Orlando, FL, MEADS International's participating companies are MBDA in Italy, LFK in Germany and Lockheed Martin in the United States. Together, these companies have focused an international engineering team in Orlando to develop systems and technologies for the MEADS program, which is closely watched as a model for collaborative transatlantic development. The United States funds 58 percent of the MEADS program, and European partners Germany and Italy provide 25 percent and 17 percent respectively.

The hit-to-kill, kinetic energy PAC-3 MSE Missile being produced for the U.S. Patriot system by Lockheed Martin Missiles and Fire Control is an advanced, capable theater air and missile defense interceptor that leverages the battle-proven PAC-3 Missile. With minor modifications for integration with the MEADS system, the PAC-3 MSE Missile is designed to provide excellent defense against the MEADS threat spectrum of tactical ballistic missiles, cruise missiles and aircraft armed with assorted threat warheads/munitions.