-- Issuer Default Rating (IDR) at 'A-';

-- Senior unsecured debt at 'A-';

-- Bank facility at 'A-';

-- Short-term IDR at 'F2';

-- Commercial paper programs at 'F2'.

The Rating Outlook is Stable. The ratings cover approximately $4.1 billion of outstanding debt.

LMT's ratings are supported by the company's position as a leading defense contractor; high levels of defense spending; strong cash flow and liquidity; $600 million of debt reduction in 2008; solid credit metrics for the ratings; large backlog; and solid growth prospects on several large programs. Concerns include U.S. government budget deficits and their potential impact on defense spending after fiscal year 2010; the large pension deficit which could reduce cash flow in future years; a cash deployment strategy focused on share repurchases and dividend increases; some modest program concentration; the possibility of higher acquisition spending; and execution on a few programs.

The Outlook could be revised to Positive or the ratings could be considered for an upgrade if LMT's large programs (particularly the F-35) continue to receive support and perform well; the company's cash deployment for share repurchases and acquisitions does not materially exceed free cash flow; and pension returns and assumptions are better than Fitch's current expectations. Fitch estimates that LMT has the financial flexibility to increase debt levels moderately while retaining its current credit ratings. Defense spending trends will also be a key consideration for future Outlook or ratings changes, although Fitch believes that modest declines in defense spending would not necessarily damage LMT's credit quality given the current strength of the company's credit metrics.

LMT's liquidity as of March 29, 2009 was $3.7 billion, consisting of $1.5 billion of credit facility availability (expiring in 2012) and $2.4 billion in cash and short-term investments, less $242 million of current debt maturities. LMT reduced debt by $600 million in 2008, and if it does not refinance the $242 million maturing later this year, debt will decline by 18% over a two year period. The company has immaterial debt maturities in 2010 through 2012.

LMT generated strong cash from operations (CFO) in 2008 ($4.4 billion, 10.3% of revenues) and 2007 ($4.2 billion, 10.1% of revenues). Free cash flow (CFO less capital expenditures and dividends) was also solid at $2.8 billion in 2008 (39% of adjusted debt) and $2.7 billion in 2007.