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Lockheed Martin Wins $331.4M F-35 Modification Contract

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Lockheed Martin Corp. (LMT - Free Report) seems to be on a winning spree even in this tight budget environment. Recently, the company clinched a $331.4 million modification contract from the U.S. Department of Defense (DoD).

The contract won by Lockheed Martin Aeronautics Co. is aimed at procuring production non-recurring items, comprising special tooling, special test equipment items and software lab upgrades in support of the F-35 Lightning II Joint Strike Fighter (JSF) aircraft for the U.S. Marine Corps, U.S. Air Force, U.S. Navy, international partners, and foreign military sales.

The deal runs through Dec 2017 and the Naval Air Systems Command, Patuxent River, MD is the contracting authority.

Lockheed Martin is the largest U.S. defense contractor contending with other major players like The Boeing Co. (BA - Free Report) , Northrop Grumman Corp. (NOC - Free Report) and General Dynamics Corp. (GD - Free Report) . The company’s products guarantee a steady inflow of follow-on orders from a leveraged presence in the Army, Air Force, Navy and IT programs. Its diverse product offering enables it to win consistent contracts from the U.S. Department of Defense and allied countries.

Going forward, its strong program execution and cost reduction measures will help the company to sustain its profitability. A key catalyst is the F-35 program, which generated 18% of total consolidated net sales in the second quarter 2014. The growing international mix is also expected to rise to 20% of total sales in 2014. Foreign orders accounted for 23% of total orders received and 17% of sales in 2013.

Recently, the Republic of Korea has finally agreed to purchase 40 of Lockheed Martin’s F-35 Lightning II JSF aircraft for its F-X fighter acquisition program. South Korea is beefing up its stealth capability in response to North Korea’s growing nuclear threat. The deal marks the country’s biggest-ever weapons purchase under which it will pay about 7.3 trillion won ($7.1 billion) for the F-35 jets. Deliveries are slated to start in 2018 and will run through 2025.

The F-35 Lightning II JSF is the 5th Generation stealth fighter combining radar evading stealth, supersonic speed and extreme agility with the most powerful and wide-ranging integrated sensor package of any fighter aircraft in history. Apart from the U.S., the plane has also been ordered by Australia, Britain, Israel, Turkey, Italy, Japan, the Netherlands and Norway. Lockheed Martin’s F-35 JSF is the most pricey weapons system in U.S. history and has a potential price tag of $400 billion to $1 trillion.

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