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Lockheed may face $1.1 billion liability if F-35 contracts delayed

WASHINGTON (Reuters) - U.S. weapons maker Lockheed Martin Corp said on Thursday it faced a potential termination liability of $1.1 billion on the F-35 fighter program unless it received additional funding for work on a sixth batch of airplanes by year end.

Lockheed disclosed the potential exposure in a filing with the U.S. Securities and Exchange Commission a day after reporting third-quarter earnings.

The company said it had about $400 million in potential liability exposure as of September 30, but the total would rise to $1.1 billion by the end of the year, including about $250 million in cash exposure.

Lockheed said it has been starting to produce a sixth batch of F-35 planes using its own funds to ensure that it will be able to meet the Pentagon's schedule for fighter plane deliveries.

The Pentagon has delayed funding for those planes until the two sides finalize a contract for the fifth batch of planes, which has been in negotiation for nearly a year.

Lockheed Chief Financial Officer Bruce Tanner told analysts on Wednesday that he expected the two sides to reach agreement in the fourth quarter.

(Reporting By Andrea Shalal-Esa)

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