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Greg Gardner - Vice President, Investor Relations
James D. Taiclet - Chairman, President and Chief Executive Officer
John W. Mollard - Acting Chief Financial Officer
Peter Arment - Robert W. Baird & Co., Inc. - Analyst
David Strauss - Barclays Capital, Inc. - Analyst
Seth Seifman - JP Morgan Securities LLC - Analyst
Kristine Liwag - Morgan Stanley & Co. LLC - Analyst
Richard Safran - Seaport Global Securities LLC - Analyst
Rob Stallard - Vertical Research Partners LLC - Analyst
Douglas Harned - Sanford C. Bernstein & Company LLC - Analyst
George Shapiro - Shapiro Research LLC - Analyst
Ronald Epstein - BofA Securities, Inc. - Analyst
Michael Maugeri - Wolfe Research LLC - Analyst
Myles Walton - UBS Warburg LLC - Analyst
Noah Poponak - Goldman Sachs & Co. LLC - Analyst
Operator
Good morning, everyone and welcome to the Lockheed Martin Fourth Quarter and Full Year 2021 Earnings Results Conference Call. Today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Mr. Greg Gardner, Vice President, Investor Relations. Please go ahead, sir.
Greg Gardner - Vice President, Investor Relations
Thank you, John, and good morning. I'd like to welcome everyone to our fourth quarter and full-year 2021 earnings conference call. Joining me today on the call are James Taiclet, our Chairman, President, and Chief Executive Officer; and John Mollard, our Acting Chief Financial Officer.
Statements made in today's call that are not historical fact are considered forward-looking statements and are made pursuant to the Safe Harbor provisions of federal securities law. Actual results may differ materially from those projected in the forward-looking statements. Please see today's press release and our SEC filings for a description of some of the factors that may cause actual results to differ materially from those in the forward-looking statements.
We have posted charts on our website today that we plan to address during the call to supplement our comments. These charts also include information regarding non-GAAP measures that may be used in today's call. Please access our website at www.lockheedmartin.com and click on the Investor Relations link to view and follow the charts.
With that, I'd like to turn the call over to Jim.
James D. Taiclet - Chairman, President and Chief Executive Officer
Thanks, Greg. Good morning, everyone, and I hope you've had a good start to the new year. Thank you for joining us on our fourth quarter 2021 earnings call as we review our results, key business area accomplishments, and our outlook for 2022. I'll begin with an update regarding our proposed acquisition of Aerojet Rocketdyne Holdings. As disclosed in our earnings release this morning, we thought it highly likely that the FTC would sue to block the transaction. Since that time, we have received notification from the FTC that they have in fact authorized filing a lawsuit. We will review the lawsuit and evaluate all of our options. With the filing of the suit, we may elect to defend the lawsuit or terminate the merger agreement.
Moving on to our financial results. In a few minutes John will discuss our financials in detail and provide our outlook for 2022, but I first would like to begin with a few highlights from the quarter and the year. In October, after we concluded our financial planning process, we established an updated forecast for 2021, which we achieved or exceeded. We met our $67 billion sales forecast, and our segment operating profit and earnings per share both exceeded our projections. Our cash from operations was exceptionally strong, over $9.2 billion, supporting our disciplined and dynamic capital allocation process.
During the year we made significant investments in our signature platforms and systems as well as emerging technologies, all to meet the rapidly-evolving challenges as we see every day in the news now, the challenges that our customers are facing and to support future growth for the benefit of our shareholders. Moreover, we continue reshaping and modernizing our operations to increase efficiencies and reduce costs so we can deliver affordable solutions for our customers going forward as well.
During 2021, we spent $1.5 billion on independent research and development, a new high-water mark for the company. Notable areas of our IR&D efforts included hypersonics, directed energy, and artificial intelligence. We also initiated the development of mission-based technology roadmaps and advanced our 5G.MIL architecture to truly enable joint all-domain operations across multiple platforms, U.S. military services, and allies. These investments position the company to meet our customers' most critical needs well into the future.
During the year, we also spent $1.5 billion on capital expenditures, focused on addressing customers' program requirements and supporting our organic growth outlook. Significant capital projects included the introduction of three new state-of-the-art factories of the future, additional adoption of cutting-edge software and hardware solutions to enable model-based engineering throughout the company, and the establishment of production facilities to support our key hypersonics programs.
During the fourth quarter, we brought many of these elements together for the opening of an intelligent, advanced hypersonic strike production facility in Courtland, Alabama, supporting both our missiles and fire control and space hypersonic programs. This facility integrates critical digital transformation advancements, such as robotic thermal protection capabilities, into our manufacturing operations and represents our long-term investment in this critical technology. The Courtland facility joins our new Spacecraft Test, Assembly and Resource Center in Titusville, Florida, and our recently-opened 215,000 square foot advanced manufacturing facility in our Skunk Works organization in Palmdale, California. Together these facilities add to our intelligent factory framework, digitally linking sites and assets across the enterprise, to speed production, provide cost efficiencies, and drive future margin improvements throughout the company.
From a capital return perspective, during the quarter we executed a $2 billion accelerated share repurchase program and thereby retired nearly 6 million shares under that agreement. This brought our total 2021 repurchase amount to over $4 billion, which when coupled with our strong dividend payments resulted in a total of $7 billion of cash returned to our shareholders during the year. We will continue to be opportunistic with share repurchases and expect to utilize our remaining $4 billion authorization in 2022.
I'll now touch briefly on the Department of Defense budgets. This quarter Congress passed a fiscal year 2022 National Defense Authorization Act with strong bipartisan support in both the house and senate. The NDAA policy bill was subsequently signed into law by President Biden. This legislation authorizes a $25 billion increase for the Department of Defense for a total of approximately $740 billion for defense programs and raises the investment accounts approximately 8% above the President's originally requested amounts. Currently, the DOD is operating under a continuing resolution through February 18 for FY 2022. As Congress continues the appropriations process, we believe our programs are well supported, reflecting the fact that our portfolio is aligned with affordably delivering our customers national security capabilities.
Turning now to our growth strategy. Last quarter we discussed our long-term expectations, which anticipate that our sales will increase by approximately 2% in 2023 with steadily increasing sales growth through 2026. As we discussed in October, the four primary areas that underpin this longer-term growth forecast are programs of record, classified activities, hypersonics, and new business awards. Expansion in our program of records is a clear key pillar of our long-term growth strategy, and this quarter we were pleased to see two new customers select our signature programs to support their national security objectives.
Last month the Government of Finland selected the F-35 Joint Strike Fighter as the winning entry in their HX Fighter Program competition, citing the aircraft's affordability as well as its combat, reconnaissance, and survival capabilities as best suited to deliver on the HX requirements. This announcement for 64 conventional takeoff and landing stealth fighters has a potential contract value of over $9 billion and follows Switzerland's decision to purchase 36 F-35s. These announcements highlight the momentum that is building in this program with future international opportunities in Canada and elsewhere still in front of us.
Our Rotary and Mission Systems team also secured an important international opportunity this past quarter as the Israeli Air Force signed a Letter of Acceptance with the United States government to pursue the Sikorsky CH-53K King Stallion heavy-lift helicopter. This agreement enables the Israeli Air Force to procure 12 53Ks with the option to buy another half dozen. If fully exercised, those options could exceed $2 billion in value. Israel would then be our first international CH-53K customer as they look to replace their current fleet of legacy Sikorsky CH-53 helicopters which have been flying over 50 years.
Another pillar of our long-term growth strategy, our classified activities, also saw momentum build in the fourth quarter. Our space business area was awarded a contract by the U.S. Air Force to develop and classify and fly a prototype IR payloads in space. Our solution leverages ongoing internal investments on our LM 400 satellite bus providing greater mission flexibility and longer duration orbit life. This award for initial engineering contract includes options to deliver an operational system with the potential for this to grow into a new franchise program down the road.
And on a final note, 2021 presented a challenging environment for both commercial and defense industries, especially in terms of continuing COVID-19 effects and supply chain impacts. Our teams in all four Lockheed Martin business areas and across our corporate functions banded together and did a tremendous job maintaining our production operations and advancing science and engineering on behalf of our customers. I'm extremely proud of the perseverance and dedication of our entire organization, and I know that as one Lockheed Martin, we're going to drive future growth into our business and advance our vision to accelerate 21st century digital world technologies into our national defense enterprise.
And with that, I'll turn the call over to John and join you later to answer your questions.
John W. Mollard - Acting Chief Financial Officer
All right. Thanks, Jim, and good morning, everyone. As I highlight our results, please follow along with the web charts we've included with our earnings release today.
Let's begin with chart three in an overview of 2021 results. Starting with sales, we recorded revenue of $67 billion, which was consistent with the guidance we provided in October. This record level of sales was made possible by an exceptionally strong fourth quarter of delivering affordable, relevant solutions to our customers. Additionally, our segment operating profit of $7.4 billion and earnings per share of $22.76 exceeded our October projections, driven by strong operational performance across the entire portfolio.
We generated more than $9.2 billion in operating cash flow this year, and as we discussed last quarter, we are committed to a strategy of disciplined and dynamic capital allocation. We continue reshaping our operations and identifying ways we can increase efficiencies and reduce costs. As Jim mentioned, we invested $3 billion in research and development and capital expenditures to help our customers achieve their missions and to drive organic growth. In addition to this internal reinvestment, we repurchased over $4 billion of shares in 2021, including $2.1 billion in the fourth quarter. Combined with increased annual dividend payments of approximately $3 billion, we returned just over $7 billion to shareholders. Looking forward, our outlook for 2022 remains consistent with our October trending information as we build our foundation for growth in 2023 and beyond.
Turning to chart 4, we compare our sales and segment operating profit this year with last year's results. Sales and segment operating profit both increased 3% compared to 2020 results and represent high-water marks for the company. Chart 5 shows our earnings per share for the year. Our full-year earnings per share of $22.76 incorporates the $4.72 non-cash charge associated with the $4.9 billion pension liability transfer that we completed during the third quarter. On an adjusted basis, our pre-transaction EPS of $27.48 was 12% higher than our 2020 result due to increased volume and improved segment operating margin, gains in our Lockheed Martin Ventures portfolio, increased FAS/CAS pension income, and a reduction in share count.
On chart 6 we look at our full-year cash generation and deployment. 2021 cash performance was outstanding as we generated over $9.2 billion in operating cash flow and $7.7 billion in free cash flow. We returned 91% of this free cash flow to our shareholders through increased share repurchases and dividends. Our remaining share repurchase authority is approximately $4 billion, and we expect to opportunistically deploy that entire amount in 2022.
Moving onto chart 7 and our 2022 guidance. Consistent with our October training information, we estimate 2022 sales at approximately $66 billion and segment operating profit of approximately $7.2 billion, resulting in a segment operating margin of 10.9%. FAS/CAS pension income is projected at $2.26 billion, which is $60 million higher than the $2.2 billion estimate we provided in October. We are projecting earnings per share of $26.70 and our estimate for 2022 cash from operations remains at greater than or equal to $8.4 billion, excluding impacts of the R&D capitalization tax law change, which we now estimate at approximately $500 million. I should mention there is still a possibility that legislation will be enacted that defers or repeals the requirement to capitalize R&D expenditures from a tax payment perspective, but we are including the impact of higher tax payments in our current outlook as we will be required to make these payments unless existing law is amended by legislation.
On chart 8, we show our updated three-year forecast for cash generation. Our outstanding fourth quarter cash flow was driven by a tightly coordinated collections process across all business areas and functional support organizations, leading to exceptional collection results from both domestic and international customers. Partially offsetting this upside was an increase of $700 million in accelerated payments we made to our supply chain during the fourth quarter. With the emergence of the Omicron variant and surges in COVID cases, we increased total accelerated payments to over $2.2 billion at year-end in our continuing effort to mitigate supply chain risk. Our outstanding collection performance and the increase in accelerated payments to our supply chain partners resulted in our generating $9.2 billion in cash from operations and $7.7 billion in free cash flow.
Over the three-year period from 2021 through 2023 and before considering the potential impacts of R&D capitalization, we now project total cash from operations of greater than or equal to $26.1 billion, which is $900 million higher than our prior estimate. This increase was driven by our fourth quarter results and our expectation that we will maintain this extremely high level of performance throughout the forecast period. Generating over $25 billion in operating cash flow after incorporating the potential $900 million impact of R&D capitalization provides significant support for a disciplined and dynamic capital allocation strategy.
On chart 9, we break out our sales and segment operating profit outlook by business areas. Our estimates for the year remain consistent with the trending information we provided in October as we focus on long-term growth opportunities and building on the strong operational results we delivered in the fourth quarter. And on chart 10, to summarize, we successfully closed out 2021 with all metrics equal to or better than the guidance we provided in October, highlighted by exceptional cash generation. With our strong balance sheet and our demonstrated ability to generate high levels of operating cash flow, we are well positioned to execute in our - on our disciplined and dynamic capital allocation strategy for years to come. I'm excited about our opportunities in 2022 as we deliver mission capabilities for our customers and long-term value for our shareholders.
And with that, John, we're ready to begin the Q&A.
Operator
[Operator Instructions]. And we'll go to the line of Peter Arment with Baird. Please go ahead.
Peter Arment - Robert W. Baird & Co., Inc. - Analyst
Thanks. Good morning, Jim and John. Jim, so I figure I'd try to ask about the news of the day on the Aerojet deal. You mentioned defend or terminate on the pending transaction. Can you give us really any color on the timeline that you at least plan to evaluate the lawsuit? And if you do choose to terminate, would you expect to redeploy those proceeds towards capital deployment, or are you preferring pursuing your M&A strategy? Thanks, Jim.
James D. Taiclet - Chairman, President and Chief Executive Officer
So, Peter, good morning. Our merger agreement with Aerojet Rocketdyne allows for a 30-day period post-filing of a lawsuit to make that decision of either defend or terminate the agreement. So we'll be working with our board over the next few days and weeks to make that determination.
John W. Mollard - Acting Chief Financial Officer
And cash deployment.
James D. Taiclet - Chairman, President and Chief Executive Officer
Well, of course. It gives us a great opportunity actually with your question, Peter, to speak to what John and I have been talking about here, disciplined and dynamic capital allocation process. So basically we array and assess all the alternative uses of capital and through a lens of what's the most beneficial for the shareholder and what's the best long-term ROI for that dollar of cash flow. And we look at the array of IR&D, capex. I just talked about last year it was about $3 billion in total. We made those investments because we think for organic or new business growth, they're going to have great ROIs and they're going to get the first call on our investment. But we don't have an unlimited set of opportunities, so to speak, in either R&D or capex, so it's bounded.
So then we look at inorganic growth opportunities, which could be M&A, joint ventures, etc. Those that are available are not that necessarily expansive right now, let's say. And so then that leads you then to share repurchase and dividend growth, which is where the bulk of our funds are going these days as you've heard from John. So it's dynamic and disciplined, that's what we mean by it, is we're going to look across all those opportunity sets, look for the best ROI for the shareholder down the road, and then we're going to allocate that capital there, and we don't need to grow our cash balance. We have upside I'd say on leverage should we choose to take it down the road. So you're going to see us continue to allocate capital in that way. So we're not just going to sit back and say, well, whether AJRD goes through or not. We're just going to sit back on our capital and let it go in the cash account. We're going to keep allocating it dynamically to the most and best highest [Phonetic] used.
Peter Arment - Robert W. Baird & Co., Inc. - Analyst
Appreciate the color. Thank you.
Operator
Our next question is from David Strauss with Barclays Capital. Please go ahead.
David Strauss - Barclays Capital, Inc. - Analyst
Hi. Good morning, everyone.
James D. Taiclet - Chairman, President and Chief Executive Officer
Good morning.
David Strauss - Barclays Capital, Inc. - Analyst
Wanted to ask within the guidance for this year, what you're assuming with regard to the CR. And then, Jim, you mentioned the plus-up on the authorization side. If we ultimately see that come through in terms of appropriations, what might that do to your prior guidance for 2% 2023 growth? And I guess the last one just, John, if you can comment on what changed on the R&D capitalization side, taking it down from $2 billion impact to $500 million? Thanks.
James D. Taiclet - Chairman, President and Chief Executive Officer
Sure. So I'll start off. It's Jim here. And then turn it over to John. So it really was encouraging what Congress came out with in the NDAA. From a program perspective, it was excellent for the company with nine additional Black Hawks, two additional CH-53Ks in the NDAA, four additional C-130Js, and 12 more THAAD interceptors, and beyond that there was increased funding for some of our tactical and strike missile programs as well. So really solid literally across the company impact of the NDAA.
We're assuming that the continuing resolution does get resolved at some point, by September 31st, 2022. And the impact of that NDAA and hopefully the defense budget appropriation coming along with it will be really to build the pipeline of future revenue for us. Given there's only seven or eight months in the fiscal year left in the first place, we have most of our revenue visibility already in process of production, orders, and deliveries. So, John, I'll give it back to you. But, basically, those plus-ups are our longer-term value creators for us and the shareholder, not necessarily going to hit meaningfully in the next say six to seven months.
John W. Mollard - Acting Chief Financial Officer
Yeah. And just to put a point on the CR impact, it would take pretty much a full-year CR to have any impact on our revenue that you would see. The biggest impact will be to our customers' ability to prosecute their missions, especially in program areas where requirements would have us on a trajectory to grow. And obviously, with a CR, you're not able to grow program requirements. So absent a full-year CR, I would anticipate relatively de minimis impact on the forecast we've given.
And I think the next question was around the change in the R&D tax payment assumption. I think, historically, we've talked about a number of $2 billion. I think the last quarter it was probably a little more subtle than you would have thought. We changed the definition to say, hey, we could see up to $2 billion. I'll start by saying there's still a possibility that legislation is going to get enacted that will end up in this getting deferred or repealed, and I said that in the script. But given that the number one vehicle to have that done is the President's Build Back Better legislation and given where that is, the path to enactment remains unclear right now. But we do, however, believe there's recognition by Congress that legislation is needed to address this critical aspect of R&D activities. It's really not at all consistent with our nation's public policy objectives.
Now, specific to the change in the amount from up to $2 billion to the approximately $500 million, we've got in our guidance, one of the first reviews I had with our tax team after taking on my current role is to understand the assumptions that were used in calculating that projected impact. I asked a bunch of questions about these assumptions and as 2022 drew closer without any form of legislative action, we refined our analysis and then shared that with external advisors. And what we did - we concluded that the capitalization provision scope was narrow than what we'd originally assumed. We've historically claimed the R&D tax credit on certain activities. And after discussion with our advisors, we determined that the R&D tax credit framework is relevant in establishing a scope of R&D activity that will require capitalization. So as a result, we've updated our estimated impact to reflect the value that is consistent with the provisions of the tax code.
Operator
Our next question is from Seth Seifman with JPMorgan. Please go ahead.
Seth Seifman - JP Morgan Securities LLC - Analyst
Thanks very much and good morning. John, I was looking at the outlook for Aeronautics this year and the 10.5% margin rate, which if we add back the second quarter charge to 2021, margin was well above that and above that in each of the quarters. So can you talk about the mechanics of what's driving down profitability in Aeronautics this year and then how you see that trending going forward beyond '22?
John W. Mollard - Acting Chief Financial Officer
Yeah, absolutely. Good question. Probably the two biggest I'll call them dilutive impacts on margins in '22 is the growth in our classified activity in Skunk Works. These are predominantly very good ROI programs, but there margins that they attract at given the lower financial risk associated with these programs are going to be dilutive. So we're projecting growth in the Skunk Works operation of roughly $300 million that's coming in that's going to be dilutive. And then we've got a lot of growth in our F-16 program, and given where that program is, we're roughly a year out from first deliveries on the F-16 line with the ramp that we're expecting. We're projecting revenue to increase on F-16 roughly $300 million. Given where that program is in its life cycle, we think it's prudent to reflect - our typically prudent but relatively conservative margins on that growth. And as a result, you're going to see a reduction in margins in 2022 on the F-16 program.
Those are probably the two biggest dilutive margin growth areas within Aeronautics. I think longer term, the key to growing margins in Aeronautics is going to be performing on the delivery of the F-35 production program, and that's going to require us to perform on delivering the enhanced capabilities that our customers need, that we've talked about a lot in keeping, for example, the TR3 infrastructure upgrade program on track, keeping the mission capability expansions on track. I'm fully confident we will be able to achieve our internal operating metrics. And if we do, there will be upside.
Operator
Our next question from Kristine Liwag with Morgan Stanley. Please go ahead.
Kristine Liwag - Morgan Stanley & Co. LLC - Analyst
Hey. Good morning, guys. It seems like there's more urgency from the Pentagon on hypersonics. Can you provide an update on where your various hypersonic programs are progressing, and should we see an acceleration from your $3 billion outlook by 2025?
James D. Taiclet - Chairman, President and Chief Executive Officer
Yeah. Good morning, Kristine. I've just returned a couple of weeks ago from opening up that Courtland facility in Alabama. And two of our I guess marquee programs in those are perhaps among the furthest along. In fact, three programs are going to be produced there. And I'll just mention them really briefly. It's a complicated set of systems, but a couple to keep in mind are what the Navy calls Conventional Prompt Strike or CPS. That's a hypersonic missile of some size that has very good range and will be launched from submarines and ultimately from Destroyer-type ships. In concert with the development of that strike product, the Army has teamed up with the Navy, which is somewhat innovative and novel for them, for what they call the Long Range Hypersonics Weapon program so LRHW. The Army intends to use a very similar missile but launched from a ground unit through what's called a TEL, in that TEL stands for Transporter Erector Launcher. We've already delivered the first training unit of that TEL to the Army, so they're working with that today. The missiles will be produced in the Courtland factory over the next few years and will be serving the Navy and the Army from there.
The third product that we intend to produce in the Courtland facility is for the Air Force, and that's called a arrow or ARRW, so Advanced Rapid Response Weapon. That's an air-launched missile that travels at hypersonic speeds, and we're testing those at Edwards Air Force base now on B-52 bombers as the carriers there. So we're going through test events in that program with the Air Force, and over the next couple of years we hope to be making the production runs on those as well. So that's a summary. Again, there's more to the story. But I think those are the highlights, CPS, the advanced air-launch weapon, and then the Long Range Hypersonics for the Army.
John W. Mollard - Acting Chief Financial Officer
Yeah. And Kristine, this is John. to your question on the long-range guide, I think I'll stick with the $3 billion revenue forecast in 2026. There are opportunities to grow it. As Jim mentioned, there's operational urgencies driving our customers to push us to go faster and faster. There's emerging activity in counter-hypersonics. It may be of some note that we'll keep an eye on that could provide upside to that forecast. But I think for modeling purposes, I'm comfortable with the $3 billion.
Operator
Next, we'll go to Rich Safran with Seaport Global Securities. Please go ahead.
Richard Safran - Seaport Global Securities LLC - Analyst
Jim, John, Greg, good morning. If it's okay, I have two, I think they're very quick questions though. On the supply chain issues last quarter and the accelerated $2.2 billion in payments you accelerated to suppliers that were going to be made in '22. If I look at 4Q results, I'm just wondering if supply chain issues that hit [Phonetic] you in three quarter - third quarter are now behind you. I'm just curious if the risk has been meaningfully reduced. You expected them to impact you in '22 and wondering if the outlook has improved and what that means about your guide.
Second question, if you have to abandon the Aerojet deal, just wondering if that has any impact on your hypersonic strategy. Thanks.
John W. Mollard - Acting Chief Financial Officer
Yeah. Hey, Rich. I'll take the first one and I'll let Jim take the second one. Just in general, as you pointed out, we accelerated substantially more payments to our supply chain during the fourth quarter than we even talked about back in October when at the time we had a $1.5 billion accelerated and we said we would anticipate to maintain that level through the year-end. But given the global COVID situation and the ongoing fragility in our supply chain, we decided that increasing the level of accelerated payments to our partners was a prudent risk-mitigation strategy.
And to your point about, are you hitting your marks, I'll give a lot of credit to our global supply chain leadership team. They've been actively working with all of our suppliers to ensure we're collectively positioned to meet our customer requirements, and that includes like embedding our own Lockheed Martin personnel within their facilities to help with the stresses that they're facing. And as a result, I think of proactive activity by our supply chain leadership team, I was encouraged to see that our fourth quarter supply chain activity was in line with or at the expectations we set in October, which assumes some level of recovery from October - from what we saw in the third quarter. But there is still no doubt an overhang on the ability of our supply chain to really to pivot to normal changes in requirements. So I don't think we're all the way out of the woods, but I think we're focused - we've got laser-like focus from both a management involvement point of view and financial support.
James D. Taiclet - Chairman, President and Chief Executive Officer
And, Rich, I'll just summarize all that by saying we think the bow wave has passed in supply chain disruption for Lockheed Martin, but we're still watching it closely. And as John just said, not all the risk is out of the system yet.
On the hypersonic strategy, I'm just going to take AJRD out of the discussion, but I will tell you how we're going about this. So for us and our customer base, which is basically the three largest military services in the United States, we've all agreed jointly to a go-fast approach to development, which means there's a little more risk in the development sequence, if you will, of develop and test, learn the lessons, and then redesign. So we're doing that jointly. And one of the benefits of integrating somewhat vertically with propulsion and what's called the glide body, which is the heat absorbing part of the missile, and then the full [Phonetic] air system that transports the missile either out of the tube or off the airplane. The more you can integrate that into one engineering organization, probably the faster you could go. But we can manage it, as we do today, with the propulsion provider outside of Lockheed Martin. So we'll continue to manage it as we have. We think we could have gotten the speed and efficiency increase by partial vertical integration of hypersonics through the AJRD acquisition specifically, but we can still manage it whichever way that deal turns out.
Operator
And we'll go to Rob Stallard with Vertical Research. Please go ahead.
Rob Stallard - Vertical Research Partners LLC - Analyst
Thanks so much. Good morning.
James D. Taiclet - Chairman, President and Chief Executive Officer
Good morning.
Rob Stallard - Vertical Research Partners LLC - Analyst
Jim, I was wondering if you could give us an update on the F-35 sustainment situation. There obviously continues to be press noise about this. And whether you've made any progress on bringing that cost per hour down. Thank you.
James D. Taiclet - Chairman, President and Chief Executive Officer
Yeah. I think we've made great progress over the past year by really bringing attention and integration between the Joint Program Office, the key services that fly the airplane, and Lockheed Martin and actually Pratt Whitney also is the suppliers. So we've all joined together in a way that I think might even be unprecedented in that we all realize we have a shared goal to reduce the cost per flight hour and improve the readiness rate of the jet, and we're all working together to do that. So we've had some successes where we've got long lead time, spare part order is already through the system, and that will help with having enough spare parts in the right places at the right time to reduce costs and improve the readiness rate.
We've also received a Request for Proposal for somewhat more limited but nonetheless a PBL, or performance-based logistics program, that we again together agreed let's really focus on the supply chain side of that, which you can integrate with production parts planning and sustainment parts planning. You always want to, if you can, keep those together. That's where this PBL is largely focused, less so on the labor piece of it, which we'll figure out as we go with the government, what happens in our supply chain, what happens with Lockheed Martin, and what happens in depots. But the bulk of the value will be in the parts flow, distribution, production, integration, etc. That is, I think, a three-year PBL. We hope to get that negotiated over the next coming months or quarters, if you will.
So I think we're really well on the road to having a much more coherent and integrated industry, customer, program office approach to sustainment, and we've already got good progress in getting some of the cost per hour down even as we speak.
John W. Mollard - Acting Chief Financial Officer
Yeah. Just to put a quantitative dimension on what Jim was talking about. So at the end of the year 2021, we had 753 fielded aircraft. And based on the production plan, that number of fielded aircraft is going to grow from 753 to like 1,525 aircraft, which is a 15% compound annual growth rate in the number of fielded aircraft and the flight hour growth rate is even faster. So you can think of sustainment cost as a function of flight hours. The flight hours are growing at over 16%, and I think we gave you a long-term sustainment revenue chart in our October call. And you would have seen on there a 6% growth in our compound annual growth rate in our sustainment cost over the period. So to me personally that says a lot to the amount of aggressive cost takeout that's being embedded by all the actions Jim talked about.
James D. Taiclet - Chairman, President and Chief Executive Officer
Yeah. And we did move it up with the Joint Program Office to a five-year PBL response. So that's where we're standing today.
Operator
Our next question is from Doug Harned with Bernstein. Please go ahead.
Douglas Harned - Sanford C. Bernstein & Company LLC - Analyst
Thank you. Good morning. I wanted to go just continue on the F-35. Right now when we think of production rates, at one time we were looking at a peak level of about 220 per year. That's steadily come down to the 156 peak level that we're looking at now. And we've seen some U.S. rate plans come down as well in budgeting. But at the same time, you've seen some new international opportunities, Finland being one of them. What risks do you see to the 156 level as a plateau level, and how do you expect the mix to progress between U.S. and international over time?
John W. Mollard - Acting Chief Financial Officer
Yeah. So I'll take a shot at that one, Doug. The broad pattern is the U.S. program of record is over 2,400 aircraft - I can't remember if it's 2,430 or 2,450 or whatever, but then we anticipate another call it 900 international aircraft. So the total program by program of record is in excess of 3,300 aircraft. So when we look at that and we look at the production flow and we think about when will we get - Finland is probably the most current contract or approach or campaign that we think will get under contract most quickly and then Switzerland and you've got opportunities in Canada, as well as a number of other campaigns.
In looking at the data, the 156 aircraft production rate, I would think if anything has bias to the upside. The reason for picking the 156 is the last thing you want is a sawtooth production pattern where you're ramping up and ramping down. So between us and the Joint Program Office, we set a rate that we're fairly comfortable will result in a level-loaded production build tempo for the foreseeable future.
James D. Taiclet - Chairman, President and Chief Executive Officer
Yeah. And Doug, it's Jim. Just as I think everybody on this call understands, you have to invest in the capital base for your peak of the sawtooth production schedule, and then you've got over-capacity in those years where the sawtooth trends down, and then you might have to recover and invest even more to bring it back up. So between the services and JPO and us, I was literally in on this conversation myself because I understand the needs of the Air Force and Marines and Navy as well as the production system, that steady and reliable 156 a year was the right investment level for government and for Lockheed Martin and our supply base over time. So I agree with John that the bias could be to the upside especially if we win more of the international opportunities, but I don't see a lot of downside risk to it.
And the last thing I'll touch on because you've actually taken a deep dive into this, Doug, and I appreciate you taking the time to do that in the past. We're getting more interest in our technology acceleration concepts to bring digital world technologies into the defense enterprise. And in the aerospace domain the F-35 is not only the logical, it's the essential cornerstone of actually doing that, because the aircraft, especially with the [Indecipherable] release 3 and the Block 4 capabilities that John mentioned are coming will have by far the highest data storage level - the highest data processing capability. And with our 5G.MIL approach, the most comprehensive connectivity to the cloud both dedicated and commercial to really make it even more attractive. So I do see if there's bias to anything, it'd be on the upside as this other element of the F-35 becomes increasingly important. Its capability to be an edge node in an integrated system.
Operator
Next, we'll go to George Shapiro with Shapiro Research. Please go ahead.
George Shapiro - Shapiro Research LLC - Analyst
Yes, good morning.
James D. Taiclet - Chairman, President and Chief Executive Officer
Hey, George.
George Shapiro - Shapiro Research LLC - Analyst
It looks like one of the biggest benefits to the cash flow this quarter was like a $2 billion decline in contract assets. So if you could discuss that. And obviously, it doesn't seem like it's a one-time benefit because the strong cash flow this year didn't affect your '22 and '23 guidance. So if you could comment on that. And then one other in RMS you've got declining sales and a declining margin projected for this year. Is that mostly due to Sikorsky where government helicopters come down and development programs like the Sikorsky CH-53K grow? Thanks.
John W. Mollard - Acting Chief Financial Officer
Yeah, hey. Thanks, George. I'll take both those questions. And as usual, your analysis was right on. I'll start with the last question in and around RMS. Yes, we're projecting almost a $300 million revenue decline in Black Hawk. The Multi-Year IX, obviously, that's a hot production line which would tend to have accretive margin. So we've got a decline there. We've also got a over $300 million ramp in the CH-53K program as you indicated. And that - given where we are in that program with a long runway ahead of it, we again per our typical practice look at risk retirement events in front of us, make our best engineering estimates of when those events will be achieved. And then when we achieve them, we record what we would describe as step-ups that you'll read about. But the two biggest margin factors are exactly what you talked about, decline in a hot production line and a ramp in the CH-53K.
So for the three-year guide, yeah, the contract assets you just saw were specifically what you and I would have called accounts receivable back in the day. Just to give you some perspective. In the last three weeks of 2021, we collected $6 billion in the last three weeks. There were two weeks where we were over $2 billion. I'll tell you, when we talked about our operating cash flow guidance in October, there were several very large domestic and international collection events that were absolutely not tracking to collect in 2021. I talked about this in the script. We came together as a cross-functional team and made a number of changes in both our internal approach and in our customer outreach activity. And those changes resulted in us collecting not only all those high-risk invoices, but we are also able to bring in a lot of collections that I absolutely would have thought, no way, those collections are going to be collected in 2021, and they were.
So to your point about, hey, this must not have come out of '22 because you're maintaining your guidance, I'll say, so while accelerating the collections from 2022 into 2021 drove the outperformance in the fourth quarter and in 2021, I'm really confident that the process and the focus that we applied in the fourth quarter is repeatable like every year, '22, '23, '24. And as a result, I'm comfortable that we can still generate the prior guide for '22 and '23 despite the outperformance.
Operator
Next, we'll go to Ron Epstein with Bank of America. Please go ahead.
Ronald Epstein - BofA Securities, Inc. - Analyst
Yeah, good morning. Jim, what's your take on the adaptive cycle engines as applied to the F-35? Because if you look at what GE is saying, they suggest that it could give the aircraft maybe 30% more range. And if indeed that's the case, doesn't that open up the market for the airplane?
James D. Taiclet - Chairman, President and Chief Executive Officer
So, Ron, I actually had the opportunity to visit both engine plants in the last couple months, Middletown for Pratt Whitney and Evendale for GE. To their credit, both companies are investing great talent and resources in improving engine options for the F-35. So there's one road that the government customers can take, which is improving the existing basic engine design and there's a second road they could take which is a clean-sheet engine design that you identified correctly, it's called adaptive cycle engine, right? So I've been around this earlier in my career, so I find it interesting.
But the difference between the adaptive cycle engine and the upgraded existing engine technology is that rather than two streams of airflow going through the engine, it's divided into three streams with some fairly sophisticated veins and control mechanisms and feedback throughout the engine. Both potential engine vendors are developing that second technology that I'm talking about, the adaptive cycle or three-airflow-type engine. And it's really just now up to the Joint Program Office and the Services and Department of Defense writ large to work with us and figure out, well, will the improved engine technology be a viable option for the future based on the threat. So the threat is evolving. The aircraft has to improve. As you said if it does improve, it has a wider use case for the U.S. and other nations. And it really will be a U.S. government decision as to based on the threat they're facing and their assessment of it and our input on what the aircraft needs to do to meet it, they will make an engine decision on one of those two roads, improve what's there today or go for an entire new technology, which is that three-stream airflow engine.
Operator
Our next question is from Mike Maugeri with Wolfe Research. Please go ahead.
Michael Maugeri - Wolfe Research LLC - Analyst
Good morning. Thank you. Jim, you talked about some of the IRAD spend going towards 5G.MIL. So I'm just wondering, are there any guideposts or signs that you'd point to that 5G.MIL is beginning to gain traction as you envision it. I guess anything looking out that we, as the investment community, can measure you against.
James D. Taiclet - Chairman, President and Chief Executive Officer
So, Mike, a lot of this is really what we call a keep-sold effort, right. 5G.MIL is designed to, first of all, give our customers more efficient, higher level of performance in missions that they're trying to accomplish. So one of those missions that we've modeled pretty deeply is called counter air, for example; the second one is surface warfare; and the third one is integrated air and missile defense. We've modeled those at a SAP [Phonetic] level in great detail with both Lockheed Martin and other OEM platforms contributing to those missions in an accelerated fashion and the new platforms coming onboard to further enhance that mission capability. That's a whole different way of looking at things than the defense industrial base has used in the past, in my view, and frankly, it may be different than our customers in their procurement systems have looked at it. We typically respond to RFPs as we just talked about where government officials determine a need, they write up a detailed document to distribute to industry who can meet that need, and then we individually respond with our own proposals.
What we're trying to do is adopt the tech industry's practice of, what's the mission we're trying to accomplish. Is it autonomous cars at scale? Is it drone package deliveries? And then figure out what existing vehicles and platforms and systems we have that can contribute to that mission and what new ones do we need to develop. But at the same time, we can upgrade that mission every six to 12 months. And that's what 5G.MIL is designed to do. It's designed to figure out how to not have to wait six years for the next NGAD platform but rather how do we integrate platforms we have today while that NGAD is being developed, and over that period of time, increase our capability every six to 12 months. So what 5G.MIL will do will help keep sold a lot of Lockheed Martin platforms, because we're going to endeavor to put those capabilities on our platforms first to be a pathfinder so we get other OEMs to play with us and create a common standard set and actually have them contribute to that mission profile, too.
So very complicated answer to a simple question. You'll see it as perhaps the program or record of F-35 either the state maintains or increases. You'll see it as we start linking in, hey, perhaps future vertical lift will be a hopefully decision criteria because we're going to enable that with 5G.MIL to connect to other assets. So that's where you're going to see it. There may not necessarily be another reportable unit or something that comes along the way that says 5G.MIL X billion dollars. It's going to come in many ways through our existing platforms predominantly, and over time we'll hope to license some of these technologies to others and get some income that way. But this is really a keep sold to drive the Lockheed Martin platform base forward and make the other platforms that we're developing prospectively for our customers enabled already with that in the design phase and make them more attractive, too. That's really why we're doing this.
Operator
Next question is from Myles Walton with UBS. Please go ahead.
Myles Walton - UBS Warburg LLC - Analyst
Thanks. Good morning. Jim, we're I think more than three years removed from when you and the DoD opened negotiations on Lot 15 on the F-35s. The backlog of F-35s is actually below where it ended 2017. And I know you're being incrementally funded for Lots 15 and beyond. But why isn't job number one to close that contract and to get on the right foot with the contract closures and getting them into the backlog?
James D. Taiclet - Chairman, President and Chief Executive Officer
I'll let John address this because he's been around for the entire three-year period. I could add some color at the end maybe.
John W. Mollard - Acting Chief Financial Officer
Yeah. Hey, Myles. Yeah, as you mentioned, we're still in negotiations with the Joint Program Office on Lots 15 to 17. It's proven more difficult than we expected to reach agreement on a cost baseline that incorporates the impacts that we see associated with our customer set ordering fewer aircraft in Lots 15 to 17 than were ordered in the prior buys of 12 to 14. They're also - we're struggling to come to a mutual agreement on the impact of global challenges that Lockheed Martin and our supply chain partners are experiencing, such as inflation and COVID-19. I'll say we'll continue using a data-driven process for as long as it takes to reach agreement based on what it's actually going to cost to build these aircraft. So that said, both parties continue good-faith negotiations and are diligently working to reach closure because we both recognize the importance of continuing to deliver these critical F-35 capabilities to the services and to our international partners.
James D. Taiclet - Chairman, President and Chief Executive Officer
So, Myles, we're sticking to our economics and trying to make sure that our shareholders get appropriate agreement on their behalf negotiated by our team, and we continue to strive to do that.
Operator
And next we'll go to Noah Poponak with Goldman Sachs. Please go ahead.
Noah Poponak - Goldman Sachs & Co. LLC - Analyst
Hi. Good morning, everyone.
James D. Taiclet - Chairman, President and Chief Executive Officer
Good morning.
Noah Poponak - Goldman Sachs & Co. LLC - Analyst
John, with regard to the R&D cash tax item, I just want to make sure I have it clear. Are you saying that you now know you only need to incorporate IRAD into that? Are you saying that there's historically where you placed R&D tax credit will be what has to be amortized going forward? Just want to make sure I have that right. And then, Jim, on a completely different topic, in the near term here we're going to get the next budget request and a multi-year look from the Pentagon. Curious if you could just spend a minute on what growth rates you expect to see? There's a lot of competing interests or do you think it's a realistic next five-year framework to think about where the '22 budget started with something squarely low-single-digit or where the '22 budget ended, something squarely mid-single digit.
James D. Taiclet - Chairman, President and Chief Executive Officer
John, why don't you do the R&D tax first and then I'll go.
John W. Mollard - Acting Chief Financial Officer
Yeah. Hey, Noah, to answer your question, the framework we're looking at for what expenses ought to be capitalized for purposes of this R&D activity, it's broader than just IR&D, but it's not as broad as the definition that we were using previously. And it is consistent, like I said in the scripted remarks, with the framework we're using when we calculate the R&D activity we're doing that merits the R&D tax credit provisions. So it's a historically consistent with that approach.
James D. Taiclet - Chairman, President and Chief Executive Officer
Okay. And then on the Future Year Defense Plan, or FYDP or F-Y-D-P, that is being developed and the first real year of that forward-looking approach is 2023. It's too soon to know what the percentage growth rates in the defense budget are going to be, but our expectation will be that FY '22, which we're already again a third of the way through, but looks like a $740 billion number would be the baseline upon which 2023 growth would be placed. And then that growth percentage, of course, is going to have to come through the administration and Congress.
But if you look at - and it's evident each day that goes by, if you look at the evolving threat level and the approach that some countries are taking, including North Korea, Iran and through some of its proxies in Yemen and elsewhere, and especially Russia today - these days and China, there's renewed Great Power Competition that does include national defense and threats to it and the history of United States is when those environments evolve that we do not sit by and just watch it happen. So I can't talk to a number, but I do think and I'm concerned personally that the threat is advancing, and we need to be able to meet it, and the contribution we can make at LM is to increase the efficiency and the reliability of our products that we have today for our customer; and secondly, to try to bring this 21st century digital technology to the enterprise in a way that allows us to keep up with the adversaries while we're developing the even newer and more advanced systems.
Greg Gardner - Vice President, Investor Relations
Hey, John. This is Greg. We've gone a little over the hour. So I think we've come up on the end of our call. I will turn it back over to Jim for some final thoughts.
James D. Taiclet - Chairman, President and Chief Executive Officer
Yeah. Thanks, Greg. I'd like to conclude the call by thanking the entire Lockheed Martin community for their steadfast commitment in a really challenging year for supporting our customers and each other, and we're all going to work to put the pandemic hopefully behind us here in '22. I'm confident in our future because the outstanding integrity and performance and innovation of our workforce, and we've got like 60,000 engineers and scientists working every day to try to address these issues, and we'll continue to support our customers and their essential missions that we just talked about. And look, I also appreciate our investors' confidence in our capability to execute on our long-term free cash flow per share growth strategy. And thanks again to all of you then for joining us on the call today, and we look forward to speaking to you in April. Bye, everybody. Take care.
Operator