Lockheed Martin 1999 Annual Report Download - page 47

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1999
These Debentures, which are redeemable in whole or in
part at the Corporation’s option at 100 percent of their
face value, have an effective yield of 13.25%.
A leveraged employee stock ownership plan (ESOP)
incorporated into the Corporation’s salaried savings plan
borrowed $500 million through a private placement of
notes in 1989. These notes are being repaid in quarterly
installments over terms ending in 2004. The ESOP note
agreement stipulates that, in the event that the ratings
assigned to the Corporation’s long-term senior unsecured
debt are below investment grade, holders of the notes may
require the Corporation to purchase the notes and pay
accrued interest. These notes are obligations of the ESOP
but are guaranteed by the Corporation and included as
debt in the Corporation’s Consolidated Balance Sheet.
At the end of 1999, the Corporation had a long-term
revolving credit facility, which matures on December 20,
2001, in the amount of $3.5 billion, and a short-term
revolving credit facility, which matures on May 26, 2000,
in the amount of $1.0 billion (collectively, the Credit
Facilities). Borrowings under the Credit Facilities would
be unsecured and bear interest, at the Corporation’s
option, at rates based on the Eurodollar rate or a bank
Base Rate (as defined). Each bank’s obligation to make
loans under the Credit Facilities is subject to, among other
things, compliance by the Corporation with various repre-
sentations, warranties, covenants and agreements, includ-
ing, but not limited to, covenants limiting the ability of the
Corporation and certain of its subsidiaries to encumber
their assets and a covenant not to exceed a maximum lev-
erage ratio. There were no borrowings outstanding under
the Credit Facilities at December 31,1999.
The Credit Facilities support commercial paper borrow-
ings of approximately $475 million and $1.3 billion out-
standing at December 31, 1999 and 1998, respectively, of
which $300 million was classified as long-term debt in the
Corporation’s Consolidated Balance Sheet at December 31,
1998 based on management’s ability and intention to main-
tain that amount of debt outstanding for at least one year.
The weighted average interest rates for commercial paper
outstanding at December 31, 1999 and 1998 were 6.6%
and 5.8%, respectively.
The Corporation’s long-term debt maturities for the five
years following December 31, 1999 are: $52 million in
2000; $816 million in 2001; $1,336 million in 2002;
$858 million in 2003; $828 million in 2004; and $7,589
million thereafter.
Certain of the Corporation’s other financing agreements
contain restrictive covenants relating to debt, limitations on
encumbrances and sale and lease-back transactions, and
provisions which relate to certain changes in control.
The estimated fair values of the Corporation’s long-term
debt instruments at December 31, 1999, aggregated
approximately $10.9 billion, compared with a carrying
amount of approximately $11.5 billion. The fair values
were estimated based on quoted market prices for those
instruments publicly traded. For privately placed debt, the
fair values were estimated based on the quoted market
prices for similar issues, or on current rates offered to the
Corporation for debt with similar remaining maturities.
Unless otherwise indicated elsewhere in the Notes to
Consolidated Financial Statements, the carrying values of
the Corporation’s other financial instruments approximate
their fair values.
Interest payments were $790 million in 1999, $856
million in 1998 and $815 million in 1997.
Note 11—Income Taxes
The provision for federal and foreign income taxes con-
sisted of the following components:
(In millions) 1999 1998 1997
Federal income taxes:
Current $136 $432 $448
Deferred 293 203 155
Total federal income taxes 429 635 603
Foreign income taxes 34 25 34
Total income taxes provided $463 $660 $637