Lockheed Martin 1999 Annual Report Download - page 48

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Lockheed Martin Corporation
Net provisions for state income taxes are included in
general and administrative expenses, which are primarily
allocable to government contracts. Such state income taxes
were $22 million for 1999, $70 million for 1998 and $62
million for 1997.
The Corporation’s effective income tax rate varied from
the statutory federal income tax rate because of the follow-
ing differences:
1999 1998 1997
Statutory federal tax rate 35.0% 35.0% 35.0%
Increase (reduction) in tax
rate from:
Nondeductible amortization 7.6 5.5 4.9
Revisions to prior years’
estimated liabilities (6.0) (2.4) (5.7)
Divestitures —1.1 (2.4)
Other, net 2.0 .5 1.1
38.6% 39.7% 32.9%
The primary components of the Corporation’s federal
deferred income tax assets and liabilities at December 31
were as follows:
(In millions) 1999 1998
Deferred tax assets related to:
Accumulated post-retirement
benefit obligations $ 632 $ 666
Contract accounting methods 587 635
Accrued compensation and benefits 248 181
Other 165 240
1,632 1,722
Deferred tax liabilities related to:
Intangible assets 436 444
Prepaid pension asset 383 338
Property, plant and equipment 93 147
912 929
Net deferred tax assets $ 720 $ 793
At December 31, 1999 and 1998, other liabilities
included net long-term deferred tax liabilities of $517
million and $316 million, respectively.
Federal and foreign income tax payments, net of
refunds received, were $530 million in 1999, $228 million
in 1998 and $986 million in 1997.
Note 12—Other Income and Expenses, Net
(In millions) 1999 1998 1997
Equity in earnings of equity investees $ 18 $ 39 $ 48
Interest income 33 38 40
Sales of surplus real estate 57 35 19
Royalty income 17 19 52
Sale of remaining interest in L-3 155 — —
Sale of Airport Group International 33 — —
Real 3D disposition 33 — —
GE Transaction —— 311
Other portfolio shaping activities (9) 18 69
Other 721 (57)
$344 $170 $482
Note 13—Stockholders’ Equity and Related Items
Capital structure— At December 31, 1999, the authorized
capital of the Corporation was composed of 1.5 billion
shares of common stock (approximately 398 million shares
issued), 50 million shares of series preferred stock (no
shares issued), and 20 million shares of Series A preferred
stock (no shares outstanding).
In 1995, the Corporation’s Board of Directors author-
ized a common stock repurchase plan for the repurchase of
up to 18 million common shares to counter the dilutive effect
of common stock issued under certain of the Corporation’s
benefit and compensation programs and for other purposes
related to such plans. No shares were repurchased in 1999,
1998 or 1997 under this plan.
Stock option and award plans— In March 1995, the stock-
holders approved the Lockheed Martin 1995 Omnibus
Performance Award Plan (the Omnibus Plan). Under the
Omnibus Plan, employees of the Corporation may be
granted stock-based incentive awards, including options to
purchase common stock, stock appreciation rights, restricted
stock or other stock-based incentive awards. Employees may
also be granted cash-based incentive awards, such as per-
formance units. These awards may be granted either indi-
vidually or in combination with other awards. The Omnibus
Plan requires that options to purchase common stock have
an exercise price of not less than 100 percent of the market
value of the underlying stock on the date of grant. The num-
ber of shares of Lockheed Martin common stock reserved