Lockheed Martin 1999 Annual Report Download - page 52

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Lockheed Martin Corporation
Note 15—Leases
Total rental expense under operating leases, net of immaterial
amounts of sublease rentals and contingent rentals, was
$287 million, $285 million and $295 million for 1999,
1998 and 1997, respectively.
Future minimum lease commitments at December 31,
1999 for all operating leases that have a remaining term
of more than one year were approximately $1,013 million
($247 million in 2000, $200 million in 2001, $156 mil-
lion in 2002, $112 million in 2003, $89 million in 2004,
and $209 million in later years). Certain major plant facili-
ties and equipment are furnished by the U.S. Government
under short-term or cancelable arrangements.
Note 16—Commitments and Contingencies
The Corporation or its subsidiaries are parties to or have
property subject to litigation and other proceedings, includ-
ing matters arising under provisions relating to the protec-
tion of the environment. In the opinion of management and
in-house counsel, the probability is remote that the outcome
of these matters will have a material adverse effect on the
Corporation’s consolidated results of operations or financial
position. These matters include the following items:
Environmental matters— The Corporation is responding
to three administrative orders issued by the California
Regional Water Quality Control Board (the Regional Board)
in connection with the Corporation’s former Lockheed
Propulsion Company facilities in Redlands, California.
Under the orders, the Corporation is investigating the
impact and potential remediation of regional groundwater
contamination by perchlorates and chlorinated solvents. The
Regional Board has approved the Corporation’s plan to
maintain public water supplies with respect to chlorinated
solvents during this investigation, and the Corporation is
negotiating with local water purveyors to implement this
plan, as well as to address water supply concerns relative
to perchlorate contamination. The Corporation estimates
that expenditures required to implement work currently
approved will be approximately $140 million. The
Corporation is also coordinating with the U.S. Air Force,
which is conducting preliminary studies of the potential
health effects of exposure to perchlorates in connection with
several sites across the country, including the Redlands site.
The results of these studies indicate that current efforts
with water purveyors regarding perchlorate issues are
appropriate; however, the Corporation currently cannot
project the extent of its ultimate clean-up obligation, if any,
with respect to perchlorates.
The Corporation entered into a consent decree with
the U.S. Environmental Protection Agency (EPA) in 1991
relating to certain property in Burbank, California, which
obligated the Corporation to design and construct facilities
to monitor, extract and treat groundwater, and to operate
and maintain such facilities for approximately eight years.
The Corporation entered into a follow-on consent decree in
1998 which obligates the Corporation to fund the contin-
ued operation and maintenance of these facilities through
the year 2018; however, the responsibility for the actual
operations of these facilities will be assumed by the city
of Burbank late in 2000. The Corporation has also been
operating under a cleanup and abatement order from the
Regional Board affecting its facilities and former facilities
in Burbank, California. This order requires site assessment
and action to abate groundwater contamination by a com-
bination of groundwater and soil cleanup and treatment.
Also as a result of its former operations at the Burbank
facilities, the Corporation is participating as one of several
parties under administrative orders from the EPA to design,
build and operate a groundwater treatment system in
Glendale, California as part of the San Fernando Super-
fund site that includes Burbank. The city of Glendale is
expected to assume responsibility for the actual operations
of the Glendale treatment plant. The Corporation estimates
that total expenditures required over the remaining terms of
the consent decrees and the Regional Board order related to
the Burbank property, and the administrative orders related
to the city of Glendale, will be approximately $100 million.
Under an agreement reached with the U.S. Government
and filed with the U.S. District Court in January 2000, an
amount equal to approximately 50 percent of these future
expenditures will be reimbursed by the U.S. Government as