Lockheed Martin 2007 Annual Report Download - page 62

Download and view the complete annual report

Please find page 62 of the 2007 Lockheed Martin annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 118

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118

and bear interest at rates based, at our option, on the Eurodollar rate or a bank Base Rate (as defined). Each bank’s obligation
to make loans under the credit facility is subject to, among other things, our compliance with various representations,
warranties and covenants, including covenants limiting our ability and the ability of certain of our subsidiaries to encumber
our assets, and a covenant not to exceed a maximum leverage ratio.
We have agreements in place with banking institutions to provide for the issuance of commercial paper. There were no
commercial paper borrowings outstanding at December 31, 2007. If we were to issue commercial paper, the borrowings
would be supported by the $1.5 billion credit facility.
We have an effective shelf registration statement on file with the Securities and Exchange Commission to provide for
the issuance of up to $1 billion in debt securities. If we were to issue debt under this shelf registration, we would expect to
use the net proceeds for general corporate purposes. These purposes may include repayment of debt, working capital needs,
capital expenditures, acquisitions and any other general corporate purpose.
We actively seek to finance our business in a manner that preserves financial flexibility while minimizing borrowing
costs to the extent practicable. Our management continually reviews changes in financial, market and economic conditions to
manage the types, amounts and maturities of our indebtedness. We may at times refinance existing indebtedness, vary our
mix of variable-rate and fixed-rate debt, or seek alternative financing sources for our cash and operational needs.
Cash and cash equivalents, Short-term investments, cash flow from operations and other available financing resources
are expected to be sufficient to meet anticipated operating, capital expenditure and debt service requirements, as well as
acquisition and other discretionary investment needs, projected over the next three years.
Contractual Commitments and Off-Balance Sheet Arrangements
At December 31, 2007, we had contractual commitments to repay debt, make payments under operating leases, settle
obligations related to agreements to purchase goods and services, and settle tax and other liabilities. Capital lease obligations
were negligible. Payments due under these obligations and commitments are as follows:
Payments Due By Period
(In millions) Total
Less Than
1 Year
1-3
Years
3-5
Years
After
5 Years
Long-term debt(a) $ 4,749 $ 104 $ 243 $ 2 $4,400
Interest payments(b) 4,945 308 512 492 3,633
Other liabilities 1,694 197 523 202 772
Operating lease obligations 1,104 295 419 268 122
Purchase obligations:
Operating activities 26,051 15,309 9,432 1,017 293
Capital expenditures 256 242 11 1 2
Total contractual cash obligations $38,799 $16,455 $11,140 $1,982 $9,222
(a) The total amount of Long-term debt excludes unamortized discounts of $342 million (see Note 7).
(b) Interest payments include amounts for debt outstanding through maturity except for our $1 billion of convertible debentures, for which
we have included payments through August 15, 2008. Subsequent to that date, interest is no longer payable to holders, but rather will
be included in the accreted principal of the debentures (see Note 7).
Long-term debt includes scheduled principal payments only. Generally, our Long-term debt obligations are subject to,
along with other things, compliance with certain covenants, including covenants limiting our ability and the ability of certain
of our subsidiaries to encumber our assets.
Amounts related to Other liabilities represent the contractual obligations for certain long-term liabilities recorded as of
December 31, 2007. Such amounts mainly include expected payments under deferred compensation plans, non-qualified
pension plans, environmental liabilities and business acquisition agreements. Obligations related to environmental liabilities
represent our estimate of remediation payment obligations under government consent decrees and agreements, excluding
amounts reimbursed by the U.S. Government in its capacity as a potentially responsible party. The amounts also include
liabilities related to tax positions we have taken for which we have recorded liabilities in accordance with the Financial
Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes (see Notes 1 and 8).
We estimated the timing of payments based on the expected completion of the related examinations by the applicable taxing
authorities.
54