Lockheed Martin 2007 Annual Report Download - page 83

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Note 6 – Property, Plant and Equipment
(In millions) 2007 2006
Land $ 112 $ 121
Buildings 4,574 4,258
Machinery and equipment 5,619 5,250
10,305 9,629
Less accumulated depreciation and amortization (5,985) (5,573)
$ 4,320 $ 4,056
During the year ended December 31, 2007, we wrote off $232 million of cost and accumulated depreciation related to
certain plant and equipment that had been fully depreciated or amortized.
Note 7 – Debt
Our Long-term debt is primarily in the form of publicly issued notes and debentures, as follows:
(In millions) Interest Rate 2007 2006
Medium Term Notes due 2006-2007 7.70 – 8.66 $—$32
Notes due 06/15/2008 7.70 103 103
Notes due 12/01/2009 8.20 241 241
Debentures due 04/15/2013 7.375 150 150
Debentures due 05/01/2016 7.65 600 600
Debentures due 09/15/2023 7.0 200 200
Notes due 06/15/2024 8.375 167 167
Debentures due 06/15/2025 7.625 150 150
Debentures due 05/01/2026 7.75 423 423
Debentures due 12/01/2029 8.5 317 317
Convertible Debentures due 08/15/2033 LIBOR –0.25 1,000 1,000
Debentures due 05/01/2036 7.20 300 300
Notes due 09/01/2036 6.15 1,079 1,079
Discount on Notes due 09/01/2036 N/A (342) (345)
Other Various 19 22
4,407 4,439
Less: Current maturities of long-term debt 104 34
$4,303 $4,405
In August 2006, we issued $1,079 million of new 6.15% Notes due 2036 (the Notes) in exchange for a portion of our
then outstanding debt securities and cash consideration of $343 million. Holders also received a cash payment representing
accrued and unpaid interest on the previous notes. We accounted for the transaction as an exchange of debt under Emerging
Issues Task Force (EITF) Issue 96-19, Debtor’s Accounting for a Modification or Exchange of Debt Instruments. The cash
consideration of $343 million, which is included in the Statement of Cash Flows in financing activities, will be amortized
over the life of the Notes as a discount using the effective interest method and recorded in interest expense. The Notes are
included on our Balance Sheet net of the unamortized discount under the caption Long-term debt, net. The expenses
associated with the exchange, net of state income tax benefits, totaled $16 million and were recorded in Other non-operating
income (expense), net. They reduced Net earnings by $11 million ($0.03 per share) in 2006.
We have outstanding $1.0 billion in floating rate convertible debentures due in 2033. The debentures bear interest at a
rate equal to three-month LIBOR less 25 basis points, reset quarterly. The interest rate in effect at December 31, 2007 was
4.62%. Interest on the debentures is payable quarterly through August 15, 2008, after which the interest will accrue as part of
the value of the debenture and will be payable, along with the principal amount of the debenture, at maturity. The debentures
are convertible by holders into shares of our common stock on a contingent basis under the circumstances discussed below
and as described in the indenture. The debentures are not convertible unless the price of our common stock is greater than or
equal to 130% of the applicable conversion price for a specified period during the previous quarter, or unless certain events
occur including, among others: we call the debentures for redemption; we distribute to all holders of our common stock
certain rights to purchase shares of common stock at less than market value on the trading day immediately preceding the
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