Lockheed Martin 2002 Annual Report Download - page 60

SIXTY-SEVEN
In June 2000, the Corporation paid $207 million to settle
its share of obligations of Globalstar, L.P. (Globalstar) under a
revolving credit agreement on which Lockheed Martin was a
partial guarantor. At the same time, Loral Space, under a sepa-
rate indemnification agreement between the Corporation and
Loral Space, paid Lockheed Martin $57 million. In light of the
uncertainty of the Corporation recovering the amounts paid on
Globalstar’s behalf from Globalstar, the Corporation recorded
an unusual charge in the second quarter of 2000, net of state
income tax benefits, of approximately $141 million in other
income and expenses. The charge reduced net earnings for
2000 by $91 million ($0.23 per diluted share).
Interest payments were $586 million in 2002, $707 mil-
lion in 2001 and $947 million in 2000.
NOTE 10—INCOME TAXES
The provision for federal and foreign income taxes attributable
to continuing operations consisted of the following components:
(In millions) 2002 2001 2000
Federal income taxes:
Current $ 469 $ 170 $728
Deferred (463) (118) (96)
Total federal income taxes 652 632
Foreign income taxes 38 38 31
Total income taxes provided $44 $90 $663
Net provisions for state income taxes are included in gen-
eral and administrative expenses, which are primarily alloca-
ble to government contracts. The net state income tax benefit
was $7 million for 2002 and $8 million for 2001, and net state
income tax expense was $100 million for 2000.
A reconciliation of income tax expense computed using
the U.S. federal statutory income tax rate to actual income tax
expense is as follows:
(In millions) 2002 2001 2000
Income tax expense at the statutory
federal rate $202 $ 47 $ 65
Increase (reduction) in tax expense from:
R&D tax credit settlement (90) ——
Revisions to prior years’
estimated liabilities (62) (20) 13
Divestitures —— 505
Non-deductible amortization —62 77
Other, net (6) 13
Actual income tax expense $44 $ 90 $663
The primary components of the Corporation’s federal
deferred income tax assets and liabilities at December 31 were
as follows:
(In millions) 2002 2001
Deferred tax assets related to:
Accumulated post-retirement
benefit obligations $ 535 $ 534
Contract accounting methods 493 459
Basis differences of impaired investments 407 370
Accrued compensation and benefits 344 286
Pensions(a) 110 —
Other 470 95
2,359 1,744
Deferred tax liabilities related to:
Intangible assets 345 378
Pensions(a) —637
Property, plant and equipment 178 155
523 1,170
Net deferred tax assets $1,836(b) $ 574
(a) The change in deferred tax balances related to pensions was
primarily due to the recording of a minimum pension liability
in 2002.
(b) This amount includes $559 million of net noncurrent deferred tax
assets which is included in “Other assets” on the consolidated
balance sheet at December 31, 2002.
Lockheed Martin Corporation