Lockheed Martin 2003 Annual Report Download - page 58

Lockheed Martin Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
56
The Corporation’s scheduled long-term debt maturities for
the 5 years following December 31, 2003 are: $136 million in
2004; $15 million in 2005; $238 million in 2006; $33 million
in 2007; $692 million in 2008; and $5,094 million thereafter.
Certain of the Corporation’s other financing agreements
contain restrictive covenants relating to debt, limitations on
encumbrances and sale and lease-back transactions, and provi-
sions which relate to certain changes in control.
The estimated fair values of the Corporation’s long-term
debt instruments at December 31, 2003, aggregated approxi-
mately $7.4 billion, compared with a carrying amount of
approximately $6.2 billion. The fair values were estimated
based on quoted market prices for those instruments that are
publicly traded. For privately placed debt, the fair values were
estimated based on the quoted market prices for similar issues,
or on current rates offered to the Corporation for debt with sim-
ilar remaining maturities. Unless otherwise indicated elsewhere
in the notes to the financial statements, the carrying values of
the Corporation’s other financial instruments approximate their
fair values.
Interest payments were $519 million in 2003, $586 million
in 2002 and $707 million in 2001.
NOTE 10 — INCOME TAXES
The provision for federal and foreign income taxes attributable
to continuing operations consisted of the following components:
(In millions) 2003 2002 2001
Federal income taxes:
Current $(14) $ 469 $ 170
Deferred 467 (463) (118)
Total federal income taxes 453 652
Foreign income taxes 26 38 38
Total income taxes provided $ 479 $44 $ 90
Net provisions for state income taxes are included in gen-
eral and administrative expenses, which are primarily allocable
to government contracts. The net state income tax expense was
$38 million for 2003, and net state income tax benefits were
$7 million for 2002 and $8 million for 2001.
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) 2003 2002 2001
Income tax expense at the statutory
federal tax rate $ 536 $202 $ 47
Increase (reduction) in tax expense from:
Extraterritorial income exclusion benefit (46) (42) (38)
Revisions to prior years’ estimated
liabilities (28) (62) (20)
R&D tax credit settlement —(90) —
Nondeductible amortization ——62
Other, net 17 36 39
Actual income tax expense $ 479 $44 $90
The primary components of the Corporation’s federal
deferred income tax assets and liabilities at December 31 were
as follows:
(In millions) 2003 2002
Deferred tax assets related to:
Accumulated post-retirement
benefit obligations $ 502 $ 535
Contract accounting methods 459 493
Accrued compensation and benefits 476 344
Basis differences of impaired investments 74 407
Pensions(a) —110
Other 242 470
1,753 2,359
Deferred tax liabilities related to:
Purchased intangibles 269 345
Property, plant and equipment 225 178
Pensions(a) 96 —
590 523
Net deferred tax assets $ 1,163(b) $ 1,836(b)
(a) The change in deferred tax balances related to pensions was primarily due
to the recording of an adjustment to reduce the minimum pension liability
in 2003.
(b) These amounts included $242 million and $559 million, respectively, of net
noncurrent deferred tax assets which are included in “Other assets” on the
consolidated balance sheet.