Lockheed Martin 2003 Annual Report Download - page 59

Lockheed Martin Corporation
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Federal and foreign income tax payments, net of refunds
received, were $170 million in 2003, $55 million in 2002 and
$837 million in 2001. Included in these amounts are tax
payments and refunds related to the Corporation’s divestiture
activities. In addition, these amounts include net tax payments
(refunds) related to discontinued operations of $(123) million
in 2003, $(22) million in 2002 and $179 million in 2001.
The Corporation realized an income tax cash benefit of
$140 million in 2002 as a result of exercises of employee stock
options. This benefit is recorded in stockholders’ equity under
the caption, “Stock awards and options, and ESOP activity.”
The benefit for 2003 was not material.
NOTE 11 — OTHER INCOME AND EXPENSES, NET
(In millions) 2003 2002 2001
Equity in earnings of equity
investees, net $ 107 $93 $68
Interest income 75 47 91
Loss on early repayment of debt (146) —(55)
Gain on sale of commercial IT business 15 ——
Space Imaging and related guarantee 19 (163) —
Write-down of telecommunications
investments —(776) —
Write-off of investments in Astrolink
and Loral Space ——(728)
Gain on sales of surplus real estate —— 111
Impairment loss related to AAP ——(100)
Other charges related to the exit from
global telecommunications ——(73)
Other activities, net (27) 8(24)
$43$(791) $ (710)
NOTE 12 — STOCKHOLDERS’ EQUITY AND
RELATED ITEMS
Capital stock — At December 31, 2003, the authorized capital
of the Corporation was composed of 1.5 billion shares of com-
mon stock (approximately 446 million shares issued), 50 million
shares of series preferred stock (no shares issued), and 20 mil-
lion shares of Series A preferred stock (no shares outstanding).
In October 2002, the Corporation announced a share
repurchase program for the repurchase of up to 23 million
shares of its common stock from time-to-time. Under the pro-
gram, management has discretion to determine the number and
price of the shares to be repurchased, and the timing of any
repurchases in compliance with applicable law and regulation.
The Corporation repurchased approximately 10.7 million
shares under the program in 2003 for $482 million, and 1 mil-
lion shares in 2002 for $50 million. In February 2004, an addi-
tional 20 million shares were authorized for repurchase under
the program. As a result of the increase, a total of 31.3 million
shares may be repurchased in the future under the program.
Stock option and award plans — In April 2003, the stockhold-
ers approved the Lockheed Martin 2003 Incentive Performance
Award Plan (the Award Plan). Under the Award Plan, employees
of the Corporation may be granted stock-based incentive
awards, including options to purchase common stock, stock
appreciation rights, restricted stock or stock units. The maxi-
mum number of shares that may be subject to such stock-based
incentive awards in any calendar year is limited to 1.9% of the
Corporation’s common stock outstanding on the December 31
preceding the grant. The maximum number of shares that may
be issued as restricted stock is limited to 18% of the total num-
ber of shares authorized to be issued under the Award Plan, or
18% of 22.5 million shares at December 31, 2003. Employees
may also be granted cash-based incentive awards. These awards
may be granted either individually or in combination with other
awards. The Award Plan requires that options to purchase com-
mon stock have an exercise price of not less than 100% of the
market value of the underlying stock on the date of grant. Under
the Award Plan, no award of options may become fully vested
prior to the second anniversary of the grant and no portion of an
option grant may become vested in less than one year, except
for 1.5 million options specifically exempted from vesting
restrictions. The minimum vesting period for restricted stock or
stock units payable in stock is three years. Award agreements
may provide for shorter vesting periods or vesting following
termination of employment in the case of death, disability,
divestiture, retirement or layoff. The Award Plan does not
impose any minimum vesting periods on other types of awards.
The maximum term of an option or any other award is 10 years.