Lockheed Martin 2005 Annual Report Download - page 68

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Lockheed฀Martin฀Corporation
NOTES฀TO฀CONSOLIDATED฀FINANCIAL฀STATEMENTS
December฀31,฀2005
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Total฀rental฀expense฀under฀operating฀leases฀was฀$324฀million,฀
$318฀ million฀ and฀ $301฀ million฀ for฀ 2005,฀ 2004฀ and฀ 2003,฀
respectively.
Future฀ minimum฀ lease฀ commitments฀ at฀ December฀ 31,฀
2005฀ for฀ all฀ operating฀ leases฀ that฀ have฀ a฀ remaining฀ term฀ of฀
more฀ than฀ one฀ year฀ were฀ approximately฀ $1.2฀ billion฀ ($261฀
million฀in฀2006,฀$210฀million฀in฀2007,฀$176฀million฀in฀2008,฀
$141฀million฀in฀2009,฀$121฀million฀in฀2010฀and฀$248฀million฀
in฀later฀years).฀Certain฀major฀plant฀facilities฀and฀equipment฀are฀
furnished฀by฀the฀U.S.฀Government฀under฀short-term฀or฀cancel-
able฀arrangements.

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The฀Corporation฀or฀its฀subsidiaries฀are฀parties฀to฀or฀have฀prop-
erty฀subject฀to฀litigation฀and฀other฀proceedings,฀including฀mat-
ters฀ arising฀ under฀ provisions฀ relating฀ to฀ the฀ protection฀ of฀ the฀
environment.฀ In฀ the฀ opinion฀ of฀ management฀ and฀ in-house฀
counsel,฀ the฀ probability฀ is฀ remote฀ that฀ the฀ outcome฀ of฀ these฀
matters฀will฀have฀a฀material฀adverse฀effect฀on฀the฀Corporation’s฀
consolidated฀ results฀ of฀ operations,฀ financial฀ position฀ or฀ cash฀
flows.฀ The฀ results฀ of฀ legal฀ proceedings,฀ however,฀ cannot฀ be฀
predicted฀with฀certainty.฀These฀ matters฀include฀the฀following฀
items,฀all฀of฀which฀have฀been฀previously฀reported:฀
On฀ June฀ 17,฀ 2002,฀ the฀ Corporation฀ was฀ served฀ with฀ a฀
grand฀jury฀subpoena฀issued฀by฀the฀United฀States฀District฀Court฀
for฀ the฀ Central฀ District฀ of฀ California.฀ The฀ subpoena฀ sought฀
documents฀relating฀to฀an฀international฀sales฀agent฀engaged฀by฀
Loral฀ Corporation฀ in฀ connection฀ with฀ the฀ sale฀ of฀ synthetic฀
aperture฀ radars฀ to฀ the฀ Government฀ of฀ Korea฀ in฀ 1996.฀ On฀
December฀ 20,฀ 2005,฀ the฀ Corporation฀ was฀ advised฀ that฀ the฀
grand฀jury’s฀investigation฀was฀closed.฀
On฀February฀6,฀2004,฀the฀Corporation฀submitted฀a฀certi-
fied฀ contract฀ claim฀ to฀ the฀ United฀ States฀ seeking฀ contractual฀
indemnity฀for฀remediation฀and฀litigation฀costs฀(past฀and฀future)฀
associated฀with฀its฀former฀facility฀in฀Redlands,฀California.฀The฀
claim฀ was฀ submitted฀ pursuant฀ to฀ a฀ claim฀ sponsorship฀ agree-
ment฀with฀The฀Boeing฀Company,฀executed฀in฀2001,฀in฀Boeing’s฀
capacity฀ as฀ the฀ prime฀ contractor฀ on฀ the฀ Short฀ Range฀ Attack฀
Missile฀ (SRAM)฀ program.฀ The฀ contract฀ for฀ the฀ SRAM฀ pro-
gram,฀which฀formed฀a฀significant฀portion฀of฀the฀Corporation’s฀
work฀ at฀ the฀ Redlands฀ facility,฀ contained฀ special฀ contractual฀
indemnities฀from฀the฀U.S.฀Air฀Force,฀as฀authorized฀by฀Public฀
Law฀85-804.฀On฀August฀31,฀2004,฀the฀United฀States฀denied฀the฀
claim.฀ The฀ Corporation’s฀ appeal฀ of฀ that฀ decision฀ is฀ pending฀
before฀the฀Armed฀Services฀Board฀of฀Contract฀Appeals.
On฀ August฀ 28,฀ 2003,฀ the฀ Department฀ of฀ Justice฀ filed฀
complaints฀ in฀ partial฀ intervention฀ in฀ two฀ previously฀ reported฀
lawsuits฀filed฀under฀the฀qui฀tam฀provisions฀of฀the฀Civil฀False฀
Claims฀Act฀in฀the฀United฀States฀District฀Court฀for฀the฀Western฀
District฀of฀Kentucky,฀United฀States฀ex฀rel.฀Natural฀Resources฀
Defense฀Council,฀et฀al฀v.฀Lockheed฀Martin฀Corporation,฀et฀al,฀
and฀United฀States฀ex฀rel.฀John฀D.฀Tillson฀v.฀Lockheed฀Martin฀
Energy฀ Systems,฀ Inc.,฀ et฀ al.฀ The฀ Department฀ alleges฀ that฀ the฀
Corporation฀committed฀violations฀of฀the฀Resource฀Conservation฀
and฀Recovery฀Act฀at฀the฀Paducah฀Gaseous฀Diffusion฀Plant฀by฀
failing฀ to฀ properly฀ handle,฀ store,฀ and฀ transport฀ hazardous฀
waste฀and฀that฀it฀violated฀the฀False฀Claims฀Act฀by฀purportedly฀
misleading฀ DoE฀ officials฀ and฀ state฀ regulators฀ regarding฀ the฀
nature฀ and฀ extent฀ of฀ environmental฀ noncompliance฀ at฀ the฀
plant.฀The฀Corporation฀disputes฀the฀allegations฀and฀is฀defend-
ing฀against฀them.฀