Lockheed Martin 2004 Annual Report Download - page 36

During 2004, New Skies Satellites, N.V. was sold to a pri-
vate equity firm. Our portion of the proceeds was $148 million,
$140 million of which was received in 2004. In December
2003, Inmarsat Ventures, Ltd., a venture in which we held a
14% interest, was acquired by a consortium of private equity
firms in a leveraged buyout transaction. In exchange for our
interest, we received cash of $114 million and a 14% ownership
interest in the new Inmarsat holding company, Inmarsat Group
Holdings, Ltd., valued at $96 million. During 2004, Inmarsat
Group Holdings refinanced its debt, and we received cash of
$50 million, reducing our investment to $46 million while
retaining our 14% ownership interest.
In January 2005, the sale of Intelsat, Ltd. to a private equity
firm was completed for $18.75 per share. We received proceeds of
about $750 million for our 25% ownership of Intelsat.
Financing Activities
Issuance and repayment of long-term debt — Cash provided
from operations has been our principal source of funds to
reduce our long-term debt. In 2004, we used $1.1 billion of cash
for the early retirement and scheduled repayment of long-term
debt. We used $163 million of cash for costs associated with the
early retirement of $951 million of debt through our tender
offers. In 2003, we issued $1.0 billion of floating rate convert-
ible senior debentures that bear interest at three-month LIBOR
less 25 basis points, reset quarterly. We used the proceeds of
that issuance, along with cash from operations, to repay $2.2
billion of debt in advance of its maturity and retire other high
cost debt. We used $175 million of cash for debt issuance and
repayment costs to complete those transactions.
Share repurchases and dividends — We also used cash in each
of the last three years for the repurchase of shares of our com-
mon stock: $772 million for 14.7 million common shares in
2004, of which $673 million for 12.9 million common shares
was settled during the year, $482 million in 2003 for 10.7 mil-
lion common shares and $50 million in 2002 for 1.0 million
common shares. These transactions were pursuant to our share
repurchase program initiated in 2002. A total of 16.6 million com-
mon shares may be repurchased in the future under the program.
The payment of dividends on our common shares is one of
the key components of our balanced cash deployment strategy.
Shareholders were paid cash dividends of $405 million in 2004,
$261 million in 2003 and $199 million in 2002. We have
increased our quarterly dividend rate in each of the last two
years. We paid a quarterly dividend of $0.22 per share during
each of the first three quarters of 2004 and $0.25 per share for
the last quarter of 2004. In 2003, we paid quarterly dividends of
$0.12 per share during each of the first three quarters of the
year and $0.22 for the last quarter of 2003.
We plan to continue to deploy a majority of the cash we
generate from operations (after capital expenditures) to repur-
chase shares and pay dividends.
Lockheed Martin Corporation
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
December 31, 2004
34