Lockheed Martin 2010 Annual Report Download - page 42

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(In millions)
2010
2009
2008
Net Cash Provided by Operating Activities
$ 3,547
$ 3,173
$ 4,421
Net Cash Used for Investing Activities
(319)
(1,518)
(907)
Net Cash Used for Financing Activities
(3,363)
(1,476)
(3,938)
Operating Activities
Net cash provided by operating activities increased by $374 million to $3,547 million in 2010 as compared to 2009. The
increase primarily was attributable to an improvement in our operating working capital balances of $570 million as discussed below,
and $187 million related to lower net income tax payments, as compared to 2009. Partially offsetting these improvements was a net
reduction in cash from operations of $350 million related to our defined benefit pension plan. This reduction was the result of
increased contributions to the pension trust of $758 million as compared to 2009, partially offset by an increase in the CAS costs
recovered on our contracts.
Operating working capital accounts consists of receivables, inventories, accounts payable, and customer advances and amounts
in excess of costs incurred. The improvement in cash provided by operating working capital was due to a decline in 2010 accounts
receivable balances compared to 2009, and an increase in 2010 customer advances and amounts in excess of costs incurred balances
compared to 2009. These improvements partially were offset by a decline in accounts payable balances in 2010 compared to 2009.
The decline in accounts receivable primarily was due to higher collections on various programs at Electronic Systems, IS&GS, and
Space Systems business areas. The increase in customer advances and amounts in excess of costs incurred primarily was attributable
to an increase on government and commercial satellite programs at Space Systems and air mobility programs at Aeronautics, partially
offset by a decrease on various programs at Electronic Systems. The decrease in accounts payable was attributable to the timing of
accounts payable activities across all segments.
Net cash provided by operating activities decreased by $1,248 million to $3,173 million in 2009 as compared to 2008. The
decline primarily was attributable to an increase in our contributions to the defined benefit pension plan of $1,373 million as compared
to 2008 and an increase in our operating working capital accounts of $147 million. Partially offsetting these items was the impact of
lower net income tax payments in 2009 as compared to 2008 in the amount of $319 million.
The decline in cash provided by operating working capital primarily was due to growth of receivables on various programs in
the MS2 and GT&L lines of business at Electronic Systems and an increase in inventories on Combat Aircraft programs at
Aeronautics, which partially were offset by increases in customer advances and amounts in excess of costs incurred on Government
Satellite programs at Space Systems and the timing of accounts payable activities.
Investing Activities
Capital expenditures – The majority of our capital expenditures relate to facilities infrastructure and equipment that are incurred
to support new and existing programs across all of our business segments. We also incur capital expenditures for IT to support
programs and general enterprise IT infrastructure. Capital expenditures for property, plant and equipment amounted to $820 million in
2010, $852 million in 2009, and $926 million in 2008. We expect that our operating cash flows will continue to be sufficient to fund
our annual capital expenditures over the next few years.
Acquisitions, divestitures and other activities – Acquisition activities include both the acquisition of businesses and investments
in affiliates. Amounts paid in 2010 of $148 million primarily related to investments in affiliates. We paid $435 million in 2009 for
acquisition activities, compared with $233 million in 2008. In 2010, we received proceeds of $798 million from the sale of EIG, net of
$17 million in transaction costs (see Note 2). There were no material divestiture activities in 2009 and 2008. During 2010, we
increased our short-term investments by $171 million compared to an increase of $279 million in 2009.
Financing Activities
Share activity and dividends – During 2010, 2009, and 2008, we repurchased 33.0 million, 24.9 million, and 29.0 million shares
of our common stock for $2,483 million, $1,851 million, and $2,931 million. Of the shares we repurchased in 2010, 0.9 million shares
for $63 million were repurchased in December but settled and were paid for in January 2011. In October 2010, our Board of Directors
approved a new share repurchase program for the repurchase of our common stock from time-to-time, up to an authorized amount of
$3.0 billion (see Note 12). Under the program, we have discretion to determine the dollar amount of shares to be repurchased and the
timing of any repurchases in compliance with applicable law and regulation. We repurchased a total of 11.2 million shares under the
program for $776 million, and as of December 31, 2010, there remained $2,224 million available for additional share repurchases. In
connection with their approval of the new share repurchase program, our Board terminated our previous share repurchase program.
Cash received from the issuance of our common stock in connection with stock option exercises during 2010, 2009, and 2008
totaled $59 million, $40 million, and $250 million. Those activities resulted in the issuance of 1.4 million shares, 1.0 million shares,
and 4.7 million shares during the respective periods.