Lockheed Martin 2011 Annual Report Download - page 48

We issued $728 million of new 5.72% Notes due 2040 (the New Notes) in 2010 in exchange for $611 million of our
then outstanding debt securities. We paid a premium of $158 million, of which $117 million was in the form of New Notes
and $41 million was paid in cash, which was recorded as a discount and is being amortized as additional interest expense
over the life of the New Notes using the effective interest method. The New Notes are included on our Balance Sheet net of
unamortized discounts.
In 2009, we issued a total of $1.5 billion of long-term notes in a registered public offering, $900 million of which are
due in 2019 and have a fixed coupon interest rate of 4.25%, and $600 million of which are due in 2039 and have a fixed
coupon interest rate of 5.50%.
In August 2011, we entered into a new $1.5 billion revolving credit facility with a group of banks and terminated our
existing $1.5 billion revolving credit facility which was to expire in June 2012. The new credit facility expires August 2016,
and we may request and the banks may grant, at their discretion, an increase to the new credit facility by an additional
amount up to $500 million. There were no borrowings outstanding under either facility through December 31, 2011.
Borrowings under the new credit facility would be unsecured and bear interest at rates based, at our option, on a Eurodollar
rate or a Base Rate, as defined in the new credit facility. Each bank’s obligation to make loans under the new credit facility is
subject to, among other things, our compliance with various representations, warranties and covenants, including covenants
limiting our ability and certain of our subsidiaries’ ability to encumber assets and a covenant not to exceed a maximum
leverage ratio, as defined in the new credit facility.
We have agreements in place with banking institutions to provide for the issuance of commercial paper. There were no
commercial paper borrowings outstanding during the year ended December 31, 2011. If we were to issue commercial paper,
the borrowings would be supported by the new credit facility. We also have an effective shelf registration statement on
Form S-3 on file with the Securities and Exchange Commission through August 2014 to provide for the issuance of an
indeterminate amount of debt securities.
We actively seek to finance our business in a manner that preserves financial flexibility while minimizing borrowing
costs to the extent practicable. We review changes in financial market and economic conditions to manage the types,
amounts, and maturities of our indebtedness. We may at times refinance existing indebtedness, vary our mix of variable-rate
and fixed-rate debt, or seek alternative financing sources for our cash and operational needs.
Our stockholders’ equity was $1.0 billion at December 31, 2011, a decrease of $2.5 billion from December 31, 2010.
The decrease primarily was due to the repurchase of 31.8 million common shares for $2.4 billion, dividends declared of
$1.1 billion during the year, and net adjustments related to our postretirement benefit plans, including the annual
December 31 re-measurement adjustment of $2.9 billion, which on a net basis increased the accumulated other
comprehensive loss by $2.2 billion. These decreases partially were offset by net earnings of $2.7 billion, and employee stock
activity of $596 million. As we repurchase our common shares, we reduce common stock for the $1 of par value of the
shares repurchased, with the remainder of the purchase price over par value recorded as a reduction of additional paid-in
capital. Due to the volume of repurchases made under our share repurchase program, additional paid-in capital was reduced
to zero, with the remainder of the excess of purchase price over par value of $1.8 billion recorded as a reduction of retained
earnings.
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