Lockheed Martin 2013 Annual Report Download - page 52

CDL, and Procerus (Note 14). In 2011, we paid $624 million for acquisition activities, primarily related to the acquisitions of
QTC and Sim-Industries (Note 14). In 2011, we received cash of $510 million from the maturity of short-term investments.
Financing Activities
Dividends and share activity – We paid dividends totaling $1.5 billion ($4.78 per share) in 2013, $1.4 billion ($4.15 per
share) in 2012, and $1.1 billion ($3.25 per share) in 2011. We have increased our quarterly dividend rate in each of the last
three years, including a 16% increase in the quarterly dividend rate in the fourth quarter of 2013. We declared quarterly
dividends of $1.15 per share during each of the first three quarters of 2013 and $1.33 per share for the last quarter; $1.00 per
share during each of the first three quarters of 2012 and $1.15 per share for the last quarter; and $.75 per share during each of
the first three quarters of 2011 and $1.00 per share for the last quarter.
We paid $1.8 billion, $1.0 billion, and $2.5 billion for repurchases of our common stock during 2013, 2012, and 2011. In
September 2013, our Board of Directors approved a $3.0 billion increase to our share repurchase program. We had total
remaining authorization of $3.6 billion for future common share repurchases under our program as of December 31, 2013.
Cash received from the issuance of our common stock in connection with employee stock option exercises during 2013,
2012, and 2011 totaled $827 million, $440 million, and $116 million. Those exercises resulted in the issuance of 10.0 million
shares, 6.7 million shares, and 2.3 million shares of our common stock during the respective periods.
Long-term debt – In 2013, we repaid $150 million of long-term notes with a fixed interest rate of 7.38% due to their
scheduled maturities. In 2012, we paid $225 million to complete an exchange of debt (Note 9) to take advantage of the low
interest rate environment. In 2011, we issued a total of $2.0 billion of long-term notes with fixed coupon rates ranging from
2.13% to 4.85%. We used a portion of the proceeds from the long-term notes that were issued in 2011 to redeem all of our
$500 million long-term notes due in 2013 with a fixed coupon rate of 4.12%. In 2011, we also repurchased $84 million of our
long-term notes through open-market purchases and paid premiums of $48 million in connection with the early
extinguishments of certain long-term notes.
Capital Structure, Resources, and Other
At December 31, 2013, we held cash and cash equivalents of $2.6 billion. As of December 31, 2013, approximately
$450 million of our cash and cash equivalents was held outside of the U.S. by foreign subsidiaries. Although those balances
are generally available to fund ordinary business operations without legal or other restrictions, a significant portion is not
immediately available to fund U.S. operations unless repatriated. Our intention is to permanently reinvest earnings from our
foreign subsidiaries. While we do not intend to do so, if this cash was repatriated at the end of 2013, we estimate that about
$50 million of U.S. federal income tax would have been due after considering foreign tax credits.
Our outstanding debt, net of unamortized discounts, amounted to $6.2 billion, and mainly is in the form of publicly-
issued notes that bear interest at fixed rates. As of December 31, 2013, we were in compliance with all covenants contained
in our debt and credit agreements.
At December 31, 2013 and 2012, we had in place with a group of banks a $1.5 billion revolving credit facility that
expires in August 2016. We may request and the banks may grant, at their discretion, an increase to the credit facility by an
additional amount up to $500 million. There were no borrowings outstanding under the credit facility through
December 31, 2013. Borrowings under the 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 credit facility. Each bank’s obligation to make loans under the 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 credit facility. The leverage ratio covenant excludes the adjustments recognized in
stockholders’ equity related to postretirement benefit plans. As of December 31, 2013, we were in compliance with all
covenants contained in the credit facility, as well as in our debt agreements.
We have agreements in place with financial institutions to provide for the issuance of commercial paper. There were no
commercial paper borrowings outstanding during the year ended December 31, 2013. If we were to issue commercial paper,
the borrowings would be supported by the credit facility. We also have an effective shelf registration statement on Form S-3
on file with the U.S. 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,
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