Lockheed Martin 2015 Annual Report Download - page 59

The following table provides a summary of our cash flow information followed by a discussion of the key elements
(in millions):
2015 2014 2013
Cash and cash equivalents at beginning of year $ 1,446 $ 2,617 $ 1,898
Operating activities
Net earnings 3,605 3,614 2,981
Non-cash adjustments 821 876 1,570
Changes in working capital (846) (372) (98)
Other, net 1,521 (252) 93
Net cash provided by operating activities 5,101 3,866 4,546
Net cash used for investing activities (9,734) (1,723) (1,121)
Net cash provided by (used for) financing activities 4,277 (3,314) (2,706)
Net change in cash and cash equivalents (356) (1,171) 719
Cash and cash equivalents at end of year $ 1,090 $ 1,446 $ 2,617
Operating Activities
2015 compared to 2014
Net cash provided by operating activities increased $1.2 billion in 2015 compared to 2014 primarily due to lower
pension contributions, partially offset by decreases in working capital and higher tax payments. The $1.8 billion increase in
cash flows related to Other, net in the table above is primarily because we made no contributions to our heritage qualified
defined benefit pension trust in 2015 compared to $2.0 billion in 2014. We made $5.0 million in contributions to our new
Sikorsky bargained qualified defined benefit pension plan in 2015. The increase in cash flows related to Other, net was offset
by higher federal and foreign income tax payments, net of refunds received, of approximately $210 million in 2015
compared to 2014 due primarily to the absence of refunds received in 2015 (prior year’s tax refunds were attributable to
timing of discretionary pension contributions made during the fourth quarter of the respective previous years). The
$474 million decrease in cash flows related to working capital (defined as receivables and inventories less accounts payable
and customer advances and amounts in excess of costs incurred) was attributable to an increase in receivables due to timing
of customer collections (primarily F-35 contracts) as well as timing of production and billing cycles affecting customer
advances and progress payments applied to inventories (primarily C-130 program). See “Critical Accounting Policies –
Postretirement Benefit Plans” (under the caption “Funding Considerations”) for discussion of future postretirement benefit
plan funding.
2014 compared to 2013
Net cash provided by operating activities decreased $680 million in 2014 compared to 2013 primarily due to higher tax
payments, net of refunds received and increases in working capital. Our federal and foreign income tax payments, net of
refunds received, were approximately $760 million higher in 2014 compared to 2013 due to an increase in net income and
lower refunds received in 2014 (attributable to timing of discretionary pension contributions made during the fourth quarter
of 2012). The decrease of $274 million in cash provided by working capital (defined as receivables and inventories less
accounts payable and customer advances and amounts in excess of costs incurred) was primarily attributable to lower cash
receipts related to accounts receivable, primarily timing on the F-35 production contracts (including amounts received in
2013 from resolving U.S. Government contractual withholds that were not repeated in 2014). Partially offsetting the
decreases in operating cash flows were lower pension contributions in 2014. We made $2.0 billion in contributions to our
qualified defined benefit pension plans in 2014, compared to $2.25 billion in 2013.
Investing Activities
Net cash used for investing activities increased $8.0 billion and $602 million in 2015 and 2014, respectively, compared
to the prior year, primarily due to increased acquisition activities. Acquisition activities include both the acquisition of
businesses and investments in affiliates. We paid $9.0 billion in 2015 for the Sikorsky acquisition, net of cash acquired
(Note 3). We paid $898 million in 2014 for acquisition activities, primarily related to the acquisitions of Zeta, Systems Made
Simple, and Industrial Defender. In 2013, we paid $269 million for acquisition activities, primarily related to the acquisition
of Amor Group.
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