Lockheed Martin 2015 Annual Report Download - page 62

Commercial Paper
We have agreements in place with financial institutions to provide for the issuance of commercial paper backed by our
$2.5 billion credit facility. In connection with the Sikorsky acquisition, in the fourth quarter of 2015 we borrowed and repaid
approximately $1.0 billion under our commercial paper program. There were no commercial paper borrowings outstanding
as of December 31, 2015. However, we expect to continue to issue commercial paper backed by our credit facility to manage
the timing of our cash flows.
Stockholders’ Equity
Our stockholders’ equity was $3.1 billion at December 31, 2015, a decrease of $303 million from December 31, 2014.
The decrease was primarily due to the repurchase of 15.2 million common shares for $3.1 billion; and dividends declared of
$1.9 billion during the year. These decreases were partially offset by net earnings of $3.6 billion; employee stock activity of
$660 million (including the impacts of stock option exercises, ESOP activity and stock-based compensation); and the
amortization of $850 million in 2015 postretirement benefit plan expense, offset by the re-measurements of our
postretirement benefit plans of $351 million.
As we repurchase our common shares, we reduce common stock for the $1 of par value of the shares repurchased, with
the excess 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 purchase price over par value of $2.4 billion recorded as a reduction of retained earnings in 2015.
Contractual Commitments and Off-Balance Sheet Arrangements
At December 31, 2015, we had contractual commitments to repay debt, make payments under operating leases, settle
obligations related to agreements to purchase goods and services and settle tax and other liabilities. Capital lease obligations
were not material. Payments due under these obligations and commitments are as follows (in millions):
Payments Due By Period
Total
Less Than
1 Year
Years
2 and 3
Years
4 and 5
After
5 Years
Long-term debt (a) $16,181 $ 953 $ 750 $2,150 $12,328
Interest payments 11,224 623 1,259 1,192 8,150
Other liabilities 2,892 313 546 365 1,668
Operating lease obligations 793 205 289 165 134
Purchase obligations:
Operating activities 40,455 18,492 15,700 4,792 1,471
Capital expenditures 290 233 55 2 —
Total contractual cash obligations $71,835 $20,819 $18,599 $8,666 $23,751
(a) Long-term debt includes scheduled principal payments only and excludes $18 million of debt issued by a consolidated joint venture,
for which the debt is not guaranteed by us.
Amounts related to other liabilities represent the contractual obligations for certain long-term liabilities recorded as of
December 31, 2015. Such amounts mainly include expected payments under non-qualified pension plans, environmental
liabilities and deferred compensation plans.
Purchase obligations related to operating activities include agreements and contracts that give the supplier recourse to us
for cancellation or nonperformance under the contract or contain terms that would subject us to liquidated damages. Such
agreements and contracts may, for example, be related to direct materials, obligations to subcontractors and outsourcing
arrangements. Total purchase obligations for operating activities in the preceding table include approximately $36.7 billion
related to contractual commitments entered into as a result of contracts we have with our U.S. Government customers. The
U.S. Government generally would be required to pay us for any costs we incur relative to these commitments if they were to
terminate the related contracts “for convenience” under the Federal Acquisition Regulation (FAR), subject to available
funding. This also would be true in cases where we perform subcontract work for a prime contractor under a U.S.
Government contract. The termination for convenience language also may be included in contracts with foreign, state and
local governments. We also have contracts with customers that do not include termination for convenience provisions,
including contracts with commercial customers.
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