Lockheed Aims to Repurchase 6.3% of Its Stock
Lockheed Corp. said Monday that it would use surplus cash to repurchase up to 4 million, or 6.3%, of its outstanding shares, rejecting the option of making a large acquisition or diversifying outside the defense industry.
Vincent Marafino, the Calabasas-based aerospace firm’s chief financial officer, said in an interview that Lockheed--along with most other defense firms--will have a positive cash flow in the future. But Lockheed wants to preserve its current debt-to-capital ratio of 33% rather than use additional cash to continue paying down debt, Marafino said.
Lockheed has long-term debt of $1.6 billion.
The firm undertook a 7-million-share buyback and created an employee stock ownership plan in 1989, when Texas investor Harold Simmons was seeking control of Lockheed. Marafino said the current buyback plan is unrelated to Simmons or other agreements with major shareholders.
The buyback will continue to boost the employee stock plan, however, from its 24% share of Lockheed stock to a range of 25% to 30%, Marafino said.
Lockheed does not have a timetable for its repurchase plan. Shares will be acquired either in the open market or in negotiated transactions, the company said.
“This is a demonstration of our commitment to returning greater value to stockholders,” said Dan Tellep, Lockheed chairman and chief executive.
Lockheed had 63.4 million shares of common stock outstanding at the end of the third quarter Sept. 30. The firm’s stock gained 62.5 cents to close at $46.125 a share in trading Monday on the New York Stock Exchange.
