Earnings Per Share, Share Repurchases and Dividends on Common Stock

12 Months Ended

Dec. 31, 2012

Earnings Per Share [Abstract]

Earnings Per Share, Share Repurchases and Dividends on Common Stock

EARNINGS PER SHARE, SHARE REPURCHASES AND DIVIDENDS ON COMMON STOCK

Basic Earnings Per Share

Basic earnings per share from both continuing and discontinued operations are calculated by dividing the respective earnings by the weighted-average number of shares of common stock outstanding during each period.

Diluted Earnings Per Share

Diluted earnings per share includes the dilutive effect of awards granted to employees under stock-based compensation plans. The dilutive effect of these securities totaled 4.8 million, 4.8 million, and 4.2 million shares for the years ended December 31, 2012, 2011, and 2010, respectively. The weighted-average diluted shares outstanding for the years ended December 31, 2012, 2011, and 2010, excludes anti-dilutive stock options to purchase approximately 1.8 million, 2.8 million, and 2.8 million shares, respectively, because such options have exercise prices in excess of the average market price of the company’s common stock during the year.

Share Repurchases

The table below summarizes the company’s share repurchases:

Repurchase Program Authorization Date	Amount Authorized (in millions)		Total Shares Retired (in millions)	Average  Price Per Share(2)		Date Completed	Shares Repurchased (in millions)
							2012	2011	2010
December 19, 2007		$3,600	60.2		$59.82	August 2010	—	—	15.7
June 16, 2010(1)		$5,350	65.1		$59.42		20.9	40.2	4.0
							20.9	40.2	19.7

(1) On June 16, 2010, the company’s board of directors authorized a share repurchase program of up to $2.0 billion of the company’s common stock. Following this initial authorization, the board of directors increased the remaining repurchase authorization to $4.0 billion in April 2011. After further repurchases reduced the remaining authorization to less than $1 billion, the board of directors again increased the remaining authorization to $2.0 billion in September 2012. As of December 31, 2012, repurchases under the program totaled $3.9 billion, and $1.5 billion remained under this share repurchase authorization. The repurchase program will expire when we have used all authorized funds for repurchase.

(2) Includes commissions paid.

Share repurchases take place under pre-established programs, depending on market conditions in the open market or in privately negotiated transactions. The company retires its common stock upon repurchase and has not made any purchases of common stock other than in connection with these publicly announced repurchase program authorizations.

In connection with the spin-off of the former shipbuilding business (see Note 3), the company obtained a Private Letter Ruling from the Internal Revenue Service (IRS) that generally limits our share repurchases to approximately 88 million shares within two years of the spin-off. The limitation expires on March 31, 2013. Since the spin-off we have repurchased approximately 61 million shares of our common stock, and as of December 31, 2012, the company may repurchase approximately 27 million shares under the Private Letter Ruling limitation. Cash available from unusual transactions, such as the disposition of significant assets, should they arise, can be used to repurchase additional shares.

Dividends on Common Stock

In May 2012, the company increased the quarterly common stock dividend to $0.55 per share; an increase from the previous amount of 0.50 per share.

In May 2011, the company increased the quarterly common stock dividend to $0.50 per share from the previous amount of 0.47 per share.

In May 2010, the company increased the quarterly common stock dividend to $0.47 per share from the previous amount of 0.43 per share.