Annual report pursuant to Section 13 and 15(d)

SHAREHOLDERS' EQUITY

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SHAREHOLDERS' EQUITY
 12 Months Ended
Dec. 31, 2013
Equity [Abstract]  
SHAREHOLDERS' EQUITY
NOTE 15. SHAREHOLDERS' EQUITY
Preferred and Preference Stock
We are authorized to issue one million shares each of zero par value preferred and preference stock with preferred shares being senior to preference shares. We can determine the number of shares of each series, and the rights, preferences and limitations of each series. At December 31, 2013, there was no preferred or preference stock outstanding.
Common Stock
Changes in shares of common stock, treasury stock and common stock held in trust for employee benefit plans are as follows:
In millions
 
Common
Stock
 
Treasury
Stock
 
Common Stock
Held in Trust
Balance at December 31, 2010
 
221.8

 
24.0

 
2.1

Shares acquired
 
—

 
6.4

 
—

Shares issued
 
0.4

 
(0.2
)
 
—

Employee benefits trust activity
 
—

 
—

 
(0.3
)
Balance at December 31, 2011
 
222.2

 
30.2

 
1.8

Shares acquired
 
—

 
2.6

 
—

Shares issued
 
0.4

 
(0.2
)
 
—

Employee benefits trust activity
 
—

 
—

 
(0.3
)
Other shareholder transactions
 
(0.2
)
 
—

 
—

Balance at December 31, 2012
 
222.4

 
32.6

 
1.5

Shares acquired
 
—

 
3.3

 
—

Shares issued
 
0.1

 
(0.3
)
 
—

Employee benefits trust activity
 
—

 
—

 
(0.2
)
Other shareholder transactions
 
(0.2
)
 
—

 
—

Balance at December 31, 2013
 
222.3

 
35.6

 
1.3


Treasury Stock
Shares of common stock repurchased by us are recorded at cost as treasury stock and result in a reduction of shareholders' equity in our Consolidated Balance Sheets. Treasury shares may be reissued as part of our stock-based compensation programs. When shares are reissued, we use the weighted-average cost method for determining cost. The gains between the cost of the shares and the issuance price are added to additional paid-in-capital. The losses are deducted from additional paid-in capital to the extent of the gains. Thereafter, the losses are deducted from retained earnings. Treasury stock activity for the three-year period ended December 31, 2013, consisting of shares issued and repurchased is presented in our Consolidated Statements of Changes in Equity.
In February 2011, the Board of Directors approved a share repurchase program and authorized the acquisition of up to $1 billion of our common stock, which was completed in June 2013. In December 2012, the Board of Directors authorized the acquisition of up to $1 billion of our common stock upon completion of the 2011 repurchase program. In 2013, we made the following quarterly purchases under the repurchase programs indicated:
In millions (except per share amounts)
For each quarter ended
 
2013 Shares Purchased
 
Average Cost
Per Share
 
Total Cost of
Repurchases
 
Remaining
Authorized
Capacity
February 2011, $1 billion repurchase program
 
 
 
 
 
 
 
 
March 31
 
—

 
$
—

 
$
—

 
$
226

June 30
 
2.0

 
113.44

 
226

 
—

Subtotal
 
2.0

 
113.44

 
226

 
—

December 2012, $1 billion repurchase program
 
 
 
 
 
 
 
 
June 30
 
0.6

 
107.74

 
63

 
937

September 29
 
—

 
—

 
—

 
937

December 31
 
0.7

 
129.18

 
92

 
845

Subtotal
 
1.3

 
119.54

 
155

 
845

Total
 
3.3

 
$
115.85

 
$
381

 
$
845


Quarterly Dividends
In July 2013, the Board of Directors authorized a dividend increase of 25 percent from $0.50 per share to $0.625 per share on a quarterly basis effective in the third quarter. In July 2012, the Board of Directors authorized a 25 percent increase to our quarterly cash dividend on our common stock from $0.40 per share to $0.50 per share. In July 2011, the Board of Directors approved a 52 percent increase to our quarterly cash dividend on our common stock from $0.2625 per share to $0.40 per share. Cash dividends per share paid to common shareholders for the last three years were as follows:
 
 
Quarterly Dividends
 
 
2013
 
2012
 
2011
First quarter
 
$
0.50

 
$
0.40

 
$
0.2625

Second quarter
 
0.50

 
0.40

 
0.2625

Third quarter
 
0.625

 
0.50

 
0.40

Fourth quarter
 
0.625

 
0.50

 
0.40

Total
 
$
2.25

 
$
1.80

 
$
1.325


Total dividends paid to common shareholders in 2013, 2012 and 2011 were $420 million, $340 million and $255 million, respectively. Declaration and payment of dividends in the future depends upon our income and liquidity position, among other factors, and is subject to declaration by our Board of Directors, who meet quarterly to consider our dividend payment. We expect to fund dividend payments with cash from operations.
Employee Benefits Trust
In 1997, we established the Employee Benefits Trust (EBT) funded with common stock for use in meeting our future obligations under employee benefit and compensation plans. The primary sources of cash for the EBT are dividends received on unallocated shares of our common stock held by the EBT. The EBT may be used to fund matching contributions to employee accounts in the 401(k) Retirement Savings Plan (RSP) made in proportion to employee contributions under the terms of the RSP. In addition, we may direct the trustee to sell shares of the EBT on the open market to fund other non-qualified employee benefit plans. Matching contributions charged to income for the years ended December 31, 2013, 2012 and 2011 were $24 million, $27 million and $28 million, respectively.