Lockheed Martin 2001 Annual Report Download - page 46

Lockheed Martin Annual Report >>> 53
Lockheed Martin Corporation
(Continued)
Net sales and earnings (loss) before income taxes
related to the discontinued businesses were as follows:
Year ended December 31,
(In millions) 2001 2000 1999
Net sales $ 803 $788 $531
(Loss) earnings before income taxes:
Results of operations of
discontinued businesses $ (52) $ (46) $ 12
Charges related to discontinued
businesses, net of IMS gain (970) ——
$(1,022) $ (46) $ 12
The major classes of assets and liabilities of the discon-
tinued businesses classified as held for sale and included in
the consolidated balance sheet were as follows:
December 31,
(In millions) 2001 2000
Assets
Receivables $81 $ 210
Deferred income taxes 149 91
Property, plant and equipment 277 504
Goodwill 84 1,376
Other assets 47 151
$638 $2,332
Liabilities
Accounts payable $28 $78
Customer advances 75 82
Other liabilities 284 307
$387 $ 467
Other Charges Related to Global Telecommunications
The charges recorded in the fourth quarter also included
nonrecurring and unusual charges, net of state income tax
benefits, of approximately $132 million related to commit-
ments to and impairment in the values of investments in
satellite joint ventures, primarily ACeS and Americom Asia-
Pacific, LLC. In addition, approximately $43 million was
recorded for severance and facilities costs, and impairment
of certain fixed assets, associated with the business units
that have been realigned. On a combined basis, these
nonrecurring and unusual charges reduced net earnings
for 2001 by $117 million ($0.27 per diluted share).
Note 3—Acquisitions and Other Divestiture Activities
Business Combination with COMSAT Corporation
In September 1998, the Corporation and COMSAT
Corporation (COMSAT) announced that they had entered
into an Agreement and Plan of Merger to combine the
companies in a two-phase transaction. The Corporation
completed a cash tender offer for 49 percent of the
outstanding stock of COMSAT on September 18, 1999.
The total value of this phase of the transaction was $1.2
billion. The Corporation accounted for its 49 percent
investment in COMSAT under the equity method
of accounting.
On August 3, 2000, the second phase of the trans-
action was completed. The total amount recorded related
to this phase of the transaction was approximately $1.3 bil-
lion based on the Corporation’s issuance of approximately
27.5 million shares of its common stock at a price of $49
per share. This price per share represents the average of
the price of Lockheed Martin’s common stock a few days
before and after the announcement of the transaction in
September 1998.
The total purchase price for COMSAT, including trans-
action costs and amounts related to Lockheed Martin’s
assumption of COMSAT stock options, was approximately
$2.6 billion, net of $76 million in cash balances acquired.
The COMSAT transaction was accounted for using the pur-
chase method of accounting, under which the purchase
price was allocated to assets acquired and liabilities assumed
based on their fair values. Included in these allocations were
adjustments totaling approximately $2.1 billion to record
investments in equity securities at fair value and goodwill.
The Corporation consolidated the operations of COMSAT
with the results of operations of Lockheed Martin Global
Telecommunications, Inc. (LMGT), a wholly-owned subsidiary
of the Corporation, from August 1, 2000.
Divestiture Activities
In November 2000, the Corporation sold its Aerospace
Electronics Systems (AES) businesses for $1.67 billion in
cash (the AES Transaction). The Corporation recorded a
nonrecurring and unusual loss of $598 million related to
the AES Transaction which is included in other income and
expenses. The loss reduced net earnings for 2000 by $878
million ($2.18 per diluted share).
In September 2000, the Corporation sold Lockheed
Martin Control Systems (Control Systems) for $510 million
in cash. This transaction resulted in the recognition of a
nonrecurring and unusual gain, net of state income taxes,
of $302 million which is reflected in other income and
expenses. The gain increased net earnings for 2000 by
$180 million ($0.45 per diluted share).