Lockheed Martin 2001 Annual Report Download - page 47

Lockheed Martin Corporation
December 31, 2001
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Also in September 2000, the Corporation sold approxi-
mately one-third of its interest in Inmarsat for $164 million.
The investment in Inmarsat was acquired as part of the
merger with COMSAT. As a result of the transaction, the
Corporation’s interest in Inmarsat was reduced from approxi-
mately 22% to 14%. The sale of shares in Inmarsat did not
impact the Corporation’s results of operations for 2000.
In March 1997, the Corporation repositioned 10 of
its non-core business units as a new independent company,
L-3 Communications Holdings, Inc. (L-3). In 1999, the
Corporation sold its remaining interest in L-3 in two sepa-
rate transactions. On a combined basis, these transactions
resulted in a nonrecurring and unusual gain, net of state
income taxes, of $155 million which increased net earn-
ings by $101 million ($0.26 per diluted share).
In September 1999, the Corporation sold its interest in
Airport Group International Holdings, LLC which resulted in
a nonrecurring and unusual gain, net of state income taxes,
of $33 million in other income and expenses. In October
1999, the Corporation exited its commercial 3D graphics
business through consummation of a series of transactions
which resulted in the sale of its interest in Real 3D, Inc., a
majority-owned subsidiary, and a nonrecurring and unusual
gain, net of state income taxes, of $33 million in other
income and expenses. On a combined basis, these trans-
actions increased net earnings by $43 million ($0.11 per
diluted share).
Note 4—Restructuring and Other Charges
In the fourth quarter of 1998, the Corporation recorded
a nonrecurring and unusual pretax charge, net of state
income tax benefits, of $233 million related to actions
surrounding the decision to fund a timely non-bankruptcy
shutdown of the business of CalComp Technology, Inc.
(CalComp), a majority-owned subsidiary. The financial
impacts of actions taken in 1999 to shut down the business
were less than anticipated in the Corporation’s plans and
estimates and, in the fourth quarter of 1999, the Corporation
reversed approximately 10 percent of the original charge
recorded in 1998. Based on management’s assessment of
the remaining actions to be taken as of December 31, 2000
to complete initiatives contemplated in the Corporation’s
original plans and estimates, the Corporation reversed
approximately $33 million of the original charge, which
increased net earnings for 2000 by $21 million ($0.05 per
diluted share). As of December 31, 2001, the Corporation
had substantially completed the shutdown of CalComp’s
operations and related initiatives.
Under existing U.S. Government regulations, certain
costs incurred for consolidation actions that can be demon-
strated to result in savings in excess of the cost to implement
can be deferred and amortized for government contracting
purposes and included as allowable costs in future pricing
of the Corporation’s products and services. Included in the
consolidated balance sheet at December 31, 2001 is
approximately $260 million of deferred costs related to
various consolidation actions.
Note 5—Earnings Per Share
Basic and diluted per share results for all periods pre-
sented were computed based on the net earnings or loss
for the respective periods. The weighted average number
of common shares outstanding during the period was used
in the calculation of basic earnings (loss) per share. In
accordance with SFAS No. 128, “Earnings Per Share,” the
weighted average number of common shares used in the
calculation of diluted per share amounts is adjusted for
the dilutive effects of stock options based on the treasury
stock method only if an entity records earnings from con-
tinuing operations (i.e., before discontinued operations,
extraordinary items and cumulative effects of changes in
accounting), as such adjustments would otherwise be anti-
dilutive to earnings per share from continuing operations.
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