Lockheed Martin 2007 Annual Report Download - page 50

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• STASYS Limited, a U.K.-based technology and consulting firm specializing in network communications and
defense interoperability (included in our IS&GS segment);
• INSYS Group Limited, a U.K.-based diversified supplier of military communications systems, weapons systems
and advanced analysis services (included in our Electronic Systems segment); and
• Coherent Technologies, Inc., a supplier of high-performance, laser-based remote sensing systems (included in the
Space Systems segment).
The aggregate cash paid for the 2006 acquisitions, as well as for amounts paid in 2006 related to acquisitions completed
in 2005, was $1.1 billion. The aggregate cash paid for the 2005 acquisitions, as well as for amounts paid in 2005 related to
acquisitions completed in prior periods, was $564 million. We accounted for the acquisitions under the purchase method of
accounting, and therefore recorded purchase accounting adjustments by allocating the purchase price to the assets acquired
and liabilities assumed based on their estimated fair values. The acquisitions were not material to our consolidated results of
operations in 2006 or 2005.
Divestitures
During 2007, 2006 and 2005, we continued to execute the strategy to monetize certain of our equity investments and
real estate by divesting of the following:
Year ended December 31, 2007
• Our remaining 20% interest in Comsat International, which resulted in a gain, net of state income taxes, of $25
million in Other income (expense), net, and increased Net earnings by $16 million ($0.04 per share); and
• Certain land in California, which resulted in a gain, net of state income taxes, of $25 million in Other income
(expense), net, and increased Net earnings by $16 million ($0.04 per share).
Year ended December 31, 2006
• Our ownership interests in Lockheed Khrunichev Energia International, Inc. (LKEI) and International Launch
Services, Inc. (ILS). The gain on the sale was deferred pending the disposition of guarantees associated with
providing launch services for certain customers (see Note 2);
• 21 million shares of Inmarsat plc, which resulted in a gain, net of state income taxes, of $127 million in Other
income (expense), net, and increased Net earnings by $83 million ($0.19 per share);
• The assets of Space Imaging, LLC, which resulted in a gain, net of state income taxes, of $23 million in Other
income (expense), net, and increased Net earnings by $15 million ($0.03 per share); and
• Certain land in California and Florida, which resulted in an aggregate gain, net of state income taxes, of $51
million in Other income (expense), net, and increased Net earnings by $33 million ($0.08 per share).
Year ended December 31, 2005
• Our interest in NeuStar, Inc., which resulted in a gain, net of state income taxes, of $30 million in Other income
(expense), net, and increased Net earnings by $19 million ($0.04 per share);
• 16 million of our Inmarsat plc shares for $89 million. In addition, primarily as a result of a successful initial public
offering by Inmarsat, we recognized a gain of $42 million which had previously been deferred. Together, these
transactions resulted in gains, net of state income taxes, totaling $126 million in Other income (expense), net, and
increased Net earnings by $82 million ($0.18 per share); and
• Our 25% interest in Intelsat, Ltd., which resulted in a gain, net of state income taxes, of $47 million in Other
income (expense), net, and increased Net earnings by $31 million ($0.07 per share).
United Launch Alliance
On December 1, 2006, we completed the formation of ULA (see Note 2) with The Boeing Company (Boeing). The net
book value of the assets we contributed and the liabilities that ULA assumed from us was initially determined to be $190
million as of the date of closing. We accounted for the transfer at net book value, with no gain or loss recognized. In July
2007, we reached agreement with Boeing with respect to resolution of the final working capital and the value of the launch
vehicle support contracts that we each contributed to form ULA, as contemplated by the original agreements. In connection
with the resolution agreements, we made additional contributions to ULA in respect of the working capital adjustment
totaling $177 million which resulted in an increase in our investment in ULA. ULA also conformed the accounting policies
of the contributed businesses. The adoption of conformed accounting policies affected the book value of the assets and
liabilities that each of us contributed and resulted in adjustments to ULA’s balance sheet as of December 1, 2006.
After the agreement was implemented and the adjustments were recorded, our 50% ownership share of ULA’s net assets
exceeded the book value of our investment by approximately $395 million, which we are recognizing ratably over 10 years
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