Lockheed Martin 2002 Annual Report Download - page 52

FIFTY-NINE
a pretax basis. The following table provides a reconciliation of
reported earnings (loss) from continuing operations and
related per share amounts for years ended December 31, 2001
and 2000 to adjusted amounts which exclude the effects of
goodwill amortization and reflect the change in amortization
related to the F-16 program for those periods.
(In millions, except per share data) 2002 2001 2000
EARNINGS (LOSS) FROM
CONTINUING OPERATIONS:
As reported $ 533 $43$(477)
Impact of:
Goodwill amortization —215 250
Contract intangible
amortization change —21 18
Adjusted $ 533 $ 279 $ (209)
DILUTED EARNINGS (LOSS) PER SHARE
FROM CONTINUING OPERATIONS:
As reported $1.18 $0.10 $(1.19)
Impact of:
Goodwill amortization —0.50 0.62
Contract intangible
amortization change —0.05 0.05
Adjusted $1.18 $0.65 $(0.52)
Intangible assets related to contracts and programs acquired
are displayed in the consolidated balance sheet net of accumu-
lated amortization of $1,364 million and $1,239 million at
December 31, 2002 and 2001, respectively. Amortization
expense related to these intangible assets was $125 million, $154
million, and $156 million for the years ended December 31,
2002, 2001 and 2000, respectively, and is estimated to be
approximately $125 million per year through 2007.
The Corporation adopted FAS 144, “Accounting for the
Impairment or Disposal of Long-Lived Assets,” effective
January 1, 2001. The new Statement supercedes previous
accounting guidance related to impairment of long-lived
assets and provides a single accounting methodology for the
disposal of long-lived assets, and also supercedes previous
guidance with respect to reporting the effects of the disposal
of a business. In connection with the Corporation’s decision to
exit its global telecommunications services business and
divest certain of the related business units (see Note 2),
the results of operations and cash flows of certain businesses
identified as held for sale, as well as the impairment and other
charges related to the decision to exit these businesses, are
classified as discontinued operations in the Corporation’s con-
solidated financial statements for all periods presented, and
are excluded from business segment information. Similarly,
the assets and liabilities of these businesses are separately
identified in the consolidated financial statements as being
held for sale.
NOTE 2—EXIT FROM THE GLOBAL TELECOMMUNICATIONS
SERVICES BUSINESS
In December 2001, the Corporation announced that it would
exit its global telecommunications services business as a result
of continuing overcapacity in the telecommunications industry
and deteriorating business and economic conditions in Latin
America. Separately, the Corporation decided not to provide
further funding to Astrolink International, LLC (Astrolink)
and, due primarily to Astrolink’s inability to obtain additional
funding from other sources, wrote off its investment in
Astrolink (see Note 8 for a discussion of the write-off of
Astrolink).
The Corporation recognized unusual charges, net of state
income tax benefits, totaling approximately $2.0 billion in the
fourth quarter of 2001 related to these actions. The charges
decreased net earnings by approximately $1.7 billion ($3.98 per
diluted share).
The Corporation retained certain global telecommunica-
tions services businesses, which were realigned with other
business segments. Equity investments retained included
Intelsat, Ltd. (Intelsat), Inmarsat Ventures plc (Inmarsat), New
Skies Satellites, N.V. (New Skies), ACeS International, Ltd.
(ACeS), Americom Asia-Pacific, LLC and Astrolink.
Discontinued Operations
The $2.0 billion in charges recorded in the fourth quarter of
2001 included charges, net of state income tax benefits, of
approximately $1.4 billion related to certain global telecom-
munications services businesses held for sale and exit costs
associated with elimination of the administrative infrastructure
supporting the global telecommunications businesses and
investments. These charges, which reduced net earnings for
Lockheed Martin Corporation