Lockheed Martin 2007 Annual Report Download - page 79

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aggregating $120 million, none of which will be amortized for tax purposes, and $12 million of other intangible assets,
primarily relating to the value of contracts we acquired. The acquisitions were not material to our consolidated results of
operations for the year ended December 31, 2007.
In 2006 and 2005, we completed acquisitions of the following businesses.
Year ended December 31, 2006 –
• Pacific Architects and Engineers, Inc. (PAE), a provider of services to support military readiness, peacekeeping
missions, nation-building activities, and disaster relief services;
• Savi Technology, Inc., a developer of active radio frequency identification solutions;
• Aspen Systems Corporation, an information management company that delivers a range of business process and
technology solutions;
• ISX Corporation, a provider of military decision systems and other information technology solutions; and
• HMT Vehicles, a military vehicle design company.
The aggregate cash paid for the 2006 acquisitions was $1.0 billion. The total amount paid for acquisitions, including
amounts paid in 2006 related to acquisitions completed in 2005, was $1.1 billion. Purchase accounting adjustments in 2006
included recording combined Goodwill of $867 million, of which approximately $80 million will be amortized for tax
purposes, and $209 million of other intangible assets, primarily relating to the value of contracts we acquired. The other
intangible assets are expected to be amortized over a period of seven years. These acquisitions were not material to our
consolidated results of operations for the year ended December 31, 2006.
Year ended December 31, 2005 –
• The SYTEX Group, Inc., a provider of information technology solutions and technical support services;
• STASYS Limited, a U.K.-based technology and consulting firm specializing in network communications and
defense interoperability;
• INSYS Group Limited, a U.K.-based diversified supplier of military communications systems, weapons systems
and advanced analysis services; and
• Coherent Technologies, Inc., a supplier of high-performance, laser-based remote sensing systems.
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. Purchase accounting adjustments included recording Goodwill aggregating $559 million,
of which $360 million is being amortized for tax purposes. These acquisitions were not material to our consolidated results of
operations for the year ended December 31, 2005.
Divestitures
Businesses
In the second quarter of 2007, we sold our remaining 20% interest in Comsat International for $26 million in cash. The
transaction resulted in a gain, net of state income taxes, of $25 million which we recorded in Other income (expenses), net,
and an increase in Net earnings of $16 million ($0.04 per share).
In October 2006, we sold our ownership interests in Lockheed Khrunichev Energia International, Inc. (LKEI) and
International Launch Services, Inc. (ILS). LKEI was a joint venture with Russian government-owned space firms which has
exclusive rights to market launches of commercial, non-Russian-origin space payloads on the Proton family of rockets. One
of the joint venture partners, Khrunichev State Research and Production Space Center (Khrunichev), is the manufacturer of
the Proton launch vehicle and provider of the related launch services. ILS was a joint venture between LKEI and us to market
Atlas and Proton launch services. In periods prior to the sale of these interests, we consolidated the results of operations of
LKEI and ILS into our financial statements based on our controlling financial interest.
Contracts for Proton launch services usually required substantial advances from the customer prior to launch which
were included as a liability on our Balance Sheet in Customer advances and amounts in excess of costs incurred. Under the
sale agreement, we will continue to be responsible to refund advances to certain customers if launch services are not
provided and ILS does not refund the advance. Due to this continuing involvement with those customers of ILS, many of the
risks related to this business have not been transferred and we did not recognize this transaction as a divestiture for financial
reporting purposes.
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