Lockheed Martin 2013 Annual Report Download - page 35

Given the size and complexity of the F-35 program, we anticipate that there will be continual reviews related to aircraft
performance, program schedule, cost, and requirements as part of the DoD, Congressional, and international partners’
oversight and budgeting processes. Current program challenges include, but are not limited to, supplier and partner
performance, software development, level of cost associated with lifecycle operations and sustainment, receiving funding for
production contracts on a timely basis, executing future flight tests, and findings resulting from testing.
Portfolio Shaping Activities
We continuously strive to strengthen our portfolio of products and services to meet the current and future needs of our
customers. We accomplish this in part by our independent research and development activities, and through acquisition,
divestiture, and internal realignment activities. Internal realignments are designed to more fully leverage existing capabilities
and enhance development and delivery of products and services.
We selectively pursue the acquisition of businesses and investments at attractive valuations that will expand or
complement our current portfolio and allow access to new customers or technologies. We have made a number of niche
acquisitions of businesses and investments in affiliates during the past several years. We also may explore the divestiture of
businesses. In pursuing our business strategy, we routinely conduct discussions, evaluate targets, and enter into agreements
regarding possible acquisitions, divestitures, ventures, and equity investments.
Acquisitions
We paid $269 million and $259 million in 2013 and 2012 for acquisition activities, primarily related to the acquisition of
businesses. In 2013, we acquired Amor Group, a United Kingdom-based company specializing in information technology,
civil government services, and the energy market. This acquisition is aligned with our strategy to grow international sales and
has been included in our IS&GS business segment. In 2012, we acquired Chandler/May, Inc. (Chandler/May), CDL Systems
Ltd. (CDL), and Procerus Technologies, L.C. (Procerus). These companies specialize in the design, development,
manufacturing, control, and support of advanced unmanned systems, which expand our offerings in support of our
customers’ increased emphasis on advanced unmanned systems and are consistent with our strategy to maintain a portfolio of
advanced technology options. These companies are part of our MST business segment where they have been integrated into
our portfolio of unmanned systems and technologies to align their product and service offerings to the U.S. Army.
In 2011, we paid $624 million for acquisition activities, primarily related to the acquisitions of QTC Holdings Inc.
(QTC) and Sim-Industries B.V. (Sim-Industries). QTC provides outsourced medical evaluation services to the U.S.
Government and has been included within our IS&GS business segment. Sim-Industries designs, develops, and manufactures
full-motion and fixed-based civil aviation flight simulators for a wide range of airline customers and independent pilot
training centers worldwide and is part of our MST business segment. These companies complement our core capabilities and
align with our strategy to expand into closely related markets and expand our customer base. For additional information, see
“Note 14 – Acquisitions and Divestitures” of our consolidated financial statements.
Divestitures
In pursuing our business strategies, we have also divested certain businesses over the past three years. Recent
divestitures consisted of Savi Technology, Inc. (Savi) in 2012 and Pacific Architects and Engineers, Inc. (PAE) in 2011. For
additional information, see “Note 14 – Acquisitions and Divestitures” of our consolidated financial statements.
27