Lockheed Martin 2013 Annual Report Download - page 93

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In addition, both we and Boeing have cross-indemnified each other for guarantees by us and Boeing of the performance
and financial obligations of ULA under certain launch service contracts. We believe ULA will be able to fully perform its
obligations, as it has done through December 31, 2013, and that it will not be necessary to make payments under the cross-
indemnities or guarantees.
Our 50% ownership share of ULA’s net assets exceeded the book value of our investment by approximately
$395 million, which we are recognizing as income ratably over 10 years through 2016. This yearly amortization and our
share of ULA’s net earnings are reported as equity in net earnings (losses) of equity investees in other income, net on our
Statements of Earnings. Our investment in ULA totaled $685 million and $572 million at December 31, 2013 and 2012.
Note 14 – Acquisitions and Divestitures
Acquisitions
We paid $269 million and $259 million in 2013 and 2012 for acquisition activities. Acquisitions in 2013 primarily
related to the acquisition of Amor Group, a United Kingdom-based company specializing in information technology, civil
government services, and the energy market and has been included in our IS&GS business segment. Acquisitions in 2012
primarily related to the acquisitions of Chandler/May, CDL, and Procerus, and each has been included within our MST
business segment. These companies specialize in the design, development, manufacturing, control, and support of advanced
unmanned systems. In 2011, we paid $624 million for acquisition activities including the acquisitions of QTC Holdings Inc.
(QTC), which provides outsourced medical evaluation services to the U.S. Government, and Sim-Industries B.V. (Sim-
Industries), a commercial aviation simulation company. QTC has been included within our IS&GS business segment, and
Sim-Industries has been included within our MST business segment.
We have accounted for the acquisitions of businesses under the acquisition method, which required us to measure all of
the assets acquired and liabilities assumed at their acquisition-date fair values. Purchase allocations related to the acquisitions
discussed above resulted in recording goodwill aggregating $175 million in 2013, $197 million in 2012, and $547 million in
2011. Of the amounts recorded in 2012 and 2011, $69 million and $113 million will be amortized for tax purposes.
Additionally, purchase allocations related to the 2011 acquisitions above resulted in recording $133 million of other
intangible assets, primarily relating to the value of customer relationships and trade names we acquired.
Divestitures
Discontinued operations for 2013 included a benefit of $31 million resulting from the resolution of certain tax matters
related to a business previously sold. Discontinued operations for 2011 included the operating results and other adjustments
of Savi Technology, Inc. (Savi), a logistics business sold in 2012 that was in our former Electronic Systems business
segment, and Pacific Architects and Engineers, Inc. (PAE), a business sold in 2011 that was formerly within our IS&GS
business segment.
Net sales and operating loss from discontinued operations for the year ended December 31, 2011 were $193 million and
$28 million (net of $12 million of income tax benefit). Additionally, net loss from discontinued operations for 2011 includes
the recognition of a deferred tax asset of $66 million, which we were required to record to reflect the tax benefit that we
expected to realize on the sale of Savi because our tax basis was higher than our book basis, and charges associated with Savi
and PAE that were incurred in 2011.
Note 15 – Fair Value Measurements
Assets and liabilities measured and recorded at fair value on a recurring basis consisted of the following (in millions):
December 31, 2013 December 31, 2012
Total Level 1 Level 2 Total Level 1 Level 2
Assets
Equity securities $77 $77 $— $75 $75 $—
Mutual funds 613 613 — 418 418 —
U.S. Government securities 238 — 238 213 — 213
Other securities 131 — 131 141 — 141
Derivative assets 28 — 28 39—39
Liabilities
Derivative liabilities 23 — 23 25—25
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