Raytheon 2003 Annual Report Download - page 46

RAYTHEON COMPANY 333
Notes to Consolidated Financial Statements (Continued) 33333333333333333333333333333333333333333333
The components of assets and liabilities related to AIS were as
follows at December 31:
(In millions) 2003 2002
Current assets $59 $75
Total assets $59 $75
Current liabilities $6 $14
Total liabilities $6 $14
In 2003, the total loss from discontinued operations was
$261 million pretax, $170 million after-tax, or $0.41 per diluted share
versus $1,013 million pretax, $887 million after-tax, or $2.17 per
diluted share in 2002 and $1,138 million pretax, $757 million after-
tax, or $2.10 per diluted share in 2001.
333NOTE C: ACQUISITIONS AND DIVESTITURES
In 2003, the Company acquired Solipsys Corporation for $170 mil-
lion, net of cash received, to be paid over two years. The Company
paid $40 million, net, in cash in 2003 and intends to make the
remaining payments, which have been accrued, in cash. In addi-
tion, the Company may be required to make certain performance-
based incentive payments. Assets acquired included $7 million of
contracts in process. Liabilities assumed included $2 million of
accounts payable and $3 million of accrued salaries and wages.
The Company also recorded $8 million of intangible assets and
$160 million of goodwill (at Integrated Defense Systems) in con-
nection with this acquisition.
In 2003, the Company acquired the Aerospace and Defence
Services business unit of Honeywell®International Inc. for $20 mil-
lion in cash. Assets acquired included $4 million of contracts in
process. Liabilities assumed included $1 million of accounts
payable and $2 million of other accrued expenses. The Company
also recorded $8 million of intangible assets and $11 million of
goodwill (at Technical Services) in connection with this acquisition.
In 2002, the Company acquired JPS Communications,™ Inc. for
$10 million in cash. Assets acquired included $2 million of accounts
receivable and $2 million of inventories. The Company also recorded
$4 million of goodwill (at Network Centric Systems) and $2 million of
intangible assets in connection with this acquisition.
Pro forma financial information has not been provided for these
acquisitions as they are not material either individually or in the
aggregate. In addition, the Company has entered into other acqui-
sition and divestiture agreements in the normal course of business
that have not been separately disclosed as they are not material.
In 2002, the Company formed a joint venture with Flight
Options, Inc. whereby the Company contributed its Raytheon
Travel Air®fractional ownership business and loaned the new entity
$20 million. In June 2003, the Company participated in a financial
recapitalization of Flight Options LLC (FO) and exchanged certain
FO debt for equity. As a result of this recapitalization, the Company
now owns approximately 66 percent of FO and is consolidating
FO’s results in its financial statements. Assets acquired included
$83 million of inventories and $27 million of other current assets.
Liabilities assumed included $97 million of notes payable and long-
term debt, $90 million of advance payments, and $77 million of
accounts payable and accrued expenses. The Company also
recorded $26 million of intangible assets and $128 million of
goodwill in connection with this recapitalization.
In 2001, the Company sold its recreational marine business for
$100 million and recorded a gain of $39 million. Additional infor-
mation about certain other acquisitions and divestitures is included
in Note H, Other Assets.
The Company merged with the defense business of Hughes
Electronics Corporation (Hughes Defense) in December 1997. In
October 2001, the Company and Hughes Electronics agreed
to a settlement regarding the purchase price adjustment related to
the Company’s merger with Hughes Defense. Under the terms of
the merger agreement, Hughes Electronics agreed to reimburse the
Company approximately $635 million of its purchase price, with
$500 million received in 2001 and the balance received in 2002.
The settlement resulted in a $555 million reduction in goodwill.
333NOTE D: RESTRUCTURING
Prior to 2000, the Company recorded restructuring charges and
exit costs in connection with the 1997 acquisition of Texas
Instruments’ defense business and merger with Hughes Defense.
The Company essentially completed all related restructuring initia-
tives in 2000 except for ongoing idle facility costs.
Restructuring charges and exit costs recognized in connection
with business combinations include the cost of involuntary
employee termination benefits and related employee severance
costs, facility closures, and other costs associated with the
Company’s approved plans. Employee termination benefits include
severance, wage continuation, medical, and other benefits. Facility
closure and related costs include disposal costs of property, plant,
and equipment, lease payments, lease termination costs, and net
gain or loss on sales of closed facilities.
In 2001, the Company determined that the cost of certain
restructuring initiatives would be lower than originally planned and
recorded an $8 million favorable adjustment to cost of sales.
In 2002, the Company determined that the cost of certain
restructuring initiatives would be lower than originally planned
and recorded a $4 million favorable adjustment to cost of sales, a
$3 million favorable adjustment to general and administrative
expenses, and a $1 million reduction in goodwill.