Raytheon 2009 Annual Report Download - page 94

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
businesses has been allocated to the estimated fair value of net tangible and intangible assets acquired, with any excess
purchase price recorded as goodwill. We completed these acquisitions to enhance our technology portfolio. Tax
deductible goodwill related to these acquisitions totaled $53 million.
Note 4: Discontinued Operations
(Loss) income from discontinued operations, net of tax, consisted of the following results from Raytheon Aircraft
Company (Raytheon Aircraft), Flight Options LLC (Flight Options) and Other Discontinued Operations:
Pretax After-tax
(In millions) 2009 2008 2007 2009 2008 2007
Gain on sale of Raytheon Aircraft $— $— $1,598 $— $ — $986
Raytheon Aircraft discontinued operations 86457830
Loss on sale of Flight Options —— (73) —— (44)
Flight Options discontinued operations (2) — (112) (1) — (88)
Other Discontinued Operations (6) (1) 8 (7) (10) 1
Total $— $ 5 $1,466 $ (1) $ (2) $885
From time to time, we have disposed of certain businesses, including our Raytheon Aircraft, Flight Options, Raytheon
Engineers & Constructors and Aircraft Integration Systems businesses. As a result, we present Raytheon Aircraft, Flight
Options and our other previously disposed businesses (Other Discontinued Operations) as discontinued operations for
all periods. All residual activity relating to our disposed businesses appears in discontinued operations.
In 2007, we sold Raytheon Aircraft for $3,318 million in gross proceeds, $3,117 million, net. We recorded a gain on sale
of $986 million, net of $612 million of federal, foreign and state income taxes.
In 2007, we sought and received a number of initial bids to purchase Flight Options. These initial bids were below our
previous estimates of Flight Options’ fair value, which was based upon its projected discounted cash flows. As a result of
receiving these external indications of market value and other conditions and events that occurred during the year, we
recorded an impairment charge of $84 million pretax, $69 million after-tax in 2007, which included all of Flight Options’
remaining goodwill and a portion of its other intangible assets. Subsequently, we sold Flight Options and recorded a loss
on sale of $73 million pretax, $44 million after-tax. In connection with the sale of Flight Options, we recorded a note
receivable for $9 million, which was subsequently collected in 2008.
We retained certain assets and liabilities of these disposed businesses. At December 31, 2009 and 2008, we had $71
million in non-current assets primarily related to our subordinated retained interest in general aviation finance
receivables previously sold by Raytheon Aircraft. At December 31, 2009 and 2008, we had $57 million and $77 million,
respectively, primarily in current liabilities related to various contract obligations, certain environmental liabilities,
aircraft lease obligations, non-income tax obligations and certain product liabilities. We also have certain income tax
obligations relating to these disposed businesses, which we include in our income tax disclosures. The Internal Revenue
Service (IRS) concluded a federal excise tax audit and assessed us additional excise tax related to the treatment of certain
Flight Options customer fees and charges, which we have appealed. We continue to believe that an unfavorable outcome
is not probable and expect that any potential liability will not have a material adverse effect on our financial position,
results of operations or liquidity. We also retained certain U.K. pension assets and obligations for a limited number of
U.K. pension plan participants as part of the Raytheon Aircraft sale, which we include in our pension disclosures.
No interest expense was allocated to discontinued operations in 2009, 2008 and 2007 since there was no debt specifically
attributable to discontinued operations or required to be repaid with proceeds from the sales.
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