Audited Consolidated Financial Statements
Martin Marietta Corporation and Subsidiaries
As of December 31, 1994 and 1993 and for the three
years in the period ended December 31, 1994
with Report of Independent Auditors
1 of 31
Contents
Report of Independent Auditors . . . . . . . . . . . . . . . 3
Audited Consolidated Financial Statements
Consolidated Statement of Earnings . . . . . . . . . . . . . 4
Consolidated Balance Sheet . . . . . . . . . . . . . . . . . 5
Consolidated Statement of Cash Flows . . . . . . . . . . . . 6
Consolidated Statement of Shareowners' Equity . . . . . . . 7
Notes to Consolidated Financial Statements . . . . . . . . . 8
2 of 31
Report of Independent Auditors
Board of Directors and Shareowners
Martin Marietta Corporation
We have audited the accompanying consolidated balance sheet
of Martin Marietta Corporation and subsidiaries as of
December 31, 1994 and 1993, and the related consolidated
statements of earnings, shareowners' equity and cash flows for
each of the three years in the period ended December 31, 1994.
These financial statements are the responsibility of
the Corporation's management. Our responsibility is to
express an opinion on these consolidated financial statements
based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used
and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material
respects, the consolidated financial position of Martin
Marietta Corporation and subsidiaries at December 31, 1994
and 1993, and the consolidated results of their operations
and their cash flows for each of the three years in the
period ended December 31, 1994, in conformity with generally
accepted accounting principles.
As discussed in Note M and Note Q to the consolidated financial
statements, in 1993 the Corporation changed its methods of
accounting for post-retirement and post-employment benefits and
income taxes.
Washington, D.C.
January 20, 1995
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Martin Marietta Corporation and Subsidiaries
Consolidated Statement of Earnings
Year ended December 31
1994 1993 1992
(in millions, except per share)
Net sales $9,874 $9,436 $5,954
Cost of sales, other costs and expenses 8,896 8,648 5,405
----------------------------------------
Earnings from Operations 978 788 549
Other income and expenses, net 209 47 21
----------------------------------------
1,187 835 570
Interest expense on debt 115 110 58
----------------------------------------
Earnings before taxes on income and cumulative
effect of accounting changes
1,072 725 512
Taxes on income 436 275 167
----------------------------------------
Earnings before Cumulative Effect of Accounting
Changes 636 450 345
Cumulative effect of changes in accounting for
post-retirement benefits other than pensions
and for post-employment benefits - (429) -
----------------------------------------
Net Earnings $ 636 $ 21 $ 345
========================================
Net Earnings (Loss) Per Common Share
Assuming no dilution:
Before cumulative effect of accounting
changes $6.00 $4.25 $3.60
Cumulative effect of accounting changes - (4.51) -
----------------------------------------
$6.00 $ (.26) $3.60
========================================
Assuming full dilution:
Before cumulative effect of accounting
changes $5.05 $3.80 $3.60
Cumulative effect of accounting changes - * -
----------------------------------------
$5.05 * $3.60
========================================
<FN>
*Anti-dilutive
See accompanying Notes to Consolidated Financial Statements.
4 of 31
Martin Marietta Corporation and Subsidiaries
Consolidated Balance Sheet
December 31
1994 1993
(in millions)
Assets
Current Assets:
Cash and cash equivalents $ 358 $ 373
Receivables 1,529 1,435
Inventories, net 603 359
Current deferred income taxes 180 239
Other current assets 90 42
-------------------------
Total Current Assets 2,760 2,448
Other Noncurrent Assets 1,194 708
Noncurrent Deferred Income Taxes 157 206
Property, Plant and Equipment, net 1,649 1,693
Cost in Excess of Net Assets Acquired 2,074 1,915
Other Intangibles 704 775
------------------------
$8,538 $7,745
========================
Liabilities and Shareowners' Equity
Current Liabilities:
Accounts payable $ 578 $ 537
Other current liabilities 760 572
Salaries, benefits, and payroll taxes 350 334
Income taxes 115 49
Current maturities of long-term debt 8 318
------------------------
Total Current Liabilities 1,811 1,810
Long-term Debt 1,346 1,479
Post-retirement Benefit Liabilities 783 741
Customer Deposits 402 -
Other Noncurrent Liabilities 825 838
Shareowners' Equity:
Series A preferred stock, liquidation preference $50 per
share 1,000 1,000
Common stock, par value $1 a share, authorized 500,000,000
shares 96 96
Additional paid-in capital 132 124
Retained earnings 2,143 1,657
------------------------
3,371 2,877
------------------------
<FN> $8,538 $7,745
========================
See accompanying Notes to Consolidated Financial Statements.
5 of 31
Martin Marietta Corporation and Subsidiaries
Consolidated Statement of Cash Flows
Year ended December 31
1994 1993 1992
(in millions)
Cash Flows from Operating Activities
Net earnings $ 636 $ 21 $ 345
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Cumulative effect of changes in accounting for post-
retirement benefits other than pensions and for post-
employment benefits - 429 -
Depreciation, depletion and amortization 338 350 226
Deferred income taxes 265 16 12
Net changes in receivables, inventories and payables (429) (273) 73
Gain - initial public offering (118) - -
Acquisition termination fee (50) - -
Amortization of intangibles 113 86 13
Other items (2) 11 9
---------------------------------------
Net Cash Provided by Operating Activities 753 640 678
---------------------------------------
Cash Flows from Investing Activities
Additions to properties, net of purchased operations (269) (215) (171)
Net proceeds - initial public offering 189 - -
Acquisition GE Aerospace - (883) -
Other acquisition activities, net (125) (16) (19)
(Additions) reductions to investments (16) 109 (19)
Other 40 16 15
---------------------------------------
Net Cash Used for Investing Activities (181) (989) (194)
---------------------------------------
Cash Flows from Financing Activities
Debt transactions:
Increase in long-term debt 6 700 4
Repayments and extinguishments of long-term debt (451) (107) (198)
Equity transactions:
Issuances of common stock 8 17 20
Purchases of common stock - - (165)
Dividends:
Preferred stock (60) (45) -
Common stock (90) (83) (76)
---------------------------------------
Net Cash (Used for) Provided by Financing Activities (587) 482 (415)
---------------------------------------
Net (Decrease) Increase in Cash and Cash Equivalents (15) 133 69
Cash and Cash Equivalents at beginning of year 373 240 171
---------------------------------------
Cash and Cash Equivalents at end of year $ 358 $ 373 $ 240
=======================================
Supplemental Schedule of Investing and Financing Activities
Non-cash consideration-Acquisition GE Aerospace:
Assumption of certain payment obligations $ - $ 750 $ -
Issuance of preferred stock - 1,000 -
---------------------------------------
$ - $ 1,750 $ -
=======================================
<FN>
See accompanying Notes to Consolidated Financial Statements.
6 of 31
Martin Marietta Corporation and Subsidiaries
Consolidated Statement of Shareowners' Equity
for years ended December 31
Additional Total
Preferred Common Paid-in Retained Shareowners'
Stock Stock Capital Earnings Equity
(in millions)
Balance at December 31, 1991 $ - $50 $212 $1,543 $1,805
Net earnings - - - 345 345
Cash dividends declared on common
stock ($.795 a share) - - - (76) (76)
Stock options exercised, net of stock
tendered in payment - - 20 - 20
Other common stock issued - - 16 - 16
Common stock purchased - (3) (162) - (165)
--------------------------------------------------------------------
Balance at December 31, 1992 - 47 86 1,812 1,945
Net earnings - - - 21 21
Preferred stock issued 1,000 - - - 1,000
Cash dividends declared on preferred
stock ($2.25 a share) - - - (45) (45)
Cash dividends declared on common
stock ($.87 a share) - - - (83) (83)
Stock awards and options exercised,
net of stock tendered in
payment - 1 22 - 23
Other common stock issued - - 16 - 16
Issuance of shares to effect 2-for-1
stock split - 48 - (48) -
--------------------------------------------------------------------
Balance at December 31, 1993 1,000 96 124 1,657 2,877
Net earnings - - - 636 636
Cash dividends declared on preferred
stock ($3.00 a share) - - - (60) (60)
Cash dividends declared on common
stock ($.93 a share) - - - (90) (90)
Stock awards and options exercised,
net of stock tendered in
payment - - 8 - 8
--------------------------------------------------------------------
Balance at December 31, 1994 $1,000 $96 $132 $2,143 $3,371
====================================================================
<FN>
See accompanying Notes to Consolidated Financial Statements.
7 of 31
Martin Marietta Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 1994
Note A: Accounting Policies
Consolidation Basis
Consolidated financial statements include the accounts of all
significant majority-owned subsidiaries of Martin Marietta
Corporation (the "Corporation"). All material intercompany
transactions have been eliminated in consolidation.
Certain amounts for the prior periods have been reclassified to
conform with the 1994 presentation.
Cash and Cash Equivalents
Cash and cash equivalents are generally comprised of highly
liquid instruments with maturities of three months or less when
purchased.
As of December 31, book cash balances amounted to net overdrafts
of $15 million in 1994 and $44 million in 1993 and are
attributable to the float of the Corporation's outstanding
checks.
Investments
Investments in associated companies are accounted for by the
equity method wherever the Corporation is able to significantly
influence operating and financial matters. Other investments are
carried at cost less valuation allowances where appropriate.
Revenue Recognition
Long-term, fixed-price contracts generally are accounted for
under percentage-of-completion methods, and sales include a
proportion of the earnings expected to be realized in the
ratio that costs incurred bear to estimated total costs.
Sales are recorded on cost-type contracts as costs are
incurred. Under all other contracts, sales are recorded when
deliveries are made or as work is performed.
8 of 31
Martin Marietta Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
Note A: Accounting Policies (continued)
Revenue Recognition (continued)
Contracts and programs in progress are reviewed quarterly, and
sales and earnings are adjusted in current accounting periods
based on revisions in contract value and estimated costs at
completion. Performance incentives are incorporated in certain
contracts that provide for increased or decreased earnings based
on performance to established targets. Incentives based upon
cost performance are recorded currently, and other incentives
and awards are recorded when the amounts reasonably can be
estimated or are awarded. Provisions for estimated losses on
contracts and programs are recorded when identified.
Sales for the Atlas launch vehicle program, which vehicles
are sold principally to customers, including the U.S.
Government, on commercial terms ("Commercial Atlas"), are
recorded upon delivery of launch services. Cost of sales
attributable to each launch is determined under the program
average cost method.
Martin Marietta Materials, Inc. (" Materials") sales are
recorded upon shipment of products or performance of
services.
Inventories
Inventories are stated at the lower of cost or market. Costs
on contracts and programs in progress represent recoverable
costs incurred for production, research and development and
selling, general and administration, less amounts attributed
to cost of sales, generally under percentage-of-completion
accounting methods. Costs for the Commercial Atlas program
represent recoverable costs incurred for production, less
amounts attributable to cost of sales, under the program
average cost method. General and administrative costs related
to the Commercial Atlas program are expensed as incurred.
Costs of other product and supply inventories are principally
determined by the first-in, first-out (FIFO) method.
Properties and Depreciation
Property, plant and equipment, including capital leases, are
carried at cost, including interest cost capitalized during
construction on significant capital programs.
Depreciation and amortization of properties are computed over
estimated service lives generally using accelerated methods,
except for Materials and other businesses that utilize the
straight-line method. Depletion of mineral deposits is
calculated over estimated recoverable quantities by the
unit-of-production method.
9 of 31
Martin Marietta Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
Note A: Accounting Policies (continued)
Intangible Assets
Costs in excess of net assets acquired ("goodwill") are
amortized ratably over appropriate periods ranging from 20 to
40 years. Other intangibles represent amounts assigned
principally to the value of programs acquired and are amortized
over periods not to exceed 15 years.
The carrying values of intangible assets are reviewed if
the facts and circumstances indicate impairment of their
carrying value. Any impairment in the carrying value of such
intangibles is recorded when identified.
Income Taxes
Current income tax provisions represent estimated amounts
payable or recoverable for each year after adjustments for
permanent differences. Deferred income tax provisions
represent the tax effect of all significant temporary
differences between financial statements and income taxes.
Research and Development and Similar Costs
Research and development and similar costs are charged to
operations as incurred unless reimbursable under specific
contractual arrangements. Independent research and
development, systems studies, other concept formulation
studies and bid and proposal work relating to government
contracts represent a major portion of these expenses. Such
amounts are allocated when appropriate to government
contracts through overhead under government-mandated cost
accounting procedures.
Preoperating costs are generally charged to operations as
incurred, except that such costs for significant new products
or services and start-up costs of certain facilities may be
deferred for amortization over periods not to exceed five years.
Earnings Per Common Share
Earnings per share are based on the weighted average number of
common shares outstanding during the year.
Earnings per share, assuming no dilution, were computed in 1994
and 1993 based on net earnings less the dividend requirement
of preferred stock. The weighted average number of
common shares outstanding assuming no dilution were
approximately 95,929,000 in 1994, 95,347,000 in 1993 and
95,869,000 in 1992.
10 of 31
Martin Marietta Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
Note A: Accounting Policies (continued)
Earnings Per Common Share (continued)
Fully diluted earnings per share in 1994 and 1993 assumed that
the average number of common shares was increased by the
conversion of preferred stock. The weighted average number of
common shares outstanding, assuming full dilution, was
approximately 125,935,000 in 1994, 118,347,000 in 1993 and
95,869,000 in 1992.
Note B: Pending Combination with Lockheed Corporation
On August 29, 1994, the Corporation, Lockheed Corporation
("Lockheed") and Lockheed Martin Corporation ("Lockheed
Martin", formerly Parent Corporation) (collectively, "the
Companies") entered into an Agreement and Plan of Reorganization
whereby the Companies would merge through an exchange of
stock (the "Combination"). On January 11, 1995, the Federal
Trade Commission ("FTC") announced it would not challenge the
Combination based upon a provisionally accepted Consent Order
that is subject to final review at the expiration of a public
comment period on March 28, 1995. Under the terms of the Consent
Order, among other things, the Companies will be prohibited from
enforcing the exclusivity provisions of certain teaming arrangements
with other parties, from sharing non-proprietary information
about competitors between certain components of the Companies,
and from modifying any of the Companies' products in a discriminatory
manner. The Combination is subject to, among other things, the
the approvals of the shareholders of the Corporation and Lockheed.
It is anticipated that the Combination, which is expected to
close in the first quarter of 1995, will constitute a tax-free
reorganization and qualify for the pooling of interests method
of accounting. Under this accounting method, the assets and
liabilities of the Corporation and Lockheed will be carried
forward to Lockheed Martin at their historical recorded
bases. Results of operations of Lockheed Martin for 1995 will
include the results of both the Corporation and Lockheed for the
entire fiscal year. When consummated, the reported balance
sheet amounts and results of operations of the separate
corporations for prior periods will be combined, reclassified and
conformed, as appropriate, to reflect the combined balance
sheets and results of operations for Lockheed Martin. The
managements of Lockheed and the Corporation currently estimate
that costs and expenses which are expected to be incurred
in connection with consummating the Combination and
integrating the operations of Lockheed and the Corporation could
total approximately $850 million (see Note L).
Under the terms of the Agreement, each outstanding share of the
Corporation's Common Stock will be converted into the right to
receive one share of Lockheed Martin Common Stock and each
outstanding share of Lockheed Common Stock will be converted
into the right to receive 1.63 shares of Lockheed Martin Common
Stock. In addition, each outstanding share of the Corporation's
Series A Preferred Stock, all of which is held by
11 of 31
Martin Marietta Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
Note B: Pending Combination with Lockheed Corporation (continued)
General Electric Company ("GE") subject to a Standstill Agreement
(see Note H), will be converted into the right to receive one
share of Lockheed Martin Series A Preferred Stock. On August 29,
1994, the Corporation, Lockheed Martin and GE entered into an
agreement which modifies the Standstill Agreement to anticipate
the conversion of shares from the Corporation to Lockheed
Martin. The Lockheed Martin Preferred Stock is essentially
the same as to terms and convertibility, and if converted,
would represent approximately 13% of the shares of Lockheed
Martin common stock after giving effect to such conversion.
The Corporation and Lockheed have entered into a
Confidentiality and Standstill Agreement. Among
other things, this agreement protects the confidentiality
of information shared between the Corporation and Lockheed,
and prohibits until March 29, 1997 the acquisition by one party
of any voting securities of the other party or participation
in ther solicitation of proxies and shareowner proposals
other than those required to effect the Combination.
The following unaudited pro forma financial information
presents the results of operations of Lockheed Martin for the
years ended December 31, 1994, 1993 and 1992, as if the
Combination had been consummated on January 1, 1992. The
pro forma amounts displayed below primarily reflect the
elimination of intercompany transactions and assume that any
impact of conforming accounting policies is insignificant. This
pro forma information does not purport to be indicative of
actual or future results of operations that would have occurred
or will occur upon consummation of the Combination or
further analysis regarding conforming of accounting policies.
Pro Forma Information (unaudited)
1994 1993 1992
(in millions, except per share)
Net sales $22,915 $22,376 $15,925
Earnings before cumulative effect of
accounting changes $ 1,061 $ 865 $ 678
Earnings per share before cumulative
effect of accounting changes, assuming
full dilution $ 4.61 $ 3.91 $ 3.46
The 1992 information presented above excludes the cumulative
effect of the adoption of Statement of Financial Accounting
Standards ("SFAS") No. 106, "Employers' Accounting for Post-
retirement Benefits Other Than Pensions" , and SFAS No. 112,
"Employers' Accounting for Post-employment Benefits", which
would reduce earnings by $1.06 billion, or $5.41 per share.
This cumulative effect includes the impact of conforming the
Corporation's historical 1993 adoption to that of Lockheed.
12 of 31
Martin Marietta Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
Note C: Acquisition of GD Space Systems and Business Combination
with GE Aerospace
On May 1, 1994, the Corporation completed its acquisition for
cash of the Space Systems division of General Dynamics
Corporation (the "Space Systems division"). This transaction
was accounted for under the purchase method of accounting,
wherein goodwill of approximately $213 million was
recognized by the Corporation. Goodwill is being amortized over
a 20-year period. Operations of the Space Systems division have
been included in the consolidated financial statements from the
closing date. Pro forma financial data related to this
transaction has not been presented based on materiality
considerations.
On November 22, 1992, the Corporation entered into a
Transaction Agreement with General Electric Company to combine
the aerospace and certain other businesses of GE (collectively,
the "GE Aerospace businesses") with the businesses of the
Corporation in the form of affiliated corporations. The
transaction (the "GE Transaction") was consummated on April 2,
1993, and GE Aerospace operations have been included in the
consolidated financial statements since that date. If the GE
Transaction were presented on an unaudited pro forma basis
as if it had occurred as of January 1, 1993, the
Corporation's 1993 net sales would increase by approximately
$1 billion and earnings before the cumulative effect of
accounting changes would increase by less than 3%.
The exchange consideration of approximately $3 billion for
the GE Transaction consisted of cash, preferred stock,
retention by GE of certain accounts receivable and the
assumption of payment obligations related to certain GE
indebtedness. The GE Transaction was accounted for under the
purchase method of accounting, wherein approximately $1.9
billion in goodwill was recognized by the Corporation after
recording approximately $700 million in other intangibles
(representing the estimated fair-market value of certain
assets) and other purchase adjustments necessary to allocate
the purchase price to the value of assets acquired and
liabilities assumed. Goodwill is being amortized over a
40-year period, and other intangibles are being amortized over
a 15-year period.
13 of 31
Martin Marietta Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
Note D: Receivables
1994 1993
(in millions)
Receivables under long-term contracts:
United States Government:
Amounts Billed $ 349 $ 332
Unbilled costs and accrued profits 716 750
Amounts withheld, due upon completion of contracts 79 43
------------------------
1,144 1,125
Other customers:
Amounts billed 106 106
Unbilled costs and accrued profits 354 290
------------------------
Total receivables under long-term contracts 1,604 1,521
Less noncurrent amounts 205 198
------------------------
1,399 1,323
Other Activities:
Commercial accounts receivable 77 85
Notes and other current receivables 57 43
------------------------
1,533 1,451
Less allowances 4 16
------------------------
Total $1,529 $1,435
========================
Unbilled costs and accrued profits are billed on the basis of contract
terms and delivery schedules. Amounts billable after one year are
included in other noncurrent assets.
Note E: Inventories
1994 1993
(in millions)
Costs on contracts and programs in progress $1,745 $1,284
Less: progress payments 493 830
noncurrent amounts 729 169
---------------------
523 285
Other inventories 80 74
--------------------
Total $603 $ 359
====================
14 of 31
Martin Marietta Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
Note E: Inventories (continued)
According to the provisions of certain U.S. Government
contracts, the customer has title to, or a security interest
in, inventories for contracts and programs in progress of
approximately $384 million for 1994 and $310 million for 1993.
Selling, general and administrative costs in connection with
production under long-term government contracts were charged to
inventories as incurred in the amounts of $406 million in 1994
and $377 million in 1993. The estimated amounts remaining in
inventories were $83 million at December 31, 1994, and $75
million at December 31, 1993.
At December 31, 1994, the Space Systems division had customer
deposits of approximately $1.2 billion which primarily
represent advance payments from its Atlas program customers.
In the Corporation's consolidated balance sheet, costs on
contracts and programs in progress are offset by related
customer deposits of $593 million at December 31, 1994. Customer
deposits, at year-end 1994, of $188 million and $402 million are
classified as current and noncurrent liabilities, respectively.
Costs on contracts and programs in progress at December 31,
1994 and 1993, did not include any significant amounts of
production costs or other deferred costs or claims and similar
items subject to uncertainty concerning their realization.
Note F: Property, Plant and Equipment
1994 1993
(in millions)
Land $ 193 $ 195
Mineral deposits 45 39
Buildings 808 837
Machinery and equipment 2,784 2,734
------------------------
3,830 3,805
Less allowances for depreciation, depletion
and amortization 2,181 2,112
------------------------
Total $ 1,649 $1,693
========================
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Martin Marietta Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
Note G: Debt
1994 1993
(in millions)
Long-term debt:
Payment obligations assumed $ 310 $ 622
9-1/2% Notes - 125
8-1/2% Notes due 1996 100 100
9% Notes due 2003 100 100
6-1/2% Notes due 2003 400 400
7% Debentures due 2011 103 101
7-3/8% Debentures due 2013 150 150
7-3/4% Debentures due 2023 150 150
Other notes and obligations 41 49
-----------------------
Total 1,354 1,797
Less current maturities 8 318
-----------------------
Long-term debt $1,346 $1,479
=======================
Payment obligations assumed as part of the exchange
consideration for the GE Transaction relate to certain GE
indebtedness. The payment obligations outstanding at December
31, 1994 mature in 1996 and carry an effective interest rate of
5.025%.
In February 1994, the $125 million of 9-1/2% notes were defeased
in substance (see Note N).
The 6-1/2% Notes, 7-3/8% Debentures, 8-1/2% Notes and 9% Notes
are not redeemable prior to maturity. The 7-3/4% Debentures may
not be redeemed by the Corporation prior to April 15, 2003, but
on or after that date may be redeemed by the Corporation at
specified redemption prices.
The 7% Debentures were sold at 53.835% of their principal
amount of $175 million in 1981. These debentures are carried
net of original issue discount, which is being amortized by
the interest method over the life of the issue. The effective
interest rate is 13-1/4%. The debentures are redeemable
in whole or in part at the Corporation's option at any time at
100% of their principal amount.
Maturities of long-term debt during the five-year period ending
December 31, 1999, are $8 million in 1995, $416 million in
1996, and $1 million in each year from 1997 through 1999.
16 of 31
Martin Marietta Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
Note G: Debt (continued)
The independently determined aggregate market value of the
Corporation's outstanding debt was lower than book value by
approximately $30 million at December 31, 1994 and
approximately $117 million above book value at December 31, 1993.
Interest payments were $124 million in 1994, $97 million in
1993 and $61 million in 1992. Interest expense on debt was net
of capitalized interest of $3 million in 1994 and 1993, and $4
million in 1992.
As of December 31, the Corporation has issued performance-related
standby letters of credit totalling $99 million in 1994 and
$94 million in 1993 supporting obligations under certain
long-term and other contracts.
Martin Marietta Technologies, Inc., a wholly owned subsidiary
of the Corporation ("Technologies"), has a $800 million
revolving credit facility guaranteed by the Corporation which
expires on March 31, 1996. This borrowing facility may be
used for general corporate purposes. Under this credit
facility, the Corporation is subject to limitations on its
financial leverage and a minimum coverage ratio requirement as
defined by the agreement. At December 31, 1994, the
Corporation had no borrowings under this credit facility. If
the proposed merger with Lockheed is consummated, the
Corporation's existing credit facility will be terminated
prior to consummation of the merger and Lockheed Martin will
obtain its own credit facility.
The financing agreements of the Corporation and its
subsidiaries contain certain restrictive covenants, including
requirements for limitations on encumbrances and on sale
and lease-back transactions.
Note H: Shareowners' Equity
The authorized capital structure of the Corporation includes
30,000,000 shares of Preferred Stock with par value of $1 a
share, none of which is outstanding, and 20,000,000 shares
of Series A Preferred Stock with par value of $1 a share
(liquidation preference $50 per share). Dividends are
cumulative and paid at an annual rate of $3.00 per share or 6%.
As part of the consideration for the GE Transaction, the
Corporation issued to GE all of the authorized and outstanding
shares of Series A Preferred Stock of the Corporation, which
shares are convertible into approximately 23% of the shares
of the Corporation's common stock after giving effect to
such conversion, and have an aggregate liquidation preference
of $1 billion. The Series A Preferred Stock is nonvoting
except in special circumstances, including the approval of the
Combination. The Series A Preferred stock is held under
a Standstill Agreement. Among other things, the Standstill
17 of 31
Martin Marietta Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
Note H: Shareowners' Equity (continued)
Agreement imposes certain limitations on either the increase or
disposal of GE's interest in voting securities of the
Corporation, on GE's solicitation of proxies and shareowner
proposals, on GE's voting of its shares and on GE's ability
to place or remove members of the Corporation's Board of
Directors. In addition, the Standstill Agreement requires
the Corporation to recommend to its shareholders the election
of persons designated by GE to serve as directors of the
Corporation.
In 1993, the Board of Directors authorized the repurchase of
approximately 32.4 million shares of the Corporation's common
stock for use in connection with the Corporation's Amended
Omnibus Securities Plan, Performance Sharing Plan and for
general corporate purposes. No share repurchases were made by
the Corporation during either 1994 or 1993.
During 1994, the Corporation adopted a Stockholder Rights
Plan pursuant to which the Corporation distributed one Common
Stock Purchase Right with respect to each share of its
Common Stock outstanding as of the close of business on
September 9, 1994, and to each additional share issued
thereafter. The Rights are not exercisable except upon the
occurrence of certain events described in the Rights Agreement.
When exercisable, each Right will entitle the holder to purchase
one share of Common Stock (or other shares, securities or
property, as the case may be, of equivalent value) at an
exercise price of $190.00 per share. The Rights are redeemable
at $0.01 per Right. The Rights will expire immediately prior to
consummation of the Combination (see Note B), or, if the
Combination is not consummated, on September 9, 2004, unless
extended by the Corporation.
The Corporation contributed 228,000 shares in 1993 and 311,000
shares in 1992 of its common stock to the Corporation's
Performance Sharing Plan for Salaried Employees in accordance
with provisions set forth in that plan.
Under Maryland General Corporation Law, shares of common stock
reacquired by a corporation constitute unissued shares. For
financial reporting purposes, reacquired shares are recorded as
reductions to issued common stock and to additional paid-in
capital. At December 31, 1994, retained earnings were
unrestricted.
18 of 31
Martin Marietta Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
Note I: Contingencies
In the opinion of management and counsel, the probability is
remote that the outcome of litigation and other proceedings,
including those pertaining to environmental matters (see
Analysis of Financial Condition and Operating Results,
Environmental Matters) relating to the Corporation and
its subsidiaries, will have a material adverse effect on the
results of the Corporation's operations or its financial
position.
Note J: Martin Marietta Technologies, Inc.
The Corporation has guaranteed payment of certain debt
obligations of Technologies which are registered with the
Securities and Exchange Commission ("SEC"). The total of such
guarantees was approximately $1 billion at December 31, 1994.
In accordance with SEC disclosure requirements, summarized
financial information for Technologies and its consolidated
subsidiaries follows:
As of December 31
1994 1993
(in millions)
Current assets $1,603 $1,585
Noncurrent assets 4,033 3,163
Current liabilities 868 825
Long-term debt 1,036 1,161
Other noncurrent liabilities 1,362 886
Shareowner's equity 2,370 1,876
Year ended December 31
1994 1993
(in millions)
Net sales $5,570 $5,628
Earnings from operations 637 583
Earnings before cumulative effect of accounting changes 494 358
Cumulative effect of accounting changes - (427)
Net earnings (loss) 494 (69)
As of December 31, 1994, there were no restrictions on
dividends or other distributions between Technologies and the
Corporation.
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Martin Marietta Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
Note K: Leases
Total rental expense for all operating leases was $166 million
in 1994, $145 million in 1993 and $83 million in 1992.
Future minimum rental commitments for all noncancelable
operating leases are: $110 million for 1995, $82 million for
1996, $60 million for 1997, $47 million for 1998, $40 million
for 1999 and $102 million for later years.
Note L: Stock Option and Award Plans
Number of Shares Option Price
Available Options Per Share Total
for Grant Outstanding Range (in
millions)
Year 1993:
January 1 97,978 3,411,050 $11.665-$29.250 $ 86
Additions 2,095,300 - - -
Options granted (1,217,600) 1,217,600 40.375-44.500 49
Awards granted (170,000) - - -
Exercised - (803,850) 11.665-29.250 (20)
Canceled 8,800 (8,800) 19.938-40.375 -
Expired - (3,600) 19.938-29.250 -
----------------------------------------------------------------
December 31 814,478 3,812,400 $19.750-$44.500 $115
----------------------------------------------------------------
Exercisable at December 31 1,490,800
Year 1994:
January 1 814,478 3,812,400 $19.750-$44.500 $115
Additions 2,119,116 - - -
Options granted (1,353,650) 1,353,650 44.500-44.875 61
Awards granted (5,000) - - -
Exercised - (575,900) 19.750-40.375 (15)
Canceled 57,000 (57,000) 25.750-44.875 (2)
Expired - (7,700) 19.938-29.250 -
----------------------------------------------------------------
December 31 1,631,944 4,525,450 $19.750-$44.875 $159
----------------------------------------------------------------
Exercisable at December 31 1,963,700
Under the Corporation's Amended Omnibus Securities Award Plan
(Omnibus Plan), employees of the Corporation may be granted
stock-based incentive awards, including options to purchase
common stock, stock appreciation rights, restricted stock or
other stock-based incentive awards. These awards may
be granted either singly or in combination with other awards.
The number of shares of stock available for awards for
20 of 31
Martin Marietta Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
Note L: Stock Option and Award Plans (continued)
each year in the period 1993 through 1996 shall not exceed
1.7% of the shares of common stock outstanding on December 31
of the previous year. The Omnibus Plan further provides that
for the years 1993, 1994 and 1995, an additional 0.5% of the
shares of common stock outstanding on December 31 of the
previous year may be granted if a corresponding percentage
decrease in shares available for award is made the following
year. Effective with the adoption of the Omnibus Plan in
1992, no further grants of options, stock appreciation rights or
restricted stock could be made under any of the Corporation's
prior plans. However, all outstanding grants and awards under
those prior plans remain in effect in accordance with their
terms.
Under the Omnibus Plan, the Corporation grants options to
purchase its common stock at a price equal to the market value
at the date of grant. These options become exercisable in
three equal annual installments beginning one year after date
of grant and expire 10 years from such date. The Omnibus
Plan allows the Corporation to provide for financing of
purchases, subject to certain conditions, by
interest-bearing notes payable to the Corporation.
Prior stock option plans included the same grant pricing,
vesting and expiration terms as the Omnibus Plan. The 1984 Plan
allows the Corporation to provide for financing of purchases,
subject to certain conditions, by interest-bearing notes payable
to the Corporation.
The 1984 Plan included stock appreciation rights granted
simultaneously in equal number with the grant of stock
options. These rights may be exercised independently of the
options and entitle a grantee to receive in cash an amount
equal to a percentage of the increase in the market value of the
Corporation's common stock.
The Omnibus Plan provides for the award and issuance of common
stock at par value subject to certain restrictions for a
specified period of time. A total of 5,000 restricted shares in
1994 and 170,000 restricted shares in 1993 were awarded under
the Omnibus Plan. Under the awards outstanding,
participants are entitled to cash dividends and to vote
their respective shares, but they are prohibited from selling
or transferring shares during a restricted period.
Under the terms of some of these, and other cash award plans,
consummation of the Combination will result in the
acceleration of payment of certain benefits that would
otherwise have been payable over time, early vesting of certain
benefits that would otherwise not be fully vested, and the use of
modified formulae for calculating the amounts of such benefits,
21 of 31
Martin Marietta Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
Note L: Stock Option and Award Plans (continued)
the effect of which has been included in the estimated costs
and expenses to be incurred in connection with consummating the
Combination. In addition, the Agreement and Plan of Reorganization
provides for each outstanding stock option, stock appreciation
right and other stock-based incentive award to be converted
into a similar instrument of Lockheed Martin upon
consummation of the Combination.
Note M: Post-Employment Benefit Plans
The Corporation and its consolidated subsidiaries sponsor a
number of retirement plans that cover substantially all
employees. Defined benefit plans for salaried and certain hourly
employees provide benefits based on employees' years of service
and average compensation, for a specified period of
time before retirement. Defined benefit plans for other hourly
employees generally provide benefits of stated amounts for
specified periods of service.
The Corporation's accounting for defined benefit pension
plans complies with three principal standards: the
Employee Retirement Income Security Act of 1974 as amended
(ERISA), which in conjunction with the Internal Revenue Code,
determines legal minimum and maximum deductible funding
requirements; U.S. Government Cost Accounting Standards (CAS),
which in conjunction with Federal Acquisition Regulations,
establish rules for determining and measuring contractors'
pension costs; and Statement of Financial Accounting Standards
No. 87, Employers Accounting for Pensions (SFAS
No. 87), which establishes rules for financial reporting.
The latter requires recognition of actuarial values on a
"termination" rather than an "ongoing" basis and specifies that
certain key actuarial assumptions be adjusted annually to
reflect current, rather than long-term, trends in the
economy.
Consistent with the requirements of ERISA and CAS, it is
the Corporation's funding policy to stabilize annual
contributions as a percentage of payroll by utilizing the
entry-age-normal actuarial cost method, with assumptions selected
on the basis of long-term trends.
On December 31, 1994, retirement plan assets, which are
held in a master trust, were invested principally in listed
stocks and bonds and cash equivalents.
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Martin Marietta Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
Note M: Post-Employment Benefit Plans (continued)
The net pension cost of the Corporation's defined benefit plans
includes the following components:
1994 1993 1992
(in millions)
Service cost-benefits earned during the year $195 $165 $116
Interest cost 311 273 183
Net amortization and other components (327) 112 (114)
Actual return on assets (14) (403) (76)
----------------------------------
Net pension cost $165 $147 $109
==================================
Assumptions used as of December 31:
Plan discount rates 8.25% 7.5% 6.3-7.5%
Rates of increase in future compensation levels 5.5% 6.0% 6.0%
Expected long-term rate of return on assets 8.75% 8.75% 8.0%
The following table sets forth the defined benefit plans' funded
status and amounts recognized in the Corporation's consolidated
balance sheet as of December 31:
1994 1993
(in millions)
Plan assets at fair value $4,026 $4,049
=======================
Actuarial present value of benefit obligations:
Vested 3,358 3,377
Non-vested 53 66
-----------------------
Accumulated Benefit Obligation (ABO) $3,411 $3,443
=======================
Projected Benefit Obligation (PBO) $4,155 $4,241
=======================
Reconciling Items:
Assets in excess of ABO $ 615 $ 606
Effect of estimated future pay increases (745) (798)
-----------------------
Assets less than PBO (129) (192)
Unrecognized prior-service cost 357 64
Unrecognized net assets (33) (37)
Unrecognized (gain) loss (138) 217
-----------------------
Prepaid pension cost $ 57 $ 52
=======================
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Martin Marietta Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
Note M: Post-Employment Benefit Plans (continued)
Certain health care and life insurance benefits are provided to
eligible retirees by the Corporation or its consolidated
subsidiaries. These benefit plans are funded by the Corporation
through several trusts. For recently retired participants, the
health benefits generally provide for cost sharing
through participant contributions and copayments. For
salaried employees who retired after 1992, there is an annual
limit on the Corporation's contribution per participant.
The Corporation adopted Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Post-retirement
Benefits Other Than Pensions" (SFAS No. 106), effective January
1, 1993. SFAS No. 106 requires that the cost of certain
post-retirement benefits be recognized under an accrual
method of accounting instead of the prior practice of expensing
the cost of such benefits as paid. The Corporation elected to
expense, in the first quarter of 1993, the liability
accumulated through 1992 due to the change in accounting
method. This one-time transition obligation of $656 million
resulted in an after-tax charge to net income of $412 million
in the first quarter of 1993. The Corporation's policy is to
fund amounts that are consistent with the expense accrual under
SFAS No. 106, including an amortization payment for the
transition obligation.
Since 1988, the Corporation has made contributions to the
irrevocable trusts established to pay future health benefits to
eligible retirees and dependents. On December 31, 1994, plan
assets were invested principally in listed stocks and bonds and
cash equivalents.
The net periodic post-retirement benefit cost for the years
ending December 31 included the following components:
1994 1993
(in millions)
Service cost-benefits earned during the year $30 $23
Interest cost 83 69
Net amortization and other components (16) 12
Actual return on assets (2) (30)
Curtailment gain (21) -
-------------------
Net periodic cost $74 $74
===================
Assumptions used as of December 31:
Discount rate 8.25% 7.5%
Expected long-term rate of return on assets 8.75% 8.75%
24 of 31
Martin Marietta Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
Note M: Post-Employment Benefit Plans (continued)
The trend rate assumption for health care inflation is 7.5% for
1995, trending down to 4.5% by 2001. The assumptions also
include the impact of Medicare cost-sharing provisions which,
when used in conjunction with the health care inflation rate,
yields an effective health care cost-trend rate of
approximately 10%.
Prior to 1993, the Corporation recognized the costs of
retiree health benefits on a claims-paid basis. These costs
were $33 million in 1992.
The following table sets forth the post-retirement health care
plans' funded status and estimated amounts recognized in the
Corporation's consolidated balance sheet as of December 31:
1994 1993
(in millions)
Plan assets at fair value $ 274 $ 280
========================
Actuarial present value of benefit obligations:
Active employees, eligible to retire $ 200 $ 67
Active employees, not eligible to retire 193 314
Former employees 690 744
------------------------
Accumulated Projected Benefit
Obligation (APBO) $1,083 $1,125
========================
Assets less than APBO $ 809 $ 845
Unrecognized prior-service cost (gain) loss (56) 7
Unrecognized loss (gain) 30 (111)
------------------------
Post-retirement benefit liability $ 783 $ 741
========================
A 1% increase in the health care cost trend rate would increase
the APBO by approximately 9.6%, and would increase the sum of
the service cost and interest cost by approximately 11.1%.
The Corporation adopted Statement of Financial Accounting
Standards No. 112, "Employers' Accounting for Post-employment
Benefits" (SFAS No. 112) in 1993. SFAS No. 112 requires that
the cost of certain post-employment benefits be recognized under
an accrual method of accounting instead of the current practice
of expensing the cost of such benefits as paid. The effect of
this change in accounting method resulted in a one-time,
25 of 31
Martin Marietta Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
Note M: Post-Employment Benefit Plans (continued)
after-tax charge to net income of $17 million in 1993. At
December 31, a liability for post-employment benefits of $27
million in 1994 and $28 million in 1993 is included in other
noncurrent liabilities.
Note N: Other Income and Expenses
1994 1993 1992
(in millions)
Gain - initial public offering $ 118 $ - $ -
Minority interest (10) - -
Acquisition termination fee 50 - -
Royalty income 57 32 10
Miscellaneous, net (6) 15 11
--------------------------------------------
Total $ 209 $ 47 $ 21
============================================
In February 1994, Materials sold through an initial public
offering approximately 8.8 million shares of its common stock.
After the public sale, Technologies owns approximately 81% of
the outstanding stock of Materials. Minority interest of $71
million is included in other noncurrent liabilities at
December 31, 1994. A portion of the proceeds from the offering
was used to defease in substance $125 million of 9.5% Notes.
Technologies recognized a pretax gain, net of a loss on debt
defeasance, of $118 million from the Materials' initial
public offering. The net after-tax gain from these
transactions was $70 million, or 56 cents per share fully
diluted.
During March 1994, the Corporation entered into an
Agreement and Plan of Merger with Grumman Corporation and
made an offer to purchase for cash all outstanding shares of
common stock of Grumman Corporation. Subsequently, Grumman
reached agreement with and accepted Northrop Corporation's
competing offer to purchase its outstanding common shares. In
April 1994, the Corporation received $50 million plus
reimbursement of expenses from Grumman pursuant to the
termination provisions of the Agreement and Plan of Merger.
Note O: Selling, General and Administrative Expenses
Selling, general and administrative expenses included in cost of
sales, other costs and expenses were $530 million for 1994, $500
million for 1993 and $406 million for 1992.
26 of 31
Martin Marietta Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
Note P: Research and Development
Research and development expenses included in cost of sales,
other costs and expenses were $243 million in 1994, $280
million in 1993 and $200 million in 1992, and included
independent research and development, systems studies, other
concept formulation studies and bid and proposal work related to
government contract products and services.
Note Q: Taxes on Income
Effective January 1, 1993, the Corporation adopted Statement
of Financial Accounting Standard No. 109, "Accounting for
Income Taxes", (SFAS No. 109). The impact of adopting this
standard on the Corporation's earnings and financial position
was not material. Prior years' financial statements have not
been restated to apply the provisions of SFAS No. 109. Income
taxes for 1992 are based on pretax financial statement income in
accordance with Accounting Principles Board Opinion No. 11.
1994 1993 1992
(in millions)
Federal income taxes:
Current $149 $231 $135
Deferred 221 12 10
------------------------------------------
Total federal income taxes 370 243 145
State income taxes:
Current 16 25 20
Deferred 44 4 2
------------------------------------------
Total state income taxes 60 29 22
Foreign income taxes 6 3 -
------------------------------------------
Total income taxes provided $436 $275 $167
==========================================
27 of 31
Martin Marietta Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
Note Q: Taxes on Income (continued)
The Corporation's effective income tax rate varied from the statutory
United States income rate because of the following tax differences:
1994 1993 1992
(in millions)
Statutory tax rate 35.0% 35.0% 34.0%
Increase (reduction) in tax rate from:
State income taxes 3.6 2.6 2.8
Nondeductible amortization 1.7 1.4 -
Deferred tax reversal - - (1.3)
Other items 0.4 (1.1) (2.9)
-------------------------------------------
5.7 2.9 (1.4)
-------------------------------------------
Effective tax rate 40.7% 37.9% 32.6%
===========================================
<FN>
The components of the provision for deferred income taxes for
the years ended December 31 were as follows:
Liability Liability Deferred
Method Method Method
1994 1993 1992
(in millions)
Deferral of profits on long-term contracts $110 $42 $(1)
Tax depreciation and amortization 66 2 (9)
Employee benefits (30) (64) 8
Financial reserves 128 47 13
Other items (9) (11) 1
--------------------------------------
$265 $16 $12
======================================
Deferred income taxes on the consolidated balance sheet reflect the
net tax effects of temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes. The Corporation does not
believe a valuation allowance is required at December 31, 1994 or 1993.
28 of 31
Martin Marietta Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
Note Q: Taxes on Income (continued)
The primary components of the Corporation's deferred income tax
assets and liabilities at December 31 were as follows:
Deferred assets (liabilities)
1994 1993
(in millions)
Deferral of profits on long-term contracts $133 $202
Property, plant and equipment and intangible assets (353) (287)
Employee benefits 360 330
Financial reserves 103 122
Other items 94 78
----------------------
$337 $445
======================
For tax purposes, profits on long-term contracts are reported
on the completed contract method for contracts entered into
prior to March 1, 1986, and on the percentage-of-completion
capitalized cost method for contracts entered into thereafter.
The amounts also include the effect of the tax deduction of
certain costs on contracts and programs in progress inventories.
Deferred income taxes relating to contracts are classified as
current if the related contract is expected to be completed
within the following year; otherwise, they are classified as
noncurrent.
Income tax payments were $136 million in 1994, $261 million in
1993 and $183 million in 1992.
29 of 31
Martin Marietta Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
Note R: Industry Segments
Depreciation,
Assets Employed Property Additions Depletion, Amortization
1994 1993 1992 1994 1993 1992 1994 1993 1992
(millions)
Electronics $2,867 $2,949 $1,008 $82 $66 $ 61 $ 126 $146 $ 82
Space 2,506 1,598 832 97 65 42 100 85 43
Information 1,289 1,162 271 23 23 19 37 52 42
Services 203 218 32 4 2 1 3 3 1
Materials 482 464 419 52 54 50 39 35 40
Energy and Other 236 299 198 16 13 9 32 28 13
--------------------------- ---------------------- -----------------------
Total operating
segments 7,583 6,690 2,760 274 223 182 337 349 221
Corporate 914 1,026 714 2 - - 1 1 5
Investments 41 29 125 - - - - - -
--------------------------- ---------------------- -----------------------
Total $8,538 $7,745 $3,599 $276 $223 $182 $338 $350 $226
=========================== ====================== =======================
Description of Industry Segments
The Corporation operates in the following principal business
segments:
Electronics Group is engaged in the design, development,
engineering and production of high-performance electronic
systems for undersea, shipboard, land-based and airborne
applications. Major product lines include advanced
technology missiles, night navigation and targeting systems
for aircraft; submarine and surface ship combat systems;
airborne, ship- and land-based radar; control systems;
ordnance; and aircraft component manufacturing and assembly.
Space Group is engaged in the design, development, engineering
and production of civil, commercial and military space launch
vehicles, satellites, spacecraft and space- and ground-based
strategic systems; surface- and space-based information and
communications systems; and the Space Shuttle External Tank
and associated electronics and instrumentation.
Information Group is engaged in the design, development,
integration and operation of information systems, including
simulation and automated test systems and image processing,
for government and commercial applications.
Services Group provides technical and management services,
including engineering, operation and maintenance of radar,
telemetry communications and instrumentation systems,
training and manufacturing assembly - for government and
industry.
30 of 31
Martin Marietta Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
Note R: Industry Segments (continued)
Materials is comprised of aggregates operations principally
engaged in producing and selling crushed stone, sand and
gravel, primarily for highways and general construction, and
magnesia specialties operations, which produce and sell
refractory materials and other magnesia products used in steel
production, chemical processing purification and other industrial
applications.
Energy and Other operations consist of the Corporation's
activities associated with the U.S. Department of Energy
research, fabrication, assembly and technology transfer
operations; real estate subsidiaries in Florida and Maryland;
research laboratories; and other miscellaneous activities.
Corporate assets consist principally of cash and cash
equivalents, deferred tax assets and general corporate
properties and, in 1992, benefit plan trusts.
The Corporation is the managing contractor for Department
of Energy facilities in Tennessee, Kentucky, Ohio, Florida,
New Mexico, California and New York. The contractual
arrangements provide for the Corporation to be reimbursed for
the cost of operations and receive a fee for performing
management services. The Corporation reflects only the
management fee in its sales and earnings for these
government-owned facilities. In addition, applicable employee
benefit plans are separate from the Corporation's plans.
Sales made directly or under subcontract to the U.S.
Government amounted to approximately $3.36 billion in 1994,
$3.55 billion in 1993 and $1.75 billion in 1992 for
Electronics; $2.74 billion in 1994, $3.20 billion in 1993 and
$3.04 billion in 1992 for Space; $1.44 billion in 1994, $1.08
billion in 1993 and $360 million in 1992 for Information; and
$357 million in 1994, $341 million in 1993 and $65 million in
1992 for Services.
Goodwill and intangible amortization was $44 million in 1994 and
$35 million in 1993 for Electronics, $33 million in 1994 and
$19 million in 1993 for Space, $27 million in 1994 and $20
million in 1993 for Information, $5 million in 1994 and $4
million in 1993 for Services and $3 million in 1994 and
1993 for Materials.
See the Net Sales and Operating Profit by Industry Segment
table included in the Analysis of Financial Condition and
Operating Results for sales and operating profit data for each
reportable segment.
31 of 31