Discontinued Operations

9 Months Ended

Sep. 25, 2011

Discontinued Operations

Discontinued Operations

NOTE 3 – DISCONTINUED OPERATIONS

During the third quarter of 2011, we committed to a plan to sell Savi Technology, Inc. (Savi), a logistics business within our Electronic Systems business segment. The operating results of Savi are included in discontinued operations on our Statements of Earnings for all periods presented, as we believe that the sale of Savi within the next twelve months is probable. The assets and liabilities of Savi have not been classified as held for sale on our September 25, 2011 Balance Sheet, as the amounts are not material.

In June 2010, we announced plans to divest Pacific Architects and Engineers, Inc. (PAE) and most of our Enterprise Integration Group (EIG), two businesses within our IS&GS business segment. In November 2010, we closed on the sale of EIG. In April 2011, we closed on the sale of PAE for cash and the beneficial interest in certain receivables. Additional amounts related to the completion of certain post-closing items, such as working capital adjustments, may be recorded in discontinued operations in periods subsequent to the sale dates. EIG's operating results are included in discontinued operations on our Statements of Earnings for the quarter and nine months ended September 26, 2010. PAE's operating results are included in discontinued operations on our Statements of Earnings for the quarter and nine months ended September 26, 2010 and through the date of sale in 2011. PAE's assets and liabilities are classified as held for sale on our December 31, 2010 Balance Sheet.

As a result of our decision to sell PAE and Savi, we were required to record deferred tax assets to reflect the tax benefit that we expected to realize on the sale of those businesses because our tax basis was higher than our book basis. Accordingly, we recorded a $15 million deferred tax asset in the first quarter of 2011 and a $96 million deferred tax asset in the second quarter of 2010 related to PAE, and we recorded a $66 million deferred tax asset in the third quarter of 2011 related to Savi. These amounts are included in "Adjustments from planned sale of businesses" in the table below, which also includes other charges associated with Savi in the third quarter of 2011 and the sale of PAE that were incurred in the quarter and nine months ended September 25, 2011.

In the following table, we have combined the results of operations of PAE, EIG, and Savi, as the amounts for the individual businesses are not material. Summary financial information related to discontinued operations is as follows:

	Quarter Ended					Nine Months Ended
	September 25, 2011			September 26, 2010		September 25, 2011			September 26, 2010
	(In millions)
Net sales	$	17		$	285	$	184		$	932
Earnings (loss) before income taxes	$	(4	)	$	6	$	(35	)	$	45
Earnings (loss) after income taxes	$	(2	)	$	3	$	(24	)	$	28
Adjustments from planned sale of businesses		37			—		27			96
Net earnings from discontinued operations	$	35		$	3	$	3		$	124

The major classes of assets and liabilities related to PAE and classified as held for sale on our December 31, 2010 Balance Sheet consisted of the following: receivables, net of $253 million, goodwill and other assets of $143 million, accounts payable and accrued expenses of $125 million, and other liabilities of $79 million.