v2.3.0.11
Discontinued Operations
 6 Months Ended
Jun. 26, 2011
Discontinued Operations  
Discontinued Operations

NOTE 3 – DISCONTINUED OPERATIONS

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 Information Systems & Global Solutions (IS&GS) reporting 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, and for PAE, the collection of certain receivables, 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 six months ended June 27, 2010. PAE's operating results are included in discontinued operations on our Statements of Earnings for the quarter and six months ended June 27, 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. In the following table, we have combined the results of operations of PAE and EIG for the quarter and six months ended June 27, 2010, as the amounts for the individual businesses are not material. As a result of our decision to sell PAE in June 2010, we were required to record a deferred tax asset to reflect the tax benefit that we expected to realize on the sale of PAE, because our tax basis was higher than our book basis. Accordingly, we recorded a $15 million and $96 million deferred tax asset in the first quarter of 2011 and the second quarter of 2010. Summary financial information related to discontinued operations is as follows:

 

     Quarter Ended      Six Months Ended  
     June 26,
2011		      June 27,
2010		      June 26,
2011		     June 27,
2010		  
     (In millions)  

Net sales

    $ —         $ 300       $ 142      $ 597   

Earnings (loss) before income taxes

    $ —         $ 22       $ (35 )    $ 43   

Earnings (loss) after income taxes

    $ —         $ 14       $ (33 )    $ 28   

Tax benefit from recognition of deferred tax asset related to PAE sale

      —           96         15        96   
                                  

Net earnings (loss) from discontinued operations

    $ —         $ 110       $ (18 )    $ 124   
                                  

The major classes of assets and liabilities related to PAE and classified as held for sale on our December 31, 2010 Balance Sheet is listed in the table below.

 

     December 31,
2010		  
     (In millions)  

Assets

   

Receivables, net

    $ 253   

Goodwill and other assets

      143   
        

Assets of discontinued operation held for sale

    $ 396   
        

Liabilities

   

Accounts payable and accrued expenses

    $ 125   

Other liabilities

      79   
        

Liabilities of discontinued operation held for sale

    $ 204