Common use of Shares Issued Clause in Contracts

Shares Issued. Exercise of stock options and related tax benefits, net of shares tendered........ $1,222,054 11,614 $1,050,836 9,392 $ 780,178 23,714 Employee benefit plans................... 42,698 11,398 15,169 Conversion of subordinated debentures.... 70,284 Acquisition of minority interest in LAH.. 195,179 Amortization of restricted options......... 3,351 3,246 10,772 Shares earned under Restricted Stock Purchase Plan............................. 5,655 3,919 7,827 Net income (loss).......................... 296,167 231,807 (80,102) Changes in net assets applicable to Space and Communications Operations............. (100,580) (25,774) 68,161 Foreign currency translation adjustment.... Balance, end of year....................... (900) ---------- $1,435,481 ========== (1,537) ---------- $1,222,054 ========== 80 ---------- $1,050,836 ========== FOR THE YEARS ENDED MARCH 31, --------------------------------- 1995 ---------- (IN 1994 ---------- THOUSANDS) 1993 --------- Operating activities: Net income (loss)......................... $ 296,167 $ 231,807 $ (80,102) Extraordinary item........................ 17,776 Cumulative effect of changes in accounting............................... 226,618 Depreciation and amortization............. 250,122 178,184 154,005 Deferred income taxes..................... 111,769 27,500 14,818 Minority interest......................... 2,586 Changes in operating assets and liabilities: Contracts in process...................... 30,966 31,850 (29,963) Accounts payable and accrued liabilities.. (59,703) (21,247) 1,539 Income taxes.............................. 2,827 17,375 27,063 Postretirement benefits and other liabilities.............................. (23,279) (26,366) 23,392 Other..................................... 4,185 (562) (914) ---------- ---------- --------- Net cash from operating activities.......... 603,966 359,061 279,006 ---------- ---------- --------- Investing activities: Acquisition of businesses, net of cash Proceeds from note receivable............. 20,935 Disposition of property, plant and equipment................................ 37,482 6,492 8,309 ---------- ---------- --------- (89,001) (1,501,628) (357,200) ---------- ---------- --------- Financing activities: Net (payments) borrowings under revolving credit facilities and commercial paper... (1,131,737) 808,018 115,531 Proceeds from borrowings.................. 651,273 503,534 120,803 Distributions to Space and Communications Proceeds from issuance of common stock.... 54,312 20,789 38,921 Seller financing in connection with acquisition of business.................. (50,357) 50,357 Other..................................... (16,418) ---------- ---------- --------- (627,789) 1,264,163 3,983 ---------- ---------- --------- Net (decrease) increase in cash and cash equivalents................................ (112,824) 121,596 (74,211) Cash and cash equivalents, beginning of year....................................... 238,498 116,902 191,113 ---------- ---------- --------- Cash and cash equivalents, end of year...... $ 125,674 $ 238,498 $ 116,902 ========== ========== ========= Supplemental information: Income taxes paid during the year, net of refunds.................................. $ 62,563 $ 73,729 $ 42,549 ========== ========== ========= See Notes 2 and 3 for additional information. See notes to consolidated financial statements. LORAL CORPORATION AND SUBSIDIARIES--RETAINED BUSINESS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION On January 7, 1996, Loral Corporation ("Loral") and Lockheed ▇▇▇▇▇▇ Corporation ("Lockheed ▇▇▇▇▇▇") entered into a definitive Agreement and Plan of Merger (the "Merger Agreement") among Loral, Lockheed ▇▇▇▇▇▇ and LAC Acquisition Corporation ("LAC"), a wholly-owned subsidiary of Lockheed ▇▇▇▇▇▇, providing for the transactions that will result in Loral becoming a subsidiary of Lockheed ▇▇▇▇▇▇ and the spin-off by Loral of its direct and indirect interests in Globalstar, L.P. ("Globalstar"), Space Systems/Loral, Inc. ("SS/L") and K & F Industries, Inc. ("K & F"), to Loral Corporation's shareholders (the "Space & Communications Operations") (See Note 14). The accompanying consolidated financial statements reflect the portion of Loral that will become a subsidiary of Lockheed ▇▇▇▇▇▇ (the "Retained Business" or the "Company"). However, the financial position and results of operations, as presented herein may not have been the same as would have occurred had Retained Business and the Space & Communications Operations been independent entities. All significant intercompany balances and transactions have been eliminated. Certain other assets of Loral will also be distributed to Space & Communications Operations as of the closing date of the merger. These assets, consisting of certain fixed assets and other miscellaneous assets, have been included in the accompanying financial statements since they have been used principally by the Retained Business. Allocation of Certain Expenses The financial statements reflect the allocations of certain expenses to Space & Communications Operations based upon estimates of actual services performed by the Company (See Note 13). The amount of corporate office expenses allocated to Space & Communications Operations have been estimated based primarily on the allocation methodology prescribed by government regulations pertaining to government contractors, which management believes to be a reasonable allocation method. Interest Expense The financial statements exclude interest of $9,456,000, $8,253,000 and $10,550,000 for the years ended March 31, 1995, 1994 and 1993, respectively, which has been allocated to Space & Communications Operations based upon the Company's historical weighted average debt cost applied to Loral's average investment in affiliates for each period. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash and Cash Equivalents Cash equivalents consist of highly liquid investments with a maturity of three months or less at time of purchase. Statements of Cash Flows Changes in operating assets and liabilities are net of the impact of acquisitions and final purchase price allocations. Investing activities do not include certain marketable securities transactions in 1993 which were not settled in cash. LORAL CORPORATION AND SUBSIDIARIES--RETAINED BUSINESS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Contracts In Process Sales on long-term production-type contracts are recorded as units are shipped; profits applicable to such shipments are recorded pro rata, based upon estimated total profit at completion of the contract. Sales and profits on cost reimbursable contracts are recognized as costs are incurred. Sales and estimated profits under other long-term contracts are recognized under the percentage of completion method of accounting using the cost-to-cost method. Amounts representing contract change orders or claims are included in sales only when they can be reliably estimated and realization is probable. Costs accumulated under long-term contracts include applicable amounts of selling, general and administrative expenses. Losses on contracts are immediately recognized in full when determinable. Revisions in profit estimates are reflected in the period in which the facts which require the revision become known. In accordance with industry practice, contracts in process contain amounts relating to contracts and programs with long production cycles, a portion of which may not be realized within one year. Property, Plant and Equipment Property, plant and equipment are stated at cost. Depreciation is provided primarily on the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the improvements. Cost in Excess of Net Assets Acquired The excess of the cost of purchased businesses over the fair value of the net assets acquired is being amortized using a straight-line method generally over a 40-year period. Accumulated amortization amounted to $107,857,000 and $70,207,000 at March 31, 1995 and 1994, respectively. The carrying amount of Cost in Excess of Net Assets Acquired is evaluated on a recurring basis. Current and future profitability as well as current and future undiscounted cash flows, excluding financing costs, of the acquired businesses are primary indicators of recoverability. For the three years ended March 31, 1995, there were no adjustments to the carrying amount of the cost in excess of net assets acquired resulting from these evaluations. Foreign Currency Translation Assets and liabilities of foreign operations are translated into U.S. dollars at current rates and income and expenses are translated at average rates during the period. The effects of the translation adjustments are included as a component of Net Assets. Accounting Pronouncements In March 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" ("SFAS 121"), which is required to be adopted by fiscal 1997. SFAS 121 establishes the accounting standards for the impairment of long-lived assets, certain intangible assets and cost in excess of net assets acquired to be held and used and for long-lived assets and certain intangible assets to be disposed of. The Company is currently evaluating the impact, if any, of SFAS 121. LORAL CORPORATION AND SUBSIDIARIES--RETAINED BUSINESS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)