Raytheon 2004 Annual Report Download - page 103
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85
Notes to Consolidated Financial Statements (Continued)
:
The Company has pension plans covering the majority of its employees, including certain employees in foreign
countries (Pension Benefits). In addition to providing pension benefits, the Company provides certain health care
and life insurance benefits to retired employees through other postretirement benefit plans (Other Benefits).
Substantially all of the Company’s U.S. employees may become eligible for the Other Benefits. Effective January 1,
2004, the Company changed the measurement date for its Pension Benefits and Other Benefits plans from October
31 to December 31. This change in measurement date was accounted for as a change in accounting principle. The
cumulative effect of this change in accounting principle was a gain of $53 million pretax for Pension Benefits and a
gain of $10 million pretax for Other Benefits. Using the Company’s year end as the measurement date for Pension
Benefits and Other Benefit plans more appropriately reflects the plans’ financial status for the years then ended. In
2004, the total cumulative effect of the change in accounting principle was a gain of $63 million pretax, $41 million
after-tax, or $0.09 per basic and diluted share.
The following adjusts reported income from continuing operations and basic and diluted earnings per share
(EPS) from continuing operations as if the change in accounting principle had been applied prior to the periods
presented:
(In millions, except per share amounts} 2004 2003 2002
Reported income from continuing operations $ 439 $ 535 $ 756
Change in accounting principle, net of tax –(68) 7
Adjusted income from continuing operations $ 439 $ 467 $ 763
Reported basic EPS from continuing operations $ 1.00 $ 1.30 $ 1.88
Change in accounting principle, net of tax –(0.17) 0.02
Adjusted basic EPS from continuing operations $ 1.00 $ 1.13 $ 1.90
Reported diluted EPS from continuing operations $ 0.99 $ 1.29 $ 1.85
Change in accounting principle, net of tax –(0.17) 0.02
Adjusted diluted EPS from continuing operations $ 0.99 $ 1.12 $ 1.87
The following adjusts reported net income (loss) and basic and diluted earnings (loss) per share (EPS) as if the
change in accounting principle had been applied prior to the periods presented:
(In millions, except per share amounts) 2004 2003 2002
Reported net income (loss) $ 417 $ 365 $ (640)
Change in accounting principle, net of tax (41) (68) 7
Adjusted net income (loss) $ 376 $ 297 $ (633)
Reported basic EPS $ 0.95 $ 0.88 $(1.59)
Change in accounting principle, net of tax (0.09) (0.16) 0.02
Adjusted basic EPS $ 0.86 $ 0.72 $(1.57)
Reported diluted EPS $ 0.94 $ 0.88 $(1.57)
Change in accounting principle, net of tax (0.09) (0.16) 0.02
Adjusted diluted EPS $ 0.85 $ 0.72 $(1.55)