Raytheon 2004 Annual Report Download - page 68

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50
The Company currently estimates that required pension plan cash contributions will be approximately $315
million in 2005 and $445 million in 2006. The Company also plans to make discretionary cash contributions of
$200 million in 2005 and 2006. These estimates are based upon certain assumptions, outlined above in Critical
Accounting Policies, and contemplate passage of the Pension Funding Equity Act, which will provide a certain
amount of pension funding relief to the Company. The estimate for 2006 is subject to change and will not be
known with certainty until the Company’s SFAS No. 87 assumptions are updated at the end of 2005. Estimates for
2007 and beyond have not been provided due to the significant uncertainty of these amounts, which are subject to
change until the Company’s SFAS No. 87 assumptions can be updated at the appropriate times. In addition,
pension contributions are eligible for future recovery through the pricing of products and services to the U.S.
government, therefore, the amounts noted above are not necessarily indicative of the impact these contributions
will have on the Company’s liquidity.
At December 31, 2004, RAC had unconditional purchase obligations of $40 million primarily related to
component parts for the Horizon aircraft with varying purchase quantities for up to 200 aircraft. In addition, the
Company’s defense businesses may enter into purchase commitments which can generally be recovered through
the pricing of products and services to the U.S. government. These unconditional purchase obligations are not
included in the table above.
 
In December 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting
Standards No. 123 (revised 2004), Share-Based Payments (SFAS No. 123R). This accounting standard, which is
effective for interim and annual periods beginning after June 15, 2005, requires the recognition of compensation
expense related to stock options under SFAS No. 123, Accounting for Stock-Based Compensation. The Company
plans to adopt SFAS No. 123R prospectively in the third quarter of 2005 with an anticipated impact to earnings per
share of less than $0.02 per share in 2005 and 2006.
In November 2004, the FASB issued Statement of Financial Accounting Standards No. 151, an amendment of
ARB No. 43, Chapter 4, Inventory Costs (SFAS No. 151). This accounting standard, which is effective for annual
periods beginning after June 15, 2005, requires that abnormal amounts of idle facility expense, freight, handling
costs, and wasted materials (spoilage) should be recognized as current-period charges. The adoption of SFAS No.
151 is not expected to have a material effect on the Company’s financial position or results or operations.