Raytheon 2004 Annual Report Download - page 80

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Notes to Consolidated Financial Statements (Continued)
of accumulated amortization) at December 31, 2003. Amortization expense is expected to approximate $9 million
for each of the next five years.
In 2002, the Company adopted Statement of Financial Accounting Standards No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. Accordingly, upon indication of possible impairment, the Company
evaluates the recoverability of held-for-use long-lived assets by measuring the carrying amount of the assets against
the related estimated undiscounted future cash flows. When an evaluation indicates that the future undiscounted
cash flows are not sufficient to recover the carrying value of the asset, the asset is adjusted to its estimated fair value.
In order for long-lived assets to be considered held-for-disposal, the Company must have committed to a plan to
dispose of the assets.
COMPUTER SOFTWARE Internal use computer software, which consists primarily of an integrated financial
package, is stated at cost less accumulated amortization and is amortized using the straight-line method over its
estimated useful life, generally 10 years.
INVESTMENTS Investments, which are included in other assets, include equity ownership of 20 percent to 50
percent in unconsolidated affiliates and of less than 20 percent in other companies. Investments in unconsolidated
affiliates are accounted for under the equity method. Investments in other companies with readily determinable
market prices are stated at estimated fair value with unrealized gains and losses included in other comprehensive
income. Other investments are stated at cost.
ADVANCE PAYMENTS AND BILLINGS IN EXCESS OF COSTS INCURRED The Company receives advances,
performance-based payments, and progress payments from customers which may exceed costs incurred on certain
contracts. These advances and payments are shown net of accumulated costs of $1,046 million and $1,071 million
at December 31, 2004 and 2003, respectively. In 2004, the Company began classifying billings in excess of costs with
advance payments. The Company reclassified $642 million of billings in excess of costs incurred from contracts in
process to advance payments and billings in excess of costs incurred at December 31, 2003 to conform with the
current year presentation.
COMPREHENSIVE INCOME Comprehensive income and its components are presented in the statement of
stockholders’ equity.
Accumulated other comprehensive income consisted of the following at December 31:
(In millions) 2004 2003
Minimum pension liability $(2,025) $(2,240)
Unrealized losses on interest-only strips (3) (2)
Interest rate lock (1) (1)
Foreign exchange translation 70 24
Cash flow hedges 39 24
Unrealized gains on investments 11
Total $(1,919) $(2,194)
The minimum pension liability adjustment is shown net of tax benefits of $1,089 million and $1,195 million at
December 31, 2004 and 2003, respectively. The unrealized losses on interest-only strips are shown net of tax
benefits of $1 million at December 31, 2004 and 2003. The interest rate lock is shown net of tax benefits of $1
million at December 31, 2004 and 2003. The cash flow hedges are shown net of tax liabilities of $21 million and $13
million at December 31, 2004 and 2003, respectively.
TRANSLATION OF FOREIGN CURRENCIES Assets and liabilities of foreign subsidiaries are translated at current
exchange rates and the effects of these translation adjustments are reported as a component of accumulated other