Raytheon 2003 Annual Report Download - page 63

P61 333 RAYTHEON COMPANY 333
333NOTE R: FINANCIAL INSTRUMENTS
At December 31, 2003, the Company recorded forward exchange
contracts designated as cash flow hedges at their fair value.
Unrealized gains of $76 million were included in noncurrent assets
and unrealized losses of $39 million were included in current liabil-
ities. The offset was included in other comprehensive income, net
of tax, of which approximately $5 million of net unrealized gains are
expected to be reclassified to earnings over the next twelve months
as the underlying transactions mature. Gains and losses resulting
from these cash flow hedges offset the foreign exchange gains and
losses on the underlying assets or liabilities being hedged. The
maturity dates of the forward exchange contracts outstanding at
December 31, 2003 extend through 2013. Certain immaterial con-
tracts were not designated as effective hedges and therefore were
included in other expense. The amount charged to other expense
related to these contracts was less than $1 million in 2003 and 2002.
In 2003, the Company entered into interest rate swaps, as
described in Note I, Notes Payable and Long-term Debt. These
interest rate swaps were designated as fair value hedges. There
was no hedge ineffectiveness during 2003.
The Company has one outstanding interest rate swap agree-
ment related to long-term receivables at Raytheon Aircraft with a
notional amount of $33 million that matures in 2004. Under this
agreement, the Company pays interest at a fixed rate of 6.2% and
receives a variable rate equal to one-month LIBOR. The variable
rate applicable to this agreement was 1.2% at December 31,
2003. This interest rate swap is considered a cash flow hedge.
At December 31, 2003, the Company had recorded the interest
rate swap at fair value consisting of an unrealized loss of $1 mil-
lion included in current liabilities with the offset included in
other comprehensive income, net of tax, which is expected to be
reclassified to earnings over the next twelve months. The ineffective
portion was not material in 2003, 2002, and 2001.
333NOTE Q: QUARTERLY
OPERATING RESULTS (UNAUDITED)
(In millions except per share amounts and stock prices)
2003 First Second Third Fourth
Net sales $4,201 $4,429 $4,378 $5,101
Gross margin 721 859 602 927
Income from
continuing operations 111 186 21 217
Net income (loss) 95 100 (35) 205
Earnings per share from
continuing operations
Basic $ 0.27 $ 0.45 $ 0.05 $ 0.52
Diluted 0.27 0.45 0.05 0.52
Earnings (loss) per share
Basic 0.23 0.24 (0.08) 0.49
Diluted 0.23 0.24 (0.08) 0.49
Cash dividends per share
Declared 0.20 0.20 0.20 0.20
Paid 0.20 0.20 0.20 0.20
Common stock prices
High $32.09 $33.69 $33.97 $30.24
Low 24.31 27.15 27.74 25.45
2002 First Second Third Fourth
Net sales $3,911 $4,095 $4,092 $4,662
Gross margin 751 888 852 911
Income from
continuing operations 150 223 228 155
Income (loss) before
accounting change (74) (136) 147 (68)
Net income (loss) (583) (136) 147 (68)
Earnings per share from
continuing operations
Basic $ 0.38 $ 0.56 $ 0.56 $ 0.38
Diluted 0.37 0.54 0.56 0.38
Earnings (loss) per share
before accounting change
Basic (0.19) (0.34) 0.36 (0.17)
Diluted (0.19) (0.33) 0.36 (0.17)
Earnings (loss) per share
Basic (1.47) (0.34) 0.36 (0.17)
Diluted (1.44) (0.33) 0.36 (0.17)
Cash dividends per share
Declared 0.20 0.20 0.20 0.20
Paid 0.20 0.20 0.20 0.20
Common stock prices
High $40.95 $44.52 $38.63 $30.75
Low 30.88 37.54 28.61 26.86
Note: Earnings per share are computed independently for each of the quarters pre-
sented, therefore, the sum of the quarterly earnings per share may not equal the total
computed for the year.