Raytheon 2004 Annual Report Download - page 83

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65
Notes to Consolidated Financial Statements (Continued)
aviation finance receivables. The Company also maintained a program under which it sold general aviation and
commuter aircraft long-term receivables under a receivables purchase facility through the end of 2002. In
connection with this program in 2002, the sale of financing receivables was $263 million and the repurchase of
financing receivables was $347 million. The Company bought out the receivables that remained in the facility in
2002 for $1,029 million, brought the related assets onto the Company’s books, and eliminated the associated $1.4
billion receivables purchase facility.
The Company’s statement of cash flows has been adjusted to reflect the fact that there was no cash received upon
the initial sale of aircraft, and to classify cash receipts from the sale of inventory as operating activities, which
resulted in the following changes to previously reported amounts:
(In millions) 2003
Previously
Reported
As
Reclassified
Net cash provided by operating activities from continuing operations $2,102 $2,567
Net cash provided by operating activities 1,569 2,034
Net cash used in investing activities (243) (708)
(In millions) 2002
Previously
Reported
As
Reclassified
Net cash provided by operating activities from continuing operations $2,235 $ 847
Net cash provided by (used in) operating activities 1,039 (349)
Net cash (used in) provided by investing activities (719) 669
ACCOUNTING STANDARDS 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.
RISKS AND UNCERTAINTIES The Company is engaged in supplying defense-related equipment to the U.S. and
foreign governments, and is subject to certain business risks specific to that industry. Sales to the government may
be affected by changes in procurement policies, budget considerations, changing concepts of national defense,
political developments abroad, and other factors.
The highly competitive market for business and special mission aircraft is also subject to certain business risks.
These risks include timely development and certification of new product offerings, the current state of the general
aviation and commuter aircraft markets, and government regulations affecting commuter aircraft.
The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and