Raytheon 2005 Annual Report Download - page 107

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Effective July 1, 2004, the Company amended its Other Benefits plans to coordinate the Company’s retiree prescription
drug coverage with the Legislation beginning in 2006. The amendment eliminated the plans’ eligibility for the federal
subsidies provided under the Legislation, as described above. The effect of the amendment on the Company’s net
periodic benefit cost was a $15 million decrease in 2004. The reduction in the accumulated postretirement benefit
obligation as a result of the plan amendment was $125 million.
The Company maintains an employee stock ownership plan (ESOP) which includes the Company’s 401(k) plan (defined
contribution plan), under which covered employees are allowed to contribute up to a specific percentage of their pay. The
Company matches the employee’s contribution, up to a maximum of generally between 3 and 4% of the employee’s pay
(Company Match). Prior to January 1, 2005, the Company Match was made through a contribution to the Company
stock fund. Effective January 1, 2005, the Company Match was invested in the same way as employee contributions. Total
expense for the Company Match was $197 million, $180 million, and $159 million in 2005, 2004, and 2003, respectively.
Prior to January 1, 2005, the Company made an annual contribution to the Company stock fund of approximately
one-half of one percent of salaries and wages, subject to certain limitations, of most U.S. salaried and hourly employees
(Company Contributions). Effective January 1, 2005, the Company discontinued the annual contribution to the
Company stock fund. The contribution for 2004 was made in March 2005. Total expense for the Company Contributions
was $27 million, $25 million, and $25 million and the number of shares allocated to participant accounts was 706,000,
813,000, and 884,000 in 2005, 2004, and 2003, respectively.
The Company purchased shares on the open market for the Company Match and Company Contributions in 2005. The
Company funded a portion of the Company Match and Company Contributions in 2004 and 2003 through the issuance
of common stock.
At December 31, 2005, there was a total of $9.4 billion invested in the Company’s defined contribution plan. At
December 31, 2005, there was a total of $1.8 billion invested in the Company stock fund consisting of $472 million of
Company Match which must remain invested in the Company stock fund for five years from the year in which the
contribution was made or the year in which the employee reaches age 55, whichever is earlier; $304 million of Company
Contributions which must remain invested in the Company stock fund until the employee reaches age 55 and completes
10 years of service; and $1,023 million over which there are no restrictions.
Note O: Business Segment Reporting
Reportable segments have been determined based upon product lines include the following: Integrated Defense Systems,
Intelligence and Information Systems, Missile Systems, Network Centric Systems, Space and Airborne Systems, Technical
Services, Aircraft, and Other which is comprised of Flight Options LLC, Raytheon Airline Aviation Services LLC, and
Raytheon Professional Services LLC.
Integrated Defense Systems provides integrated air defense, maritime and joint battlespace solutions.
Intelligence and Information Systems provides systems, subsystems and software engineering services for national and
tactical intelligence systems, as well as for homeland security and information technology solutions.
Missile Systems provides air-to-air, precision strike, surface Navy air defense, and land combat missiles, guided
projectiles, kinetic kill vehicles, and directed energy weapons.
Network Centric Systems develops and produces net-centric mission solutions for network sensors, command and
control communications, air traffic management and homeland security.
Space and Airborne Systems designs and develops integrated systems and solutions for advanced missions including
unmanned aerial operations, electronic warfare, active electronically scanned array radars, airborne processors, weapon
grade lasers, missile defense, and intelligence, surveillance and reconnaissance systems.
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