Raytheon 2005 Annual Report Download - page 112

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2004 First Second Third Fourth
Net sales $4,676 $4,929 $4,936 $5,704
Gross margin 680 812 807 965
Income (loss) from continuing operations 101 (94) 186 246
Income (loss) before accounting change 87 (108) 152 245
Net income (loss) 128 (108) 152 245
Earnings (loss) per share from continuing operations
Basic $ 0.24 $(0.22) $ 0.41 $ 0.55
Diluted 0.24 (0.22) 0.41 0.54
Earnings (loss) per share before accounting change
Basic 0.21 (0.25) 0.34 0.54
Diluted 0.21 (0.25) 0.34 0.54
Earnings (loss) per share
Basic 0.31 (0.25) 0.34 0.54
Diluted 0.30 (0.25) 0.34 0.54
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 $32.35 $35.48 $37.17 $41.89
Low 29.28 30.73 31.91 34.84
Note: Earnings per share are computed independently for each of the quarters presented, therefore, the sum of the
quarterly earnings per share may not equal the total computed for the year.
Note Q: Financial Instruments
At December 31, 2005, the Company recorded forward exchange contracts designated as cash flow hedges at their fair
value. Unrealized gains of $51 million were included in noncurrent assets and unrealized losses of $45 million were
included in current liabilities. The offset was included in other comprehensive income, net of tax, of which approximately
$3 million of net unrealized losses 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, 2005 extend through 2013. Certain immaterial contracts 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 2005, 2004, and 2003.
The Company enters into interest rate swaps, as described in Note H, Notes Payable and Long-Term Debt. These interest
rate swaps were designated as fair value hedges. There was no hedge ineffectiveness in 2005, 2004, or 2003.
Major currencies and the approximate amounts associated with foreign exchange contracts consisted of the following at
December 31:
2005 2004
(In millions) Buy Sell Buy Sell
British Pounds $ 725 $483 $566 $354
Canadian Dollars 180 24 117 31
European Euros 94 25 77 36
Australian Dollars 69 31 35 13
Arab Emirates Dirham 20 29 931
Norwegian Kroner 10 1 21 10
Swiss Francs 86 218
Omani Rial 110 ——
All other 2— 42
Total $1,109 $609 $831 $495
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