Raytheon 2005 Annual Report Download - page 82

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Intangible assets subject to amortization consisted primarily of drawings and intellectual property totaling $63 million
(net of $62 million of accumulated amortization) at December 31, 2005 and $74 million (net of $52 million of
accumulated amortization) at December 31, 2004. Amortization expense is expected to approximate $13 million for each
of the next five years.
In accordance with Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, the Company determines whether long-lived assets are to be held-for-use or held-for-disposal. 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. Once deemed held-for-disposal, the assets are stated at
the lower of carrying amount or fair value.
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% to 50% in
unconsolidated affiliates and of less than 20% 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.
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) 2005 2004
Minimum pension liability $(1,978) $(2,025)
Unrealized gains (losses) on interest-only strips 3(1)
Interest rate lock (1) (1)
Foreign exchange translation 23 70
Cash flow hedges 439
Unrealized gains on investments (1) (1)
Total $(1,950) $(1,919)
The minimum pension liability adjustment is shown net of tax benefits of $1,065 million and $1,089 million at
December 31, 2005 and 2004, respectively. The unrealized gains (losses) on interest-only strips are shown net of tax
liability of $2 million at December 31, 2005 and net of tax benefits of $1 million at December 31, 2004. The interest rate
lock is shown net of tax benefits of $1 million at December 31, 2005 and 2004. The cash flow hedges are shown net of tax
liabilities of $2 million and $21 million at December 31, 2005 and 2004, 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 comprehensive
income in stockholders’ equity. Deferred taxes are not recognized for translation-related temporary
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