Raytheon 2007 Annual Report Download - page 81

Interest payments include interest on debt that is redeemable at the option of the Company.
We currently estimate that required pension plan cash contributions will be approximately $535 million in 2008. We
expect to contribute approximately $30 million to our other postretirement benefit plans in 2008. Estimates for 2009 and
beyond have not been provided due to the significant uncertainty of these amounts, which are subject to change with
respect to future interest rates, asset returns and pension funding reform. In addition, pension contributions are eligible
for future recovery through the pricing of products and services to the U.S. government, therefore, the amounts noted
above are not necessarily indicative of the impact these contributions will have on our liquidity.
In August 2006, the Pension Protection Act of 2006 (the Pension Act) was signed into law by President Bush. Under the
Pension Act, companies will be required to fully fund their pension plans over a seven-year period. For defense
contractors, the new funding rules become effective no sooner than 2009 and no later than 2011, depending on when the
U.S. Government Cost Accounting Standards Board aligns the U.S. Government Cost Accounting Standards with the
new funding requirements.
ACCOUNTING STANDARDS
In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting
Standards No. 157, Fair Value Measurements (SFAS No. 157). SFAS No. 157 establishes a framework for measuring fair
value and requires expanded disclosures regarding fair value measurements. This accounting standard is effective for
financial statements issued for fiscal years beginning after November 15, 2007. However, in January 2008, the FASB
issued FASB Staff Position FAS 157-b, Effective Date of FASB Statement No. 157 (FSP FAS 157-b). This FSP permits
entities to elect to defer the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except
those that are recognized or disclosed at fair value in the financial statements on a recurring basis. We have elected to
defer the adoption of SFAS No. 157 for those assets and liabilities included in FSP FAS 157-b. The adoption of SFAS
No. 157 will not have a material impact on our financial position and results of operations.
In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities, including an amendment of FASB Statement No. 115 (SFAS No. 159). SFAS
No. 159 permits entities to choose, at specified election dates, to measure eligible items at fair value (the “fair value
option”). A business entity shall report unrealized gains and losses on items for which the fair value option has been
elected in earnings at each subsequent reporting period. This accounting standard is effective for financial statements
issued for fiscal years beginning after November 15, 2007. The adoption of SFAS No. 159 will not have a material impact
on our financial position and results of operations.
In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141 (revised 2007), Business
Combinations (SFAS No. 141(R)). SFAS No. 141(R) replaces SFAS No. 141, Business Combinations. SFAS No. 141(R)
requires the acquiring entity in a business combination to recognize the full fair value of assets acquired and liabilities
assumed in the transaction; requires certain contingent assets and liabilities acquired to be recognized at their fair values
on the acquisition date; requires contingent consideration to be recognized at its fair value on the acquisition date and
changes in the fair value to be recognized in earnings until settled; requires the expensing of most transaction and
restructuring costs; and generally requires the reversals of valuation allowances related to acquired deferred tax assets and
changes to acquired income tax uncertainties to also be recognized in earnings. This accounting standard is effective for
financial statements issued for fiscal years beginning after December 15, 2008. We are currently evaluating the provisions
of SFAS No. 141(R) to determine the potential impact, if any, the adoption will have on our financial position and results
of operations.
In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51 (SFAS No. 160). SFAS No. 160 requires the ownership
interests in subsidiaries held by parties other than the parent be clearly identified in the consolidated statement of
financial position within equity, but separate from the parent’s equity. This standard also requires the amount of
consolidated net income attributable to the parent and to the noncontrolling interest be clearly identified and presented
on the face of the consolidated statement of income. This accounting standard is effective for financial statements issued
for fiscal years beginning after December 15, 2008. We are currently evaluating the provisions of SFAS No. 160 to
determine the potential impact, if any, the adoption will have on our financial position and results of operations.
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