Raytheon 2011 Annual Report Download - page 91

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
83
Provisions for depreciation are generally computed using a combination of accelerated and straight-line methods and are
based on estimated useful lives as follows:
Machinery and equipment
Equipment leased to others
Buildings
Years
3–10
5–10
20–45
Leasehold improvements are amortized over the lesser of the remaining life of the lease or the estimated useful life of the
improvement.
Impairment of Goodwill and Long-lived Assets—We evaluate our goodwill for impairment annually or whenever events
or circumstances indicate the carrying value of that goodwill may not be recoverable. We perform our annual impairment test
on the first day of the fourth quarter utilizing a two-step methodology that requires us to first identify potential goodwill
impairment and then measure the amount of the related goodwill impairment loss, if any. We have identified our operating
segments as reporting units under the impairment test assessment criteria outlined in GAAP. In performing our annual
impairment test in the fourth quarter of 2011 and 2010, we did not identify any goodwill impairment.
We determine whether long-lived assets are to be held for use or disposal. Upon indication of possible impairment of long-
lived assets held for use, we evaluate the recoverability of such 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, we must have committed to a plan to dispose of the assets. Once deemed held
for disposal, the assets are stated at the lower of the carrying amount or fair value.
Computer Software, Net—Internal use computer software, net, included in other assets, net, which consists primarily of an
integrated financial software package used across the Company, is stated at cost less accumulated amortization and is amortized
using the straight-line method over its estimated useful life, generally 10 years.
Advance Payments and Billings in Excess of Costs Incurred—We receive advances, performance-based payments and
progress payments from customers that may exceed costs incurred on certain contracts. We classify advance payments and
billings in excess of costs incurred, other than those reflected as a reduction of contracts in process, as current liabilities.
Other Comprehensive Income—Other Comprehensive income (loss) includes foreign currency translation adjustments,
gains and losses on derivative instruments qualified as cash flow hedges, unrealized gains (losses) on investments, and gain
and losses associated with pension and other postretirement benefits. The computation of other comprehensive income (loss)
and its components are presented in the consolidated statements of comprehensive income. The related gross, tax and net
amounts for each component were as follows:
(In millions) Year Ended December 31, 2011
Foreign exchange translation
Cash flow hedges and interest rate locks
Unrealized gains on investments and other
Pension and other employee benefit plans:
Net change initial net obligation
Prior service cost arising during period
Net loss arising during period
Amortization of prior service cost included in net periodic pension cost
Amortization of net actuarial loss included in net income
Effect of exchange rates
Defined benefit pension and other employee benefit plans, net
Other comprehensive income (loss)
Before-
Tax
Amount
$(3)
(9)
3
4
45
(3,688)
1
795
(2)
(2,845)
$(2,854)
Tax
(Expense)
or Benefit
$ —
3
3
(2)
(17)
1,290
—
(279)
1
993
$ 999
Net-of-Tax
Amount
$(3)
(6)
6
2
28
(2,398)
1
516
(1)
(1,852)
$(1,855)