| Interest Expense
Interest and debt expense is presented net of amounts
capitalized. Interest expense is subject
to capitalization as a construction-period cost of property,
plant and equipment and of commercial program tooling. |
| Income Taxes
Federal, state and foreign income taxes are computed at
current tax rates, less tax credits.
Taxes are adjusted both for items that do not have tax
consequences and for the cumulative effect of any
changes in tax rates from those previously used to determine
deferred tax assets or liabilities. Tax provisions
include amounts that are currently payable, plus changes
in deferred tax assets and liabilities that arise because
of temporary differences between the time when items of
income and expense are recognized for financial
reporting and income tax purposes. |
| Postretirement Benefits
The Company’s funding policy for pension plans is
to contribute, at a minimum, the
statutorily required amount to an irrevocable trust. Benefits
under the plans are generally based on age at retirement,
the employee’s annual earnings indexed at the U.S.
Treasury 30-year bond rate, and years of service. The
actuarial cost method used in determining the net periodic
pension cost is the projected unit credit method. |
| Cash and Cash Equivalents
Cash and cash equivalents consist of highly liquid instruments,
such as certificates
of deposit, time deposits, treasury notes and other money
market instruments, which generally have maturities
of less than three months. |
| Available-for-Sale
Securities The Company holds certain investments
that are treated as “available-for-sale” securities
under SFAS No.115, Accounting for Certain Investments
in Debt and Equity Securities. These investments are
classified as ‘Other assets’ on the Consolidated
Statements of Financial Position, at their quoted market
values. Unrealized gains and losses are reported as part
of ‘Accumulated other comprehensive income’
on the Consolidated Statements of Financial Position.
Realized gains and losses are included in the Consolidated
Statements of Operations, in the line item ‘Other
income, principally interest.’ |
| Held-to-Maturity Securities
Held-to-maturity securities, classified as ‘Other
assets’ on the Consolidated Statements of Financial
Position, include bond notes, enhanced equipment trust
certificates and debentures for which the Company has
the positive intent and ability to hold to maturity are
reported at amortized cost. |
| Property, Plant and
Equipment Property, plant and equipment are
recorded at cost, including applicable construction- period
interest, and depreciated principally over the following
estimated useful lives: new buildings and land improvements,
from 20 to 45 years; and machinery and equipment, from
3 to 13 years. The principal methods of depreciation are
as follows: buildings and land improvements, 150% declining
balance; and machinery and equipment, sum-of-the-years’
digits. The Company periodically evaluates the appropriateness
of remaining depreciable lives assigned to long-lived
assets subject to a management plan for disposition. |
| Long-lived assets deemed available for sale are stated
at the lower of cost or fair value. Long-lived assets
held
for use are subject to an impairment adjustment down to
fair value if the carrying value is no longer recoverable
based upon the undiscounted future cash flows. |
| Goodwill and Acquired
Intangibles Goodwill, representing the excess
of acquisition costs over the fair value of net assets
of businesses purchased, is amortized on a straight-line
method over 20 to 30 years. Recoverability of the unamortized
goodwill and acquired intangibles balance is primarily
based upon assessment of related operational cash flows.
See Note 5 for a discussion on the adoption of SFAS No.142,
Goodwill and Other Intangible Assets. |
| Acquired intangibles and their associated lives, amortized
on a straight-line method, include the following: developed
technologies, 5 to 20 years; tradename, 20 years; data
repositories, 15 to 20 years; assembled workforce,
5 to 15 years; product know-how, 15 to 20 years; and customer
lists, 5 to 15 years. |
| Derivatives
The Company accounts for derivatives pursuant to SFAS
No.133, Accounting for Derivative Instruments and Hedging
Activities, as amended. This standard requires that
all derivative instruments be recognized in the financial
statements and measured at fair value regardless of the
purpose or intent for holding them. Changes in the fair
value of derivative instruments are either recognized
periodically in income or shareholders’ equity (as
a component of accumulated other comprehensive income),
depending on their use and designation. The adoption of
SFAS No.133 in 2001 resulted in a transition gain of $1
on the Consolidated Statements of Operations shown under
the caption ‘Cumulative effect of accounting change,
net,’ and a net loss of $18 ($11 net of tax) recorded
to accumulated other comprehensive income. |
| Aircraft Valuation
Aircraft deemed available for sale, which are included
in inventory, are stated at the lower of cost or fair
value. The Company reviews its used aircraft purchase
commitments relative to the aircraft’s anticipated
fair value, and records any deficiency as a charge to
earnings. Fair value is determined by using both internal
and external aircraft valuations, including information
developed from the sale of similar aircraft in the secondary
market. |
