RAYTHEON COMPANY 333 P35 333 CONSOLIDATED STATEMENTS OF OPERATIONS 33333333333333333333333333 (In millions except per share amounts) Years Ended December 31: 2003 2002 2001 Net sales $18,109 $16,760 $16,017 Cost of sales 15,000 13,358 13,664 Administrative and selling expenses 1,306 1,170 1,131 Research and development expenses  487 449 456 Total operating expenses 16,793 14,977 15,251 Operating income 1,316 1,783 766 Interest expense 537 497 696 Interest income (50) (27) (36) Other expense, net 67 237 6 Non-operating expense, net 554 707 666 Income from continuing operations before taxes 762 1,076 100 Federal and foreign income taxes 227 320 98 Income from continuing operations 535 756 2 Loss from discontinued operations, net of tax  (170) (887) (757) Income (loss) before accounting change 365 (131) (755) Cumulative effect of change in accounting principle, net of tax — (509) — Net income (loss) $ 365 $ (640) $ (755) Earnings per share from continuing operations Basic  $ 1.30 $ 1.88 $ 0.01 Diluted 1.29 1.85 0.01 Earnings (loss) per share Basic $ 0.88 $ (1.59) $ (2.12) Diluted 0.88 (1.57) (2.09) The accompanying notes are an integral part of the financial statements.