Raytheon 2004 Annual Report Download - page 87

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69
Notes to Consolidated Financial Statements (Continued)
 :   
Contracts in process consisted of the following at December 31, 2004:
(In millions)
Cost
Type
Fixed
Price Total
U.S. government end-use contracts
Billed $ 393 $ 295 $ 688
Unbilled 845 4,253 5,098
Less progress payments – (3,326) (3,326)
1,238 1,222 2,460
Other customers
Billed 19 226 245
Unbilled 11 1,285 1,296
Less progress payments – (487) (487)
30 1,024 1,054
Total $1,268 $ 2,246 $ 3,514
Contracts in process consisted of the following at December 31, 2003:
(In millions)
Cost
Type
Fixed
Price Total
U.S. government end-use contracts
Billed $ 427 $ 277 $ 704
Unbilled 637 4,018 4,655
Less progress payments – (3,004) (3,004)
1,064 1,291 2,355
Other customers
Billed 13 298 311
Unbilled 11 997 1,008
Less progress payments – (372) (372)
24 923 947
Total $1,088 $ 2,214 $ 3,302
The U.S. government has title to the assets related to unbilled amounts on contracts that provide for progress
payments. Unbilled amounts are recorded under the percentage of completion method and are recoverable from
the customer upon shipment of the product, presentation of billings, or completion of the contract.
Included in contracts in process at December 31, 2004 and 2003 was $66 million and $77 million, respectively,
related to claims on contracts, which were recorded at their estimated realizable value. The Company believes that
it has a legal basis for pursuing recovery of these claims and that collection is probable. The settlement of these
amounts depends on individual circumstances and negotiations with the counterparty, therefore, the timing of the
collection will vary and approximately $9 million of collections are expected to extend beyond one year.
Billed and unbilled contracts in process include retentions arising from contractual provisions. At December 31,
2004, retentions amounted to $48 million and are anticipated to be collected as follows: $43 million in 2005, $2
million in 2006, and the balance thereafter.