Raytheon 2004 Annual Report Download - page 98

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Notes to Consolidated Financial Statements (Continued)
recovery of environmental cleanup costs from the U.S. government is considered probable based on the Company’s
long history of receiving reimbursement for such costs. Accordingly, the Company has recorded $59 million at
December 31, 2004 for the estimated future recovery of these costs from the U.S. government, which is included in
contracts in process. The Company leases certain government-owned properties and is generally not liable for
environmental remediation at these sites, therefore, no provision has been made in the financial statements for
these costs. Due to the complexity of environmental laws and regulations, the varying costs and effectiveness of
alternative cleanup methods and technologies, the uncertainty of insurance coverage, and the unresolved extent of
the Company’s responsibility, it is difficult to determine the ultimate outcome of these matters, however, any
additional liability is not expected to have a material adverse effect on the Company’s financial position or results of
operations.
Environmental remediation costs expected to be incurred are:
(In millions)
2005 $34
2006 14
2007 10
2008 9
2009 8
Thereafter 55
The Company issues guarantees and has banks and surety companies issue, on its behalf, letters of credit and
surety bonds to meet various bid, performance, warranty, retention, advance payment, and certain financial
obligations. Approximately $294 million, $827 million, and $250 million of these guarantees, letters of credit, and
surety bonds, for which there were stated values, were outstanding at December 31, 2004, respectively and
$354 million, $890 million, and $389 million were outstanding at December 31, 2003, respectively. These
instruments expire on various dates through 2015. At December 31, 2004, the amount of guarantees, letters of
credit, and surety bonds, for which there were stated values, that remained outstanding was $94 million, $9 million,
and $234 million, respectively, related to discontinued operations and are included in the numbers above compared
to $99 million, $146 million, and $283 million, respectively, at December 31, 2003. Additional guarantees of project
performance for which there is no stated value also remain outstanding.
At December 31, 2004, RAC had unconditional purchase obligations of $40 million primarily related to
component parts for the Horizon aircraft with varying purchase quantities for up to 200 aircraft. In addition, the
Company’s defense businesses may enter into purchase commitments which can generally be recovered through
the pricing of products and services to the U.S. government. These unconditional purchase obligations are not
included in the table above.
In 2001, the Company formed a joint venture, Thales-Raytheon Systems (TRS), described in Note G, Other
Assets. The Company has guaranteed TRS-related borrowings of up to $34 million under which $12 million was
outstanding at December 31, 2004. The Company has also entered into other joint ventures, also described in Note
G, Other Assets. TRS and the other joint ventures, in the normal course of business, have banks issue letters of
credit and guarantees related to project performance and other contractual obligations. While the Company
expects these joint ventures to satisfy their loan, project performance, and other contractual obligations, their
failure to do so may result in a future obligation for the Company.