Raytheon 2005 Annual Report Download - page 80

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Activity related to aircraft warranty provisions was as follows:
(In millions)
Balance at December 31, 2002 $22
Accruals for aircraft deliveries in 2003 21
Accruals related to prior year aircraft deliveries 8
Warranty services provided in 2003 (22)
Balance at December 31, 2003 29
Accruals for aircraft deliveries in 2004 29
Accruals related to prior year aircraft deliveries 3
Warranty services provided in 2004 (23)
Balance at December 31, 2004 $38
Accruals for aircraft deliveries in 2005 32
Accruals related to prior year aircraft deliveries 2
Warranty services provided in 2005 (22)
Balance at December 31, 2005 $50
Research and Development Expenses—Expenditures for Company-sponsored research and development projects
and bid and proposal costs are expensed as incurred. Customer-sponsored research and development projects performed
under contracts are accounted for as contract costs as the work is performed.
Federal and Foreign Income Taxes—The Company and its domestic subsidiaries provide for federal income taxes
on pretax accounting income at rates in effect under existing tax law. Foreign subsidiaries have recorded provisions for
income taxes at applicable foreign tax rates in a similar manner.
Cash and Cash Equivalents—Cash and cash equivalents consist of cash and short-term, highly liquid investments
with original maturities of 90 days or less.
Allowance for Doubtful Accounts—The Company maintains an allowance for doubtful accounts to provide for the
estimated amount of accounts receivable that will not be collected. The allowance is based upon an assessment of
customer credit-worthiness, historical payment experience, the age of outstanding receivables, and collateral to the extent
applicable.
Activity related to the allowance for doubtful accounts was as follows:
(In millions)
Balance at December 31, 2002 $73
Provisions 1
Utilizations (39)
Balance at December 31, 2003 35
Provisions 1
Utilizations (1)
Balance at December 31, 2004 35
Provisions 4
Utilizations (15)
Balance at December 31, 2005 $24
Contracts in Process—Contracts in process are stated at cost plus estimated profit, but not in excess of realizable
value.
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