Raytheon 2005 Annual Report Download - page 86

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note C: Acquisitions and Divestitures
In August 2005, the Company acquired UTD, Inc. for $39 million, net of cash received, subject to a purchase price
adjustment. The Company recorded $2 million of intangible assets and $36 million of goodwill (at Intelligence and
Information Systems) in connection with this acquisition.
In 2004, the Company acquired Photon Research Associates Inc. for $42 million, net of cash received. In addition, the
Company may be required to make certain performance-based incentive payments. Assets acquired included $5 million
of contracts in process, $1 million of property, plant and equipment, and $1 million of other assets. Liabilities assumed
included $2 million of accrued salaries and wages and $3 million of other accrued liabilities. The Company also recorded
$5 million of intangible assets and $35 million of goodwill (at Space and Airborne Systems) in connection with this
acquisition.
In 2004, the Company sold its commercial infrared business for $43 million and recorded a pretax gain of $10 million
which was included in other income.
In 2003, the Company acquired Solipsys Corporation for $170 million, net of cash received, to be paid over two years.
The Company made cash payments of $60 million in 2005, $70 million in 2004 and $40 million in 2003 related to this
acquisition. In addition, the Company may be required to make certain performance-based incentive payments. Assets
acquired included $7 million of contracts in process. Liabilities assumed included $2 million of accounts payable and $3
million of accrued salaries and wages. The Company also recorded $8 million of intangible assets and $160 million of
goodwill (at Integrated Defense Systems) in connection with this acquisition.
In 2003, the Company acquired the Aerospace and Defence Services business unit of Honeywell International Inc. for $20
million in cash. Assets acquired included $4 million of contracts in process. Liabilities assumed included $1 million of
accounts payable and $2 million of other accrued expenses. The Company also recorded $8 million of intangible assets
and $11 million of goodwill (at Technical Services) in connection with this acquisition.
Pro forma financial information has not been provided for these acquisitions as they are not material either individually
or in the aggregate. In addition, the Company has entered into other acquisition and divestiture agreements in the
normal course of business that have not been separately disclosed as they are not material.
In 2002, the Company formed a joint venture with Flight Options, Inc. whereby the Company contributed its Raytheon
Travel Air fractional ownership business and loaned the new entity $20 million. In June 2003, the Company participated
in a financial recapitalization of Flight Options LLC (FO) and exchanged certain FO debt for equity. In December 2005,
the Company settled all disputes with the FO minority shareholders and acquired the minority shares for $28 million in
cash and assumed liabilities and now owns 100% of FO. Employees of FO own an insignificant amount of FO stock and
stock options.
Note D: Contracts In Process
Contracts in process consisted of the following at December 31, 2005:
(In millions) Cost Type Fixed Price Total
U.S. government end-use contracts
Billed $ 430 $ 163 $ 593
Unbilled 888 4,514 5,402
Less progress payments — (3,315) (3,315)
1,318 1,362 2,680
Other customers
Billed 24 136 160
Unbilled 7 1,109 1,116
Less progress payments — (487) (487)
31 758 789
Total $1,349 $ 2,120 $ 3,469
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