Raytheon 2007 Annual Report Download - page 100

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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 unbilled at December 31,
2007 was $194 million which is expected to be collected outside of one year.
Billed and unbilled contracts in process include retentions arising from contractual provisions. At December 31, 2007,
retentions were $65 million and are anticipated to be collected as follows: $44 million in 2008 and the balance thereafter.
Note 5: Inventories
Inventories consisted of the following at December 31:
(In millions) 2007 2006
Finished goods $47 $91
Work in process 276 229
Materials and purchased parts 63 56
Total $386 $376
Inventories at the government and defense businesses include component parts, materials and in certain instances, costs
incurred in advance of contract award or funding. If we determine that the contract award or funding is probable, these
precontract costs, excluding any start-up costs, are capitalized into inventory. Capitalized precontract and other deferred
costs of $95 million and $84 million were included in inventory as work in process at December 31, 2007 and 2006,
respectively.
Note 6: Property, Plant and Equipment, Net
Property, plant and equipment, net consisted of the following at December 31:
(In millions) 2007 2006
Land $86$85
Buildings and leasehold improvements 2,158 2,030
Machinery and equipment 3,127 3,057
Equipment leased to others 107 111
5,478 5,283
Less accumulated depreciation and amortization (3,420) (3,258)
Total $ 2,058 $ 2,025
Depreciation expense was $288 million, $285 million and $274 million in 2007, 2006 and 2005, respectively. Accumulated
depreciation on equipment leased to others was $32 million and $33 million at December 31, 2007 and 2006, respectively.
Note 7: Other Assets, Net
Other assets, net consisted of the following at December 31:
(In millions) 2007 2006
Long-term receivables
Due from customers in installments to 2015 $ 124 $ 148
Other 25 43
Sales-type leases, due in installments to 2013 78
Computer software, net 423 416
Investments 173 161
Other noncurrent assets, net 611 641
Total $1,363 $1,417
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