Raytheon 2009 Annual Report Download - page 96

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Billed and unbilled contracts in process include retentions arising from contractual provisions. At December 31, 2009,
retentions were $61 million. We anticipate collecting $45 million of these retentions in 2010 and the balance thereafter.
Note 6: Property, Plant and Equipment, Net
Property, plant and equipment, net consisted of the following at December 31:
(In millions) 2009 2008
Land $93$85
Buildings and leasehold improvements 2,293 2,202
Machinery and equipment 3,187 3,137
Equipment leased to others 82 93
5,655 5,517
Less: Accumulated depreciation and amortization 3,654 3,493
Total $2,001 $2,024
Depreciation and amortization expense of property, plant and equipment, net was $299 million, $292 million and $288
million in 2009, 2008 and 2007, respectively. Accumulated depreciation on equipment leased to others was $34 million at
December 31, 2009 and 2008.
Note 7: Other Assets, Net
Other assets, net consisted of the following at December 31:
(In millions) 2009 2008
Long-term receivables
Due from customers in installments to 2015 $23$59
Other 23 26
Computer software, net 392 412
Investments 67 78
Other noncurrent assets, net 764 665
Total $1,269 $1,240
We previously sold undivided interests in general aviation finance receivables, while retaining subordinated interests in
and servicing rights to the receivables. We irrevocably, and without recourse, transferred the receivables to GARC,
formed in 2003, which in turn, issued beneficial interests in these receivables to a commercial paper conduit. The conduit
obtained the funds to purchase the interest in the receivables, other than the retained interest, by selling commercial
paper to third-party investors. At December 31, 2009 and 2008, the outstanding balance of securitized accounts receivable
held by the third party conduit totaled $73 million and $99 million, respectively, of which our subordinated retained
interest, which is included in other noncurrent assets, net in the table above, was $67 million and $66 million,
respectively, and the fair value of the servicing liability was less than $1 million at December 31, 2008. There was no
servicing liability at December 31, 2009. The underlying aircraft serve as collateral for these accounts receivable. We
estimated the fair value of the subordinated retained interest at December 31, 2009 and 2008 based on the present value
of future expected cash flows using certain key assumptions, including collection period and a discount rate of 5.3% and
4.4%, respectively. At December 31, 2009, a 10% and 20% adverse change in the collection period and discount rate
would not have a material effect on our financial position or results of operations. In January 2010, we adopted the
required new accounting standards which amend the accounting and disclosure requirements for transfers of financial
assets and consolidation of VIEs. Among other things, these accounting standards eliminate the concept of a QSPE and
the related exception for applying the consolidation guidance. As a result, on January 1, 2010 we consolidated GARC,
which did not have a material impact on our consolidated financial statements and resulted in:
ⳮThe removal of our $67 million investment in GARC previously reported in other assets, net, and
ⳮThe addition of long and short-term notes receivable, net of $68 million, current and long-term notes payable of $2
million, and an increase in retained earnings of less than $1 million, net of tax.
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