Raytheon 2014 Annual Report Download - page 105

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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At December 31, 2014, we had commitments under agreements to outsource a portion of our information technology function,
which have minimum annual payments of less than $5 million.
Environmental Matters—We are involved in various stages of investigation and cleanup related to remediation of various
environmental sites. Our estimate of the liability of total environmental remediation costs includes the use of a discount rate
and takes into account that a portion of these costs is eligible for future recovery through the pricing of our products and
services to the U.S. Government. We consider such recovery probable based on government contracting regulations and our
long history of receiving reimbursement for such costs, and accordingly have recorded the estimated future recovery of these
costs from the U.S. Government within contracts in process, net. Our estimates regarding remediation costs to be incurred
were as follows at December 31:
(In millions, except percentages) 2014 2013
Total remediation costs—undiscounted $ 202 $ 198
Weighted-average discount rate 5.5% 5.6%
Total remediation costs—discounted $ 131 $ 133
Recoverable portion 80 90
We also lease certain government-owned properties and generally are not liable for remediation of preexisting environmental
contamination at these sites. As a result, we generally do not provide for these costs in our consolidated financial statements.
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 our responsibility, it is difficult
to determine the ultimate outcome of environmental matters. However, we do not expect any additional liability to have a
material adverse effect on our financial position, results of operations or liquidity.
Environmental remediation costs expected to be incurred are:
(In millions)
2015 $ 30
2016 21
2017 14
2018 14
2019 11
Thereafter 112
Financing Arrangements and Other—We issue guarantees, and banks and surety companies issue, on our behalf, letters of
credit and surety bonds to meet various bid, performance, warranty, retention and advance payment obligations of us or our
affiliates. These instruments expire on various dates through 2023. Additional guarantees of project performance for which
there is no stated value also remain outstanding. The stated values outstanding consisted of the following at December 31:
(In millions) 2014 2013
Guarantees $ 266 $ 378
Letters of credit 1,938 1,424
Surety bonds 298 238
Included in guarantees and letters of credit described above were $196 million and $244 million, respectively, at December 31,
2014, and $233 million and $268 million, respectively, at December 31, 2013, related to our joint venture in TRS. We provide
these guarantees and letters of credit to TRS and other affiliates to assist these entities in obtaining financing on more favorable
terms, making bids on contracts and performing their contractual obligations. While we expect these entities to satisfy their
loans and meet their project performance and other contractual obligations, their failure to do so may result in a future obligation
to us. We periodically evaluate the risk of TRS and other affiliates failing to satisfy their loans and meet their project performance
and other contractual obligations described above. At December 31, 2014, we believe the risk that TRS and other affiliates
will not be able to perform or meet their obligations is minimal for the foreseeable future based on their current financial