Raytheon 2015 Annual Report Download - page 80

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COMMITMENTS AND CONTINGENCIES
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, in our consolidated balance sheets. Our estimates regarding
remediation costs to be incurred were as follows at December 31:
(In millions, except percentages) 2015 2014
Total remediation costs—undiscounted $ 224 $ 202
Weighted-average discount rate 5.2% 5.5%
Total remediation costs—discounted $ 149 $ 131
Recoverable portion 94 80
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)
2016 $ 32
2017 24
2018 20
2019 16
2020 11
Thereafter 121
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 2024. 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) 2015 2014
Guarantees $ 213 $ 266
Letters of credit 2,242 1,938
Surety bonds 264 298
Included in guarantees and letters of credit described above were $203 million and $187 million, respectively, at December 31,
2015, and $196 million and $244 million, respectively, at December 31, 2014, related to our joint venture in Thales-Raytheon
Systems Co. Ltd. (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 meet
their obligations described above. At December 31, 2015, we believe the risk that TRS and other affiliates will not be able to
meet their obligations is minimal for the foreseeable future based on their current financial condition. All obligations were
current at December 31, 2015. At December 31, 2015 and December 31, 2014, we had an estimated liability of $8 million
and $9 million, respectively, related to these guarantees and letters of credit.