RAYTHEON COMPANY 333 Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) 3333333333333 issued 31,578,900 shares of common stock for $33.25 per share. The proceeds of the offerings were $1,388 million, net of $56 mil- lion of offering costs, and were used to reduce debt and for general corporate purposes. for this payment, the Company received a note from Space Imaging for this amount that the Company has valued at zero.  Investments, which are included in other assets, consisted of the following at December 31: The Company’s need for, cost of, and access to funds are dependent on future operating results, as well as conditions exter- nal to the Company. Cash and cash equivalents, cash flow from operations, proceeds from divestitures, and other available financ- ing resources are expected to be sufficient to meet anticipated operating, capital expenditure, and debt service requirements dur- ing the next twelve months and for the foreseeable future. In 2003, the Company sold $337 million of general aviation finance receivables to a qualifying special purpose entity which in turn issued beneficial interests in these receivables to a commercial paper conduit, received proceeds of $279 million, retained a subor- dinated interest in and servicing rights to the receivables, and recog- nized a gain of $2 million. The sale was non-recourse to the Company, and effectively reduced the Company’s exposure to gen- eral aviation market risk for receivables by approximately 25 percent.  In 2003, the Company sold the remaining interest in its former aviation support business (Raytheon Aerospace) for $97 million and recorded a gain of $82 million. The Company had sold a major- ity interest in Raytheon Aerospace in 2001 for $154 million in cash and retained $47 million in trade receivables and $66 million in preferred and common equity in the business. The $66 million rep- resented a 26 percent ownership interest and was recorded at zero because the new entity was highly leveraged. In 2002, the Company formed a joint venture, Flight Options LLC (FO), 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 FO. As a result of this recapitalization, the Company now owns approximately 66 percent of FO and is consolidating FO’s results in its financial statements. Prior to the financial recapitalization, 100 per- cent of FO’s $20 million of losses were recorded in other expense in the first six months of 2003 since the Company had been meeting all of FO’s financing requirements. The consolidation of FO did not have a significant effect on the Company’s financial position or results of operations, although the Company’s reported revenue, operating income, and other expense changed as a result of the consolidation of FO’s results. FO’s customers, in certain instances, have the con- tractual ability to require FO to buy back their fractional share based on its current fair market value. The estimated value of this potential obligation was approximately $575 million at December 31, 2003. In 2003, the Company sold its investment in Alliance Laundry Systems for $15 million and recorded a loss of $4 million. The Company had sold its commercial laundry business unit to Alliance in 1998 for $315 million in cash and $19 million in securities.  In 2001, the Company formed a joint venture, Thales-Raytheon Systems™ (TRS), that has two major operating subsidiaries, one of which the Company controls and consolidates. TRS is a system of systems integrator and provides fully customized solutions through the integration of command and control centers, radars, and com- munication networks. HRL Laboratories ® is a scientific research facility whose staff engages in the areas of space and defense technologies. Indra develops flight data processors for air traffic control automation systems. TelASIC ® Communications delivers high performance, cost-effective radio frequency (RF), analog mixed signal, and digital solutions for both the commercial and defense electronics markets. Hughes ® Arabia Limited was formed in connection with the award of the Peace Shield program and offers certain tax advantages to the Company.  In 1995, through the acquisition of E-Systems, Inc., the Company invested in Space Imaging and currently has a 31 percent equity investment in Space Imaging LLC. In 2002, the Company recorded a $175 million charge to write-off the Company’s invest- ment in Space Imaging and accrue for payment under the Company’s guarantee of a Space Imaging credit facility that matured in March 2003. In the first quarter of 2003, the Company paid $130 million related to the credit facility guarantee. In exchange In addition, the Company has entered into joint ventures formed specifically to facilitate a teaming arrangement between two con- tractors for the benefit of the customer, generally the U.S. government, whereby the Company receives a subcontract from the joint 333 MAJOR AFFILIATED ENTITIES 333 OFF BALANCE SHEET  FINANCING ARRANGEMENTS 2003 (In millions) Ownership % 2003 2002 Equity method investments: Thales-Raytheon Systems Co. Ltd. 50.0 $78 $5 9 HRL Laboratories, LLC 33.3 30 29 Indra ATM S.L. 49.0 12 12 TelASIC Communications 23.5 7 2 Hughes Arabia Limited 49.0 1 13 Raytheon Aerospace — — 5 Other n/a 8 — 136 120 Other investments: Alliance Laundry Systems — 19 Other 10 15 10 34 Total $146 $154