RAYTHEON COMPANY 333 P45 333 Contracts in process consisted of the following at December 31, 2002: Activity related to restructuring initiatives was as follows: The U.S. government has title to the assets related to unbilled amounts on contracts that provide for progress payments. Unbilled amounts are primarily recorded on 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 contracts in process at December 31, 2003 and 2002 was $77 million and $113 million, respectively, related to claims on contracts, which were recorded at their estimated realiz- able value. The Company believes that it has a legal basis for pur- suing recovery of these claims and that collection is probable. The settlement of these amounts depends on individual circumstances and negotiations with the counterparty, therefore, the timing of the collection will vary and approximately $18 million of collections are expected to extend beyond one year. Billed and unbilled contracts in process include retentions aris- ing from contractual provisions. At December 31, 2003, reten- tions amounted to $22 million and are anticipated to be collected as follows: $12 million in 2004, $1 million in 2005, and the bal- ance thereafter. Inventories consisted of the following at December 31:  333 NOTE F: INVENTORIES 333 NOTE E: CONTRACTS IN PROCESS Contracts in process consisted of the following at December 31, 2003: Exit Costs (In millions)  2003 2002 2001 Accrued liability at beginning of year $4 $17 $47 Changes in estimate Severance and other employee- related costs — — — Facility closure and related costs — (1) — — (1) — Costs incurred Severance and other employee- related costs — 2 3 Facility closure and related costs 3 10 27 3 12 30 Accrued liability at end of year $1 $4 $ 1 7 Cash expenditures $3 $4 $ 1 8 Restructuring  (In millions)  2003 2002 2001 Accrued liability at beginning of year $— $7 $28 Changes in estimate Severance and other employee- related costs — (3) (4) Facility closure and related costs — (4) (4) $— (7) (8) Costs incurred Severance and other employee- related costs — — 6 Facility closure and related costs — — 7 — — 13 Accrued liability at end of year $— $— $ 7 Cash expenditures $— $— $ 8 (In millions) Cost Type Fixed Price Total U.S. government end-use contracts Billed $ 428 $ 112 $ 540 Unbilled 670 3,793 4,463 Less progress payments — (2,740) (2,740) 1,098 1,165 2,263 Other customers Billed 15 391 406 Unbilled — 861 861 Less progress payments — (514) (514) 15 738 753 Total $1,113 $ 1,903 $ 3,016 (In millions) Cost Type Fixed Price Total U.S. government end-use contracts Billed $ 424 $ 315 $ 739 Unbilled 569 3,813 4,382 Less progress payments — (3,233) (3,233) 993 895 1,888 Other customers Billed 13 322 335 Unbilled 10 925 935 Less progress payments — (396) (396) 23 851 874 Total $1,016 $ 1,746 $ 2,762 (In millions) 2003 2002 Finished goods $ 669 $ 597 Work in process 1,023 1,042 Materials and purchased parts 306 393 Total $1,998 $2,032