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## 333 NOTE L: FEDERAL AND FOREIGN INCOME TAXES 

The provision for federal and foreign income taxes consisted of the following: 

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The provision for state income taxes was included in general and administrative expenses as these costs can generally be recovered through the pricing of products and services to the U.S. government. 

The provision for income taxes differs from the U.S. statutory rate due to the following: 

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Effective January 1, 2002, the Company discontinued the amor- tization of goodwill as required by SFAS No. 142, as described in Note A, Accounting Policies, Impairment of Long-lived Assets. The higher effective tax rate in 2001 resulted from the increased effect of non-deductible amortization of goodwill on lower income before taxes resulting primarily from the charges at Raytheon Airline Aviation Services. 

In 2003, 2002, and 2001, domestic income (loss) before taxes was $493 million, $(12) million, and $(1,156) million, respectively, and foreign income before taxes was $8 million, $75 million, and $118 million, respectively. Income reported for federal and foreign tax purposes differs from pretax accounting income due to differences between U.S. Internal Revenue Code requirements and the Company’s accounting practices. No provision has been made for deferred taxes on undistributed earnings of non-U.S. subsidiaries as these earnings have been indefinitely reinvested. Net cash (payments) refunds were $(13) million, $145 million, and $27 million in 2003, 2002, and 2001, respectively. 

Deferred federal and foreign income taxes consisted of the fol- lowing at December 31: 

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There were $12 million and $1 million of taxes refundable included in prepaid expenses and other current assets at December 31, 2003 and 2002, respectively. Federal tax benefits related to discontinued operations were $91 million in 2003 and $126 million in 2002 and were included in deferred federal and for- eign income taxes in the table above. 

At December 31, 2003, the Company had net operating loss carryforwards of $1.4 billion that expire in 2020 through 2023, for- eign tax credit carryforwards of $41 million that expire in 2006 through 2008, and research tax credit carryforwards of $26 million that expire in 2018 to 2023. The Company believes it will be able to utilize all of these carryforwards over the next 3 to 4 years. 

## 333 NOTE M: COMMITMENTS AND CONTINGENCIES 

At December 31, 2003, the Company had commitments under long-term leases requiring annual rentals on a net lease basis as follows: 

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Rent expense in 2003, 2002, and 2001 was $441 million, $449 million, and $276 million, respectively. In the normal course of business, the Company leases equipment, office buildings, and other facilities under leases that include standard escalation clauses for adjusting rent payments to reflect changes in price indices, as well as renewal options. 

