Raytheon 2004 Annual Report Download - page 93

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Notes to Consolidated Financial Statements (Continued)
The aggregate amounts of installments due on long-term debt and subordinated notes payable for the next five
years are:
(In millions)
2005 $516
2006 418
2007 679
2008 310
2009 1
The Company’s most restrictive bank agreement covenant is an interest coverage ratio that currently requires
earnings before interest, taxes, depreciation, and amortization (EBITDA), excluding certain charges, to be at least
3.0 times net interest expense for the prior four quarters. In July 2003, the covenant was amended to exclude pretax
charges of $100 million related to RE&C and in October 2003 the covenant was further amended to exclude $226
million of pretax charges related to Network Centric Systems and Technical Services, and $78 million of pretax
charges related to RE&C. The Company was in compliance with the interest coverage ratio covenant, as amended,
during 2004.
Lines of credit with certain commercial banks exist to provide short-term liquidity. The lines of credit bear
interest based upon LIBOR and were $2.3 billion at December 31, 2004, consisting of $1.0 billion which matures in
May 2005 and $1.3 billion which matures in 2006. The lines of credit were $2.7 billion at December 31, 2003. There
were no borrowings under the lines of credit at December 31, 2004, however, the Company had approximately
$100 million of outstanding letters of credit which effectively reduced the Company’s borrowing capacity under the
lines of credit to $2.2 billion. There were no borrowings under the lines of credit at December 31, 2003.
Uncommitted credit lines with banks are also maintained by certain foreign subsidiaries to provide them with a
limited amount of short-term liquidity. These lines of credit were $91 million and $99 million at December 31,
2004 and 2003, respectively. There were no amounts outstanding under these lines of credit at December 31, 2004.
There was $1 million outstanding under these lines of credit at December 31, 2003. Compensating balance
arrangements are not material.
Total cash paid for interest on notes payable and long-term debt was $396 million, $515 million, and $522
million in 2004, 2003, and 2002, respectively, including amounts classified as discontinued operations.
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In 2001, the Company issued 17,250,000, 8.25%, $50 par value equity security units. Each equity security unit
consisted of a contract to purchase shares of the Company’s common stock on May 15, 2004 and a mandatorily
redeemable equity security with a stated liquidation amount of $50 due on May 15, 2006.
In 2004, in accordance with the terms of the equity security units, the Company received proceeds of $863
million and issued 27.0 million shares of common stock. The contract required a quarterly distribution, which was
recorded as a reduction to additional paid-in capital, of 1.25% per year of the stated amount of $50 per purchase
contract. Cash paid for the quarterly distribution on the contract was $4 million in 2004 and $11 million in 2003
and 2002. The mandatorily redeemable equity security represents preferred stock of RC Trust I (RCTI), a subsidiary
of the Company that initially issued this preferred stock to the Company in exchange for a subordinated note. The
subordinated notes payable have the same terms as the mandatorily redeemable equity security and represent an
undivided interest in the assets of RCTI, a Delaware business trust formed for the purpose of issuing these securities