Raytheon 2003 Annual Report Download - page 50

RAYTHEON COMPANY 333
Notes to Consolidated Financial Statements (Continued) 33333333333333333333333333333333333333333333
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. govern-
ment, whereby the Company receives a subcontract from the joint
venture in the joint venture’s capacity as prime contractor.
Accordingly, the Company records the work it performs for the joint
venture as operating activity.
Certain joint ventures and equity and cost method invest-
ments are not listed separately in the table above as the
Company’s investment in these entities is less than $5 million.
Information for these joint ventures and investments has not been
separately disclosed since they are not material either individually
or in the aggregate.
333NOTE I: NOTES PAYABLE AND
LONG-TERM DEBT
Notes payable and long-term debt consisted of the following at
December 31:
(In millions) 2003 2002
Notes payable at a weighted-average interest
rate of 6.25% for 2003 and 4.48% for 2002 $15 $1
Current portion of long-term debt —1,152
Notes payable and current portion of long-term debt 15 1,153
Notes due 2003, 5.70%, not redeemable
prior to maturity —377
Notes due 2003, 7.90%, not redeemable
prior to maturity —775
Notes due 2005, 6.30%, not redeemable
prior to maturity 123 438
Notes due 2005, floating rate, 1.64% at December
31, 2003, redeemable after 2004 200 —
Notes due 2005, 6.50%, not redeemable
prior to maturity 689 687
Notes due 2006, 8.20%, redeemable at any time 191 797
Notes due 2007, 4.50%, redeemable at any time 224 224
Notes due 2007, 6.75%, redeemable at any time 924 920
Notes due 2008, 6.15%, redeemable at any time 542 542
Notes due 2010, 6.00%, redeemable at any time 222 222
Notes due 2010, 6.55%, redeemable at any time 244 244
Notes due 2010, 8.30%, redeemable at any time 398 398
Notes due 2011, 4.85%, redeemable at any time 496 —
Notes due 2012, 5.50%, redeemable at any time 346 345
Notes due 2013, 5.375%, redeemable at any time 419 —
Debentures due 2018, 6.40%, redeemable at any time 372 371
Debentures due 2018, 6.75%, redeemable at any time 249 249
Debentures due 2025, 7.375%, redeemable after 2005 205 205
Debentures due 2027, 7.20%, redeemable at any time 359 359
Debentures due 2028, 7.00%, redeemable at any time 184 184
Other notes with varying interest rates 85 6
Interest rate swaps 45 89
Less installments due within one year —(1,152)
Long-term debt 6,517 6,280
Subordinated notes payable 859 858
Total debt issued and outstanding $7,391 $ 8,291
The floating rate notes due in 2005 are redeemable on or after
June 10, 2004 at the option of the Company at a redemption price
equal to 100 percent of par. The debentures due in 2025 are
redeemable at the option of the Company on or after July 15, 2005
at redemption prices no greater than 103 percent of par. The notes
and debentures redeemable at any time are at redemption prices
equal to the present value of remaining principal and interest pay-
ments. Information about the subordinated notes payable is
included in Note J, Equity Security Units.
In 2003, the Company issued $425 million of long-term debt
and used the proceeds to reduce the amounts outstanding under
the Company’s lines of credit. Also in 2003, the Company issued
$500 million of long-term debt and $200 million of floating rate
notes. The proceeds were used to partially fund the repurchase of
long-term debt with a par value of $924 million at a loss of $77 mil-
lion pretax, which was included in other expense, $50 million after-
tax, or $0.12 per diluted share. The Company has on file a shelf
registration with the Securities and Exchange Commission regis-
tering the issuance of up to $3.0 billion in debt securities, common
or preferred stock, warrants to purchase any of the aforementioned
securities, and/or stock purchase contracts, under which $1.3 bil-
lion remained outstanding at December 31, 2003.
In December 2003, the Company entered into various interest
rate swaps that correspond to a portion of the Company’s fixed
rate debt in order to effectively hedge interest rate risk. The $250 mil-
lion notional value of the interest rate swaps effectively converted a
portion of the Company’s total debt to variable rate debt.
In 2002, the Company issued $575 million of long-term debt to
reduce the amounts outstanding under the Company’s lines of credit.
Also in 2002, the Company repurchased debt with a par value of
$96 million at a gain of $2 million pretax, which was included in
other income, or $1 million after-tax.
In 2001, the Company repurchased long-term debt with a par
value of $1,375 million at a loss of $24 million pretax, which was
included in other expense, $16 million after-tax, or $0.04 per
diluted share.
In 2001, the Company entered into various interest rate swaps
that corresponded to a portion of the Company’s fixed rate debt in
order to effectively hedge interest rate risk. In 2002, the Company
closed out these interest rate swaps and received proceeds of
$95 million which are being amortized over the remaining life of the
debt as a reduction of interest expense. At December 31, 2003,
the unamortized balance was $45 million.