Raytheon 2004 Annual Report Download - page 92

Download and view the complete annual report

Please find page 92 of the 2004 Raytheon annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 126

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126

74
Notes to Consolidated Financial Statements (Continued)
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 payments. Information about the
subordinated notes payable is included in Note I, Equity Security Units.
In 2004, the Company repurchased long-term debt with a par value of $1,773 million at a loss of $100 million
pretax, which was included in other expense. The Company enters 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 $600 million
notional value of the interest rate swaps that remained outstanding at December 31, 2004 effectively converted that
portion of the Company’s total debt to variable rate debt. The Company has on file a shelf registration with the
Securities and Exchange Commission for 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 billion remained outstanding at December 31, 2004.
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 will be amortized over the remaining life of the debt as a
reduction of interest expense. The unamortized balance was $14 million and $45 million at December 31, 2004 and
2003, respectively.
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 million pretax, which was included in other expense, $50 million
after-tax, or $0.12 per diluted share.
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.
The principal amounts of long-term debt were reduced by debt issue discounts of $81 million and $102 million
at December 31, 2004 and 2003, respectively and interest rate hedging costs of $54 million and $105 million, at
December 31, 2004 and 2003, respectively, on the date of issuance, and are reflected as follows at December 31:
(In millions) 2004 2003
Principal $4,765 $6,593
Unamortized issue discounts (30) (41)
Unamortized interest rate hedging costs (26) (35)
Installments due within one year (480) –
Total $4,229 $6,517