Raytheon 2009 Annual Report Download - page 102

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
In the fourth quarter of 2009, we received proceeds of $496 million for the issuance of $500 million fixed rate long-term
debt and exercised our call rights to repurchase, at prices based on fixed spreads to U.S. Treasuries, $474 million of our
long-term debt maturing in 2011 at a loss of $22 million pretax, which is included in other expense, net.
In 2007, we exercised our call rights and repurchased long-term debt with a par value of $1,039 million at a loss of $59
million pretax, which is included in other expense, net.
We periodically enter into various interest rate swaps that correspond to a portion of our fixed-rate debt in order to
effectively hedge interest rate risk. The $575 million notional value of the interest rate swaps that remained outstanding at
December 31, 2008 effectively converted $250 million of the 4.85% Notes due 2011, which we repurchased in the fourth
quarter of 2009, and $325 million of the 5.375% Notes due 2013 that were outstanding at December 31, 2008 to variable-
rate debt based on six-month LIBOR. We terminated these interest rate swap agreements in the first quarter of 2009, and
collected cash of $37 million related to the early termination. In 2009, we recorded $16 million of income as a reduction
to interest expense related to the amortization of the gain on the termination of our interest rate swaps, including $6
million of accelerated amortization related to the 4.85% Notes due 2011 due to their repurchase in the fourth quarter of
2009. We will include the amortization of the remaining $21 million gain as a reduction to interest expense over the
remaining life of the related debt. There were no interest rate swaps outstanding at December 31, 2009.
The adjustments to the principal amounts of long-term debt were reflected as follows at December 31:
(In millions) 2009 2008
Principal $2,336 $2,289
Interest rate swaps 21 48
Unamortized issue discounts (14) (13)
Unamortized interest rate hedging costs (14) (15)
Total $2,329 $2,309
The aggregate amounts of principal payments due on long-term debt for the next five years are:
(In millions)
2010 $—
2011 —
2012 333
2013 345
2014 —
In November 2009, we entered into two new bank revolving credit facilities in the aggregate amount of $1.5 billion
replacing the previous $2.2 billion bank revolving credit facility which was set to mature in March 2010.
The first new credit facility is a $1.0 billion three-year facility maturing in November 2012, $150 million of which is
available to Raytheon United Kingdom Limited, our U.K. subsidiary. The second new credit facility is a $500 million
364-day facility maturing in November 2010. Borrowings under these facilities bear interest at various rate options,
including LIBOR plus a margin based on our credit default swap spread, with minimum and maximum margins that are
adjusted for our credit ratings. Based on Raytheon’s credit ratings at December 31, 2009, borrowings under these facilities
would bear interest at LIBOR plus 100 basis points, the minimum margin.
Under the $1.0 billion facility, we can borrow, issue letters of credit and backstop commercial paper. Under the $500
million facility we can borrow and backstop commercial paper. The credit facilities are comprised of commitments from
approximately twenty-five separate highly rated lenders, each committing no more than 10% of the aggregate of the
facilities. As of December 31, 2009 and December 31, 2008, there were no borrowings outstanding under these credit
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