Raytheon 2010 Annual Report Download - page 68

The decrease of $783 million in net cash provided by (used in) operating activities in 2010 compared to 2009 was
primarily due to $750 million of higher discretionary pension contributions. The increase of $710 million in net cash
provided by (used in) operating activities in 2009 compared to 2008 was primarily due to $240 million of lower net tax
payments, driven by the $350 million refund described below and $69 million of overpayment credits; $42 million of
lower pension and other postretirement benefit payments described below; and $37 million of proceeds from the
termination of our interest rate swap agreements. The remainder of the increase in net cash was primarily due to an
increase in net cash receipts in line with total net sales growth.
Tax Payments—In 2010, we received federal tax refunds totaling $96 million and made $433 million in federal and net
foreign tax payments and $54 million in net state tax payments. In 2009, we received federal tax refunds totaling $350
million and made $558 million in federal and net foreign tax payments, net of $69 million of overpayment credits. In
2009, we received state tax refunds totaling $23 million and made $45 million in state tax payments. In 2008, we made
$448 million in federal and net foreign tax payments and $125 million in net state tax payments. Federal and foreign tax
payments for 2011 are expected to approximate $700 million.
In March 2010, the Patient Protection and Affordable Care Act, as modified by the Health Care and Education
Reconciliation Act of 2010, was enacted which changed the tax treatment of the U.S. Government subsidies for
companies that provide qualifying drug coverage to Medicare eligible retirees. Although some companies have been
adversely affected by this act, we do not receive such U.S. Government subsidies and therefore this change will not have
an effect on our financial position, results of operations or liquidity.
Pension Plan Contributions—We make both required and discretionary contributions to our pension plans. Required
contributions are primarily determined under the ERISA rules and are affected by the actual return on plan assets and plan
funded status. We made the following required and discretionary contributions to our pension plans during December 31:
(In millions) 2010 2009 2008
Required contributions $1,152 $1,115 $ 514
Discretionary contributions 750 — 660
Total $1,902 $1,115 $1,174
Required contributions in 2010 were consistent with 2009. Required contributions in 2009 were higher than 2008 due to
the impact of the decline in the value of pension plan assets in 2008. We expect to make required contributions to our
pension plans of approximately $1.1 billion in 2011. We will continue to periodically evaluate whether to make additional
discretionary contributions. Effective January 1, 2011, we are subject to the funding requirements under the Pension
Protection Act of 2006 (PPA), which amended ERISA. Under the PPA, we are required to fully fund our pension plans
over a rolling seven-year period as determined annually based upon the funded status at the beginning of each year.
Additionally, the recognition of pension costs for government contractors under the CAS rules is required to be
harmonized with the PPA. On May 10, 2010, the CAS Pension Harmonization Notice of Proposed Rulemaking (NPRM)
was published in the Federal Register with a 60 day comment period. The NPRM is the third step of a four step statutory
process to implement a final CAS standard (Harmonization Rule) related to the recognition of pension costs for
government contractors. Based upon the feedback received during the comment period, the CAS Board will either issue
the final rule or alternatively reissue the NPRM. We expect that the final rule would increase our CAS recovery amount
and decrease the FAS/CAS Pension Adjustment. Other postretirement benefit payments were $31 million, $45 million
and $28 million in 2010, 2009 and 2008, respectively.
We made interest payments of $134 million, $147 million and $142 million in 2010, 2009 and 2008, respectively. The
decrease in interest payments in 2010 compared to 2009 was primarily due to the repurchase, in the fourth quarter of
2009, of our 4.85% Notes due 2011. Interest payments in 2009 remained relatively consistent with 2008.
Investing Activities
(In millions) 2010 2009 2008
Net cash provided by (used in) investing activities $(535) $(692) $(417)
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