Raytheon 2010 Annual Report Download - page 71

credit facilities or our previous credit facility. However, we had $3 million and $21 million of outstanding letters of credit
at December 31, 2010 and December 31, 2009, respectively, which effectively reduced our borrowing capacity under these
credit facilities and our previous credit facility by those same amounts.
Under the current and previous credit facilities, we must comply with certain covenants, including a ratio of total debt to
total capitalization of no more than 50% and a ratio of consolidated earnings attributable to Raytheon Company before
interest, taxes, depreciation and amortization to consolidated net interest expense, for any period of four consecutive
fiscal quarters, of no less than 3 to 1. We were in compliance with these covenants during 2010 and 2009. Our ratio of
total debt to total capitalization, as defined in the current and previous credit facilities, was 26.7% and 19.0% at
December 31, 2010 and December 31, 2009, respectively. We are providing these ratios, which are financial covenants
under our current credit facilities, as these metrics are used by our lenders to monitor the Company’s leverage and debt
service capacity and are also thresholds that limit our ability to utilize these two facilities.
Certain of our foreign subsidiaries maintain revolving bank lines of credit to provide them with a limited amount of
short-term liquidity, including the $150 million Raytheon United Kingdom Limited facility described above. In addition,
other uncommitted bank lines totaled approximately $2 million and $15 million at December 31, 2010 and December 31,
2009, respectively. There were no amounts outstanding under these lines of credit at December 31, 2010 and
December 31, 2009. Compensating balance arrangements are not material.
Credit Ratings—Three major corporate debt rating organizations, Fitch Ratings (Fitch), Moody’s Investors Service
(Moody’s) and Standard & Poor’s (S&P), assign ratings to our short-term and long-term debt. The following chart
reflects the current ratings assigned by each of these agencies as of December 31, 2010 to our short and long-term senior
unsecured debt:
Short-Term Long-Term Senior Debt
Rating Agency Debt Rating Outlook Date of Last Action
Fitch F2 A- Stable September 2008
Moody’s P-2 Baa1 Stable March 2007
S&P A-2 A- Stable September 2008
Shelf Registrations—We have an effective shelf registration with the SEC, filed in October 2010, which covers the
registration of debt securities, common stock, preferred stock and warrants.
CONTRACTUAL OBLIGATIONS
The following is a schedule of our contractual obligations outstanding at December 31, 2010:
(In millions) Total
Less than
1 year
(2011)
1 - 3 years
(2012- 2013)
4 - 5 years
(2014- 2015)
After 5 years
(2016 and
thereafter)
Debt(1) $ 3,658 $ — $ — $ 400 $3,258
Interest payments 2,432 167 336 336 1,593
Operating leases 1,216 254 363 214 385
Purchase obligations 8,875 6,205 2,382 222 66
Total $16,181 $6,626 $3,081 $1,172 $5,302
(1) Debt includes scheduled principal payments only.
Purchase obligations in the table above represent enforceable and legally binding agreements with suppliers to purchase
goods or services. We enter into contracts with customers, primarily the U.S. Government, which entitles us to full
recourse for costs incurred, including purchase obligations, in the event the contract is terminated by the customer for
convenience. These purchase obligations are included above notwithstanding the amount for which we are entitled to full
recourse from our customers. The table above does not include required pension and other postretirement contributions.
We expect to make required pension and other postretirement contributions of $1.1 billion in 2011, exclusive of any U.S.
Government recovery. Amounts beyond 2011 for required pension and other postretirement contributions depend upon
actuarial assumptions, actual plan asset performance and other factors described under pension costs in Critical
Accounting Estimates on page 35. However, based solely on our current assumptions, we expect our funding
requirements to be approximately $1 billion in 2012 and 2013, exclusive of any U.S. Government recovery, and slowly
decreasing thereafter.
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