Raytheon 2010 Annual Report Download - page 94

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
We recognized the following pretax gains (losses) related to foreign currency forward contracts designated as cash flow
hedges:
(In millions) 2010 2009
Effective Portion
Gain (loss) recognized in AOCL $4 $55
Gain (loss) reclassified from AOCL to net sales 1(7)
Gain (loss) reclassified from AOCL to cost of sales 31 —
Amount excluded from effectiveness assessment and ineffective portion
Gain (loss) recognized in cost of sales $— $—
We recognized the following pretax gains (losses) related to foreign currency forward contracts not designated as cash
flow hedges:
(In millions) 2010 2009
Gain (loss) recognized in net sales $(1) $—
Gain (loss) recognized in cost of sales (4) 4
In October 2010, we issued $2.0 billion of fixed rate long-term debt with maturities ranging from 5 to 30 years. In
conjunction with the debt issuance, we entered into interest rate lock agreements with a total notional value of $1,550
million to manage interest rate risk, which resulted in an increase to AOCL of $8 million to be amortized over the term of
the debt issued. As of December 31, 2010, the above referenced interest rate locks were closed out.
In the fourth quarter of 2010, we exercised our right to call and repurchased $678 million of our long-term debt due in
2012 and 2013 that was previously hedged with the interest rate swaps, described below. The remaining unamortized gain
resulting from the early termination of the interest rate swaps of $15 million was recorded as a reduction to interest
expense. In the first quarter of 2009 we terminated our interest rate swaps 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 which we repurchased in the fourth quarter of 2009. There were no interest rate
swaps outstanding at December 31, 2010 and December 31, 2009.
The notional amounts of outstanding foreign currency forward contracts consisted of the following at:
December 31, 2010 December 31, 2009
(In millions) Buy Sell Buy Sell
British Pounds $370 $296 $407 $498
Canadian Dollars 220 51 212 46
Euros 165 32 190 35
All other 85 39 176 53
Total $840 $418 $985 $632
Buy amounts represent the U.S. Dollar equivalent of commitments to purchase foreign currencies and sell amounts
represent the U.S. Dollar equivalent of commitments to sell foreign currencies. Foreign currency forward contracts that
do not involve U.S. Dollars have been converted to U.S. Dollars for disclosure purposes.
Foreign currency forward contracts, used to fix the dollar value of specific commitments and payments to international
vendors and the value of foreign currency denominated receipts, have maturities at various dates through 2020 as follows:
$791 million in 2011, $274 million in 2012, $94 million in 2013, $40 million in 2014 and $59 million thereafter.
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