Raytheon 2010 Annual Report Download - page 95

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Our foreign currency forward contracts contain off-set, or netting provisions, to mitigate credit risk in the event of
counterparty default, including payment default and cross default. At December 31, 2010 and December 31, 2009, these
netting provisions effectively reduced our exposure to approximately $4 million and $35 million, respectively, which is
spread across numerous highly rated counterparties.
Note 9: Fair Value Measurements
The estimated fair value of certain financial instruments, including cash and cash equivalents, approximates the carrying
value due to their short maturities. The estimated fair value of notes receivable approximates the carrying value based
principally on their underlying interest rates and terms, maturities, collateral and credit status of the receivables. The
carrying value of long-term debt of $3,610 million and $2,329 million at December 31, 2010 and December 31, 2009,
respectively, was recorded at amortized cost. The estimated fair value of long-term debt of approximately $3,783 million
and $2,581 million at December 31, 2010 and December 31, 2009, respectively, was based on quoted market prices.
We did not have any significant nonfinancial assets or nonfinancial liabilities that would be recognized or disclosed at fair
value on a recurring basis as of December 31, 2010 and December 31, 2009.
We did not have any transfers of assets and liabilities between Level 1 and Level 2 of the fair value measurement hierarchy
during the year ended December 31, 2010 and December 31, 2009.
The following tables set forth the financial assets and liabilities that we measured at fair value on a recurring basis by level
within the fair value hierarchy. We classify assets and liabilities measured at fair value in their entirety based on the lowest
level of input that is significant to their fair value measurement.
Assets and liabilities measured at fair value on a recurring basis consisted of the following at December 31:
(In millions) Level 1 Level 2 Level 3 Total 2010
Assets
Marketable securities $344 $— $— $344
Foreign currency forward contracts 45 — — 45
Liabilities
Deferred compensation 215 — — 215
Foreign currency forward contracts 41 — — 41
(In millions) Level 1 Level 2 Level 3 Total 2009
Assets
Marketable securities $296 $— $— $296
Foreign currency forward contracts 69 — — 69
Retained Interest — — 67 67
Liabilities
Deferred compensation 192 — — 192
Foreign currency forward contracts 33 — — 33
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