Raytheon 2012 Annual Report Download - page 107

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
99
Under the $1.4 billion credit facility we must comply with certain covenants, including a ratio of total debt to total capitalization
of no more than 60%. We were in compliance with the credit facility covenants during 2012 and 2011. Our ratio of total debt
to total capitalization, as those terms are defined in the credit facility, was 36.6% at December 31, 2012. We are providing
this ratio as this metric is used by our lenders to monitor our leverage and is also a threshold that limits our ability to utilize
this facility. We were also required to comply with certain covenants in connection with our previous credit facilities and were
in compliance with such covenants in 2011.
Total cash paid for interest on notes payable and long-term debt was $198 million, $167 million and $134 million in 2012,
2011 and 2010, respectively.
Note 11: Commitments and Contingencies
Leases—At December 31, 2012, we had commitments under long-term leases requiring annual rentals on a net lease basis
as follows:
(In millions)
2013 $ 206
2014 168
2015 139
2016 109
2017 75
Thereafter 265
Rent expense was $258 million, $271 million and $306 million in 2012, 2011 and 2010, respectively. In the normal course
of business, we lease equipment, office buildings and other facilities under leases that include standard escalation clauses for
adjusting rent payments to reflect changes in price indices, as well as renewal options.
At December 31, 2012, we had commitments under agreements to outsource a portion of our information technology function,
which have no minimum annual payments.
Environmental Matters—We are involved in various stages of investigation and cleanup related to remediation of various
environmental sites. Our estimate of the liability of total environmental remediation costs includes the use of a discount rate
and takes into account that a portion of these costs is eligible for future recovery through the pricing of our products and
services to the U.S. Government. We consider such recovery probable based on government contracting regulations and our
long history of receiving reimbursement for such costs, and accordingly have recorded the estimated future recovery of these
costs from the U.S. Government within contracts in process. Our estimates regarding remediation costs to be incurred were
as follows at December 31:
(In millions, except percentages) 2012 2011
Total remediation costs—undiscounted $ 202 $ 227
Weighted average risk-free rate 5.6% 5.6%
Total remediation costs—discounted $ 131 $ 152
Recoverable portion 86 105
We also lease certain government-owned properties and are generally not liable for remediation of preexisting environmental
contamination at these sites; as a result, we generally do not provide for these costs in our consolidated financial statements.
Due to the complexity of environmental laws and regulations, the varying costs and effectiveness of alternative cleanup
methods and technologies, the uncertainty of insurance coverage and the unresolved extent of our responsibility, it is difficult
to determine the ultimate outcome of environmental matters; however, we do not expect any additional liability to have a
material adverse effect on our financial position, results of operations or liquidity.