Raytheon 2012 Annual Report Download - page 74

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66
obligations relating to disposed businesses.
As further described in "Note 15: Income Taxes" within Item 8 of this Form 10-K, during the year ended December 31, 2010,
we recorded a $281 million reduction in our unrecognized tax benefits, which included a decrease of $89 million in tax expense
from discontinued operations, including interest, primarily related to our previous disposition of Raytheon Engineers and
Constructors (RE&C).
FINANCIAL CONDITION AND LIQUIDITY
Overview
We pursue a capital deployment strategy that balances funding for growing our business, including working capital, capital
expenditures, acquisitions and research and development; prudently managing our balance sheet, including debt repayments
and pension contributions; and returning cash to our stockholders, including dividend payments and share repurchases, as
outlined below. Our need for, cost of and access to funds are dependent on future operating results, as well as other external
conditions. We currently expect that cash and cash equivalents, available-for-sale securities, cash flow from operations and
other available financing resources will be sufficient to meet anticipated operating, capital expenditure, investment, debt
service and other financing requirements during the next twelve months and for the foreseeable future.
In addition, the following table highlights selected measures of our liquidity and capital resources at December 31, 2012 and
2011:
(In millions) 2012 2011
Cash and cash equivalents $ 3,188 $ 4,000
Short-term investments 856 —
Working capital 3,344 3,179
Amount available under our credit facilities 1,398 1,397
Operating Activities
(In millions) 2012 2011 2010
Net cash provided by (used in) operating activities from continuing operations $ 1,951 $ 2,102 $ 1,892
Net cash provided by (used in) operating activities 1,957 2,107 1,942
Net cash provided by (used in) operating activities in 2012 remained relatively consistent with 2011. Net cash provided by
(used in) operating activities in 2011 remained relatively consistent with 2010.
Tax Payments—In 2012, we received federal tax refunds totaling $79 million, including the refund relating to the 2012 Tax
Settlement, and $41 million of foreign tax refunds, and made $959 million in federal and foreign tax payments and $77 million
in net state tax payments. In 2011, we received federal tax refunds totaling $128 million, including the refund relating to the
2011 Tax Settlement, and made $553 million in federal and net foreign tax payments and $12 million in net state 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. Federal and foreign tax payments for 2013 are expected to approximate $655 million.
Pension Plan Contributions—We may make both required and discretionary contributions to our pension plans. Required
contributions are primarily determined in accordance with the PPA, which amended the ERISA rules and are affected by the
actual return on plan assets and plan funded status. The funding requirements under the PPA require us to fully fund our
pension plans over a rolling seven-year period as determined annually based upon the PPA calculated funded status at the
beginning of the year. The PPA funded status is based on actual asset performance, averaged over three years and PPA discount
rates, which are based on a 24-month average of high quality corporate bond rates, as published by the IRS. In July 2012, the
Surface Transportation Extension act, which is also referred to as the Moving ahead for Progress in the 21st Century Act (STE
Act), was passed by Congress and signed by the President. The STE Act includes a provision for temporary pension funding
relief from the current historically low interest rate environment. The provision adjusts the 24-month average high quality
bond rates used to determine the PPA funded status so that they are within a floor and cap, or "corridor," based on the 25-year
average of corporate bond rates. Beginning in 2012, interest rates must be between 90% and 110% of the 25-year rate, with
a 5% increase in this corridor for each year from 2013–2016, resulting in a gradual phase-out of the provision. As a result of