Raytheon 2012 Annual Report Download - page 75

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the STE Act, the approximate PPA funding status for most of our plan increased from 80-90% funded to 90-100% funded.
The provision reduced our cash funding requirements in 2012 by approximately $450 million before an estimated tax impact
of $275 million ($175 million after-tax). Funding requirements for future periods will be based on actual asset performance
and future interest rates. Pension assets and liabilities are valued annually at December 31 for purposes of determining funded
status and future year for FAS expense, CAS expense and cash funding requirements.
The STE Act does not change the calculation of our FAS expense. However, reductions in our required contributions could
increase our FAS expense in future years by the amount of expected return that would have applied to the contributions. Our
$500 million discretionary pension contribution in 2012 generally offsets the impact to our future year FAS expense that would
have resulted from the reduced 2012 funding requirements under the STE Act. In addition, based upon current interest rate
projections, the STE Act could have a modest impact on our CAS expense in 2014, when CAS Harmonization incorporates
the PPA interest rate into CAS calculations.
The STE Act also increases the insurance premiums that we are required to pay to the Pension Benefit Guarantee Corporation
(PBGC). However, we do not expect these increases to have a material effect on our financial position, results of operations
or liquidity.
We made the following required and discretionary contributions to our pension plans during the years ended December 31:
(In millions) 2012 2011 2010
Required contributions $ 721 $ 1,078 $ 1,152
Discretionary contributions 500 750 750
Total $ 1,221 $ 1,828 $ 1,902
The decrease in required contributions of $357 million in 2012 compared to 2011 was primarily due to the passage of the STE
Act as discussed above. Required contributions in 2011 were relatively consistent with 2010. With the passage of the STE
Act discussed above, we now expect to make required contributions to our pension and other postretirement benefit plans of
approximately $800 million in 2013. The gradual phase out of the STE Act provisions is expected to result in an increase in
our required pension contributions in 2014 and beyond to levels comparable to 2010 and 2011 unless interest rates significantly
increase. We periodically evaluate whether to make discretionary contributions. Due to the differences in requirements and
calculation methodologies, our FAS pension expense or income is not indicative of the funding requirement or amount of
government recovery.
Other postretirement benefit payments were $19 million, $18 million and $32 million in 2012, 2011 and 2010, respectively.
Interest Payments—We made interest payments on our outstanding debt of $198 million, $167 million and $134 million in
2012, 2011 and 2010, respectively. The increase in interest payments in 2012 compared to 2011 was principally due to the
issuance of $1.0 billion of fixed rate long-term debt in the fourth quarter of 2011. The increase in interest payments in 2011
compared to 2010 was primarily due to interest payments on the 1.625% notes, 3.125% notes, and 4.875% notes issued in the
fourth quarter of 2010.
Investing Activities
(In millions) 2012 2011 2010
Net cash provided by (used in) investing activities from continuing operations $(1,523)$(1,083)$
(535)
Net cash provided by (used in) investing activities (1,523)(1,051)(535)
The change of $472 million in net cash provided by (used in) investing activities in 2012 compared to 2011 was primarily
due to purchases of short-term investments, as described below, partially offset by lower cash payments for acquisitions due
to the acquisition of Applied Signal Technology, Inc. in 2011, as described below. The change of $516 million in net cash
provided by (used in) investing activities in 2011 compared to 2010 was primarily due to the acquisition of Applied Signal
Technology, Inc., as described below.