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Borrowings and Lines of Credit

3 Months Ended

Mar. 31, 2020

Borrowings and Lines of Credit [Text Block]

Note 6: Borrowings and Lines of Credit


(dollars in millions)	March 31, 2020		December 31, 2019
Commercial paper	$	500	$	—
Other borrowings	1,225		2,364
Total short-term borrowings	$	1,725	$	2,364

In preparation for and in anticipation of the Separation Transactions, the Distributions and the Raytheon Merger, the Company, Otis and Carrier entered into, and the Company terminated, a number of credit agreements in the quarter ended March 31, 2020.

As of March 31, 2020, we had credit agreements with various banks permitting aggregate borrowings of up to $4.35 billion, including: a $2.20 billion revolving credit agreement and a $2.15 billion multicurrency revolving credit agreement, both of which were terminated on April 3, 2020 upon the completion of the Raytheon Merger. On March 16, 2020, we entered into a revolving credit agreement with various banks permitting aggregate borrowings of up to $5.0 billion which became available upon completion of the Raytheon Merger on April 3, 2020. This credit agreement matures on April 3, 2025. On May 6, 2020, we entered into a revolving credit agreement with various banks permitting aggregate borrowings of up to $2.0 billion. This credit agreement matures on May 5, 2021.

As of March 31, 2020, our maximum commercial paper borrowing limit was $4.35 billion. There was $500 million of commercial paper borrowings as of March 31, 2020. We use our commercial paper borrowings for general corporate purposes, including the funding of potential acquisitions, pension contributions, debt refinancing, dividend payments and repurchases of our common stock. Generally, the need for commercial paper borrowings arises when the use of domestic cash for general corporate purposes exceeds the sum of domestic cash generation and foreign cash repatriated to the U.S.

On March 23, 2020, we entered into a $500 million term loan credit agreement which matures on the earlier of June 18, 2020 and the date that is 30 days after the Raytheon Merger. On March 20, 2020, we entered into a $500 million term loan credit agreement which will mature on June 18, 2020. As of March 31, 2020, we had borrowed $1.0 billion under these term loan credit agreements. On April 28, 2020, we repaid $500 million borrowed under the term loan credit agreement entered into on March 23, 2020. On May 5, 2020, we repaid $500 million borrowed under the term loan credit agreement entered into on March 20, 2020.

As of March 31, 2020, Carrier entered into a revolving credit agreement with various banks permitting aggregate borrowings of up to $2.0 billion pursuant to an unsecured, unsubordinated 5-year revolving credit agreement, maturing on February 10, 2025. This credit agreement became available upon Carrier's separation on April 3, 2020.

As of March 31, 2020, Otis entered into a revolving credit agreement with various banks permitting aggregate borrowings of up to $1.5 billion pursuant to an unsecured, unsubordinated 5-year revolving credit agreement, maturing on February 10, 2025. This credit agreement became available upon Otis' separation on April 3, 2020.

On February 10, 2020, Otis entered into a term loan credit agreement providing for a $1.0 billion unsecured, unsubordinated 3-year loan credit agreement which matures on February 10, 2023. On March 27, 2020 Otis drew on the full amount of the term loan and distributed the full proceeds to Raytheon Technologies in connection with the separation. The borrowings under the term loan agreement are classified as long-term debt on the Condensed Consolidated Balance Sheet as of March 31, 2020.

On February 10, 2020, Carrier entered into a term loan credit agreement providing for a $1.75 billion unsecured, unsubordinated 3-year loan credit agreement which matures February 10, 2023. On March 27, 2020, Carrier drew on the full amount of the term loan and distributed the full proceeds to Raytheon Technologies in connection with the separation. The borrowings under the term loan agreement is classified as long-term debt on the Condensed Consolidated Balance Sheet as of March 31, 2020.

During the quarter ended March 31, 2020, we had a $2.0 billion revolving credit agreement and a $4.0 billion term loan credit agreement, both of which we entered into on March 15, 2019 and which would have matured on March 15, 2021, or if earlier, the date that is 180 days after the date on which each of the separations of Otis and Carrier have been consummated. As of December 31, 2019, there were borrowings of $2.1 billion under the $4.0 billion term credit agreement, which were repaid during the quarter ended March 31, 2020. As of March 31, 2020, the $2.0 billion revolving credit agreement and the $4.0 billion term loan credit agreement were terminated.

Long-term debt consisted of the following:


(dollars in millions)	March 31, 2020		December 31, 2019
4.875% notes due 2020	$	—	$	171
4.500% notes due 2020	—		1,250
1.900% notes due 2020	—		1,000
EURIBOR plus 0.20% floating rate notes due 2020 (€750 million principal value) ²	824		831
8.750% notes due 2021	250		250
3.100% notes due 2021 ⁴	250		250
3.350% notes due 2021	—		1,000
LIBOR plus 0.650% floating rate notes due 2021 ³	—		750
1.950% notes due 2021	—		750
1.125% notes due 2021 (€950 million principal value)	—		1,053
2.300% notes due 2022	—		500
2.800% notes due 2022 ⁴	1,100		1,100
3.100% notes due 2022	—		2,300
1.923% notes due 2023 ⁶	500		—
LIBOR plus 1.125% Term Loan due 2023 (Otis) ⁶	1,000		—
LIBOR plus 0.45% floating rates due 2023 ⁶	500		—
1.250% notes due 2023 (€750 million principal value)	—		831
LIBOR plus 1.125% Term Loan due 2023 (Carrier) ⁶	1,750		—


3.650% notes due 2023 ¹	581		2,250
3.700% notes due 2023 ⁴	400		400
2.800% notes due 2024	—		800
3.200% notes due 2024 ⁴	950		950
1.150% notes due 2024 (€750 million principal value)	—		831
2.056% notes due 2025 ⁶	1,300		—
2.242% notes due 2025 ⁶	2,000		—
3.950% notes due 2025 ¹	1,500		1,500
1.875% notes due 2026 (€500 million principal value)	—		554
2.650% notes due 2026 ¹	719		1,150
2.293% notes due 2027 ⁶	500		—
2.493% notes due 2027 ⁶	1,250		—
3.125% notes due 2027 ¹	1,100		1,100
3.500% notes due 2027 ⁴	1,300		1,300
7.100% notes due 2027	141		141
6.700% notes due 2028	400		400
4.125% notes due 2028 ¹	3,000		3,000
7.500% notes due 2029 ¹	550		550
2.150% notes due 2030 (€500 million principal value) ¹	549		554
2.565% notes due 2030 ⁶	1,500		—
2.722% notes due 2030 ⁶	2,000		—
5.400% notes due 2035 ¹	600		600
6.050% notes due 2036 ¹	600		600
6.800% notes due 2036 ¹	134		134
7.000% notes due 2038	159		159
6.125% notes due 2038 ¹	1,000		1,000
4.450% notes due 2038 ¹	750		750
3.112% notes due 2040 ⁶	750		—
3.377% notes due 2040 ⁶	1,500		—
5.700% notes due 2040 ¹	1,000		1,000
4.500% notes due 2042 ¹	3,500		3,500
4.800% notes due 2043 ⁴	400		400
4.150% notes due 2045 ¹	850		850
3.750% notes due 2046 ¹	1,100		1,100
4.050% notes due 2047 ¹	600		600
4.350% notes due 2047 ⁴	1,000		1,000
4.625% notes due 2048 ¹	1,750		1,750
3.362% notes due 2050 ⁶	750		—
3.577% notes due 2050 ⁶	2,000
Project financing obligations ⁵	316		309
Other (including finance leases)	268		331
Total principal long-term debt	44,941		41,599
Other (fair market value adjustments, discounts and debt issuance costs)	(347)		(315)
Total long-term debt	44,594		41,284
Less: current portion	1,362		3,496
Long-term debt, net of current portion	$	43,232	$	37,788

1 We may redeem these notes at our option pursuant to their terms.

2 The three-month EURIBOR rate as of March 31, 2020 was approximately -0.363%. The notes may be redeemed at our option in whole, but not in part, at any time in the event of certain developments affecting U.S. taxation.

3 The three-month LIBOR rate as of March 31, 2020 was approximately 1.4505%.

4 Rockwell Collins debt which remained outstanding following the Rockwell Acquisition.

5 Project financing obligations are associated with the sale of rights to unbilled revenues related to the ongoing activity of an entity owned by Carrier.

6 The debt issuances reflect additional debt incurred by Otis and Carrier and attributed to those businesses post Separation Transactions. The net proceeds of these issuances were primarily utilized to extinguish Raytheon Technologies short-term and long-term debt in order to achieve the applicable net indebtedness required by the merger agreement with Raytheon.

We had no long-term debt issuances in 2019 and had the following issuances of debt during the quarter ended March 31, 2020:


(dollars in millions)
Issuance Date	Description of Notes	Aggregate Principal Balance
February 27, 2020	1.923% notes due 2023 ¹	$	500
	Libor plus 0.450% floating rate notes due 2023 ¹	500
	2.056% notes due 2025 ¹	1,300
	2.242% notes due 2025¹	2,000
	2.293% notes due 2027¹	500
	2.493% notes due 2027¹	1,250
	2.565% notes due 2030¹	1,500
	2.722% notes due 2030¹	2,000
	3.112% notes due 2040 ¹	750
	3.377% notes due 2040 ¹	1,500
	3.362% notes due 2050 ¹	750
	3.577% notes due 2050 ¹	2,000
March 27, 2020	Term Loan due 2023 (Otis)¹	1,000
	Term Loan due 2023 (Carrier)¹	1,750
				$	17,300

1 The debt issuances and term loan draws reflect additional debt incurred by Otis and Carrier and attributed to those businesses post Separation Transactions. The net proceeds of these issuances were primarily utilized to extinguish Raytheon Technologies short term and long term debt in order to achieve the applicable net indebtedness required by the merger agreement with Raytheon.

We had the following repayments of long-term debt during the quarter ended March 31, 2020 and the year-ended December 31, 2019:


(dollars in millions)
Repayment Date	Description of Notes	Aggregate Principal Balance
March 29, 2020	4.500% notes due 2020 ^2,3	$	1,250
	1.125% notes due 2021 (€950 million principal value) ^2,3	1,082
	1.250% notes due 2023 (€750 million principal value) ^2,3	836
	1.150% notes due 2024 (€750 million principal value) ^2,3	841
	1.875% notes due 2026 (€500 million principal value) ^2,3	567
March 3, 2020	1.900% notes due 2020 ^2,3	1,000
	3.350% notes due 2021 ^2,3	1,000
	LIBOR plus 0.650% floating rate notes due 2021 ^2,3	750
	1.950% notes due 2021 ^2,3	750
	2.300% notes due 2022 ^2,3	500
	3.100% notes due 2022 ^2,3	2,300
	2.800% notes due 2024 ^2,3	800
March 2, 2020	4.875% notes due 2020 ^2,3	171
February 28, 2020	3.650% notes due 2023 ^2,3	1,669
	2.650% notes due 2026 ^2,3	431
				$	13,947
November 15, 2019	8.875% notes due 2019	$	271
November 13, 2019	EURIBOR plus 0.15% floating rate notes due 2019	831
November 1, 2019	LIBOR plus 0.350% floating rate notes due 2019	350
	1.500% notes due 2019	650
July 15, 2019	1.950% notes due 2019 ¹	300
	5.250% notes due 2019 ¹	300
				$	2,702

1 The notes and term loan were acquired in connection with the Rockwell Collins acquisition and have been subsequently repaid.

2 Extinguishment of Raytheon Technologies short term and long term debt in order to achieve the net indebtedness required by the merger agreement with Raytheon.

3 In connection with the early repayment of outstanding principal, Raytheon Technologies paid approximately $660 million of debt extinguishment costs.

The average maturity of our long-term debt at March 31, 2020 is approximately 14 years. The average interest expense rate on our total borrowings for the quarters ended March 31, 2020 and 2019 was as follows:


	Quarter Ended March 31,
	2020		2019
Average interest expense rate	3.6	%	3.6	%

We have an existing universal shelf registration statement filed with the SEC for an indeterminate amount of debt and equity securities for future issuance, subject to our internal limitation on the amount of debt to be issued under this shelf registration statement.