Borrowings and Lines of Credit

12 Months Ended

Dec. 31, 2020

BORROWINGS AND LINES OF CREDIT


(dollars in millions)	2020		2019

Commercial paper	$	160	$	—
Other borrowings	87		2,293
Total short-term borrowings	$	247	$	2,293

As of December 31, 2020, our maximum commercial paper borrowing limit was $5.0 billion as the commercial paper is backed by our $5.0 billion revolving credit agreement. 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. The commercial paper notes outstanding have original maturities of not more than 90 days from the date of issuance.

In preparation for and in anticipation of the Separation Transactions, the Distributions and the Raytheon Merger, the Company entered into and terminated a number of credit agreements.

On February 11, 2020 and March 3, 2020, we terminated a $2.0 billion revolving credit agreement and a $4.0 billion term loan credit agreement, respectively. Upon termination, we repaid the $2.1 billion of borrowings outstanding on the $4.0 billion term loan credit agreement. On April 3, 2020, upon the completion of the Raytheon Merger, we terminated a $2.20 billion revolving credit agreement and a $2.15 billion multicurrency revolving credit agreement.

On March 20, 2020 and March 23, 2020, we entered into two $500 million term loan credit agreements and borrowed $1.0 billion under these agreements in the first quarter of 2020. We terminated these agreements on May 5, 2020 and April 28, 2020, respectively, upon repayment.

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 December 31, 2020, we had revolving credit agreements with various banks permitting aggregate borrowings of up to $7.0 billion, and there were no borrowings outstanding under these agreements.

In preparation for and in anticipation of the Separation Transactions and Distributions, the Company, Carrier and Otis issued and the Company repaid long-term debt during the year ended December 31, 2020, which are shown in the tables below. On February 10, 2020, Otis entered into a term loan credit agreement providing for a $1.0 billion unsecured, unsubordinated 3-year term loan credit facility. Also on February 10, 2020, Carrier entered into a term loan credit agreement providing for a $1.75 billion unsecured, unsubordinated 3-year term loan credit facility. On March 27, 2020, Carrier and Otis drew on the full amounts of the term loans and distributed the full proceeds to Raytheon Technologies in connection with the Separation

Transactions. UTC utilized those amounts to extinguish Raytheon Technologies’ short-term and long-term debt in order to not exceed the maximum applicable net indebtedness required by the Raytheon Merger Agreement.

At December 31, 2020, approximately $1 billion was available under short-term lines of credit with local banks at our various domestic and international subsidiaries. The weighted-average interest expense rates applicable to short-term borrowings and total debt were as follows:


	2020		2019
Average interest expense rate - average outstanding borrowings during the year:
Short-term borrowings	2.0	%	1.7	%
Total debt	4.0	%	3.6	%
Average interest expense rate - outstanding borrowings as of December 31:
Short-term borrowings	0.6	%	2.3	%
Total debt	4.2	%	3.6	%

We had the following issuances of long-term debt during 2020, which is inclusive of issuances made by Carrier and Otis which were primarily used by the Company to extinguish certain Raytheon Technologies short-term and long-term debt and, therefore, were treated as a distribution from discontinued operations within financing activities from continuing operation on our Consolidated Statement of Cash Flows:


Issuance Date	Description of Notes	Aggregate Principal Balance (in millions)
May 18, 2020	2.250% notes due 2030	$	1,000
	3.125% notes due 2050	1,000
March 27, 2020	Term Loan due 2023 (Otis) (1)	1,000
	Term Loan due 2023 (Carrier) (1)	1,750
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 2025 (1)	2,000
	2.293% notes due 2027 (1)	500
	2.493% notes due 2027 (1)	1,250
	2.565% notes due 2030 (1)	1,500
	2.722% notes due 2030 (1)	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

(1) The debt issuances and term loan draws reflect debt incurred by Carrier and Otis. The net proceeds of these issuances were primarily utilized to extinguish Raytheon Technologies short-term and long-term debt in order to not exceed the maximum applicable net indebtedness required by the Raytheon Merger Agreement.

We had no issuances of long-term debt during 2019.

We made the following repayments of debt during 2020 and 2019:


Repayment Date	Description of Notes	Aggregate Principal Balance (in millions)
October 15, 2020	3.125% notes due 2020 (1)	$	1,000
May 19, 2020	3.650% notes due 2023 (2)(3)	$	410
May 15, 2020	EURIBOR plus 0.20% floating rate notes due 2020 (€750 million principal value)(3)	$	817
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
November 15, 2019	8.875% notes due 2019	$	271
November 13, 2019	EURIBOR plus 0.15% floating rate notes due 2019	€	750
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 (4)	$	300
	5.250% notes due 2019 (4)	$	300

(1) These notes were assumed in connection with the Raytheon Merger and subsequently repaid.

(2) In connection with the early repayment of outstanding principal, Raytheon Technologies recorded debt extinguishment costs of $703 million for the year ended December 31, 2020, which are classified as discontinued operations in our Consolidated Statement of Operations as we would not have had to redeem the debt, except for the Separation Transactions. No proceeds of the notes issued May 18, 2020 were used to fund the May 19, 2020 redemption.

(3) Extinguishment of Raytheon Technologies short-term and long-term debt in order to not exceed the maximum net indebtedness required by the Raytheon Merger Agreement.

(4) These notes were assumed in connection with the Rockwell Collins Acquisition and subsequently repaid.

On June 10, 2020, we completed an exchange offer with eligible holders of the outstanding notes of Goodrich Corporation maturing through 2046, Raytheon Company maturing through 2044 and Rockwell Collins Inc. maturing through 2047 (collectively, the “Subsidiary Notes”). An aggregate principal amount of approximately $8.2 billion of the Subsidiary Notes was exchanged for approximately $8.2 billion of Raytheon Technologies notes with identical interest rates, maturity dates, and redemption provisions, if any, as the Subsidiary Notes exchanged. Because the exchange was for substantially identical notes, the change was treated as a debt modification for accounting purposes with no gain or loss recognized.

Long-term debt consisted of the following as of December 31:


(dollars in millions)	2020		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)	—		831
8.750% notes due 2021	250		250
3.100% notes due 2021	250		250
3.350% notes due 2021	—		1,000


LIBOR plus 0.650% floating rate notes due 2021	—	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	1,100	1,100
3.100% notes due 2022	—	2,300
2.500% notes due 2022 (2)	1,100	—
1.250% notes due 2023 (€750 million principal value)	—	831
3.650% notes due 2023 (1)	171	2,250
3.700% notes due 2023	400	400
2.800% notes due 2024	—	800
3.200% notes due 2024	950	950
1.150% notes due 2024 (€750 million principal value)	—	831
3.150% notes due 2024 (2)	300	—
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
3.125% notes due 2027 (1)	1,100	1,100
3.500% notes due 2027	1,300	1,300
7.200% notes due 2027 (2)	382	—
7.100% notes due 2027	141	141
6.700% notes due 2028	400	400
7.000% notes due 2028 (2)	185	—
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)	612	554
2.250% notes due 2030 (1)	1,000	—
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
5.700% notes due 2040 (1)	1,000	1,000
4.875% notes due 2040 (2)	600	—
4.700% notes due 2041 (2)	425	—
4.500% notes due 2042 (1)	3,500	3,500
4.800% notes due 2043	400	400
4.200% notes due 2044 (2)	300	—
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	1,000	1,000
4.625% notes due 2048 (1)	1,750	1,750
3.125% notes due 2050 (1)	1,000	—
Other (including finance leases)	292	315
Total principal long-term debt	31,470	41,274
Other (fair market value adjustments, (discounts)/premiums and debt issuance costs)	106	(315)


Total long-term debt	31,576		40,959
Less: current portion	550		3,258
Long-term debt, net of current portion	$	31,026	$	37,701

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

(2) Debt assumed in the Raytheon Merger.

The percentage of total short-term borrowings and long-term debt at variable interest rates was approximately 1% and 9% at December 31, 2020 and 2019, respectively. Interest rates on our commercial paper borrowings are considered variable due to their short-term duration and high-frequency of turnover.

The average maturity of our long-term debt at December 31, 2020 is approximately 14 years. The schedule of principal payments required on long-term debt for the next five years and thereafter is:


(in millions)
2021	$	550
2022	2,224
2023	581
2024	1,262
2025	1,582
Thereafter	25,271
Total	$	31,470