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Raytheon Reports Solid Fourth Quarter and Full-Year 2010 Results

- Fourth quarter 2010 Adjusted EPS of $1.57, up 20 percent; EPS from continuing operations was $1.37(1)

WALTHAM, Mass., Jan. 27, 2011 /PRNewswire-FirstCall/ -- Raytheon Company (NYSE: RTN) announced fourth quarter 2010 Adjusted EPS of $1.57 per diluted share compared to $1.31 per diluted share in the fourth quarter 2009(1), up 20 percent. The increase was primarily driven by operational improvements and capital deployment actions. Fourth quarter 2010 EPS from continuing operations was $1.37 compared to $1.30 in the fourth quarter 2009. Fourth quarter 2010 and fourth quarter 2009 EPS from continuing operations included net charges of $0.10 and $0.03, respectively, associated with the impacts of the early debt retirements. Fourth quarter 2010 also included FAS/CAS pension expense of $0.11, compared to $0.01 of FAS/CAS pension income in the fourth quarter 2009.

"Raytheon's focus on performance drove solid operating results," said William H. Swanson, Raytheon's Chairman and CEO. "The depth and breadth of our product portfolio coupled with outstanding execution positions the company well going forward."

Net sales in the fourth quarter 2010 were $6.9 billion compared to $6.7 billion in the fourth quarter 2009.

Operating cash flow from continuing operations in the fourth quarter 2010 was $861 million after a $750 million discretionary cash contribution made to the Company's pension plans, compared to $1,073 million in the fourth quarter 2009. The strong operating cash flow from continuing operations in the fourth quarter 2010 was primarily due to the timing of collections and lower cash taxes.

In the fourth quarter 2010, the Company repurchased 5.3 million shares of common stock for $250 million, as part of its previously announced share repurchase program. For the full-year 2010 the Company repurchased 29.0 million shares of common stock for $1,450 million.

As previously announced, in the fourth quarter 2010, the Company issued $2.0 billion in long-term debt and retired $678 million in long-term debt maturing in 2012 and 2013. As a result of the debt retirement and issuance of longer maturities, the Company extended the term of its debt structure at lower interest rates.

Also as previously announced, in the fourth quarter 2010, the Company signed a definitive agreement to acquire Applied Signal Technology, Inc. (AST) and commenced a cash tender offer to purchase all of the outstanding shares of common stock of AST. The transaction is expected to close in the first quarter 2011 and AST will become part of Raytheon's Space and Airborne Systems (SAS) business.

Full-Year Financial Results

Full-year 2010 Adjusted EPS was $5.58 per diluted share compared to $4.87 for the full-year 2009(2), up 15 percent. The increase was primarily driven by operational improvements and capital deployment actions. Full-year 2010 EPS from continuing operations was $4.79 compared to $4.89 for the full-year 2009.

                              2009 vs. 2010 EPS Variance
                              --------------------------

                                EPS        Adjusted EPS(2)
                                ---        ---------------
    Full-year 2009                  $4.89                $4.87

    Operational Improvements         0.37                 0.37
    Reduced Share Count              0.23                 0.23
    Other Items, net                 0.11                 0.11
                                    (0.44)                  NA
    FAS/CAS Pension Adjustment*
    Q2 UK Border Agency Program
     Adjustment                     (0.75)                  NA
    Q3 Favorable Tax Settlement      0.45                   NA
    Q4 Early Debt Retirement
     Impact, net**                  (0.07)                  NA
                                    -----                  ---
    Full-year 2010                  $4.79                $5.58
                                    =====                =====


    * Represents the difference between the 2010 and 2009 FAS/CAS
    Pension Adjustments of $(0.40) and $0.04, respectively.
    ** Represents the difference between the Q4 2010 and Q4 2009 early
    retirement make-whole provision charges net of the acceleration of
    deferred gains related to terminated interest rate swaps on the
    retired debt of $(0.10) and $(0.03), respectively.

Net sales in 2010 were $25.2 billion, compared to $24.9 billion in 2009.

The Company generated strong operating cash flow for the year. Operating cash flow from continuing operations was $1.9 billion in 2010 after a $750 million discretionary cash contribution made to the Company's pension plans, compared to $2.7 billion in 2009. The Company made $1,902 million in total cash contributions to its pension plans in full-year 2010 compared to $1,115 million in full-year 2009.

The Company ended 2010 with a strong balance sheet, with $3.6 billion in cash and cash equivalents, and $3.6 billion in total debt.

(1) Adjusted EPS is EPS from continuing operations attributable to Raytheon Company common stockholders excluding the EPS impact of the FAS/CAS pension adjustment and, from time to time, certain other items. In addition to the FAS/CAS pension adjustment, Q4 2010 and 2009 Adjusted EPS exclude the impacts of early debt retirements in Q4 2010 and Q4 2009, and full-year 2010 and 2009 EPS exclude the impacts of the UK Border Agency program adjustment in Q2 2010, a favorable tax settlement in Q3 2010 and early debt retirements in Q4 2010 and Q4 2009. Adjusted EPS is a non-GAAP financial measure. See attachment F for a reconciliation of this measure and a discussion of why the Company is presenting this information.

(2) Adjusted EPS is EPS from continuing operations attributable to Raytheon Company common stockholders excluding the EPS impact of the FAS/CAS pension adjustment and, from time to time, certain other items. In addition to the FAS/CAS pension adjustment, full-year 2010 and 2009 EPS exclude the impacts of the UK Border Agency program adjustment in Q2 2010, a favorable tax settlement in Q3 2010 and early debt retirements in Q4 2010 and Q4 2009. Adjusted EPS is a non-GAAP financial measure. See attachment F for a reconciliation of this measure and a discussion of why the Company is presenting this information.


    Summary Financial Results              4th Quarter             %
                                           -----------
    ($ in millions, except per
     share data)                        2010        2009      Change
                                        ----        ----      ------

    Net sales                       $6,885      $6,667            3%
    Income from continuing
     operations attributable to
     Raytheon Company                 $499        $504           -1%
    Adjusted Income(1)                $575        $510           13%
    EPS from continuing
     operations                      $1.37       $1.30            5%
    Adjusted EPS(1)                  $1.57       $1.31           20%
    Operating cash flow from
     cont. ops.                       $861      $1,073

    Workdays in fiscal
     reporting calendar                 62          61



    Summary Financial Results                 Full-Year                %
                                              ---------
    ($ in millions, except per
     share data)                          2010          2009      Change
                                          ----          ----      ------

    Net sales                        $25,183       $24,881            1%
    Income from continuing
     operations attributable to
     Raytheon Company                 $1,804        $1,936           -7%
    Adjusted Income(1)                $2,105        $1,928            9%
    EPS from continuing
     operations                        $4.79         $4.89           -2%
    Adjusted EPS(1)                    $5.58         $4.87           15%
    Operating cash flow from
     cont. ops.                       $1,931        $2,745

    Workdays in fiscal
     reporting calendar                  249           249


    (1) Adjusted Income is income from continuing operations attributable
    to Raytheon Company common stockholders excluding the after-tax
    impact of the FAS/CAS pension adjustment and, from time to time,
    certain other items.   Adjusted EPS is EPS from continuing
    operations attributable to Raytheon Company common stockholders
    excluding the EPS impact of the FAS/CAS pension adjustment and,
    from time to time, certain other items.  In addition to the FAS/CAS
    pension adjustment, Q4 2010 and Q4 2009 Adjusted Income and Adjusted
    EPS exclude the impacts of early debt retirements in Q4 2010 and Q4
    2009, and full-year 2010 and 2009 Adjusted Income and Adjusted EPS
    exclude the impacts of the UK Border Agency program adjustment in
    Q2 2010, a favorable tax settlement in Q3 2010 and early debt
    retirements in Q4 2010 and Q4 2009.  Adjusted Income and Adjusted
    EPS are non-GAAP financial measures. See attachment F for a
    reconciliation of these measures and a discussion of why the Company
    is presenting this information.


Bookings and Backlog


    Bookings              4th Quarter             Full-Year
                          -----------             ---------
    ($ in millions)     2010           2009    2010          2009
                        ----           ----    ----          ----

    Bookings          $5,984         $7,065 $24,449       $25,058
                      ======         ====== =======       =======
    Backlog              Period Ending
                         -------------
    ($ in millions) 12/31/10       12/31/09
                    --------       --------

    Backlog          $34,551        $36,877
    Funded Backlog   $22,632        $23,479

The Company reported bookings for the full-year 2010 of $24.4 billion and ended with a backlog of $34.6 billion. Bookings in 2010 were affected by the timing of both domestic and international awards.

Outlook

    2011 Financial Outlook
                                          2010              2011
                                         Actual           Outlook*
                                          ------           --------

    Net Sales ($B)                          25.2        25.5 - 26.3
    FAS/CAS Pension Inc./(Exp.) ($M)        (230)               (367)
                                                          
    Interest Expense, Net ($M)              (110)       (155) - (165)
    Diluted Shares (M)                       377         353 - 359
    Effective Tax Rate                      24.2%             ~30.5%
    EPS from Continuing
     Operations(1)                         $4.79       $4.83 - $4.98
    Adjusted EPS(2)                        $5.58       $5.50 - $5.65
    Operating Cash Flow from Cont.
     Ops. ($B)                               1.9         2.0 - 2.2
    ROIC (%)(3)                             14.6        13.4 - 13.9

    (1) 2010 and 2011 EPS from continuing operations includes $43 million
    and $2 million of income, respectively, representing the difference
    between our post-retirement benefits (PRB) credit under FAS in
    accordance with GAAP and our PRB adjustment under CAS (FAS/CAS PRB
    adjustment).  In order to more clearly show each business'
    underlying operational performance, we will begin treating the FAS/
    CAS PRB adjustment (previously reported as part of each business)
    consistent with the FAS/CAS pension adjustment for management
    reporting in 2011.  Beginning in 2011, we will change our segment
    presentation to exclude from each business segment the amounts
    related to the FAS/CAS PRB adjustment and combine such amounts with
    our FAS/CAS pension adjustment. The foregoing changes in segment
    presentation and the FAS/CAS pension adjustment are not reflected
    in the amounts above but will be reflected in future reporting periods
    in 2011.
    (2) Adjusted EPS is EPS from continuing operations attributable to
    Raytheon Company common stockholders excluding the EPS impact of the
    FAS/CAS pension adjustment and, from time to time, certain other
    items.  In addition to the FAS/CAS pension adjustment, 2010
    Adjusted EPS excludes the impacts of the UK Border Agency program
    adjustment in Q2 2010, a favorable tax settlement in Q3 2010 and an
    early debt retirement in Q4 2010.  Adjusted EPS is a non-GAAP
    financial measure.  See attachment F for a reconciliation of this
    measure and a discussion of why the Company is presenting this
    information.
    (3) ROIC is a non-GAAP financial measure. ROIC has been calculated
    using the Company's revised ROIC definition as detailed in
    attachment G. We adjusted the ROIC definition to exclude any change
    from pension contributions, which eliminates all of the non-
    operational pension impact from the calculation in order to more
    clearly reflect the underlying business performance in ROIC.  See
    attachment G for more information on the revised and prior ROIC
    definitions and the Company's use of ROIC.
    (*) 2011 Outlook assumes the closing of the acquisition of Applied
    Signal Technology in first quarter 2011.  The AST acquisition is
    subject to certain customary closing conditions as discussed more
    fully in our Schedule TO, as amended, filed with the SEC.

The Company has provided its financial outlook for 2011. Charts containing additional information on the Company's 2011 outlook are available on the Company's website at www.raytheon.com/ir.

Segment Results

Integrated Defense Systems



                    4th Quarter           %          Full-Year            %
                    -----------                      ---------
     ($ in
      millions)   2010         2009  Change     2010         2009  Change
                  ----         ----  ------     ----         ----  ------

     Net Sales  $1,463       $1,541       -5% $5,470       $5,525       -1%
     Operating
      Income      $240         $249       -4%   $879         $859        2%
     Operating
      Margin      16.4%        16.2%            16.1%        15.5%



Fourth Quarter

Integrated Defense Systems (IDS) had fourth quarter 2010 net sales of $1,463 million compared to $1,541 million in the fourth quarter 2009. The change in net sales was primarily due to lower sales on various U.S. Navy programs and on two joint battlefield sensor programs, partially offset by higher sales on international Patriot programs. IDS recorded $240 million of operating income compared to $249 million in the fourth quarter 2009. The change in operating income was primarily due to lower sales.

During the quarter, IDS booked $131 million to provide Patriot Guidance Enhanced Missile-Tactical (GEM-T) missiles for Kuwait, $120 million to provide Consolidated Contractor Logistics Support (CCLS) for the Missile Defense Agency (MDA), and $112 million on the Air & Missile Defense Radar (AMDR) program for the U.S. Navy.

Full-year

IDS had full-year 2010 net sales of $5,470 million compared to $5,525 million in 2009. The change in net sales was primarily due to lower sales on various U.S. Navy programs and on two joint battlefield sensor programs, partially offset by higher sales on international Patriot programs. IDS recorded $879 million of operating income in 2010 compared to $859 million in 2009. The increase in operating income was primarily due to operational improvements.

During the year, IDS booked $400 million to provide advanced Patriot air and missile defense capability for an international customer, $271 million on the Zumwalt-class destroyer program for the U.S. Navy, $228 million on the Aegis weapon system for the U.S. Navy, $222 million to provide engineering services support for a Patriot air and missile defense program for U.S. and international customers, $190 million for a U.S. Army/U.S. Navy Transportable Radar Surveillance (AN/TPY-2) radar for the MDA, $148 million to provide CCLS for the MDA, $131 million to provide GEM-T missiles for Kuwait, and $112 million on the AMDR program for the U.S. Navy.

Intelligence and Information Systems


                       4th Quarter           %     Full-Year           %
                       -----------                 ---------
     ($ in millions)  2010        2009  Change   2010*     2009 Change
                      ----        ----  ------   -----     ---- ------

     Net Sales        $820        $803        2% $2,757  $3,204     -14%
     Operating Income
      (Loss)           $69         $64        8%  $(150)   $259    NM
     Operating Margin  8.4%        8.0%            -5.4%    8.1%


      *Full-year 2010 includes a $316 million reduction to net sales and a
      $395 million reduction to operating income due to the UK Border
      Agency program termination in the second quarter 2010.
      NM = Not Meaningful
      -------------------

Fourth Quarter

Intelligence and Information Systems (IIS) had fourth quarter 2010 net sales of $820 million compared to $803 million in the fourth quarter 2009. The increase in net sales was primarily due to higher sales on Global Positioning System Operational Control Segment (GPS-OCX), a GPS command, control and mission capabilities program. IIS recorded $69 million of operating income compared to $64 million in the fourth quarter 2009. The increase in operating income was primarily due to improved program performance.

During the quarter, IIS booked $167 million on a contract to provide intelligence, surveillance and reconnaissance (ISR) support to the U.S. Air Force. IIS also booked $281 million on a number of classified contracts.

Full-year

IIS had full-year 2010 net sales of $2,757 million compared to $3,204 million in 2009. The change in net sales was primarily due to lower sales on the UK Border Agency program and a U.S. Air Force program, partially offset by higher sales on the GPS-OCX program.

During the year, IIS booked $901 million on a contract to develop the next-generation GPS-OCX for the U.S. Air Force, $167 million on a contract to provide intelligence, surveillance and reconnaissance (ISR) support to the U.S. Air Force, and $80 million on the Earth Observing System Data and Information System (EOSDIS) contract for NASA. IIS also booked $1,723 million on a number of classified contracts.

Missile Systems



                   4th Quarter           %          Full-Year            %
                   -----------                      ---------
    ($ in
     millions)   2010         2009  Change     2010         2009  Change
                 ----         ----  ------     ----         ----  ------

    Net
     Sales     $1,565       $1,413       11% $5,732       $5,561        3%
     Operating
     Income      $170         $154       10%   $654         $604        8%
     Operating
     Margin      10.9%        10.9%            11.4%        10.9%
     ---------   ----         ----             ----         ----

Fourth Quarter

Missile Systems (MS) had fourth quarter 2010 net sales of $1,565 million, up 11 percent compared to $1,413 million in the fourth quarter 2009, primarily due to higher sales on the Paveway(TM), Standard Missile-3 (SM-3), and Advanced Medium-Range Air-to-Air Missiles (AMRAAM) programs. MS recorded $170 million of operating income compared to $154 million in the fourth quarter 2009. The increase in operating income was primarily due to higher volume.

During the quarter, MS booked $546 million for the production of Paveway(TM) for the Kingdom of Saudi Arabia and other international customers, $247 million for the production of Tomahawk missiles for the U.S. Navy, and $85 million on a classified program.

Full-year

MS had full-year 2010 net sales of $5,732 million compared to $5,561 million in 2009. The increase in net sales in 2010 was primarily due to higher sales on the SM-3, AMRAAM, Tube Launched, Optically Tracked, Wireless (TOW) missiles, and Paveway(TM) programs. MS recorded $654 million of operating income in 2010 compared to $604 million in 2009. The increase in operating income in 2010 was primarily due to favorable contract mix and improved program performance.

During the year, MS booked $743 million for SM-3, $698 million for AMRAAM, $675 million on a classified program, $668 million for Paveway(TM), $501 million for Tomahawk missiles, $451 million for engineering and manufacturing development on the Small Diameter Bomb II (SDB II) contract, $425 million for Standard Missile-2 (SM-2), $274 million for Rolling Airframe Missiles (RAM), $271 million for Phalanx Weapon Systems, $262 million for development work on the Exoatmospheric Kill Vehicle (EKV), $209 million for AIM-9X Sidewinder short range air-to-air missiles, $198 million for the Javelin program, $168 million for Miniature Air Launched Decoys (MALD), $147 million for Evolved Sea Sparrow Missiles (ESSM), $122 million for TOW missiles, and $114 million for Joint Stand-off Weapon (JSOW).

Network Centric Systems



                   4th Quarter           %          Full-Year            %
                   -----------                      ---------
    ($ in
     millions)   2010         2009  Change     2010         2009  Change
                 ----         ----  ------     ----         ----  ------

    Net
     Sales     $1,310       $1,259        4% $4,918       $4,822        2%
     Operating
     Income      $198         $169       17%   $701         $674        4%
     Operating
     Margin      15.1%        13.4%            14.3%        14.0%



Fourth Quarter

Network Centric Systems (NCS) had fourth quarter 2010 net sales of $1,310 million, up 4 percent compared to $1,259 million in the fourth quarter 2009, primarily due to higher sales on a classified international program. NCS recorded $198 million of operating income compared to $169 million in the fourth quarter 2009. The increase in operating income was primarily due to improved program performance.

During the quarter, NCS booked $180 million on the Standard Terminal Automation Replacement System (STARS) program for the Federal Aviation Administration (FAA) and Department of Defense (DoD), $96 million for Improved Thermal Sight Systems (ITSS) for an international customer, and $94 million for Long Range Advanced Scout Surveillance Systems (LRAS3) for the U.S. Army.

Full-year

NCS had full-year 2010 net sales of $4,918 million compared to $4,822 million in 2009. The increase in net sales was primarily due to sales related to detection systems and customer funded research and development. NCS recorded $701 million of operating income compared to $674 million in 2009. The increase in operating income was primarily due to improved program performance and higher sales.

During the year, NCS booked $254 million on the STARS program for the FAA and DoD, $250 million for LRAS3 for the U.S. Army, $146 million on a command and control program for an international customer, $111 million for Horizontal Technology Integration (HTI) forward-looking infrared kits for the U.S. Army, $104 million on the Navy Multiband Terminal (NMT) program for the U.S. Navy, and $96 million for ITSS for an international customer.

Space and Airborne Systems



                 4th                     Full-
               Quarter             %      Year              %
               -------                    -----
    ($ in
     millions)    2010    2009  Change     2010    2009  Change
                  ----    ----  ------     ----    ----  ------

    Net Sales   $1,300  $1,266        3% $4,830  $4,582        5%
    Operating
     Income       $165    $174       -5%   $686    $647        6%
    Operating
     Margin       12.7%   13.7%            14.2%   14.1%



Fourth Quarter

Space and Airborne Systems (SAS) had fourth quarter 2010 net sales of $1,300 million, up 3 percent compared to $1,266 million in the fourth quarter 2009, primarily due to growth on classified business and on a multi-spectral targeting system program. SAS recorded $165 million of operating income compared to $174 million in the fourth quarter 2009. The change in operating income was primarily due to a change in contract mix.

During the quarter, SAS booked $374 million for the production of Active Electronically Scanned Array (AESA) radars for the U.S. Navy and an international customer. SAS also booked $192 million on a number of classified contracts.

Full-year

SAS had full-year 2010 net sales of $4,830 million, up 5 percent compared to $4,582 million in 2009. The increase in net sales was primarily due to growth in classified business. SAS recorded $686 million of operating income in 2010 compared to $647 million in 2009. The increase in operating income was primarily due to higher sales and favorable contract mix, partially offset by $19 million of favorable contractual settlements in 2009.

During the year, SAS booked $618 million for the production of AESA radars for the U.S. Air Force, U.S. Navy, Air National Guard and international customers, and $90 million for the production of Advanced Countermeasures Electronic System (ACES) for Egypt. SAS also booked $1,106 million on a number of classified contracts.

Technical Services



                 4th                   Full-
               Quarter           %      Year              %
               -------                  -----
    ($ in
     millions)    2010  2009  Change     2010    2009  Change
                  ----  ----  ------     ----    ----  ------

    Net Sales     $964  $888        9% $3,472  $3,161       10%
    Operating
     Income        $83   $58       43%   $300    $215       40%
    Operating
     Margin        8.6%  6.5%             8.6%    6.8%



Fourth Quarter

Technical Services (TS) had fourth quarter 2010 net sales of $964 million, up 9 percent compared to $888 million in the fourth quarter 2009, primarily due to growth in domestic and foreign training programs supporting the U.S. Army's Warfighter Field Operations Customer Support (FOCUS) activities and higher sales on programs with the Transportation Security Administration (TSA). TS recorded operating income of $83 million in the fourth quarter 2010 compared to $58 million in the fourth quarter 2009, primarily due to operational improvements.

During the quarter, TS booked $91 million on domestic training programs and $47 million on foreign training programs in support of the Warfighter FOCUS activities.

Full-year

TS had full-year 2010 net sales of $3,472 million, up 10 percent compared to $3,161 million in 2009. The increase in net sales was primarily due to growth in domestic and foreign training programs and programs with the TSA. TS recorded operating income of $300 million in 2010 compared to $215 million in 2009. The increase in operating income was primarily due to operational improvements.

During the year, TS booked $952 million on domestic training programs and $328 million on foreign training programs in support of the Warfighter FOCUS activities. TS also booked $173 million to provide operational and logistics support to the National Science Foundation (NSF) Office of Polar Programs and $88 million on the Security Equipment Integration Services (SEIS) contract for the TSA.

Raytheon Company (NYSE: RTN), with 2010 sales of $25 billion, is a technology and innovation leader specializing in defense, homeland security and other government markets throughout the world. With a history of innovation spanning 89 years, Raytheon provides state-of-the-art electronics, mission systems integration and other capabilities in the areas of sensing; effects; and command, control, communications and intelligence systems, as well as a broad range of mission support services. With headquarters in Waltham, Mass., Raytheon employs 72,000 people worldwide.

Conference Call on the Fourth Quarter and Full-Year 2010 Financial Results

Raytheon's financial results conference call will be held on Thursday, January 27, 2011 at 9 a.m. ET. Participants will include William H. Swanson, Chairman and CEO; David C. Wajsgras, senior vice president and CFO; and other Company executives.

The dial-in number for the conference call will be (877) 415-3182 in the U.S. or (857) 244-7325 outside of the U.S. The conference call will also be audiocast on the Internet at www.raytheon.com/ir. Individuals may listen to the call and download charts that will be used during the call. These charts will be available for printing prior to the call.

Interested parties are encouraged to check the website ahead of time to ensure their computers are configured for the audio stream. Instructions for obtaining the free required downloadable software are posted on the site.

Disclosure Regarding Forward-looking Statements

This release and the attachments contain forward-looking statements, including information regarding the Company's financial outlook, future plans, objectives, business prospects and anticipated financial performance. These forward-looking statements are not statements of historical facts and represent only the Company's current expectations regarding such matters. These statements inherently involve a wide range of known and unknown risks and uncertainties. The Company's actual actions and results could differ materially from what is expressed or implied by these statements. Specific factors that could cause such a difference include, but are not limited to: the Company's dependence on the U.S. Government for a significant portion of its business and the risks associated with U.S. Government sales, including changes or shifts in defense spending, uncertain funding of programs, potential termination of contracts, and difficulties in contract performance; the resolution of program terminations; the ability to procure new contracts; the risks of conducting business in foreign countries; the ability to comply with extensive governmental regulation, including import and export policies, the Foreign Corrupt Practices Act, the International Traffic in Arms Regulations, and procurement and other regulations; the impact of competition; the ability to develop products and technologies; the impact of changes in the financial markets and global economic conditions; the risk that actual pension returns, discount rates or other actuarial assumptions are significantly different than the Company's assumptions; the risk of cost overruns, particularly for the Company's fixed-price contracts; dependence on component availability, subcontractor performance and key suppliers; risks of a negative government audit; the use of accounting estimates in the Company's financial statements; risks associated with acquisitions, dispositions, joint ventures and other business arrangements; risks of an impairment of goodwill or other intangible assets; the outcome of contingencies and litigation matters, including government investigations; the ability to recruit and retain qualified personnel; the impact of potential security threats and other disruptions; and other factors as may be detailed from time to time in the Company's public announcements and Securities and Exchange Commission filings. The Company undertakes no obligation to make any revisions to the forward-looking statements contained in this release and the attachments or to update them to reflect events or circumstances occurring after the date of this release, including any acquisitions, dispositions or other business arrangements that may be announced or closed after such date. This release and the attachments also contain non-GAAP financial measures. A GAAP reconciliation and a discussion of the Company's use of these measures are included in this release or the attachments.


    Media Contact:                            Investor Relations Contact:
    Jon Kasle                                 Todd Ernst
    781-522-5110                              781-522-5141

    Attachment A
    Raytheon Company
    Preliminary Statement of Operations Information
    Fourth Quarter 2010

    (In millions,
     except per
     share                                              Twelve Months
     amounts)              Three Months Ended                 Ended
                           ------------------             -------------
                           31-                        31-          31-
                          Dec-        31-Dec-        Dec-         Dec-
                           10            09           10           09
                          ----       --------        ----         ----

    Net sales            $6,885        $6,667      $25,183      $24,881
                         ------        ------      -------      -------
    Operating
     expenses
         Cost of sales    5,506         5,317       20,303       19,747
          Administrative
          and selling
          expenses          432           392        1,648        1,527
         Research and
          development
          expenses          143           158          625          565
                            ---           ---          ---          ---

    Total
     operating
     expenses             6,081         5,867       22,576       21,839
                          -----         -----       ------       ------

    Operating
     income                 804           800        2,607        3,042
                            ---           ---        -----        -----

         Interest
          expense            28            28          126          123
         Interest
          income             (6)           (3)         (16)         (14)
         Other
          (income)
          expense            67            21           65            3
                            ---           ---          ---          ---

    Non-
     operating
     (income)
     expense                 89            46          175          112
                            ---           ---          ---          ---

    Income from
     continuing
     operations
     before taxes           715           754        2,432        2,930

    Federal and
     foreign
     income taxes           201           237          589          953
                            ---           ---          ---          ---

    Income from
     continuing
     operations             514           517        1,843        1,977

    Income (loss)
     from
     discontinued
     operations,
     net of tax             (40)         -       36        (1)
                            ---           ---          ---          ---

    Net income              474           517        1,879        1,976

      Less: Net
       income
       (loss)
       attributable
       to
       noncontrolling
       interests in
       subsidiaries          15         13       39        41
                            ---           ---          ---          ---

    Net income
     attributable
     to Raytheon
     Company               $459          $504       $1,840       $1,935
                           ====          ====       ======       ======

    Basic
     earnings
     (loss) per
     share
     attributable
     to Raytheon
     Company
      common
       stockholders:
           Income from
            continuing
            operations    $1.38         $1.32        $4.84        $4.96
           Income (loss)
            from
            discontinued
            operations,
            net of tax    (0.11)         -     0.10         -
           Net income      1.26          1.32         4.94         4.96

    Diluted
     earnings
     (loss) per
     share
     attributable
     to Raytheon
     Company
      common
       stockholders:
           Income from
            continuing
            operations    $1.37         $1.30        $4.79        $4.89
           Income (loss)
            from
            discontinued
            operations,
            net of tax    (0.11)         -     0.10         -
           Net income      1.25          1.30         4.88         4.89

    Amounts
     attributable
     to Raytheon
     Company
     common
     stockholders:
           Income from
            continuing
            operations     $499          $504       $1,804       $1,936
           Income (loss)
            from
            discontinued
            operations,
            net of tax      (40)         -       36        (1)
                            ---           ---          ---          ---
           Net income      $459          $504       $1,840       $1,935
                           ====          ====       ======       ======

    Average
     shares
     outstanding
             Basic        363.2         382.2        372.7        390.4
             Diluted      366.0         388.4        377.0        395.7

    Attachment B
    Raytheon Company
    Preliminary Segment Information
    Fourth Quarter 2010

                              Net Sales              Operating Income
    (In millions,
     except                                          Three Months
     percentages)         Three Months Ended               Ended
                          ------------------          -------------
                          31-           31-       31-           31-
                         Dec-          Dec-      Dec-          Dec-
                          10            09        10            09
                         ----          ----      ----          ----

    Integrated Defense
     Systems            $1,463        $1,541      $240          $249
    Intelligence and
     Information
     Systems               820           803        69            64
    Missile Systems      1,565         1,413       170           154
    Network Centric
     Systems             1,310         1,259       198           169
    Space and Airborne
     Systems             1,300         1,266       165           174
    Technical Services     964           888        83            58
    FAS/CAS Pension
     Adjustment              -             -       (60)            6
    Corporate and
     Eliminations         (537)         (503)      (61)          (74)
                          ----          ----       ---           ---

    Total               $6,885        $6,667      $804          $800
                        ======        ======      ====          ====


                            Net Sales         Operating Income
    (In millions,
     except                Twelve Months         Twelve Months
     percentages)              Ended                               Ended
                          --------------        --------------
                          31-           31-       31-           31-
                         Dec-          Dec-      Dec-          Dec-
                          10            09        10            09
                         ----          ----      ----          ----

    Integrated Defense
     Systems            $5,470        $5,525      $879          $859
    Intelligence and
     Information
     Systems             2,757         3,204      (150)          259
    Missile Systems      5,732         5,561       654           604
    Network Centric
     Systems             4,918         4,822       701           674
    Space and Airborne
     Systems             4,830         4,582       686           647
    Technical Services   3,472         3,161       300           215
    FAS/CAS Pension
     Adjustment              -             -      (230)           27
    Corporate and
     Eliminations      (1,996)       (1,974)      (233)         (243)
                        ------        ------      ----          ----

    Total              $25,183       $24,881    $2,607        $3,042
                       =======       =======    ======        ======


                                       Operating Income
                                        As a Percent of
                                           Net Sales
    (In millions, except
     percentages)                     Three Months Ended
                                      ------------------
                                      31-           31-
                                     Dec-          Dec-
                                      10            09
                                     ----          ----

    Integrated Defense
     Systems                          16.4%         16.2%
    Intelligence and
     Information Systems               8.4%          8.0%
    Missile Systems                   10.9%         10.9%
    Network Centric Systems           15.1%         13.4%
    Space and Airborne
     Systems                          12.7%         13.7%
    Technical Services                 8.6%          6.5%
    FAS/CAS Pension
     Adjustment
    Corporate and
     Eliminations

    Total                             11.7%         12.0%

                                    Operating Income
                                     As a Percent of
                                         Net Sales
    (In millions, except               Twelve Months
     percentages)                          Ended
                                      --------------
                                      31-           31-
                                     Dec-          Dec-
                                      10            09
                                     ----          ----

    Integrated Defense
     Systems                          16.1%         15.5%
    Intelligence and
     Information Systems              -5.4%          8.1%
    Missile Systems                   11.4%         10.9%
    Network Centric Systems           14.3%         14.0%
    Space and Airborne
     Systems                          14.2%         14.1%
    Technical Services                 8.6%          6.8%
    FAS/CAS Pension
     Adjustment
    Corporate and
     Eliminations

    Total                             10.4%         12.2%

    Attachment C
    Raytheon Company
    Other Preliminary Information
    Fourth Quarter 2010
    (In millions)               Funded Backlog          Total Backlog
                                --------------          -------------
                               31-          31-     31-           31-
                              Dec-         Dec-    Dec-          Dec-
                               10           09      10            09
                              ----         ----    ----          ----

    Integrated Defense
     Systems                 $6,433       $5,595  $8,473       $10,665
    Intelligence and
     Information Systems        725        1,588   4,319         4,360
    Missile Systems           6,385        6,454   8,212         7,657
    Network Centric Systems   3,740        4,389   4,912         5,501
    Space and Airborne
     Systems                  3,266        3,402   5,981         5,921
    Technical Services        2,083        2,051   2,654         2,773
                              -----        -----   -----         -----

    Total                   $22,632      $23,479 $34,551       $36,877
                            =======      ======= =======       =======


                                 Bookings            Bookings
                                Three Months       Twelve Months
                                   Ended               Ended
                               -------------         -------------
                               31-          31-     31-           31-
                              Dec-         Dec-    Dec-          Dec-
                               10           09      10            09
                              ----         ----    ----          ----

    Bookings                 $5,984       $7,065 $24,449       $25,058
                             ======       ====== =======       =======

    Attachment D
    Raytheon Company
    Preliminary Balance Sheet Information
    Fourth Quarter 2010
    (In millions)
                                                         31-          31-
                                                        Dec-         Dec-
                                                         10           09
                                                        ----         ----
    Assets
         Cash and cash equivalents                     $3,638       $2,642
         Contracts in process                           4,414        4,493
         Inventories                                      363          344
         Deferred taxes                                   266          273
         Prepaid expenses and other current
          assets                                          141          116
                                                          ---          ---
                Total current assets                    8,822        7,868

    Property, plant and equipment, net                  2,003        2,001
    Deferred taxes                                        106          436
    Goodwill                                           12,045       11,922
    Other assets, net                                   1,446        1,380
                                                        -----        -----
                       Total assets                   $24,422      $23,607
                                                      =======      =======

    Liabilities and Equity
    Current liabilities
         Advance payments and billings in
          excess of costs incurred                     $2,201       $2,224
         Accounts payable                               1,538        1,397
         Accrued employee compensation                    901          868
         Other accrued expenses                         1,320        1,034
                                                        -----        -----
                Total current liabilities               5,960        5,523

    Accrued retiree benefits and other
     long-term liabilities                              4,815        5,793
    Deferred taxes                                        147           23
    Long-term debt                                      3,610        2,329

    Equity
      Raytheon Company stockholders' equity
         Common stock                                       4            4
         Additional paid-in capital                    11,406       10,991
         Accumulated other comprehensive loss         (5,146)      (4,824)
         Treasury stock, at cost                      (6,900)      (5,446)
         Retained earnings                             10,390        9,102
                                                       ------        -----
                Total Raytheon Company stockholders'
                 equity                                 9,754        9,827
         Noncontrolling interests in
          subsidiaries                                    136          112
                                                          ---          ---
             Total equity                               9,890        9,939
                                                        -----        -----
                       Total liabilities and equity   $24,422      $23,607
                                                      =======      =======

    Attachment E
    Raytheon Company
    Preliminary Cash Flow Information
    Fourth Quarter 2010
    (In millions)                                  Three Months Ended
                                                   ------------------
                                             31-Dec-10          31-Dec-09
                                             ---------          ---------

    Net income (loss)                               $474              $517
    (Income) loss from discontinued
     operations, net of tax                           40                 -
                                                     ---               ---
    Income (loss) from continuing
     operations                                      514               517

    Depreciation                                    79                79
    Amortization                                    30                28
    Working capital (excluding pension
     and taxes)*                                   495               178
    Other                                         (257)              271
                                                  ----               ---
          Net operating cash flow                  861             1,073

    Discontinued operations                          4                (4)
    Capital spending                              (135)             (142)
    Internal use software spending                 (22)              (18)
    Acquisitions                                  (140)             (334)
    Dividends                                     (135)             (118)
    Repurchases of common stock                   (250)             (300)
    Debt issuance                                1,975               496
    Debt repayments                               (678)             (474)
    Warrants exercised                               -                 -
    Other                                            9                21
                                                   ---               ---
          Total cash flow                       $1,489              $200
                                                ======              ====




    (In millions)                              Twelve Months Ended
                                               -------------------
                                           31-Dec-10      31-Dec-09
                                           ---------      ---------

    Net income (loss)                         $1,879         $1,976
    (Income) loss from discontinued
     operations, net of tax                      (36)             1
                                                 ---            ---
    Income (loss) from continuing
     operations                                1,843          1,977

    Depreciation                               304            299
    Amortization                               116            103
    Working capital (excluding pension
     and taxes)*                               358            (47)
    Other                                     (690)           413
                                              ----            ---
          Net operating cash flow            1,931          2,745

    Discontinued operations                     11            (20)
    Capital spending                          (319)          (280)
    Internal use software spending             (67)           (67)
    Acquisitions                              (152)          (334)
    Dividends                                 (536)          (473)
    Repurchases of common stock             (1,450)        (1,200)
    Debt issuance                            1,975            496
    Debt repayments                           (678)          (474)
    Warrants exercised                         250              -
    Other                                       31            (10)
                                               ---            ---
          Total cash flow                     $996           $383
                                              ====           ====



    *  Working capital (excluding pension and taxes) is a summation of
    changes in: contracts in process and advance payments and  billings
    in excess of costs incurred, inventories, prepaid expenses and other
    current assets, accounts payable,  accrued employee compensation,
    and other accrued expenses from the Statements of Cash Flows.


    Attachment F (Page 1 of 2)
    Raytheon Company
    Non-GAAP Financial Measures - Adjusted EPS, Adjusted Income and
    Adjusted Operating Margin
    Fourth Quarter 2010

    Adjusted EPS Non-GAAP
     Reconciliation
    ---------------------

    (In millions, except per share
     amounts)
                                             Fourth Quarter
                                             --------------
                                             2010           2009
                                             ----           ----
    Diluted earnings per share from
     continuing operations
                 attributable to Raytheon
                 Company common
                 stockholders              $1.37          $1.30
    Per share impact of the FAS/CAS
     Pension Adjustment (A)                  0.11          (0.01)
    Per share impact of United
     Kingdom (UK) Border Agency
     program adjustment (B)                     -              -
    Per share impact of the
     favorable tax settlement (C)               -              -
    Per share impact of the early
     debt retirement make-whole
     provision (D)                           0.13           0.04
    Per share impact of the
     acceleration of deferred gains
     related to terminated interest
     rate swaps on retired debt (E)         (0.03)         (0.01)
                                            -----          -----
    Adjusted EPS (1)                        $1.57          $1.31
                                            =====          =====


        (A)     FAS/CAS Pension Adjustment       $60            $(6)
                 Tax effect (at 35%
                 federal statutory
                 rate)                       (21)             2
                                             ---            ---
                After-tax impact              39             (4)
                Diluted Shares             366.0          388.4
                                            -----
                Per share impact           $0.11         $(0.01)
                                            =====


                 UK Border Agency program
        (B)      adjustment                   $-             $-
                 Tax effect (at 28% UK
                 statutory tax rate)           -              -
                                             ---            ---
                After-tax adjustment           -              -
                Diluted Shares                 -              -
                                              ---
                Per share impact              $-             $-
                                              ===

        (C)     Favorable tax settlement        $-             $-
                Diluted Shares                 -              -
                                              ---
                Per share impact              $-             $-
                                              ===

                 Early debt retirement
    (D)          make-whole provision        $73            $22
                 Tax effect (at 35%
                 federal statutory
                 rate)                       (26)            (8)
                                             ---            ---
                After-tax impact              47             14
                Diluted Shares             366.0          388.4
                                            -----
                Per share impact           $0.13          $0.04
                                            =====

                 Acceleration of deferred
                 gains related to
                 terminated interest rate
    (E)          swaps on retired debt      $(15)           $(6)
                 Tax effect (at 35%
                 federal statutory
                 rate)                         5              2
                                             ---            ---
                After-tax impact             (10)            (4)
                Diluted Shares             366.0          388.4
                                            -----
                Per share impact          $(0.03)        $(0.01)
                                          =======






    Adjusted EPS Non-GAAP
     Reconciliation
    ---------------------

    (In millions, except per share
     amounts)
                                               Full Year
                                               ---------
                                             2010         2009
                                             ----         ----
    Diluted earnings per share from
     continuing operations
                 attributable to Raytheon
                 Company common
                 stockholders              $4.79        $4.89
    Per share impact of the FAS/CAS
     Pension Adjustment (A)                  0.40        (0.04)
    Per share impact of United
     Kingdom (UK) Border Agency
     program adjustment (B)                  0.75            -
    Per share impact of the
     favorable tax settlement (C)           (0.45)           -
    Per share impact of the early
     debt retirement make-whole
     provision (D)                           0.13         0.04
    Per share impact of the
     acceleration of deferred gains
     related to terminated interest
     rate swaps on retired debt (E)         (0.03)       (0.01)
                                            -----        -----
    Adjusted EPS (1)                        $5.58        $4.87
                                            =====        =====


        (A)     FAS/CAS Pension Adjustment      $230         $(27)
                 Tax effect (at 35%
                 federal statutory
                 rate)                       (80)           9
                                             ---          ---
                After-tax impact             150          (18)
                Diluted Shares             377.0        395.7
                                            -----
                Per share impact           $0.40       $(0.04)
                                            =====


                 UK Border Agency program
        (B)      adjustment                 $395           $-
                 Tax effect (at 28% UK
                 statutory tax rate)        (111)           -
                                            ----          ---
                After-tax adjustment         284            -
                Diluted Shares             377.0            -
                                            -----
                Per share impact           $0.75           $-
                                            =====

        (C)     Favorable tax settlement     $(170)          $-
                Diluted Shares             377.0            -
                                            -----
                Per share impact          $(0.45)          $-
                                          =======

                 Early debt retirement
    (D)          make-whole provision        $73          $22
                 Tax effect (at 35%
                 federal statutory
                 rate)                       (26)          (8)
                                             ---          ---
                After-tax impact              47           14
                Diluted Shares             377.0        395.7
                                            -----
                Per share impact           $0.13        $0.04
                                            =====

                 Acceleration of deferred
                 gains related to
                 terminated interest rate
    (E)          swaps on retired debt      $(15)         $(6)
                 Tax effect (at 35%
                 federal statutory
                 rate)                         5            2
                                             ---          ---
                After-tax impact             (10)          (4)
                Diluted Shares             377.0        395.7
                                            -----
                Per share impact          $(0.03)      $(0.01)
                                          =======






    Adjusted EPS Non-GAAP
     Reconciliation
    ---------------------

    (In millions, except per share
     amounts)                                 2011 Guidance
                                              -------------
                                           Low       High
                                           end        end
                                            of         of
                                          range      range
                                         ------     ------
    Diluted earnings per share from
     continuing operations
                 attributable to Raytheon
                 Company common
                 stockholders            $4.83      $4.98
    Per share impact of the FAS/CAS
     Pension Adjustment (A)                0.67       0.68
    Per share impact of United
     Kingdom (UK) Border Agency
     program adjustment (B)                   -          -
    Per share impact of the
     favorable tax settlement (C)             -          -
    Per share impact of the early
     debt retirement make-whole
     provision (D)                            -          -
    Per share impact of the
     acceleration of deferred gains
     related to terminated interest
     rate swaps on retired debt (E)           -          -
                                            ---        ---
    Adjusted EPS (1)                      $5.50      $5.65
                                          =====      =====


        (A)     FAS/CAS Pension Adjustment    $367       $367
                 Tax effect (at 35%
                 federal statutory
                 rate)                    (128)      (128)
                                          ----       ----
                After-tax impact           239        239
                Diluted Shares           359.0      353.0
                                          -----
                Per share impact         $0.67      $0.68
                                          =====


                 UK Border Agency program
        (B)      adjustment
                 Tax effect (at 28% UK
                 statutory tax rate)
                After-tax adjustment
                Diluted Shares
                Per share impact

        (C)     Favorable tax settlement
                Diluted Shares
                Per share impact

                 Early debt retirement
    (D)          make-whole provision
                 Tax effect (at 35%
                 federal statutory
                 rate)
                After-tax impact
                Diluted Shares
                Per share impact

                 Acceleration of deferred
                 gains related to
                 terminated interest rate
    (E)          swaps on retired debt
                 Tax effect (at 35%
                 federal statutory
                 rate)
                After-tax impact
                Diluted Shares
                Per share impact




    (1)  These amounts are not measures of financial performance under
    U.S. generally accepted accounting principles (GAAP).  They should
    be considered supplemental to and not a substitute for financial
    performance in accordance with GAAP and may not be defined and
    calculated by other companies in the same manner.  These amounts
    exclude the FAS/CAS Pension Adjustment and, from time to time,
    certain other items.  We are providing these measures because
    management uses them for the purposes of evaluating and forecasting
    the Company's financial performance and believes that they provide
    additional insights into the Company's underlying business
    performance.  We also believe that they allow investors to benefit
    from being able to assess our operating performance in the context
    of how our principal customer, the U.S. Government, allows us to
    recover pension costs and to better compare our operating
    performance to others in the industry on that same basis. Amounts
    may not recalculate directly due to rounding.

    Adjusted EPS is diluted EPS from continuing operations attributable
    to Raytheon Company common stockholders excluding the EPS impact of
    the FAS/CAS Pension Adjustment and, from time to time, certain
    other items.  In addition to the FAS/CAS Pension Adjustment, fourth
    quarter 2010 and 2009 Adjusted EPS exclude the earnings per share
    impact of the charges associated with the make-whole provision on
    the early retirement of debt and the impact of the acceleration of
    deferred gains related to terminated interest rate swaps on retired
    debt.  In addition to the FAS/CAS Pension Adjustment, 2010 and 2009
    Adjusted EPS exclude an adjustment on the UK Border Agency program,
    on which RSL was notified of its termination in the second quarter
    of 2010, at the UK statutory tax rate that was in effect in the
    second quarter of 28%, the favorable tax settlement in the third
    quarter 2010 as a result of our receipt of final approval from the
    IRS and the U.S Congressional Joint Committee on Taxation of the
    IRS' examination of our tax returns for the 1998-2005 tax years,
    and the impacts of the early retirement of debt in the fourth
    quarter 2010 and 2009, previously described.

    Attachment F (Page 2 of 2)
    Raytheon Company
    Non-GAAP Financial Measures - Adjusted EPS, Adjusted Income and
    Adjusted Operating Margin
    Fourth Quarter 2010


    Adjusted Income Non-GAAP Reconciliation
    ---------------------------------------

    (In
     millions)
                                Fourth Quarter                Full Year
                                --------------                ---------
                                2010         2009        2010          2009
                                ----         ----        ----          ----
    Income from
     continuing
     operations
     attributable to
     Raytheon Company
      common stockholders      $499         $504      $1,804        $1,936
    FAS/CAS Pension
     Adjustment (Tax
     effect at 35%
     federal statutory
     rate)                       39        (4)     150        (18)
    UK Border Agency
     program adjustment
     (Tax effect at 28%
     UK statutory tax
     rate)                        -         -      284          -
    Favorable tax
     settlement                   -            -        (170)            -
    Early debt
     retirement make-
     whole provision
     (Tax effect at 35%
     federal statutory
     rate)                       47        14       47         14
    Acceleration of
     deferred gains
     related to
     terminated interest
     rate swaps on
     retired debt (Tax
     effect at 35%
     federal statutory
     rate)                      (10)       (4)     (10)        (4)
    Adjusted Income (1)        $575         $510      $2,105        $1,928
                               ====         ====      ======        ======

    Adjusted Operating
     Margin Non-GAAP
     Reconciliation
    ------------------


                              Fourth Quarter             Full Year
                              --------------             ---------
                               2010         2009        2010          2009
                               ----         ----        ----          ----

    Operating Margin          11.7 %       12.0 %      10.4 %        12.2 %
    Impact of the FAS/
     CAS Pension
     Adjustment                0.9 %      (0.1) %       0.9 %       (0.1) %
    Impact of UK Border
     Agency program
     adjustment                 - %         - %       1.4 %          - %
    Adjusted Operating
     Margin (1)               12.5 %       11.9 %      12.7 %        12.1 %
                              =====        =====       =====         =====




    (In
     millions)                                       2011 Guidance
                                             -------------
                                 Low
                                 end         High end
                                  of
                                range        of range
                               ------        --------
    Income from
     continuing
     operations
     attributable to
     Raytheon Company
      common stockholders      $1,708             $1,760
    FAS/CAS Pension
     Adjustment (Tax
     effect at 35%
     federal statutory
     rate)                     239             239
    UK Border Agency
     program adjustment
     (Tax effect at 28%
     UK statutory tax
     rate)                       -               -
    Favorable tax
     settlement                     -                  -
    Early debt
     retirement make-
     whole provision
     (Tax effect at 35%
     federal statutory
     rate)                       -               -
    Acceleration of
     deferred gains
     related to
     terminated interest
     rate swaps on
     retired debt (Tax
     effect at 35%
     federal statutory
     rate)                       -               -
    Adjusted Income (1)        $1,947             $1,999
                               ======             ======

    Adjusted Operating
     Margin Non-GAAP
     Reconciliation
    ------------------

                                    2011 Guidance
                                    -------------
                                 Low
                                 end         High end
                                  of
                                range        of range
                               ------        --------

    Operating Margin            10.6 %             10.8 %
    Impact of the FAS/
     CAS Pension
     Adjustment                  1.4 %              1.4 %
    Impact of UK Border
     Agency program
     adjustment                   - %               - %
    Adjusted Operating
     Margin (1)                 12.0 %             12.2 %
                                =====              =====



    (1)  These amounts are not measures of financial performance under U.S.
         generally accepted accounting principles (GAAP).  They should be
         considered supplemental to and not a substitute for financial
         performance in accordance with GAAP and may not be defined and
         calculated by other companies in the same manner.  These amounts
         exclude the FAS/CAS Pension Adjustment and, from time to time,
         certain other items.  We are providing these measures because
         management uses them for the purposes of evaluating and forecasting
         the Company's financial performance and believes that they provide
         additional insights into the Company's underlying business
         performance.  We also believe that they allow investors to benefit
         from being able to assess our operating performance in the context
         of how our principal customer, the U.S. Government, allows us to
         recover pension costs and to better compare our operating
         performance to others in the industry on that same basis. Amounts
         may not recalculate directly due to rounding.

      Adjusted Income is income from continuing operations attributable to
      Raytheon Company common stockholders excluding the after-tax impact
      of the FAS/CAS Pension Adjustment at the federal statutory tax rate
      of 35% and, from time to time, certain other items.  In addition to
      the FAS/CAS Pension Adjustment, fourth quarter of 2010 and 2009
      Adjusted Income exclude the impact of the charges associated with
      the make-whole provision on the early retirement of debt and the
      impact of the acceleration of deferred gains related to terminated
      interest rate swaps on retired debt.  In addition to the FAS/CAS
      Pension Adjustment, 2010 and 2009 Adjusted Income exclude the after-
      tax impact of an adjustment on the UK Border Agency program in the
      second quarter 2010, previously described, the favorable tax
      settlement in the third quarter 2010, previously described, and the
      early retirement of debt in the fourth quarter 2010 and 2009,
      previously described.

      Adjusted Operating Margin is defined as total operating margin
      excluding the margin impact of the FAS/CAS Pension Adjustment and
      the UK Border Agency program adjustment, previously described.

    Attachment G (Page 1 of 2)
    Raytheon Company
    Preliminary Return on Invested Capital Non-GAAP Financial Measure
    Fourth Quarter 2010

    Revised ROIC Calculation
    ------------------------

    Our revised definition of Return on Invested Capital (ROIC) is the
    same as our prior definition except stockholders' equity is now
    adjusted to add back the Company's liability for defined benefit
    pension plans, net of tax, instead of just the impact of the
    accounting standard for employers' accounting for defined benefit
    pension plans.  We adjusted the ROIC definition to exclude any
    change from pension contributions, which eliminates all of the non-
    operational pension impact from the calculation in order to more
    clearly reflect the underlying business performance in ROIC.  We
    define ROIC as income from continuing operations excluding the
    after-tax effect of the FAS/CAS Pension Adjustment and, from time
    to time, certain other items, plus after-tax net interest expense
    plus one-third of operating lease expense after-tax (estimate of
    interest portion of operating lease expense) divided by average
    invested capital after capitalizing operating leases (operating
    lease expense times a multiplier of 8), adding financial guarantees
    less net investment in Discontinued Operations, and adding back the
    liability for defined benefit pension plans, net of tax.  2009 ROIC
    also excludes from income from continuing operations the after-tax
    effect of the fourth quarter 2009 charge associated with the make-
    whole provision on the early retirement of debt and 2010 ROIC also
    excludes from income from continuing operations the after-tax
    effect of the second quarter 2010 UK Border Agency program
    adjustment, the third quarter 2010 favorable tax settlement and the
    after-tax effect of the fourth quarter 2010 charge associated with
    the make-whole provision on the early retirement of debt. ROIC is
    not a measure of financial performance under generally accepted
    accounting principles (GAAP) and may not be defined and calculated
    by other companies in the same manner.  ROIC should be considered
    supplemental to and not a substitute for financial information
    prepared in accordance with GAAP. The Company uses ROIC as a measure
    of the efficiency and effectiveness of its use of capital and as an
    element of management compensation.

    Return on Invested Capital

    (In millions, except                                2011 Initial
     percentages)                                         Guidance
                                                       -------------
                                                                  High
                                                 Low end           end
                                                    of             of
                                  2009     2010   range          range
                                  ----     ----  ------         ------
    Income from continuing
     operations                 $1,977   $1,843
    FAS/CAS Pension
     Adjustment, after-tax *       (18)     150
    Q2 2010 UK Border Agency
     program adjustment,
     after-tax **                    -      284
    Q3 2010 favorable tax
     settlement                      -     (170) Combined       Combined
    Q4 2009 and 2010 early
     debt retirement make-
     whole provision, after-
     tax *                          14       47
    Net interest expense,
     after-tax *                    71       72
    Lease expense, after-tax *      66       67
                                   ---      ---
    Return                      $2,110   $2,293    $2,165         $2,215
                                ------   ------    ------         ------

    Net debt ***                 $(132)   $(171)
    Equity less investment in
     discontinued operations     9,560    9,944
    Lease expense x 8, plus
     financial guarantees        2,815    2,890  Combined       Combined
    Pension liability, net of
     tax                         3,612    3,049
    Invested capital from
     continuing operations
     ****                      $15,855  $15,712   $16,185        $15,985
                               -------  -------   -------        -------


    ROIC                          13.3%    14.6%     13.4%          13.9%
                                  ----     ----      ----           ----


    *  Calculated utilizing the federal statutory tax rate of 35%
    **  Calculated utilizing the UK statutory tax rate in effect in Q2
    2010 of 28%
    ***  Net debt is defined as total debt less cash and cash equivalents
    and is calculated using a 2-point average
    ****  Calculated using a 2-point average

    Attachment G (Page 2 of 2)
    Raytheon Company
    Preliminary Return on Invested Capital Non-GAAP Financial Measure
    Fourth Quarter 2010

    Prior ROIC Calculation
    ----------------------

    Our prior definition of Return on Invested Capital (ROIC) was income
    from continuing operations excluding the after-tax effect of the
    FAS/CAS Pension Adjustment plus after-tax net interest expense
    plus one-third of operating lease expense after-tax (estimate of
    interest portion of operating lease expense) divided by average
    invested capital after capitalizing operating leases (operating
    lease expense times a multiplier of 8), adding financial guarantees
    less net investment in Discontinued Operations, and adding back the
    impact of the accounting standard for employers' accounting for
    defined benefit pension and other postretirement plans.  2009 ROIC
    also excludes from income from continuing operations the after-tax
    effect of the fourth quarter 2009 charge associated with the make-
    whole provision on the early retirement of debt and 2010 ROIC also
    excludes from income from continuing operations the after-tax
    effect of the second quarter 2010 UK Border Agency program
    adjustment, the third quarter 2010 favorable tax settlement and the
    after-tax effect of the fourth quarter 2010 charge associated with
    the make-whole provision on the early retirement of debt.  ROIC is
    not a measure of financial performance under generally accepted
    accounting principles (GAAP) and may not be defined and calculated
    by other companies in the same manner.  ROIC should be considered
    supplemental to and not a substitute for financial information
    prepared in accordance with GAAP. The Company uses ROIC as a measure
    of the efficiency and effectiveness of its use of capital and as an
    element of management compensation.

    Return on Invested
     Capital

    (In millions, except                          2011 Initial
     percentages)                                   Guidance
                                                 -------------
                                                            High
                                           Low end           end
                                              of             of
                            2009     2010   range          range
                            ----     ----  ------         ------
    Income from
     continuing
     operations           $1,977   $1,843
    FAS/CAS Pension
     Adjustment, after-
     tax *                   (18)     150
    Q2 2010 UK Border
     Agency program
     adjustment, after-
     tax **                    -      284
    Q3 2010 favorable
     tax settlement            -     (170) Combined       Combined
    Q4 2009 and 2010
     early debt
     retirement make-
     whole provision,
     after-tax *              14    47
    Net interest
     expense, after-tax
     *                        71       72
    Lease expense,
     after-tax *              66       67
                             ---      ---
    Return                $2,110   $2,293    $2,165         $2,215
                          ------   ------    ------         ------

    Net debt ***           $(132)   $(171)
    Equity less
     investment in
     discontinued
     operations            9,560    9,944
    Lease expense x 8,
     plus financial
     guarantees            2,815    2,890  Combined       Combined
    Unfunded projected
     benefit obligation    5,007    5,024
    Invested capital
     from continuing
     operations ****     $17,250  $17,687   $18,581        $18,381
                         -------  -------   -------        -------


    ROIC                    12.2%    13.0%     11.7%          12.1%
                            ----     ----      ----           ----


    *  Calculated utilizing the federal statutory tax rate of 35%
    **  Calculated utilizing the UK statutory tax rate in effect in Q2
    2010 of 28%
    ***  Net debt is defined as total debt less cash and cash equivalents
    and is calculated using a 2-point average
    ****  Calculated using a 2-point average

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