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raytheonSmith Barney Citigroup 18th Annual Global Industrial Manufacturing Conference

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This document contains the presentation slides from Raytheon Company CFO Ed Pliner at the 18th Annual Global Industrial Manufacturing Conference on March 8, 2005. The presentation provides an overview of Raytheon, including that it is a $20 billion defense technology business leader. It outlines Raytheon's strategy of growing in core defense markets and leveraging domain expertise across sectors. Financial information is presented showing strong order growth, sales increases, debt reduction, and 2005 guidance forecasts.

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Raytheon Company Ed Pliner, Chief Financial Officer Smith Barney 18th Annual Global Industrial Manufacturing Conference March 8, 2005
Forward Looking Statements This presentation contains forward-looking statements and projections. The Company cautions readers that such forward-looking statements are based on assumptions that the Company believes are reasonable, but are subject to a wide range of risks, and actual results may differ materially. The Company expressly disclaims any current intention to provide updates to forward-looking statements, and the estimates and assumptions associated with them, after the date of this presentation. Important factors that could cause actual results to differ include, but are not limited to: the ability to obtain or the timing of obtaining future government awards; the availability of government funding; changes in government or customer priorities due to program reviews or revisions to strategic objectives; difficulties in developing and producing operationally advanced technology systems; termination of government contracts; program performance, including resolution of claims; timing of contract payments; the performance of critical subcontractors; government import and export policies and other government regulations; the ultimate resolution of contingencies and legal matters, including government investigations and a securities class action lawsuit related to the sale of our former engineering and construction business; the ultimate resolution of insurance coverage for the class action shareholder and derivative lawsuits against the Company; the effect of market conditions, particularly in relation to the general aviation, commuter and fractional aircraft markets; cost growth risks inherent with large long-term fixed price contracts; conflicts with other investors in joint ventures and less than wholly-owned businesses; and risks associated with our former engineering and construction business related to outstanding letters of credit, surety bonds, guarantees and similar agreements and the resolution of claims and litigation. Further information regarding the factors that could cause actual results to differ materially from the projected results can be found in the Company's filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the year ended December 31, 2003 and quarterly reports on Form 10-Q, copies of which may be obtained at the Company's website www.raytheon.com.
An Industry Leader • $20B business focused on defense technology. An industry leader in: • Defense and government electronics • Space • Information technology • Technical services • Including $2.4B of sales by Raytheon Aircraft, a leader in business and special mission aircraft • Raytheon provides integrated mission systems to meet the critical defense and non-defense needs of its customers 3 World Class People and Technology
Raytheon’s Strategy • Grow our position in core defense markets through a focus on key strategic pursuits, mission support, technology and Mission Assurance. • Use the Strategic Business Areas to leverage domain knowledge of core defense markets — across the company — to achieve growth and to expand our Mission Systems Integration opportunities. • Return Beechcraft® and Hawker® brands to a preeminent position. • Be a Customer Focused company based on: • Performance – Promises made, promises kept. • Relationships – Listen, anticipate, respond and follow through with our Customers, partners and each other. • Solutions – Develop and provide superior Customer solutions working as One Company. 4 A Global Leader in Technology Driven Solutions
Our Strategy Is Working . . . $18.1 $16.8 $20.2 $22.7 $25.7 $17.9 2002 2003 2004 2002 2003 2004 Record orders of $25.7B Strong sales growth $8.3 $7.4 $5.2 32.8% 44.7% 48.3% 2002 2003 2004 2002 2003 2004 Over $3B in debt reduction Lowest debt to cap ratio since 1994 Using Performance to Drive Growth and Strengthen Balance Sheet 5
Capital Deployment • Debt - Continue reduction at approx $500M/yr over the next Significant Debt Reduction Since 1999 three years. Profile of BBB+ • Pension - Continue additional $200M in 2005/2006 • Dividends – Increase by 10% to $.88/share • Share Repurchase - $700M over 18-24 months 1999 2000 2001 2002 2003 2004 • Invest in Growing the Business A Strategic Balanced Approach 6
2005 Guidance 2004 2005 Bookings $25.7B $22.5B-$23.5B Revenue $20.2B $21.5B-$22.0B Operating Margin 6.9% 7.3%-7.5% GAAP EPS $0.99 $1.80-$1.90 Continuing Ops Free Cash Flow $1.5B $1.2B-$1.4B A Strong 2004…Positioned Well for 2005! 7
Non-GAAP Financial Measure Free cash flow, which the Company defines as operating cash flow less capital spending and internal use software spending, is considered a quot;non-GAAPquot; financial measure under SEC guidelines. ($ Millions) 2005F 2004 Free cash flow Operating cash flow $ 1,700-1,850 $ 1,876 Less: Capital spending $ (375)-(350) $ (361) Internal use software spending $ (125)-(100) $ (103) Free cash flow $ 1,200-1,400 $ 1,412 Plus: Discontinued operations $ 20-25 $ 43 Free cash flow from continuing operations $ 1,220-1,425 $ 1,455 While this information may be useful in evaluating the Company, it should be considered supplemental to and not as a substitute for financial information prepared in accordance with generally accepted accounting principles. 8
raytheonSmith Barney Citigroup 18th Annual Global Industrial Manufacturing Conference

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raytheonSmith Barney Citigroup 18th Annual Global Industrial Manufacturing Conference

  • 1. Raytheon Company Ed Pliner, Chief Financial Officer Smith Barney 18th Annual Global Industrial Manufacturing Conference March 8, 2005
  • 2. Forward Looking Statements This presentation contains forward-looking statements and projections. The Company cautions readers that such forward-looking statements are based on assumptions that the Company believes are reasonable, but are subject to a wide range of risks, and actual results may differ materially. The Company expressly disclaims any current intention to provide updates to forward-looking statements, and the estimates and assumptions associated with them, after the date of this presentation. Important factors that could cause actual results to differ include, but are not limited to: the ability to obtain or the timing of obtaining future government awards; the availability of government funding; changes in government or customer priorities due to program reviews or revisions to strategic objectives; difficulties in developing and producing operationally advanced technology systems; termination of government contracts; program performance, including resolution of claims; timing of contract payments; the performance of critical subcontractors; government import and export policies and other government regulations; the ultimate resolution of contingencies and legal matters, including government investigations and a securities class action lawsuit related to the sale of our former engineering and construction business; the ultimate resolution of insurance coverage for the class action shareholder and derivative lawsuits against the Company; the effect of market conditions, particularly in relation to the general aviation, commuter and fractional aircraft markets; cost growth risks inherent with large long-term fixed price contracts; conflicts with other investors in joint ventures and less than wholly-owned businesses; and risks associated with our former engineering and construction business related to outstanding letters of credit, surety bonds, guarantees and similar agreements and the resolution of claims and litigation. Further information regarding the factors that could cause actual results to differ materially from the projected results can be found in the Company's filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the year ended December 31, 2003 and quarterly reports on Form 10-Q, copies of which may be obtained at the Company's website www.raytheon.com.
  • 3. An Industry Leader • $20B business focused on defense technology. An industry leader in: • Defense and government electronics • Space • Information technology • Technical services • Including $2.4B of sales by Raytheon Aircraft, a leader in business and special mission aircraft • Raytheon provides integrated mission systems to meet the critical defense and non-defense needs of its customers 3 World Class People and Technology
  • 4. Raytheon’s Strategy • Grow our position in core defense markets through a focus on key strategic pursuits, mission support, technology and Mission Assurance. • Use the Strategic Business Areas to leverage domain knowledge of core defense markets — across the company — to achieve growth and to expand our Mission Systems Integration opportunities. • Return Beechcraft® and Hawker® brands to a preeminent position. • Be a Customer Focused company based on: • Performance – Promises made, promises kept. • Relationships – Listen, anticipate, respond and follow through with our Customers, partners and each other. • Solutions – Develop and provide superior Customer solutions working as One Company. 4 A Global Leader in Technology Driven Solutions
  • 5. Our Strategy Is Working . . . $18.1 $16.8 $20.2 $22.7 $25.7 $17.9 2002 2003 2004 2002 2003 2004 Record orders of $25.7B Strong sales growth $8.3 $7.4 $5.2 32.8% 44.7% 48.3% 2002 2003 2004 2002 2003 2004 Over $3B in debt reduction Lowest debt to cap ratio since 1994 Using Performance to Drive Growth and Strengthen Balance Sheet 5
  • 6. Capital Deployment • Debt - Continue reduction at approx $500M/yr over the next Significant Debt Reduction Since 1999 three years. Profile of BBB+ • Pension - Continue additional $200M in 2005/2006 • Dividends – Increase by 10% to $.88/share • Share Repurchase - $700M over 18-24 months 1999 2000 2001 2002 2003 2004 • Invest in Growing the Business A Strategic Balanced Approach 6
  • 7. 2005 Guidance 2004 2005 Bookings $25.7B $22.5B-$23.5B Revenue $20.2B $21.5B-$22.0B Operating Margin 6.9% 7.3%-7.5% GAAP EPS $0.99 $1.80-$1.90 Continuing Ops Free Cash Flow $1.5B $1.2B-$1.4B A Strong 2004…Positioned Well for 2005! 7
  • 8. Non-GAAP Financial Measure Free cash flow, which the Company defines as operating cash flow less capital spending and internal use software spending, is considered a quot;non-GAAPquot; financial measure under SEC guidelines. ($ Millions) 2005F 2004 Free cash flow Operating cash flow $ 1,700-1,850 $ 1,876 Less: Capital spending $ (375)-(350) $ (361) Internal use software spending $ (125)-(100) $ (103) Free cash flow $ 1,200-1,400 $ 1,412 Plus: Discontinued operations $ 20-25 $ 43 Free cash flow from continuing operations $ 1,220-1,425 $ 1,455 While this information may be useful in evaluating the Company, it should be considered supplemental to and not as a substitute for financial information prepared in accordance with generally accepted accounting principles. 8