RECORD RESULTS FROM RAYTHEON

31 Jan 08. Raytheon Company (NYSE: RTN) reported fourth quarter 2007 income from
continuing operations of $634m or $1.45 per diluted share, (2006: $344m or $0.76). Fourth quarter 2007 income from continuing operations was higher primarily due to operational improvements, combined with lower net interest and pension expense as well as tax-related benefits of $214 million or $0.49 per diluted share.

“2007 was a very successful year for the Company; we grew sales 8% in 2007 while increasing operating income by 20%,” said William H. Swanson, Raytheon Chairman and CEO. “We ended the year with record bookings and backlog, which positions us well for 2008 and beyond.”

Fourth quarter 2007 net income was $598 million or $1.37 per diluted share
(2006: $365m or $0.81) Net income for the fourth quarter 2007 included an after-tax loss of $36m or $0.08 per diluted share in discontinued operations (2006: $21m or $0.05). As previously disclosed, fourth quarter 2007 discontinued operations results included an after-tax charge of $44m related to the sale of Flight Options LLC (FO), which was completed in the fourth quarter 2007. Fourth quarter 2006 discontinued operations included a full quarter of the results of FO and Raytheon Aircraft Company (RAC), which was sold in the second quarter 2007.

Net sales for the fourth quarter 2007 were $6.0bn, up 8 percent from
$5.6bn in the fourth quarter 2006, with growth across all of the Company’s businesses.

Operating cash flow from continuing operations for the fourth quarter 2007 was $941 (2006: $1,293m). This decrease is primarily due to the acceleration of a $500m discretionary cash contribution originally planned to be made to the Company’s pension plans in the first quarter 2008 and the timing of certain customer advances, partially offset by $381 million in tax refunds received during the quarter from the resolution of various tax matters.

Full-Year Financial Results

For the full year the Company reported income from continuing operations of
$1.7bn or $3.80 per diluted share (2006: $1.2bn or $2.63), primarily due to operational improvements combined with lower net interest and pension expense, and tax-related benefits. Full- year 2007 adjusted EPS from continuing operations was $3.31(1).

In 2007 the Company sold Raytheon Aircraft Company (RAC) and Flight Options
LLC (FO), which together contributed $885m or $1.99 per diluted share
(in discontinued operations) to net income. Net income for 2007 also
included tax-related benefits of $219m or $0.49 per diluted share. The Company reported net income for 2007 of $2.6bn or $5.79 per diluted share (2006: $1.3bn or $2.85).

Total 2007 net sales for the Company were $21.3bn compared to $19.7bn for 2006, an increase of 8 percent, primarily due to Integrated Defense Systems (IDS), Intelligence and Information Systems (IIS), Missile Systems (MS) and Network Centric Systems (NCS).

Operating cash flow from continuing operations was $1,249m in 2007
compared to $2,477m in 2006. The decrease in operating cash flow in
2007 compared to 2006 was primarily due to higher cash tax payments and
discretionary pension cash contributions made in 2007. The Company paid
$1,115m in cash taxes in 2007 ($631m attributable to the gain on the sale of RAC) compared to $375m in 2006. Also, the Company made $900m in discretionary cash contributions to the Company’s pension plans in 2007 compared to $200m in 2006. The Company also received tax refunds of $381m during the fourth quarter 2007.

As part of the Company’s previously announced share repurchase program, during the fourth quarter 2007 the Company repurchased 5.4 million shares of common stock for $341m, and for the year repurchased 28.7m shares for $1.6bn.

Summary Financial Results 4th Quarter % Full-Year %
($ in millions, except per
share data) 2007 2006 Change 2007 2006 Change

Net Sales