Raytheon 2003 Annual Report Download - page 3

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Raytheon’s 2003 Annual Report tells the story of a
company that is well positioned in defense, that has re-base-
lined its business aircraft operations to reflect difficult market con-
ditions, that has enjoyed exceptional cash flow performance and
that has put many of its issues behind it. While the company still
has work to do, I believe we are focused on the right things and on
the right path going forward. 33 STRONG GOVERNMENT AND
DEFENSE BOOKINGS AND BACKLOG Government and
Defense bookings for the year were $20 billion, up from $14.9
billion in 2002, pushing year-end 2003 Government and Defense
backlog to a record $25 billion, an increase of $4 billion over
the prior year. This strong bookings and backlog performance
is a direct result, I believe, of our focus on our customers.
33 Government and Defense sales, which constitute the lion’s
share of total company sales, increased 7 percent compared with
the prior year, after the elimination of intercompany sales. The
increase was led by Integrated Defense Systems, Missile Systems
and Space and Airborne Systems. Total company net sales in 2003
were $18.1 billion, up from $16.8 billion in 2002. 33Income from
continuing operations was $535 million or $1.29 per diluted share
in 2003 compared with $756 million or $1.85 per diluted share in
2002. Income from continuing operations in 2003 was negatively
affected by Network Centric Systems and Raytheon Technical
Services Company, and by increased non-cash pension expense.
It was positively affected by strong operating performance
in a number of our other Government and Defense businesses.
33Including the impact of discontinued operations, the com-
pany’s net income in 2003 was $0.88 per diluted share compared
with a net loss of $1.57 per diluted share in the prior year.
33 TAKING THE PULSE OF THE COMPANY My career with
Raytheon began in 1972. It has been my privilege to work since
then as an engineer on the shop floor, in materials, manufacturing,
fabrication and quality, in systems integration and planning, in pro-
gram and general management — and in almost all levels of leader-
ship. These experiences have left me with a love for this company,
its people and its customers — and a strong sense of stewardship
on behalf of our shareholders. 33 While metrics are extremely
important in leading a team of 78,000 people, one also needs to
have a feel of the pulse of the company. I hold a view that you
remember a third of what you read, half of what you hear, but 100
percent of what you feel. That feeling for the pulse of the company
is very important. For this reason, I value one-on-one communica-
tion, in person when possible, electronically when not. I try to read
all of my e-mails within 24 hours. Ideally, I like to have a clean e-mail
GOALS FOR 2004 333
Customer Growth People Productivity
DEAR FELLOW SHAREHOLDERS 333
3
WILLIAM H. SWANSON
Chairman and CEO