Raytheon 2005 Annual Report Download - page 3

DEAR FELLOW SHAREHOLDERS,
Raytheon had another good year in 2005, reflecting
our commitment to our customers, shareholders and
employees. We are proud that by year-end, we had
reduced our net debt position to its lowest level in
10 years and that in 2005 we achieved continued
predictability in our results.
Highlights from our 2005 results included total company
sales of $21.9 billion, up 8percent compared with
2004; Government and Defense sales, up 6percent; and
Raytheon Aircraft Company sales, up 18 percent. Total
Raytheon fourth quarter 2005 sales were the highest
ever, and our diluted earnings per share from continuing
operations rose significantly for the year.
In 2005, our operating cash flow from continuing
operations was $2.5 billion compared with $2.1 billion
in 2004. Our net debt (total debt less cash and cash
equivalents) was $3.3 billion at the end of 2005,a
reduction of $1.3 billion from the end of 2004. Total
backlog at the end of 2005 was $34.4 billion, up
$1.9 billion from the end of the prior year.
During 2005, the company returned cash to shareholders
through a previously authorized 10 percent increase
in the dividend — and through the repurchase of
11.2 million shares of common stock for $436 million,
part of a total $700 million stock repurchase program
authorized by the Board.
At Raytheon, we believe that there is a link between
this financial success and our ongoing emphasis on
customer focus, growth and shareholder value. We plan
to continue to run the company with a focus on our
customers, concentrating on continuous improvement
in our performance, relationships and solutions. To
this end, we have increased our emphasis on speed and
agility in the organization to help us deploy our
capabilities and programs ever more efficiently in
our changing world.
Performance
At Raytheon, performance means promises made,
promises kept. It means leveraging the best processes,
metrics and oversight to deliver on our customer
promises. This focus makes us more efficient, provides
consistency of priorities and goals, and creates a frame-
work for predictability that we all share. One example
is our Integrated Product Development System (IPDS),
which creates consistent evaluation and execution at
each milestone in the life-cycle of a program, providing
a business roadmap that the entire company can follow.
Oversight is also very important to us. Our operating
reviews, annual operating plan reviews, human
resources reviews, strategy reviews and capabilities
provided by our internal audit team and our Raytheon
Company Evaluation Team enable Raytheon managers
— from the corner office to the factory floor — to under-
stand our business objectives and performance goals so
that we are aligned as an organization. It is this level of
understanding and alignment that allows us to create
value from our broad and deep portfolio of programs
and contracts.
A few highlights of our focus include:
MISSION ASSURANCE —Performance is achieved
when business objectives meet customer needs in a
quality environment. As I said in my letter to you last
year, whether the user of our systems and services is a
soldier, sailor, airman or Marine; a researcher in the
Antarctic; an air traffic controller; or a passenger or
pilot in one of our Beechcraft®or Hawker®aircraft —
our customers depend on us to do the job right. At
Raytheon, we call this Mission Assurance. It means that
when our customers see the Raytheon name, there
should be “no doubt.”
Raytheon employees around the world embrace
Mission Assurance — and “no doubt” — as our
customer-focused measurement of success.
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