Raytheon 2005 Annual Report Download - page 67

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Total contributions (required and discretionary) to the Company’s pension plans are expected to be approximately $640
million in 2006. Congress is currently considering pension funding reform legislation which would increase funding
requirements for most companies sponsoring defined benefit pension plans. If enacted, the pension funding reform
legislation could result in an increase in the Company’s pension contribution requirement beginning in 2006.
Savings and investment plan activity includes certain items related to the Company’s 401(k) plan that were funded
through the issuance of the Company’s common stock and are non-cash operating activities included on the 2004 and
2003 statement of cash flows. In 2004, the Company began funding its 401(k) plan match with cash.
Although not expected to be material, due to potential noncompliance by certain suppliers with DoD procurement
requirements, the Company has experienced delays in deliveries and collections and has not billed customers for certain
portions of products as the Company and other industry participants work to resolve this matter with the DoD.
The Company provides long-term financing to its aircraft customers. Origination of financing receivables was $315
million in 2005, $325 million in 2004, and $402 million in 2003. Collection of financing receivables not sold was $411
million in 2005, $459 million in 2004, and $588 million in 2003. The Company received proceeds of $23 million in 2005,
$59 million in 2004 and $279 million in 2003 related to the sale of certain general aviation finance receivables, described
below in Off-Balance Sheet Arrangements.
Investing Activities—Net cash used in investing activities was $436 million in 2005 versus $532 million in 2004 and
$708 million in 2003. Capital expenditures were $338 million in 2005, $363 million in 2004, and $428 million in 2003.
Capital expenditures in 2006 are expected to approximate $400 million. Capitalized expenditures for internal use
software were $75 million in 2005, $103 million in 2004, and $98 million in 2003. Capitalized expenditures for internal
use software in 2006 are expected to approximate $100 million. In 2003, the Company bought back the assets remaining
in a synthetic lease facility for $125 million.
Proceeds from the sale of operating units and investments were $78 million in 2005 versus $47 million in 2004 and $111
million in 2003. In 2005, the Company sold its investment in Indra ATM S.L., a Spanish joint venture, for $59 million. In
2004, the Company sold its commercial infrared business for $43 million. In 2003, the Company sold the remaining
interest in its former aviation support business for $97 million.
In 2005, the Company paid the third and final installment of $60 million related to its 2003 acquisition of Solipsys
Corporation. Also in 2005, the Company paid $39 million for the acquisition of UTD, Inc. and $26 million to acquire the
remaining interest in Flight Options. In 2003 and 2004, the Company paid $40 million and $70 million, respectively
related to the acquisition of Solipsys Corporation. Also in 2004, the Company paid $42 million for the acquisition of
Photon Research Associates, Inc.
In 2003, the Company paid $130 million related to the Space Imaging credit facility guarantee, described below in Major
Affiliated Entities.
Financing Activities—Net cash used in financing activities was $1,433 million in 2005 versus $1,644 million in 2004
and $1,209 million in 2003. Dividends paid to stockholders were $387 million in 2005, $349 million in 2004, and $331
million in 2003. The quarterly dividend rate was $0.22 per share for each of the four quarters of 2005 versus $0.20 per
share for each of the four quarters of 2004 and 2003. Although the Company does not have a formal dividend policy,
management believes that a reasonable dividend payout ratio based on the current industry environment and market
conditions is approximately one third of the Company’s economic earnings (income excluding FAS/CAS Pension
Adjustment). Dividends are subject to approval by the Board of Directors.
In 2004, the Board of Directors authorized the repurchase, between January 1, 2005 and December 31, 2006, of up to
$700 million of the Company’s outstanding common stock. In 2005, the Company repurchased $436 million of common
stock under this program.
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