Raytheon 2006 Annual Report Download - page 4

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Dear Fellow Shareholders,
Performance, relationships and solutions: These are the
pillars that have supported the company’s progress —
and these are the principles, combined with our process
discipline, that continue to deliver strong results.
Two thousand six was a year of record bookings, backlog
and operating cash fl ow from continuing operations for the
company, a year in which we achieved “organically”- driven
sales growth of 7 percent — as well as a 37 percent increase
in diluted earnings per share from continuing operations.
It was a year in which net debt — total debt less cash
and cash equivalents — was reduced by $1.7 billion to a
year-end level of $1.5 billion, the lowest level in more than
12 years.
We also improved our return on invested capital
(ROIC) from 5.9 percent in 2005 to 7.6 percent in
2006, a 29 percent increase — with more than 19,000
employees trained in ROIC to date and additional
employees planned for 2007.
It was a year in which the company took strategic steps
to focus on our core government and defense businesses,
announcing in December a defi nitive agreement to sell
Raytheon Aircraft Company. We thank the team at
Raytheon Aircraft for building on the Hawker® and
Beechcraft® brands. It was also announced that, subject
to the closing of the transaction, the Board of Directors
authorized an increase in the current share repurchase
program by an additional $750 million and the early
retirement of approximately $1 billion in debt, in
addition to approximately $685 million of scheduled
maturities in 2007.
Our long-term senior unsecured credit rating was
upgraded by Standard & Poor’s to BBB+ in December,
by Fitch to BBB+ in early January 2007 and by Moody’s
to Baa1 in early March 2007.
And it was a year in which the company’s stock price
increased more than 30 percent.
Building On Our Strengths
While we are pleased with our company’s progress in
2006, our team’s focus continues to be on the future
success of our customers and stockholders. We believe
that the way to do this is to draw on our technology,
systems engineering expertise and our world-class talent
to provide outstanding solutions to our customers
— in government and industry, in countries around
the world, and especially to those who are serving on
the front lines in harm’s way; their needs are a priority
for our company.
One of the key drivers of these solutions, and of the
company’s growth, is innovation. At Raytheon, technology
and innovation are the company’s heritage and our
foundation for the future. In the pages that follow, we
will show you many of our capabilities, including our
ability to integrate multiple systems to deliver a solu-
tion for our customers’ mission needs. We call this core
competency Mission Systems Integration.
One of the more unique characteristics of our company
is our diverse portfolio of programs and capabilities,
a portfolio that ranges from serving as national team
integrator for the U.S. Navy’s Zumwalt Class Destroyer
program, to participation in thousands of programs in
80 countries around the world.
In some instances we are team leaders, in others we are
partners with prime contractors, in others still we are
suppliers or providers of Mission Support solutions.