Raytheon 2007 Annual Report Download - page 77

We make both discretionary and required contributions to our pension plans. As discretionary contributions are made, a
funding credit is accumulated which can be used to offset future calculated required contributions. The funding credit for
our pension plans was $1.8 billion at December 31, 2007. Discretionary contributions in 2007 were significantly higher
than in 2006 due to the acceleration of a planned 2008 contribution of $500 million into December 2007. We expect to
make required contributions to our pension plans of approximately $535 million in 2008. We will continue to
periodically evaluate whether to make additional discretionary contributions.
There was no origination of long-term aircraft financing receivables in 2007, compared to $8 million in 2006 and $23
million in 2005. Collection of financing receivables not sold was $88 million in 2007, $123 million in 2006 and $128
million in 2005. As a result of our sale of Raytheon Aircraft and Flight Options in 2007, we do not expect to originate any
significant long-term aircraft financing receivables in the future, however, we continue to hold long-term financing
receivables as part of our commuter aircraft portfolio. In 2006, we received proceeds of $53 million related to the sale of
certain finance receivables.
Investing Activities—Net cash provided by investing activities was $2,507 million in 2007 compared to net cash used
in investing activities of $451 million in 2006 and $436 million in 2005. Capital expenditures for property, plant and
equipment were $313 million in 2007, $294 million in 2006 and $296 million in 2005. Capitalized expenditures for
internal use software were $85 million in 2007, $77 million in 2006 and $73 million in 2005. We expect our capital and
internal use software expenditures to be approximately $360 million and $90 million, respectively, in 2008, consistent
with the anticipated growth of our business and for specific investments. In pursuing our business strategies, we acquire
and make investments in certain businesses that meet strategic and financial criteria and divest of certain non-core
businesses and investments and assets when appropriate.
Acquisitions. In 2007, we acquired Oakley Networks, Inc. and the robotics technologies and capabilities of Sarcos for an
aggregate of $211 million, exclusive of retention and management incentive payments for future services. In 2006, we
acquired Houston Associates, Inc. and Virtual Technology Corporation for an aggregate of $87 million. In 2005, we paid
the third and final installment of $60 million related to our 2003 acquisition of Solipsys Corporation and acquired UTD,
Inc. for $39 million. Also in 2005, we acquired the remaining interest in Flight Options for $26 million.
Divestitures and sales of other assets. In 2007, we received pretax net proceeds of $3,143 million related to the sales of
Raytheon Aircraft and Flight Options. In 2006, we sold our investment in HRL Laboratories, LLC for $28 million and
received proceeds of $24 million related to the sale of Space Imaging assets. In 2005, we sold our investment in Indra
ATM S.L., a Spanish joint venture, for $59 million.
Financing Activities—Cash provided by operating activities has been the primary source used to repay debt, pay
dividends and repurchase common stock. In 2007, we also used the proceeds from the sale of Raytheon Aircraft. Net cash
used in financing activities was $3,510 million in 2007 compared to $1,034 million in 2006 and $1,433 million in 2005.
Debt. We made debt repayments of $1,724 million in 2007, $382 million in 2006 and $671 million in 2005. The debt
repayments in 2007 consisted of the retirement of $685 million of current maturities and the exercise of our call rights to
repurchase, at prices based on fixed spreads to U.S. Treasuries, $1,039 million of our long-term debt maturing between
2008-2010 at a loss of $59 million pretax, which is included in other expense (income), net. In 2006, we retired $408
million of subordinated notes payable which had matured, consisting of a payment of $382 million and a reduction in
our investment in RC Trust I of $26 million. In 2005, we repaid $671 million of long-term debt including the exercise of
our call rights to repurchase, at a fixed price, long-term debt with a par value of $196 million at a loss of $10 million
pretax, which is included in other expense (income), net.
Stock Repurchases. We repurchased 28.7 million shares of our common stock under our various repurchase programs for
$1,642 million in 2007, 7.9 million shares for $352 million in 2006 and 11.2 million shares in 2005 for $436 million. In
October 2007, our Board of Directors authorized the repurchase of up to an additional $2.0 billion of our outstanding
common stock. As of December 31, 2007 approximately $230 million of stock had been repurchased and approximately
$1,770 million remained under this program. In December 2006, our Board of Directors, authorized the repurchase of up
to $750 million of our outstanding common stock. This program was completed during the fourth quarter of 2007. In
March 2006, our Board of Directors authorized the repurchase of up to $750 million of our outstanding common stock
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