Raytheon 2010 Annual Report Download - page 4

Raytheon delivered strong operating performance in 2010.
We continued executing well and delivered solid
bottom-line results in a challenging environment.
This was a result of our focus on program execu-
tion and productivity initiatives driven by Raytheon
Six Sigma™ and operational improvements. We have
a strong balance sheet, a diverse portfolio of innova-
tive technologies both in depth and breadth, as well
as strong demand for our solutions domestically
and internationally.
The year had some headwinds including program
delays, U.S. government budget uncertainty and
a difficult economy. However, our strategies pre-
pared us well for these conditions and allowed us
to leverage our capabilities, cost competitiveness,
solid program performance and strong customer
alignment to achieve one of the highest competi-
tive win rates in the company’s history. In short, we
created opportunities from challenges.
During 2010, our adjusted earnings per share rose to $5.58, up
15 percent from 2009 to 2010, primarily due to our operational
improvements and capital deployment actions. We also gener-
ated strong operating cash flow of $1.9 billion for the year, after
making a fourth quarter $750 million discretionary contribution
to our pension plans. For the full year, Raytheon had a 14.6
percent return on invested capital and continued to have strong
operating margins. The company ended the year with a net debt
of near zero.
Raytheon demonstrated its balanced approach to capital deploy-
ment with a number of actions in 2010 as we continued our
focus on creating value for our customers and our shareholders.
The company repurchased 29 million shares of common stock
for about $1.5 billion during 2010. This, coupled with our sixth
consecutive year of dividend increases, and the discretionary
pension contribution, underscored our approach.
We increased long-term value generation in 2010 through
strategic acquisition activity. We acquired Technology Associates,
Trusted Computer Solutions and substantially all the assets of an
Australian company, Compucat Research Pty. Ltd. These transac-
tions bring new and complementary capabilities to our company
and customers. In December, we announced the Applied Signal
Technology acquisition which closed in January 2011. AST brings
world-class technologies, and its talent aligns with Raytheon’s
strong Intelligence, Surveillance and Reconnaissance solutions.
This combination of strengths along with our complementary
cultures of innovation will provide capabilities to
address our customers’ current and future challenges.
2010 was a great year for competitive wins,
including programs such as Small Diameter Bomb,
Global Positioning System (GPS) Advanced Control
Segment, Air and Missile Defense Radar for the
U.S. Navy, and the Standard Terminal Automa-
tion Replacement System for air traffic control,
among others. These wins position us well for
future competitions.
A PORTFOLIO WITH DEPTH AND BREADTH
One of Raytheon’s strengths is the depth and
breadth of our portfolio of technologies, products,
systems and capabilities. We believe they are
well aligned with our customers’ needs to address
important threats. One could argue that these
threats have increased in our global environment.
Nowhere was this more evident than in the cyber-
domain. Insider threats were headline news in 2010,
and this is an area where we have built world-class capabilities.
Our customers are increasingly relying on our award-winning
SureView™ information protection solution, as well as our other
Cybersecurity technologies that close the cyberthreat.
Our Homeland Security capabilities were strengthened with the
introduction of our Clear View™ security solutions. It is a compre-
hensive security management system for critical infrastructure,
border security and other security needs.
An uncertain world increases the demand for our Intelligence,
Surveillance and Reconnaissance capabilities. Raytheon is uniquely
capable of providing full-spectrum ISR solutions that address
Secretary Gates’ mandate to provide additional tactical ISR
capability to our forces deployed in combat.
In Missile Defense, we had several key tests and intercepts
that prove the system is ready and ready to be further developed
to meet all future missile defense requirements. Most notably, our
Standard Missile-3 is the cornerstone of the U.S. Phased Adaptive
Approach, and demand continues to grow for our Patriot Air and
Missile Defense System.
Our more than 70 years’ expertise in radars serves as a
cornerstone for Missile Defense, and is used in scores of other
applications on land, sea, air and space – from tactical fighters
outfitted with our active electronically scanned array Raytheon
Advanced Combat Radars, to radar design for the U.S. Air Force’s
Space Fence for tracking and detecting space objects.
VALUES
VISION
STRATEGY
GOALS
DEAR FELLOW SHAREHOLDERS,