8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (date of earliest event reported): July 28, 2005

RAYTHEON COMPANY

(Exact name of registrant as specified in its charter)

Delaware	1-13699	95-1778500
(State of Incorporation)	(Commission File Number)	(IRS Employer Identification Number)

870 Winter Street Waltham, Massachusetts	02451
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (781) 522-3000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On July 28, 2005, Raytheon Company issued a press release announcing financial results for the second quarter of fiscal year 2005. A copy of the press release is furnished with this report as Exhibit 99.1. The information in this Current Report on Form 8-K and the Exhibit attached is furnished in accordance with SEC Release No. 33-8216 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(c) Exhibits

Exhibit 99.1    Press Release issued by Raytheon Company dated July 28, 2005.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: July 28, 2005

RAYTHEON COMPANY
By:	/s/ Biggs C. Porter
	Biggs C. Porter
	Vice President and Corporate Controller,
	Acting Chief Financial Officer

EX-99.1

Exhibit 99.1

Media Relations

News release

FOR IMMEDIATE RELEASE

Media Contact:	Investor Relations Contact:
James Fetig	Greg Smith
781-522-5111	781-522-5141

Raytheon Reports 10 Percent Sales Growth in Second Quarter 2005 and Increases Full-year Guidance

• Sales of $5.4 billion, EPS of $0.51 from Continuing Operations

• Bookings of $8.1 billion, record backlog of $34.6 billion

• Free cash flow from continuing operations of $736 million

WALTHAM, Mass., (Jul. 28, 2005) – Raytheon Company (NYSE: RTN) reported second quarter 2005 income from continuing operations of $233 million or $0.51 per diluted share compared to a loss from continuing operations of $94 million or $0.22 per diluted share in the second quarter 2004. Second quarter 2004 income from continuing operations, excluding the effect of charges for the settlement of a class action shareholder lawsuit and the early retirement of debt, was $152 million or $0.35 per diluted share. Second quarter 2005 income from continuing operations was higher due to better operating results in the Government and Defense businesses and at Raytheon Aircraft Company (RAC) combined with lower interest expense.

“I continue to be pleased with performance throughout the Company,” said William H. Swanson, Raytheon’s Chairman and CEO. “The strength of our bookings and record backlog demonstrate that the Company is well positioned for future growth.”

Second quarter 2005 net income was $201 million or $0.44 per diluted share compared to a net loss of $108 million or $0.25 per diluted share in 2004. Net income for the second quarter of 2005 included a $32 million after-tax loss in discontinued operations or $0.07 per diluted share, primarily attributable to foreign tax related matters, versus a $14 million after-tax loss or $0.03 per diluted share in 2004.

Net sales for the second quarter 2005 were $5.4 billion, up 10 percent from $4.9 billion in the comparable period in 2004. Government and Defense sales for the quarter (after the elimination of intercompany sales) increased 8 percent to $4.5 billion from $4.2 billion in the comparable quarter. RAC sales for the quarter increased 21 percent to $687 million from $570 million in the 2004 comparable quarter.

Free cash flow from continuing operations for the second quarter 2005 was $736 million versus $820 million for the comparable period in 2004, a decrease primarily due to timing of collections. Year-to-date free cash flow was $398 million versus $620 million for the comparable period in 2004, a decrease primarily due to a $200 million discretionary cash contribution to the Company’s pension plans made in the first quarter of 2005. Free cash flow is defined by the Company as operating cash flow less capital spending and internal use software spending.

During the second quarter of 2005, the Company repurchased 3.6 million shares of common stock for $139 million as part of the Company’s previously announced $700 million share repurchase program, bringing the total shares of common stock repurchased year-to-date to 4.9 million for $192 million.

Net debt was $4.6 billion at the end of the second quarter 2005 and at the end of 2004.

Summary Financial Results	2nd Quarter					%		Six Months				%
(in millions, except per share data)	2005		2004			Change		2005		2004		Change
Net sales	$	5,409	$	4,929		10	%	$	10,353	$	9,605	8	%
Total operating expenses		4,982		4,589					9,549		9,014
Operating income		427		340		26	%		804		591	36	%
Non-operating expenses		70		462					151		567
Income (loss) from cont. ops. before taxes	$	357	$	(122	)			$	653	$	24
Income (loss) from continuing operations	$	233	$	(94	)			$	429	$	7
Net income (loss)	$	201	$	(108	)			$	367	$	20
Diluted EPS from continuing operations	$	0.51	$	(0.22	)			$	0.94	$	0.02
Diluted EPS	$	0.44	$	(0.25	)			$	0.81	$	0.05
Free cash flow from cont. operations	$	736	$	820				$	398	$	620

Bookings and Backlog

The Government and Defense businesses recorded strong second quarter 2005 bookings of $7.3 billion compared to bookings of $5.0 billion in the second quarter of 2004, a 46 percent increase primarily due to two large bookings at Integrated Defense Systems.

Raytheon Aircraft Company’s second quarter 2005 bookings were $602 million compared to $851 million in the 2004 comparable quarter. Second quarter 2004 bookings included a single order in excess of $300 million.

The Company ended the quarter with a record backlog of $34.6 billion compared to $32.5 billion at the end of 2004. The Government and Defense businesses ended the quarter with a backlog of $31.8 billion compared to $29.6 billion at the end of 2004.

Bookings	2nd Quarter				Six Months
(in millions)	2005		2004		2005		2004
Bookings
Government and Defense	$	7,283	$	4,976	$	11,895	$	12,897
Commercial		787		1,004		1,450		1,588
Total Bookings	$	8,070	$	5,980	$	13,345	$	14,485
Backlog	Period ending
(in millions)	06/26/05		12/31/04
Backlog	$	34,551	$	32,543
Funded Backlog	$	19,287	$	18,403

Outlook

The Company now expects 2005 earnings per share from continuing operations to be $1.90-$2.00 versus its previous guidance of $1.85-$1.95. The Company raised its full year guidance for net sales to $21.6-$22.1 billion from $21.5-$22.0 billion. The Company now expects net interest expense to be $285-$300 million versus its previous guidance of $300-$315 million. The Company raised its full year guidance for bookings to $23.7-$24.7 billion from $23.2-$24.2 billion. Charts containing the Company’s guidance are available on the Company’s website at www.raytheon.com.

2005 Financial Outlook	Prior	Current
Bookings	$23.2B-$24.2B	$23.7B-$24.7B
Net Sales	$21.5B-$22.0B	$21.6B-$22.1B
FAS/CAS Pension Expense	$463M	$463M
Interest Expense, net	$300M-$315M	$285M-$300M
Diluted Shares	455M	455M
EPS from Cont. Ops.	$1.85-$1.95	$1.90-$2.00
Cont. Ops./Total Free Cash Flow	$1.3B-$1.5B	$1.3B-$1.5B

Segment Results

Integrated Defense Systems

	2nd Quarter						%		Six Months						%
(in millions, except margin percent)	2005			2004			Change		2005			2004			Change
Net Sales	$	940		$	870		8	%	$	1,846		$	1,709		8	%
Operating Income	$	139		$	104		34	%	$	260		$	198		31	%
Operating Margin		14.8	%		12.0	%				14.1	%		11.6	%

Integrated Defense Systems (IDS) had second quarter 2005 net sales of $940 million, up 8 percent compared to $870 million in the second quarter 2004, primarily due to growth in international Patriot programs and the Cobra Judy program partially offset, as expected, by lower sales on the Sea-Based Radar program. IDS recorded $139 million of second quarter 2005 operating income compared to $104 million in the comparable quarter a year ago. Operating income was higher primarily due to increased sales on international programs and profit adjustments on contracts nearing completion.

During the quarter, IDS booked $1.7 billion of a $3 billion award to continue the ship system integration and detail design for the U.S. Navy’s DD(X) Destroyer. IDS also booked $631 million to provide Taiwan with an Early Warning Surveillance Radar System. These were partially offset by a backlog adjustment of $700 million due to a customer funding profile change to the JLENS program, which is expected to be restored to backlog later this year.

Intelligence and Information Systems

	2nd Quarter						%		Six Months						%
(in millions, except margin percent)	2005			2004			Change		2005			2004			Change
Net Sales	$	630		$	583		8	%	$	1,172		$	1,107		6	%
Operating Income	$	59		$	52		13	%	$	109		$	97		12	%
Operating Margin		9.4	%		8.9	%				9.3	%		8.8	%

Intelligence and Information Systems (IIS) had second quarter 2005 net sales of $630 million, up 8 percent compared to $583 million in the second quarter 2004, primarily due to continued growth in classified programs. IIS recorded $59 million of operating income compared to $52 million in the comparable quarter a year ago.

During the quarter, IIS booked $430 million on a number of classified contracts, including a major international competitive classified contract.

Missile Systems

	2nd Quarter						%		Six Months						%
(in millions, except margin percent)	2005			2004			Change		2005			2004			Change
Net Sales	$	1,007		$	939		7	%	$	1,997		$	1,904		5	%
Operating Income	$	104		$	106		-2	%	$	209		$	213		-2	%
Operating Margin		10.3	%		11.3	%				10.5	%		11.2	%

Missile Systems (MS) had second quarter 2005 net sales of $1,007 million, up 7 percent compared to $939 million in the second quarter 2004, primarily due to a ramp up on Tactical Tomahawk and several new programs. MS recorded $104 million of operating income compared to $106 million in the comparable quarter a year ago. Last year’s second quarter operating income included cost recovery for prior year restructuring actions.

During the quarter, MS booked $163 million for the production of 251 Evolved SeaSparrow Missiles (ESSM) for the U.S. Navy and nine other allied nations. MS also booked $111 million for a classified contract.

Network Centric Systems

	2nd Quarter						%		Six Months						%
(in millions, except margin percent)	2005			2004			Change		2005			2004			Change
Net Sales	$	804		$	758		6	%	$	1,566		$	1,462		7	%
Operating Income	$	78		$	64		22	%	$	157		$	118		33	%
Operating Margin		9.7	%		8.4	%				10.0	%		8.1	%

Network Centric Systems (NCS) had second quarter 2005 net sales of $804 million, up 6 percent compared to $758 million in the second quarter 2004 primarily due to increased effort on development programs and communication programs. NCS recorded operating income of $78 million compared to $64 million in the comparable quarter a year ago. Operating income was higher due to improved performance.

During the quarter, NCS booked $485 million for the definitization of the Ground Sensor Integrator (GSI) on the Future Combat System (FCS) contract initially awarded in the third quarter of 2003, bringing the total booked to over $1 billion on this program. NCS also booked $169 million for a Horizontal Technology Integration (HTI) production follow-on contract for the U.S. Army.

Space and Airborne Systems

	2nd Quarter						%		Six Months						%
(in millions, except margin percent)	2005			2004			Change		2005			2004			Change
Net Sales	$	1,060		$	985		8	%	$	2,017		$	1,998		1	%
Operating Income	$	146		$	142		3	%	$	301		$	271		11	%
Operating Margin		13.8	%		14.4	%				14.9	%		13.6	%

Space and Airborne Systems (SAS) had second quarter 2005 net sales of $1,060 million, up 8 percent compared to $985 million in the second quarter 2004 primarily due to growth in ATFLIR production and airborne radar programs. SAS recorded $146 million of operating income compared to $142 million in the comparable quarter a year ago.

During the quarter, SAS booked $586 million for the production of 190 APG-79 Active Electronically Scanned Array (AESA) radars for the F/A-18 Super Hornet program. SAS also booked $130 million on a number of classified contracts.

Technical Services

	2nd Quarter						%		Six Months						%
(in millions, except margin percent)	2005			2004			Change		2005			2004			Change
Net Sales	$	509		$	478		6	%	$	976		$	928		5	%
Operating Income	$	38		$	35		9	%	$	69		$	66		5	%
Operating Margin		7.5	%		7.3	%				7.1	%		7.1	%

Technical Services (TS) had second quarter 2005 net sales of $509 million, up 6 percent compared to $478 million in the second quarter 2004. TS recorded operating income of $38 million in the first quarter of 2005 compared to $35 million in the comparable quarter a year ago.

During the quarter, TS booked $57 million from the Defense Threat Reduction Agency to provide improved security at Russian nuclear weapons storage facilities under the Cooperative Threat Reduction Program. TS also booked a mission support contract valued at $29 million to provide avionics maintenance to AP-3C aircraft for the Australian Commonwealth.

Aircraft

	2nd Quarter						%		Six Months						%
(in millions, except margin percent)	2005			2004			Change		2005			2004			Change
Net Sales	$	687		$	570		21	%	$	1,129		$	944		20	%
Operating Income	$	33		$	23		43	%	$	35		$	(5	)
Operating Margin		4.8	%		4.0	%				3.1	%		-0.5	%
Commercial Deliveries		79			75		5	%		112			100		12	%

Raytheon Aircraft Company (RAC) had second quarter 2005 net sales of $687 million, up 21 percent from $570 million in the second quarter 2004. RAC recorded operating income of $33 million in the quarter compared to $23 million in the comparable quarter in 2004. Operating income was higher primarily due to higher sales volume and aircraft mix.

RAC delivered 79 commercial aircraft in the second quarter of 2005, compared to 75 in the same quarter last year.

Other

Net sales for this segment in the second quarter 2005 were $189 million compared to $153 million in the second quarter 2004. The segment recorded an operating loss of $20 million in the second quarter 2005 compared to an operating loss of $7 million in the comparable quarter in 2004.

Discontinued Operations

During the quarter, the Company recorded an after-tax loss from discontinued operations of $32 million or $0.07 per diluted share related to its former engineering and construction and Aircraft Integration Systems businesses. The $32 million after-tax loss includes a $23 million charge in the quarter for foreign tax related matters.

Raytheon Company (NYSE: RTN), with 2004 sales of $20.2 billion, is an industry leader in defense and government electronics, space, information technology, technical services, and business and special mission aircraft. With headquarters in Waltham, Mass., Raytheon employs 80,000 people worldwide.

Disclosure Regarding Forward-looking Statements

Certain statements included in this release, including any statements relating to the Company’s future plans, objectives, and projected future financial performance, contain or are based on, forward-looking statements within the meaning of the federal securities laws. Specifically, statements that are not historical facts, including statements accompanied by words such as “believe,” “expect,” “estimate,” “intend,” or “plan,” and variations of these words and similar expressions, are intended to identify forward-looking statements and convey the uncertainty of future events or outcomes. The Company cautions readers that any such forward-looking statements are based on assumptions that the Company believes are reasonable, but are subject to a wide range of risks, and actual results may differ materially. The Company expressly disclaims any current intention to provide updates to forward-looking statements, and the estimates and assumptions associated with them, after the date of this release. Important factors that could cause actual results to differ include, but are not limited to: the ability to obtain or the timing of obtaining future government awards; the availability of government funding; changes in government or customer priorities due to program reviews or revisions to strategic

objectives; difficulties in developing and producing operationally advanced products and technology systems; termination of government contracts; program performance, including resolution of claims; timing of contract payments; the performance of critical subcontractors; government import and export policies and other government regulations; the ultimate resolution of contingencies and legal matters, including government investigations; the ultimate resolution of insurance coverage for class action shareholder and derivative lawsuits against the Company; the effect of regulatory actions and market conditions, particularly in relation to the general aviation, commuter, and fractional aircraft businesses; cost growth risks inherent with large long-term fixed price contracts; conflicts with other investors and business risks in joint ventures and less than wholly-owned businesses; and risks associated with our former engineering and construction business related to outstanding letters of credit, surety bonds, guarantees and similar agreements and the resolution of claims and litigation. Further information regarding the factors that could cause actual results to differ materially from the projected results can be found in the Company’s filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the year ended December 31, 2004 and quarterly reports on Form 10-Q, copies of which may be obtained at the Company’s website at www.raytheon.com.

Conference Call on the Second Quarter 2005 Financial Results

Raytheon’s financial results conference call will be Thursday, July 28, 2005 at 9 a.m. EDT. Participants will be William H. Swanson, Chairman and CEO, Biggs C. Porter, vice president and corporate controller, and acting CFO, and other Company executives.

The dial-in number for the conference call will be (800) 265—0241. The conference call will also be audiocast on the Internet at www.raytheon.com. Individuals may listen to the call and download charts that will be used during the call. These charts will be available for printing prior to the call.

Interested parties are urged to check the website ahead of time to ensure their computers are configured for the audio stream. Instructions for obtaining the free required downloadable software are posted on the site.

# # #

Attachment A

Raytheon Company

Financial Information

Second Quarter 2005

(In millions except per share amounts)

	Three Months Ended						Six Months Ended
	26-Jun-05			27-Jun-04			26-Jun-05			27-Jun-04
Net sales	$	5,409		$	4,929		$	10,353		$	9,605
Cost of sales		4,490			4,117			8,608			8,113
Administrative and selling expenses		356			345			705			659
Research and development expenses		136			127			236			242
Total operating expenses		4,982			4,589			9,549			9,014
Operating income		427			340			804			591
Interest expense		82			109			158			226
Interest income		(12	)		(10	)		(24	)		(22	)
Other expense, net		—			363			17			363
Non-operating expense, net		70			462			151			567
Income (loss) from continuing operations before taxes		357			(122	)		653			24
Federal and foreign income taxes		124			(28	)		224			17
Income (loss) from continuing operations		233			(94	)		429			7
Loss from discontinued operations, net of tax		(32	)		(14	)		(62	)		(28	)
Income (loss) before accounting change		201			(108	)		367			(21	)
Cumulative effect of change in accounting principle, net of tax		—			—			—			41
Net income (loss)	$	201		$	(108	)	$	367		$	20
Earnings (loss) per share from continuing operations
Basic	$	0.52		$	(0.22	)	$	0.95		$	0.02
Diluted	$	0.51		$	(0.22	)	$	0.94		$	0.02
Loss per share from discontinued operations
Basic	$	(0.07	)	$	(0.03	)	$	(0.14	)	$	(0.07	)
Diluted	$	(0.07	)	$	(0.03	)	$	(0.14	)	$	(0.07	)
Earnings per share from cumulative effect of change in accounting principle
Basic	$	—		$	—		$	—		$	0.10
Diluted	$	—		$	—		$	—		$	0.10
Earnings (loss) per share
Basic	$	0.45		$	(0.25	)	$	0.82		$	0.05
Diluted	$	0.44		$	(0.25	)	$	0.81		$	0.05
Average shares outstanding
Basic		449.0			434.6			449.8			426.6
Diluted		455.1			434.6			455.6			429.3

Attachment B

Raytheon Company

Segment Information

Second Quarter 2005

(In millions)

	Net Sales Three Months Ended						Operating Income Three Months Ended						Operating Income As a Percent of Sales Three Months Ended
	26-Jun-05			27-Jun-04			26-Jun-05			27-Jun-04			26-Jun-05		27-Jun-04
Integrated Defense Systems	$	940		$	870		$	139		$	104		14.8	%	12.0	%
Intelligence and Information Systems		630			583			59			52		9.4	%	8.9	%
Missile Systems		1,007			939			104			106		10.3	%	11.3	%
Network Centric Systems		804			758			78			64		9.7	%	8.4	%
Space and Airborne Systems		1,060			985			146			142		13.8	%	14.4	%
Technical Services		509			478			38			35		7.5	%	7.3	%
Aircraft		687			570			33			23		4.8	%	4.0	%
Other		189			153			(20	)		(7	)	-10.6	%	-4.6	%
FAS/CAS Pension Adjustment		—			—			(116	)		(118	)
Corporate and Eliminations		(417	)		(407	)		(34	)		(61	)
Total	$	5,409		$	4,929		$	427		$	340		7.9	%	6.9	%
	Net Sales Six Months Ended						Operating Income Six Months Ended						Operating Income As a Percent of Sales Six Months Ended
	26-Jun-05			27-Jun-04			26-Jun-05			27-Jun-04			26-Jun-05		27-Jun-04
Integrated Defense Systems	$	1,846		$	1,709		$	260		$	198		14.1	%	11.6	%
Intelligence and Information Systems		1,172			1,107			109			97		9.3	%	8.8	%
Missile Systems		1,997			1,904			209			213		10.5	%	11.2	%
Network Centric Systems		1,566			1,462			157			118		10.0	%	8.1	%
Space and Airborne Systems		2,017			1,998			301			271		14.9	%	13.6	%
Technical Services		976			928			69			66		7.1	%	7.1	%
Aircraft		1,129			944			35			(5	)	3.1	%	-0.5	%
Other		381			328			(41	)		(22	)	-10.8	%	-6.7	%
FAS/CAS Pension Adjustment		—			—			(232	)		(239	)
Corporate and Eliminations		(731	)		(775	)		(63	)		(106	)
Total	$	10,353		$	9,605		$	804		$	591		7.8	%	6.2	%

Attachment C

Raytheon Company

Other Information

Second Quarter 2005

	Backlog (In millions)				Funded Backlog (In millions)
	26-Jun-05		31-Dec-04		26-Jun-05		31-Dec-04
Integrated Defense Systems	$	7,454	$	6,628	$	3,630	$	3,454
Intelligence and Information Systems		4,019		4,066		840		811
Missile Systems		8,618		8,341		4,931		4,517
Network Centric Systems		4,332		3,587		3,052		2,623
Space and Airborne Systems		5,715		5,216		3,129		3,127
Technical Services		1,644		1,773		936		939
Aircraft		2,499		2,638		2,499		2,638
Other		270		294		270		294
	$	34,551	$	32,543	$	19,287	$	18,403
Government and Defense businesses	$	31,782	$	29,611	$	16,518	$	15,471
U.S. government backlog included above	$	28,018	$	25,525

	Bookings (In millions) Three months ended
	26-Jun-05		27-Jun-04
Government and Defense businesses	$	7,283	$	4,976
Commercial businesses		787		1,004
	$	8,070	$	5,980
	New Aircraft Deliveries (Units) Three Months Ended
	26-Jun-05		27-Jun-04
Horizon		—		—
Hawker 800XP		13		14
Premier I		6		9
Hawker 400XP		16		5
King Air		27		22
1900D Commuter		—		—
Pistons		25		25
T-6A		17		20
Total		104		95
	New Aircraft Bookings (Units) Three Months Ended
	26-Jun-05		27-Jun-04
Horizon		1		1
Hawker 800XP		13		35
Premier I		6		10
Hawker 400XP		8		26
King Air		42		31
1900D Commuter		—		—
Pistons		14		12
T-6A		—		—
Total		84		115

Attachment D

Raytheon Company

Preliminary Financial Information

Second Quarter 2005

(In millions)

Balance sheets

	26-Jun-05		31-Dec-04
Assets
Cash and cash equivalents	$	454	$	556
Accounts receivable		410		478
Contracts in process		3,689		3,514
Inventories		1,960		1,745
Deferred federal and foreign income taxes		436		469
Prepaid expenses and other current assets		325		343
Assets from discontinued operations		17		19
Total current assets		7,291		7,124
Property, plant and equipment, net		2,623		2,738
Deferred federal and foreign income taxes		—		71
Goodwill		11,511		11,516
Other assets, net		2,553		2,704
Total assets	$	23,978	$	24,153
Liabilities and Stockholders’ Equity
Notes payable and current portion of long-term debt	$	468	$	516
Subordinated notes payable		408		—
Advance payments and billings in excess of costs incurred		1,919		1,900
Accounts payable		952		867
Accrued salaries and wages		799		934
Other accrued expenses		1,326		1,403
Liabilities from discontinued operations		31		24
Total current liabilities		5,903		5,644
Accrued retiree benefits and other long-term liabilities		3,130		3,224
Deferred federal and foreign income taxes		65		—
Long-term debt		4,219		4,229
Subordinated notes payable		—		408
Minority interest		126		97
Stockholders’ equity		10,535		10,551
Total liabilities and stockholders’ equity	$	23,978	$	24,153

Attachment E

Raytheon Company

Preliminary Cash Flow Information

Second Quarter 2005

(In millions)

Cash flow information

	Three Months Ended						Six Months Ended
	26-Jun-05			27-Jun-04			26-Jun-05			27-Jun-04
Income from continuing operations	$	233		$	(94	)	$	429		$	7
Depreciation		88			89			176			174
Amortization		22			19			42			35
Working capital		283			888			(351	)		277
Discontinued operations		(49	)		(25	)		(52	)		(16	)
Capital spending		(64	)		(74	)		(112	)		(134	)
Internal use software spending		(20	)		(25	)		(36	)		(50	)
Net activity in financing receivables		46			2			91			97
Other		148			15			159			214
Subtotal - free cash flow (a)		687			795			346			604
Sale of short-term investments		—			(74	)		—			(74	)
Acquisitions		—			—			(60	)		(70	)
Investment activity and divestitures		—			—			7			4
Dividends		(100	)		(85	)		(190	)		(168	)
Issuance of common stock		—			863			—			867
Repurchase of common stock		(139	)		—			(192	)		—
Debt borrowings (repayments)		(484	)		(855	)		(62	)		(858	)
Other		33			20			49			38
Total cash flow	$	(3	)	$	664		$	(102	)	$	343

Segment free cash flow information

	Three Months Ended						Six Months Ended
	26-Jun-05			27-Jun-04			26-Jun-05			27-Jun-04
Integrated Defense Systems	$	70		$	322		$	160		$	193
Intelligence and Information Systems		58			77			15			34
Missile Systems		231			233			282			192
Network Centric Systems		142			57			2			(72	)
Space and Airborne Systems		69			222			(178	)		107
Technical Services		32			(12	)		14			3
Aircraft		(59	)		(9	)		(7	)		47
Other		15			(68	)		24			(50	)
Discontinued operations		(49	)		(25	)		(52	)		(16	)
Corporate		178			(2	)		86			166
	$	687		$	795		$	346		$	604

(a) See Attachment F for a description of free cash flow.

Attachment F

Raytheon Company

Non-GAAP Financial Measures

Second Quarter 2005

This release contains non-GAAP financial measures (as defined by SEC Regulation G). While these non-GAAP financial measures may be useful in evaluating the Company, this information should be considered supplemental to and not as a substitute for financial information prepared in accordance with generally accepted accounting principles.

The following measures are considered “non-GAAP” financial measures under SEC guidelines:

(i) Free cash flow.

(ii) Income from Continuing Operations and EPS Excluding Charges Related to Class Action Lawsuit Settlement and Early Retirement of Debt.

Free cash flow is a “non-GAAP” financial measure under SEC regulations. The Company defines free cash flow as operating cash flow less capital spending and internal use software spending. Our definition may differ from similarly titled measures used by others. The Company uses free cash flow to facilitate management’s internal comparisons to the Company’s historical operating results and to competitors’ operating results and as an element of management incentive compensation. The Company believes disclosure of free cash flow performance provides investors greater transparency with respect to information used by management in its financial and operational decision making. The Company also uses non-GAAP financial measures which exclude certain charges and credits because it believes that such items are not indicative of its core operating results, are not indicative of trends, and do not provide meaningful comparisons with other reporting periods.

Free cash flow

	Three Months Ended						Six Months Ended
	26-Jun-05			27-Jun-04			26-Jun-05			27-Jun-04
Operating cash flow	$	771		$	894		$	494		$	788
Less: Capital spending		(64	)		(74	)		(112	)		(134	)
Internal use software spending		(20	)		(25	)		(36	)		(50	)
Free cash flow		687			795			346			604
Plus: Discontinued operations		49			25			52			16
Free cash flow from continuing operations	$	736		$	820		$	398		$	620

Free cash flow guidance

2005

Full year

	Current Guidance
	Low end of range			High end of range
Operating cash flow	$	1,735		$	1,895
Less: Capital and internal software spending		(500	)		(450	)
Free cash flow		1,235			1,445
Plus: Discontinued operations		80			75
Free cash flow from continuing operations	$	1,315		$	1,520

2004 Income From Continuing Operations and EPS Excluding Charges Related to Class Action Lawsuit Settlement and Early Retirement of Debt

	Three Months Ended 27-Jun-04
	Income from continuing operations			EPS from continuing operations
GAAP, as reported	$	(94	)	$	(0.22	)
Excluding settlement of class action lawsuit charge		(222	)		(0.51	)
Excluding early retirement of debt charge		(24	)		(0.06	)
Non-GAAP	$	152		$	0.35