RAYTHEON COMPANY (Exact Name of Registrant As Specified in Its Charter)
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Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2003. ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-13699 RAYTHEON COMPANY (Exact Name of Registrant as Specified in its Charter) DELAWARE 95-1778500 (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.) 870 WINTER STREET, WALTHAM, MASSACHUSETTS 02451 (Address of Principal Executive Offices) (Zip Code) (781) 522-3000 Registrant’s telephone number, including area code Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which Registered Common Stock, $.01 par value New York Stock Exchange Chicago Stock Exchange Pacific Exchange Equity Security Units New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K ☐ Indicate by check mark whether the registrant is an accelerated filer. Yes ☒ No ☐ The aggregate market value of the voting stock held by non-affiliates of the Registrant, as of June 29, 2003, was approximately $13.3 billion. Number of shares of Common Stock outstanding as of December 31, 2003: 418,136,000. Documents incorporated by reference and made a part of this Form 10-K: Portions of the Proxy Statement for Raytheon’s 2004 Annual Meeting which will be filed with the Commission within 120 days after the close of Part III Raytheon’s fiscal year. Table of Contents INDEX Table of Contents Page PART I Item 1. Business 3 Item 2. Properties 16 Item 3. Legal Proceedings 18 Item 4. Submission of Matters to a Vote of Security Holders 20 Item 4(A). Executive Officers of the Registrant 20 PART II Item 5. Market For Registrant’s Common Equity and Related Stockholder Matters 23 Item 6. Selected Financial Data 24 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 25 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 39 Item 8. Financial Statements and Supplementary Data 40 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 68 Item 9A. Controls and Procedures 68 PART III Item 10. Directors and Executive Officers of the Registrant 69 Item 11. Executive Compensation 69 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 69 Item 13. Certain Relationships and Related Transactions 70 Item 14. Principal Accountant Fees and Services 70 PART IV Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K 71 2 Table of Contents PART I Item 1. Business GENERAL Raytheon Company (“Raytheon” or the “Company”), with worldwide 2003 sales of $18.1 billion, is an industry leader in defense and government electronics, space, information technology, technical services, and business and special mission aircraft. Raytheon was founded in 1922 and is currently incorporated in the state of Delaware. The Company is the surviving company of the 1997 merger of HE Holdings, Inc. and Raytheon Company. Raytheon’s government and defense business is currently aligned in six business segments: Integrated Defense Systems; Intelligence and Information Systems; Missile Systems; Network Centric Systems; Space and Airborne Systems; and Technical Services. Raytheon Aircraft is one of the leading providers of business and special mission aircraft and delivers a broad line of jet, turboprop, and piston-powered airplanes to individual, corporate and government customers world- wide. The Company’s principal executive offices are located at 870 Winter Street, Waltham, Massachusetts 02451. The Company’s Internet address is www.raytheon.com. The content on the Company’s website is available for information purposes only. It should not be relied upon for investment purposes, nor is it incorporated by reference into this Form 10-K. The Company makes available free of charge on or through its Internet website under the heading “Investor Relations,” its report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports as soon as reasonably practicable after it electronically files such material with, or furnishes it to, the Securities and Exchange Commission. BUSINESS SEGMENTS Effective January 1, 2003, the Company began reporting its government and defense businesses in six segments. In addition, the Company’s Commercial Electronics businesses were reassigned to the new Integrated Defense Systems and Network Centric Systems defense segments. The Company has conformed its segment reporting accordingly and has reclassified comparative prior period information to reflect this change. See “Note P - Business Segment Reporting” within Item 8 of this Form 10-K. Integrated Defense Systems. The Integrated Defense Systems (IDS) segment is Raytheon’s leader in mission systems integration. With a strong international and domestic customer base, including the U.S. Missile Defense Agency and the U.S. Armed Forces, IDS provides integrated air and missile defense and naval and maritime solutions. IDS’ major programs, products and initiatives currently include: DD(X), SPY-3 Radar, the Patriot Air and Missile Defense System, Early Warning Radars, the Cobra Judy Replacement program, Surface-Launched AMRAAM (SLAMRAAM), Complementary Low-Altitude Weapon System (CLAWS), Theater High Altitude Area Defense (THAAD) Radar, Sea-Based X-Band Radar (SBX), Ballistic Missile Defense System (BMDS), Upgraded Early Warning Radar (UEWR), Joint Land Attack Cruise Missile Defense Elevated Netted Sensor (JLENS), Landing Platform Dock Amphibious Ship LPD-17, Common Aviation Command and Control System (CAC2S), Combat System Mk2 (CCS Mk2), Ship Self-Defense System (SSDS) and Aegis Weapon Systems radar equipment. Some specific IDS accomplishments in 2003 included: • Award of a contract to provide engineering, construction, integration and testing of a forward-deployable BMDS radar. The BMDS radar, is a transportable, X-band, phased array radar with sufficient sensitivity to detect, track and discriminate between missile threats; • Mission systems engineering, software development, and test and evaluation services as systems integrator on the DD(X) program, the U.S. Navy’s next-generation surface combatant ship; • Fabrication, assembly and testing of the Sea-based Test-XBR, a high powered, phased-array radar mounted on an ocean-going platform and designed to meet near-term ballistic missile threats; • Design, production, integration, and testing of Cobra Judy Replacement Mission Equipment for the Naval Sea Systems Command. The existing Cobra Judy is an integrated, computer-driven surveillance and data collection radar system. IDS will replace the current Cobra Judy with a dual-band radar suite consisting of X-band and S-band active phased array sensors and other related mission equipment; and • Development of the JLENS Spiral 2, a netted sensor system for cruise missile defense, for the U.S. Army Space and Missile Defense Command. 3 Table of Contents Product performance and support and price are among the principal competitive factors considered by IDS’ customers, which include the U.S. Missile Defense Agency and the U.S. Armed Forces. IDS relies upon its domain knowledge and products to compete in the Missile Defense, Integrated Air Defense and other mission areas. Intelligence and Information Systems. The Intelligence and Information Systems (IIS) segment is a leading provider of systems, subsystems, and software engineering services for national and tactical intelligence systems, as well as for homeland security and information technology solutions. Areas of special concentration include processing, analysis and dissemination of signals and imagery, production of geospatial intelligence, command and control of airborne and spaceborne platforms including unmanned aerial vehicles (UAV’s) and satellites, and integrated ground systems for weather and environmental programs. IIS contracts encompass a broad range of products from signal intelligence (SIGINT) sensors (used on platforms such as U2) to mission management systems (used to manage operation and data for platforms like Global Hawk). In addition, IIS delivers integrated solutions for government IT requirements and knowledge driven homeland security solutions for customers worldwide. IIS’ major programs, products and initiatives currently include: UAV systems and Ground Stations, Signal and Imagery Intelligence Programs, Communications Systems, Information Solutions Programs, Department of Education Programs, Supercomputing, National Polar-orbiting Operational Environmental Satellite System Program, Mobile Very Small Aperture Satellite