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Raytheon Reports Strong Fourth Quarter and Full-Year 2007 Results; Increases 2008 Full-Year Guidance

WALTHAM, Mass., Jan. 31, 2008 /PRNewswire-FirstCall/ --

                                Highlights

  -- Record bookings of $9.2 billion in quarter and $25.5 billion for year;
     record backlog of $36.6 billion
  -- Sales of $6.0 billion in quarter and $21.3 billion for year, both up 8
     percent
  -- Operating income of $646 million in quarter, up 17 percent; $2.3
     billion for year, up 20 percent
  -- Earnings per share (EPS) from continuing operations of $1.45 in quarter
     and $3.80 for year
     -- Adjusted EPS from continuing operations of $0.96 in quarter and
        $3.31 for year, both up 26 percent(1)
  -- Repurchased 5.4 million shares for $341 million in quarter; 28.7
     million shares for $1.6 billion for year

Raytheon Company (NYSE: RTN) reported fourth quarter 2007 income from continuing operations of $634 million or $1.45 per diluted share compared to $344 million or $0.76 per diluted share in the fourth quarter 2006. Fourth quarter 2007 income from continuing operations was higher primarily due to operational improvements, combined with lower net interest and pension expense as well as tax-related benefits of $214 million or $0.49 per diluted share.

"2007 was a very successful year for the Company; we grew sales 8% in 2007 while increasing operating income by 20%," said William H. Swanson, Raytheon Chairman and CEO. "We ended the year with record bookings and backlog, which positions us well for 2008 and beyond."

Fourth quarter 2007 net income was $598 million or $1.37 per diluted share compared to $365 million or $0.81 per diluted share in the fourth quarter 2006. Net income for the fourth quarter 2007 included an after-tax loss of $36 million or $0.08 per diluted share in discontinued operations compared to income of $21 million or $0.05 per diluted share in the fourth quarter 2006. As previously disclosed, fourth quarter 2007 discontinued operations results included an after-tax charge of $44 million related to the sale of Flight Options LLC (FO), which was completed in the fourth quarter 2007. Fourth quarter 2006 discontinued operations included a full quarter of the results of FO and Raytheon Aircraft Company (RAC), which was sold in the second quarter 2007.

Net sales for the fourth quarter 2007 were $6.0 billion, up 8 percent from $5.6 billion in the fourth quarter 2006, with growth across all of the Company's businesses.

Operating cash flow from continuing operations for the fourth quarter 2007 was $941 million compared to $1,293 million for the fourth quarter 2006. This decrease is primarily due to the acceleration of a $500 million discretionary cash contribution originally planned to be made to the Company's pension plans in the first quarter 2008 and the timing of certain customer advances, partially offset by $381 million in tax refunds received during the quarter from the resolution of various tax matters.

Full-Year Financial Results

For the full year the Company reported income from continuing operations of $1.7 billion or $3.80 per diluted share compared to $1.2 billion or $2.63 per diluted share in 2006, primarily due to operational improvements combined with lower net interest and pension expense, and tax-related benefits. Full- year 2007 adjusted EPS from continuing operations was $3.31(1).

In 2007 the Company sold Raytheon Aircraft Company (RAC) and Flight Options LLC (FO), which together contributed $885 million or $1.99 per diluted share (in discontinued operations) to net income. Net income for 2007 also included tax-related benefits of $219 million or $0.49 per diluted share. The Company reported net income for 2007 of $2.6 billion or $5.79 per diluted share compared to $1.3 billion or $2.85 per diluted share in 2006.

Total 2007 net sales for the Company were $21.3 billion compared to $19.7 billion for 2006, an increase of 8 percent, primarily due to Integrated Defense Systems (IDS), Intelligence and Information Systems (IIS), Missile Systems (MS) and Network Centric Systems (NCS).

Operating cash flow from continuing operations was $1,249 million in 2007 compared to $2,477 million in 2006. The decrease in operating cash flow in 2007 compared to 2006 was primarily due to higher cash tax payments and discretionary pension cash contributions made in 2007. The Company paid $1,115 million in cash taxes in 2007 ($631 million attributable to the gain on the sale of RAC) compared to $375 million in 2006. Also, the Company made $900 million in discretionary cash contributions to the Company's pension plans in 2007 compared to $200 million in 2006. The Company also received tax refunds of $381 million during the fourth quarter 2007.

As part of the Company's previously announced share repurchase program, during the fourth quarter 2007 the Company repurchased 5.4 million shares of common stock for $341 million, and for the year repurchased 28.7 million shares for $1.6 billion.

  Summary Financial Results     4th Quarter     %       Full-Year       %
  ($ in millions, except per
   share data)                   2007    2006  Change   2007     2006 Change

  Net Sales                    $6,000  $5,561    8%  $21,301  $19,707    8%
  Total Operating Expenses      5,354   5,008         18,973   17,763
  Operating Income                646     553   17%    2,328    1,944   20%
  Non-operating Expenses            7      40            103      153
  Income from Cont. Ops.
   before Taxes                  $639    $513   25%   $2,225   $1,791   24%
  Income from Continuing
   Operations                    $634    $344   84%   $1,693   $1,187   43%
  (Loss) income from Disc.
   Operations                     (36)     21   NM       885       96   NM
  Net Income                     $598    $365   64%   $2,578   $1,283  101%

  Diluted EPS from Continuing
   Operations                   $1.45   $0.76   91%    $3.80    $2.63   44%
  Adjusted EPS from Cont.
   Ops.(1)                      $0.96   $0.76   26%    $3.31    $2.63   26%
  Diluted EPS                   $1.37   $0.81   69%    $5.79    $2.85  103%

  Operating Cash Flow from
   Cont. Ops.                    $941  $1,293         $1,249   $2,477


  (1) Adjusted EPS from continuing operations is EPS from continuing
      operations excluding tax-related benefits of $0.49 ($214M) in Q4 '07
      and $0.49 ($219M) in full-year '07.  Adjusted EPS from continuing
      operations is a non-GAAP financial measure.  See attachment G for a
      reconciliation of this measure to EPS from continuing operations under
      GAAP and a discussion of why the Company is presenting this
      information.

  Bookings and Backlog


  Bookings                            4th Quarter             Full-Year
  (in millions)                       2007     2006         2007       2006

  Total Bookings                    $9,181   $7,633      $25,498    $22,417

  Backlog
  (in millions)                   12/31/07 12/31/06

  Backlog                          $36,614  $33,838
  Funded Backlog                   $20,518  $18,186

The Company reported total bookings for the fourth quarter 2007 of $9.2 billion compared to $7.6 billion in the fourth quarter 2006, an increase driven primarily by two international multi-year programs, the Australian Air Warfare Destroyer program and the U.K. e-Borders contract. The Company reported full-year 2007 bookings of $25.5 billion, up 14 percent compared to $22.4 billion for full-year 2006.

The Company ended 2007 with a record backlog of $36.6 billion, up 8 percent compared to $33.8 billion at the end of 2006.

  Outlook


                                                                 Prior
  2008 Financial Outlook                        Current       (10/25/07)

  Net Sales ($B)                              22.4 - 22.9     22.1 - 22.6
  FAS/CAS Pension Expense ($M)                    150        Not provided
  Interest Expense, net ($M)                    45 - 60      Not provided
  Diluted Shares (M)                           427 - 429     Not provided
  EPS from Cont. Ops.                        $3.65 - $3.80   $3.45 - $3.65
  Operating Cash Flow from Cont. Ops. ($B)     2.0 - 2.2       1.5 - 1.7
  ROIC (%)                                     9.6 - 10.1    Not provided

The Company has updated full-year 2008 guidance. Charts containing additional information on the Company's 2008 guidance are available on the Company's website at http://www.raytheon.com/. See attachment F for the Company's calculation and use of Return on Invested Capital (ROIC), a non-GAAP financial measure.

  Segment Results

  Integrated Defense Systems


                                  4th Quarter     %      Full-Year      %
  ($ in millions)                 2007    2006  Change  2007    2006  Change

  Net Sales                     $1,290  $1,189    8%  $4,695  $4,220   11%
  Operating Income                $211    $189   12%    $828    $691   20%
  Operating Margin                16.4%   15.9%         17.6%   16.4%

Integrated Defense Systems (IDS) had fourth quarter 2007 net sales of $1,290 million, up 8 percent compared to $1,189 million in the fourth quarter 2006, primarily due to growth on Missile Defense Agency, U.S. Army, and international programs. IDS recorded $211 million of operating income compared to $189 million in the fourth quarter 2006. The increase in operating income was primarily due to higher volume and improved performance on several international and domestic programs.

During the quarter, IDS booked $1.3 billion for the Air Warfare Destroyer program for the Australian Navy. IDS also booked $233 million for the Patriot Pure Fleet program for the U.S. Army.

  Intelligence and Information Systems


                                    4th Quarter    %      Full-Year     %
  ($ in millions)                    2007  2006 Change  2007    2006  Change

  Net Sales                          $808  $690   17%  $2,742  $2,560   7%
  Operating Income                    $66   $63    5%    $248    $234   6%
  Operating Margin                    8.2%  9.1%          9.0%    9.1%

Intelligence and Information Systems (IIS) had fourth quarter 2007 net sales of $808 million, up 17 percent compared to $690 million in the fourth quarter 2006, primarily due to new programs, including e-Borders. IIS recorded $66 million of operating income compared to $63 million in the fourth quarter 2006. The increase in operating income was primarily due to higher volume partially offset by certain costs associated with the Oakley Networks acquisition.

During the quarter, IIS booked $1.4 billion for the U.K. e-Borders contract, an advanced border control and security program and $160 million for the Global Positioning System Operational Control Segment (GPS-OCX) contract for the U.S. Air Force. IIS also booked $538 million on a number of classified contracts, including $246 million on a major classified contract.

  Missile Systems


                                    4th Quarter    %      Full-Year      %
  ($ in millions)                   2007   2006  Change  2007    2006 Change

  Net Sales                       $1,362  $1,316   3%  $4,993  $4,503   11%
  Operating Income                  $148    $138   7%    $541    $479   13%
  Operating Margin                  10.9%   10.5%        10.8%   10.6%

Missile Systems (MS) had fourth quarter 2007 net sales of $1,362 million, up 3 percent compared to $1,316 million in the fourth quarter 2006, primarily due to higher volume on the Standard Missile program. MS recorded $148 million of operating income compared to $138 million in the fourth quarter 2006. The increase in operating income was primarily due to higher volume and a royalty on a foreign military sale.

During the quarter, MS booked $242 million for Phalanx Weapons Systems for the U.S. Navy, $234 million for the design and development of the Mid Range Munition (MRM) system and $196 million for the production of Tube-launched Optically guided Wire controlled (TOW) missiles for the U.S. Army. MS also booked $145 million for the production of Enhanced Paveway™ for an international customer.

  Network Centric Systems


                                  4th Quarter     %      Full-Year      %
  ($ in millions)                 2007    2006  Change  2007    2006  Change

  Net Sales                     $1,147  $1,011   13%  $4,164  $3,561   17%
  Operating Income                $127    $117    9%    $506    $379   34%
  Operating Margin                11.1%   11.6%         12.2%   10.6%

Network Centric Systems (NCS) had fourth quarter 2007 net sales of $1,147 million, up 13 percent compared to $1,011 million in the fourth quarter 2006, primarily due to increased volume on certain U.S. Army programs. NCS recorded $127 million of operating income compared to $117 million in the fourth quarter 2006. The increase in operating income was primarily due to higher volume.

During the quarter, NCS booked $150 million to deliver SATCOM on the Move (SOTM) systems to the U.S. Army for use on Mine Resistant Ambush Protected (MRAP) vehicles.

  Space and Airborne Systems


                                  4th Quarter     %      Full-Year      %
  ($ in millions)                 2007    2006  Change  2007    2006  Change

  Net Sales                     $1,243  $1,175    6%  $4,288  $4,319   -1%
  Operating Income                $177    $159   11%    $560    $604   -7%
  Operating Margin                14.2%   13.5%         13.1%   14.0%

Space and Airborne Systems (SAS) had fourth quarter 2007 net sales of $1,243 million, up 6 percent compared to $1,175 million in the fourth quarter 2006, primarily due to growth on airborne radar and sensor programs. SAS recorded $177 million of operating income compared to $159 million in the fourth quarter 2006. The increase in operating income was primarily due to higher volume and improved program performance.

SAS booked $460 million on a number of classified contracts, including $381 million on a major classified contract.

  Technical Services


                                    4th Quarter   %      Full-Year      %
  ($ in millions)                    2007  2006 Change  2007    2006  Change

  Net Sales                          $643  $639    1%  $2,174  $2,153    1%
  Operating Income                    $47   $50   -6%    $139    $153   -9%
  Operating Margin                    7.3%  7.8%          6.4%    7.1%

Technical Services (TS) had fourth quarter 2007 net sales of $643 million compared to $639 million in the fourth quarter 2006. TS recorded operating income of $47 million in the fourth quarter 2007 compared to $50 million in the fourth quarter 2006.

During the quarter, TS booked $118 million for the initial work on the Warfighter Field Operations Customer Support (FOCUS) contract for the U.S. Army to provide live, virtual and constructive training services.

Discontinued Operations

During the quarter, the Company recorded an after-tax loss from discontinued operations of $36 million, which as previously disclosed, included an after-tax charge of $44 million related to the sale of Flight Options LLC. The transaction was completed in the fourth quarter 2007.

Raytheon Company (NYSE: RTN), with 2007 sales of $21.3 billion, is a technology leader specializing in defense, homeland security and other government markets throughout the world. With a history of innovation spanning more than 85 years, Raytheon provides state-of-the-art electronics, mission systems integration and other capabilities in the areas of sensing; effects; and command, control, communications and intelligence systems, as well as a broad range of mission support services. With headquarters in Waltham, Mass., Raytheon employs 72,000 people worldwide.

Disclosure Regarding Forward-looking Statements

This release and the attachments contain forward-looking statements, including information regarding the Company's 2008 financial outlook, future plans, objectives, business prospects and anticipated financial performance. These forward-looking statements are not statements of historical facts and represent only the Company's current expectations regarding such matters. These statements inherently involve a wide range of known and unknown risks and uncertainties. The Company's actual actions and results could differ materially from what is expressed or implied by these statements. Specific factors that could cause such a difference include, but are not limited to: the Company's dependence on the U.S. government for a significant portion of its business and the risks associated with U.S. government sales, including changes or shifts in defense spending, uncertain funding of programs, potential termination of contracts, and difficulties in contract performance; the ability to procure new contracts; the risks of conducting business in foreign countries; the ability to comply with extensive governmental regulation, including import and export policies and procurement and other regulations; the impact of competition; the ability to develop products and technologies; the risk of cost overruns, particularly for the Company's fixed- price contracts; dependence on component availability, subcontractor performance and key suppliers; risks of a negative government audit; the use of accounting estimates in the Company's financial statements; the outcome of contingencies and litigation matters, including government investigations; the ability to recruit and retain qualified personnel; risks associated with acquisitions, dispositions, joint ventures and other business arrangements; and other factors as may be detailed from time to time in the Company's public announcements and Securities and Exchange Commission filings. In addition, these statements do not give effect to the potential impact of any acquisitions, dispositions or business combinations that may be announced or closed after the date hereof. The Company undertakes no obligation to make any revisions to the forward-looking statements contained in this release and the attachments or to update them to reflect events or circumstances occurring after the date of this release. This release and the attachments also contain non-GAAP financial measures. A GAAP reconciliation and a discussion of the Company's use of these measures are included in this release or the attachments.

Conference Call on the Fourth Quarter and Full-Year 2007 Financial Results

Raytheon's financial results conference call will be held on Thursday, January 31, 2008 at 9 a.m. ET. Participants will include William H. Swanson, Chairman and CEO, David C. Wajsgras, senior vice president and CFO, and other Company executives.

The dial-in number for the conference call will be (866) 800 - 8651. The conference call will also be audiocast on the Internet at http://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 encouraged 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.

  Media Contact:                      Investor Relations Contact:
  Jon Kasle                           Greg Smith
  781-522-5110                        781-522-5141


  Attachment A

  Raytheon Company
  Preliminary Statement of Operations Information
  Fourth Quarter 2007
  (In millions except per share amounts)

                                     Three Months Ended  Twelve Months Ended
                                    31-Dec-07 31-Dec-06  31-Dec-07 31-Dec-06

  Net sales                            $6,000    $5,561    $21,301  $19,707

  Cost of sales                         4,837     4,525     17,037   15,977
  Administrative and selling expenses     392       361      1,434    1,322
  Research and development expenses       125       122        502      464

  Total operating expenses              5,354     5,008     18,973   17,763

  Operating income                        646       553      2,328    1,944

  Interest expense                         41        70        196      272
  Interest income                         (36)      (28)      (163)     (75)
  Other expense (income), net               2        (2)        70      (44)

  Non-operating expense, net                7        40        103      153

  Income from continuing operations
   before taxes                           639       513      2,225    1,791

  Federal and foreign income taxes          5       169        532      604

  Income from continuing operations       634       344      1,693    1,187

  Income (loss) from discontinued
   operations, net of tax                   8        21        (57)      96
  (Loss) gain on sales of discontinued
    operations, net of tax                (44)        -        942        -

  (Loss) income from discontinued
   operations                             (36)       21        885       96

  Net income                             $598      $365     $2,578   $1,283

  Earnings per share from continuing
   operations
      Basic                             $1.50     $0.78      $3.91    $2.69
      Diluted                           $1.45     $0.76      $3.80    $2.63

  (Loss) earnings per share from
   discontinued operations
      Basic                            $(0.09)    $0.05      $2.04    $0.22
      Diluted                          $(0.08)    $0.05      $1.99    $0.21

  Earnings per share
      Basic                             $1.41     $0.83      $5.95    $2.90
      Diluted                           $1.37     $0.81      $5.79    $2.85

  Average shares outstanding
      Basic                             423.2     440.1      433.0    441.8
      Diluted                           436.8     452.3      445.7    450.9



  Attachment B

  Raytheon Company
  Preliminary Segment Information
  Fourth Quarter 2007

  (In millions)

                                                          Operating Income
                                                            As a Percent
                       Net Sales       Operating Income       of Sales
                   Three Months Ended Three Months Ended Three Months Ended
                 31-Dec-07 31-Dec-06 31-Dec-07 31-Dec-06 31-Dec-07 31-Dec-06

  Integrated
   Defense
   Systems          $1,290    $1,189      $211      $189     16.4%     15.9%
  Intelligence
   and Information
   Systems             808      690         66        63      8.2%      9.1%
  Missile Systems    1,362    1,316        148       138     10.9%     10.5%
  Network Centric
   Systems           1,147    1,011        127       117     11.1%     11.6%
  Space and Airborne
   Systems           1,243    1,175        177       159     14.2%     13.5%
  Technical Services   643      639         47        50      7.3%      7.8%
  FAS/CAS Pension
   Adjustment            -        -        (67)      (91)
  Corporate and
   Eliminations       (493)    (459)       (63)      (72)

  Total             $6,000   $5,561       $646      $553     10.8%      9.9%



                                                          Operating Income
                                                            As a Percent
                       Net Sales       Operating Income       of Sales
                 Twelve Months Ended Twelve Months Ended Twelve Months Ended
                 31-Dec-07 31-Dec-06 31-Dec-07 31-Dec-06 31-Dec-07 31-Dec-06

  Integrated
   Defense
   Systems          $4,695    $4,220      $828     $691      17.6%     16.4%
  Intelligence
   and Information
   Systems           2,742     2,560       248      234       9.0%      9.1%
  Missile Systems    4,993     4,503       541      479      10.8%     10.6%
  Network Centric
   Systems           4,164     3,561       506      379      12.2%     10.6%
  Space and Airborne
   Systems           4,288     4,319       560      604      13.1%     14.0%
  Technical Services 2,174     2,153       139      153       6.4%      7.1%
  FAS/CAS Pension
   Adjustment            -         -      (259)    (362)
  Corporate and
   Eliminations     (1,755)   (1,609)     (235)    (234)

  Total            $21,301   $19,707    $2,328   $1,944      10.9%      9.9%



  Attachment C

  Raytheon Company
  Other Preliminary Information
  Fourth Quarter 2007

                                                                Funded
                                          Backlog              Backlog
                                        (In millions)       (In millions)
                                     31-Dec-07 31-Dec-06 31-Dec-07 31-Dec-06

  Integrated Defense Systems            $9,296    $7,934    $4,781    $4,088
  Intelligence and Information
   Systems                               5,636     3,935     2,325       893
  Missile Systems                        9,379     9,504     5,218     5,135
  Network Centric Systems                5,102     5,059     3,957     4,037
  Space and Airborne Systems             5,276     5,591     3,037     2,770
  Technical Services                     1,925     1,815     1,200     1,263

  Total                                $36,614   $33,838   $20,518   $18,186



                                         Bookings            Bookings
                                       (In millions)       (In millions)
                                     Three Months Ended  Twelve Months Ended
                                     31-Dec-07 31-Dec-06 31-Dec-07 31-Dec-06

  Total Bookings                        $9,181    $7,633   $25,498   $22,417



  Attachment D

  Raytheon Company
  Preliminary Balance Sheet Information
  Fourth Quarter 2007

  (In millions)


                                                        31-Dec-07 31-Dec-06
  Assets
  Cash and cash equivalents                                $2,655    $2,460
  Accounts receivable, less allowance for doubtful
   accounts                                                   126       141
  Contracts in process                                      3,821     3,600
  Inventories                                                 386       376
  Deferred taxes                                              432       257
  Prepaid expenses and other current assets                   196       108
  Assets held for sale                                          -     2,575
    Total current assets                                    7,616     9,517

  Property, plant and equipment, net                        2,058     2,025
  Deferred taxes                                                -       170
  Prepaid retiree benefits                                    617       527
  Goodwill                                                 11,627    11,461
  Other assets, net                                         1,363     1,417
  Assets held for sale                                          -       374
      Total assets                                        $23,281   $25,491

  Liabilities and Stockholders' Equity
  Notes payable and current portion of long-term debt          $-      $687
  Advance payments and billings in excess of costs
   incurred                                                 1,845     1,885
  Accounts payable                                          1,141       910
  Accrued employee compensation                               902       937
  Other accrued expenses                                      900     1,043
  Liabilities held for sale                                     -     1,253
    Total current liabilities                               4,788     6,715

  Accrued retiree benefits and other long-term
   liabilities                                              3,016     4,053
  Deferred taxes                                              451         -
  Long-term debt                                            2,268     3,278
  Liabilities held for sale                                     -       179
  Minority interest                                           216       165
  Stockholders' equity                                     12,542    11,101
      Total liabilities and stockholders' equity          $23,281   $25,491



  Attachment E

  Raytheon Company
  Preliminary Cash Flow Information
  Fourth Quarter 2007

  (In millions)

                                     Three Months Ended  Twelve Months Ended
                                     31-Dec-07 31-Dec-06 31-Dec-07 31-Dec-06

  Net income                              $598      $365    $2,578   $1,283
  Less: Loss (income) from
   discontinued operations, net of tax      36       (21)     (885)     (96)
  Income from continuing operations        634       344     1,693    1,187

  Depreciation                              74        76       288      285
  Amortization                              23        20        84       76
  Working capital                          444       824       (85)     377
  Discontinued operations                   (8)      258       (51)     266
  Net activity in financing receivables     17        72        88      168
  Other                                   (251)      (43)     (819)     384
        Net operating cash flow            933     1,551     1,198    2,743

  Capital spending                        (153)     (149)     (313)    (294)
  Internal use software spending           (34)      (27)      (85)     (77)
  Acquisitions                            (211)        -      (211)     (87)
  Investment activity and divestitures      26         3     3,143       53
  Dividends                               (109)     (107)     (440)    (420)
  Repurchase of common stock              (341)        -    (1,642)    (352)
  Debt repayments                         (118)      (16)   (1,724)    (437)
  Discontinued operations                    -       (21)      (29)     (73)
  Other                                     53        64       298      202
        Total cash flow                    $46    $1,298      $195   $1,258



  Attachment F

  Raytheon Company
  Preliminary Return on Invested Capital Non-GAAP Financial Measure
  Fourth Quarter 2007



  We define Return on Invested Capital (ROIC) as income from continuing
  operations plus after-tax net interest expense plus one-third of operating
  lease expense after-tax (estimate of interest portion of operating lease
  expense) divided by average invested capital after capitalizing operating
  leases (operating lease expense times a multiplier of 8), adding
  financial guarantees less net investment in Discontinued Operations, and
  adding back the cumulative minimum pension liability/impact of FAS 158.
  ROIC is not a measure of financial performance under generally accepted
  accounting principles (GAAP) and may not be defined and calculated by
  other companies in the same manner. ROIC should be considered supplemental
  to and not a substitute for financial information prepared in accordance
  with GAAP. We use ROIC as a measure of efficiency and effectiveness of our
  use of capital and as an element of management compensation.

  Return on Invested Capital

  (In millions)                                    2008  Guidance
                                             Low end           High end
                                             of range          of range
  Income from continuing operations
  Net interest expense, after-tax*           Combined          Combined
  Lease expense, after-tax*
  Return                                       $1,655            $1,720

  Net debt **
  Equity less investment in discontinued
   operations
  Lease expense x 8 plus financial
   guarantees                                Combined          Combined
  Minimum pension liability (cumulative)

  Invested capital from continuing
   operations***                              $17,300           $17,100

  ROIC                                           9.6%             10.1%

  *   Effective 2008 tax rate: 34.1% (2008 guidance)
  **  Net debt is defined as total debt less cash and cash equivalents and
      is calculated using a 2 point average
  *** Calculated using a 2 point average



  Attachment G

  Raytheon Company
  Preliminary Adjusted EPS from Continuing Operations Non-GAAP
  Reconciliation
  Fourth Quarter 2007

                                     Three Months Ended  Twelve Months Ended
                                     31-Dec-07 31-Dec-06 31-Dec-07 31-Dec-06
  Diluted EPS from continuing
   operations as reported
   under GAAP                            $1.45     $0.76     $3.80     $2.63
  Less: Diluted EPS from tax-related
   benefits                              (0.49)        -     (0.49)        -
  Adjusted EPS from continuing
   operations *                          $0.96     $0.76     $3.31     $2.63


  * Adjusted EPS from continuing operations is not a measure of financial
    performance under generally accepted accounting principles (GAAP).  It
    should be considered supplemental to and not a substitute for financial
    performance in accordance with GAAP.  We use Adjusted EPS from
    continuing operations to facilitate management's internal comparisons to
    the Company's historical operating results, to competitors' operating
    results, and to provide greater transparency to investors of
    supplemental information used by management in its financial and
    operational decision-making, including management's evaluation of the
    Company's operating performance.  Adjusted EPS from continuing
    operations excludes the tax-related benefits recognized in the fourth
    quarter of 2007 because the Company 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.

SOURCE: Raytheon Company

CONTACT: Media, Jon Kasle, +1-781-522-5110, or Investors, Greg Smith,
+1-781-522-5141, both of Raytheon Company

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