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Dear Fellow Shareholders,

Raytheon had another strong year in 2009 — results that build on our past success and strengthen the foundation on which we will strive to be even better in the future.

I believe that our accomplishments in 2009, as well as during the last several years, are rooted in Raytheon’s Vision, Strategy, Goals and Values (VSGVs). Our VSGVs are reflected in our focus on the customer, in our technology and innovation leadership, in our commitment to execution, and in the positive spirit of our employees as measured by our employee opinion survey. By generating world-class ideas and putting these ideas into action, we seek to provide our men and women in uniform and others with the systems and services they need to be safe and to succeed, and to enable the success of all of our stakeholders around the world.

In a challenging environment for many businesses, we had the right strategic focus, the right processes and the right talent in place to meet our customers’ needs, to grow, and to build on our reputation for corporate responsibility. This focus is reflected in our strong results for 2009 — in a book-to-bill ratio greater than one and a year-end backlog of $37 billion, which bodes well for the future. For the year, we had a 7 percent increase in sales — and international sales, including foreign military sales, represented 21 percent of the total. International bookings were also strong, representing 30 percent of total bookings. Earnings per share from continuing operations were up 24 percent, cash flow was robust, and we continued to improve our return on invested capital (ROIC), by 10 percent from 2008 to 2009.

The company maintains a strong focus on program execution and the prudent management of capital and investments. This focus maximizes operating income and cash, and continues to improve ROIC. It allows us to pursue a capital deployment strategy that balances funding for growing our business, pension stability and returning cash to our shareholders through dividend payments and share repurchases — repurchases that totaled 25.8 million shares for $1.2 billion in 2009.

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