Income Tax Expense (Benefit)
Effective Income Tax Rate (EITR)
Components of Deferred Tax Assets and Liabilities
Adjustments to Financial Statements: Removal of Deferred Taxes
Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)
Adjusted Net Profit Margin
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Raytheon Co., income tax expense (benefit), continuing operations

US$ in millions

12 months ended:	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Federal	638)	245)	822)	713)	757)
Foreign	48)	43)	40)	38)	36)
State	—)	—)	—)	(3)	(4)
Current income tax expense	686)	288)	862)	748)	789)
Federal	(26)	(42)	235)	102)	(103)
Foreign	1)	15)	18)	6)	45)
State	(3)	3)	(1)	1)	2)
Deferred income tax expense (benefit)	(28)	(24)	252)	109)	(56)
Provision for federal and foreign income taxes	658)	264)	1,114)	857)	733)

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

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Item	Description	The company
Current income tax expense	Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations.	Raytheon Co. current income tax expense decreased from 2017 to 2018 but then increased from 2018 to 2019 not reaching 2017 level.
Deferred income tax expense (benefit)	Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations.	Raytheon Co. deferred income tax expense (benefit) decreased from 2017 to 2018 and from 2018 to 2019.
Provision for federal and foreign income taxes	Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Raytheon Co. provision for federal and foreign income taxes decreased from 2017 to 2018 but then slightly increased from 2018 to 2019.

Raytheon Co., effective income tax rate (EITR) reconciliation

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Statutory tax rate	21.00%	21.00%	35.00%	35.00%	35.00%
Foreign derived intangible income (FDII)	-3.30%	-4.20%	0.00%	0.00%	0.00%
Research and development tax credit (R&D tax credit)	-2.30%	-2.40%	-1.50%	-1.30%	-1.20%
Equity compensation	-0.30%	-1.00%	-1.20%	-1.60%	0.00%
Foreign income tax rate differential	0.80%	1.30%	0.20%	0.00%	-1.40%
Prior year true-up	0.40%	-1.10%	0.10%	0.00%	0.00%
Tax benefit related to discretionary pension contributions	0.00%	-3.00%	0.00%	0.00%	0.00%
R&D tax credit claims related to the 2014-2017 tax years	0.00%	-2.10%	0.00%	0.00%	0.00%
Irish restructuring	0.00%	-2.00%	0.00%	0.00%	0.00%
Change in valuation allowance	0.00%	2.00%	0.00%	0.00%	0.00%
Domestic manufacturing deduction benefit	0.00%	0.00%	-2.50%	-2.70%	-3.10%
Remeasurement of deferred taxes	0.00%	0.00%	3.20%	0.00%	0.00%
One-time transition tax on previously undistributed foreign earnings	0.00%	0.00%	2.30%	0.00%	0.00%
TRS tax-free gain	0.00%	0.00%	0.00%	-1.80%	0.00%
Tax settlements and refund claims	0.00%	0.00%	0.00%	0.00%	-3.20%
Other items, net	0.20%	-0.10%	0.20%	0.70%	0.20%
Effective tax rate	16.50%	8.40%	35.80%	28.30%	26.30%

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

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Item	Description	The company
Effective tax rate	Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Raytheon Co. effective tax rate decreased from 2017 to 2018 but then slightly increased from 2018 to 2019.

Raytheon Co., components of deferred tax assets and liabilities

US$ in millions

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Accrued employee compensation and benefits	246)	209)	202)	293)	322)
Other accrued expenses and reserves	(21)	77)	86)	126)	133)
Contract balances and inventories	(611)	(494)	(537)	(852)	(841)
Pension benefits	1,701)	1,306)	1,505)	2,368)	2,355)
Other retiree benefits	68)	67)	67)	109)	109)
Operating lease right-of-use assets	(204)	—)	—)	—)	—)
Operating lease liabilities	214)	—)	—)	—)	—)
Net operating loss and tax credit carryforwards	405)	83)	99)	107)	115)
Depreciation and amortization	(921)	(827)	(858)	(1,343)	(1,385)
Partnership outside basis difference	(25)	(29)	(36)	(90)	6)
Other	21)	21)	21)	52)	75)
Valuation allowance	(360)	(84)	(17)	(24)	(2)
Noncurrent deferred tax assets (liabilities)	513)	329)	532)	746)	887)

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

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Item	Description	The company
Noncurrent deferred tax assets (liabilities)	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting.	Raytheon Co. noncurrent deferred tax assets (liabilities) decreased from 2017 to 2018 but then increased from 2018 to 2019 not reaching 2017 level.

Raytheon Co., adjustments to financial statements

US$ in millions

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Adjustment to Total Assets
Total assets (as reported)	34,566)	31,864)	30,860)	30,052)	29,281)
Less: Noncurrent deferred tax assets, net	534)	331)	537)	753)	906)
Total assets (adjusted)	34,032)	31,533)	30,323)	29,299)	28,375)
Adjustment to Total Raytheon Company Stockholders’ Equity
Total Raytheon Company stockholders’ equity (as reported)	12,223)	11,472)	9,963)	10,066)	10,128)
Less: Net deferred tax assets (liabilities)	513)	329)	532)	746)	887)
Total Raytheon Company stockholders’ equity (adjusted)	11,710)	11,143)	9,431)	9,320)	9,241)
Adjustment to Net Income Attributable To Raytheon Company
Net income attributable to Raytheon Company (as reported)	3,343)	2,909)	2,024)	2,211)	2,074)
Add: Deferred income tax expense (benefit)	(28)	(24)	252)	109)	(56)
Net income attributable to Raytheon Company (adjusted)	3,315)	2,885)	2,276)	2,320)	2,018)

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

Raytheon Co., Financial Data: Reported vs. Adjusted

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Raytheon Co., adjusted financial ratios

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Net Profit Margin
Reported net profit margin	11.46%	10.75%	7.98%	9.19%	8.92%
Adjusted net profit margin	11.36%	10.66%	8.98%	9.64%	8.68%
Total Asset Turnover
Reported total asset turnover	0.84	0.85	0.82	0.80	0.79
Adjusted total asset turnover	0.86	0.86	0.84	0.82	0.82
Financial Leverage
Reported financial leverage	2.83	2.78	3.10	2.99	2.89
Adjusted financial leverage	2.91	2.83	3.22	3.14	3.07
Return on Equity (ROE)
Reported ROE	27.35%	25.36%	20.32%	21.97%	20.48%
Adjusted ROE	28.31%	25.89%	24.13%	24.89%	21.84%
Return on Assets (ROA)
Reported ROA	9.67%	9.13%	6.56%	7.36%	7.08%
Adjusted ROA	9.74%	9.15%	7.51%	7.92%	7.11%

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

Financial ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Raytheon Co. adjusted net profit margin ratio improved from 2017 to 2018 and from 2018 to 2019.
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Raytheon Co. adjusted total asset turnover ratio improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019.
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Raytheon Co. adjusted financial leverage ratio decreased from 2017 to 2018 but then slightly increased from 2018 to 2019.
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Raytheon Co. adjusted ROE improved from 2017 to 2018 and from 2018 to 2019.
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Raytheon Co. adjusted ROA improved from 2017 to 2018 and from 2018 to 2019.

Raytheon Co., Financial Ratios: Reported vs. Adjusted

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	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Raytheon Company	3,343)	2,909)	2,024)	2,211)	2,074)
Net sales	29,176)	27,058)	25,348)	24,069)	23,247)
Profitability Ratio
Net profit margin¹	11.46%	10.75%	7.98%	9.19%	8.92%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Raytheon Company	3,315)	2,885)	2,276)	2,320)	2,018)
Net sales	29,176)	27,058)	25,348)	24,069)	23,247)
Profitability Ratio
Adjusted net profit margin²	11.36%	10.66%	8.98%	9.64%	8.68%

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

2019 Calculations

¹ Net profit margin = 100 × Net income attributable to Raytheon Company ÷ Net sales
= 100 × 3,343 ÷ 29,176 = 11.46%

² Adjusted net profit margin = 100 × Adjusted net income attributable to Raytheon Company ÷ Net sales
= 100 × 3,315 ÷ 29,176 = 11.36%

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Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Raytheon Co. adjusted net profit margin ratio improved from 2017 to 2018 and from 2018 to 2019.

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net sales	29,176)	27,058)	25,348)	24,069)	23,247)
Total assets	34,566)	31,864)	30,860)	30,052)	29,281)
Activity Ratio
Total asset turnover¹	0.84	0.85	0.82	0.80	0.79
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Net sales	29,176)	27,058)	25,348)	24,069)	23,247)
Adjusted total assets	34,032)	31,533)	30,323)	29,299)	28,375)
Activity Ratio
Adjusted total asset turnover²	0.86	0.86	0.84	0.82	0.82

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

2019 Calculations

¹ Total asset turnover = Net sales ÷ Total assets
= 29,176 ÷ 34,566 = 0.84

² Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 29,176 ÷ 34,032 = 0.86

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Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Raytheon Co. adjusted total asset turnover ratio improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019.

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Total assets	34,566)	31,864)	30,860)	30,052)	29,281)
Total Raytheon Company stockholders’ equity	12,223)	11,472)	9,963)	10,066)	10,128)
Solvency Ratio
Financial leverage¹	2.83	2.78	3.10	2.99	2.89
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets	34,032)	31,533)	30,323)	29,299)	28,375)
Adjusted total Raytheon Company stockholders’ equity	11,710)	11,143)	9,431)	9,320)	9,241)
Solvency Ratio
Adjusted financial leverage²	2.91	2.83	3.22	3.14	3.07

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

2019 Calculations

¹ Financial leverage = Total assets ÷ Total Raytheon Company stockholders’ equity
= 34,566 ÷ 12,223 = 2.83

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Raytheon Company stockholders’ equity
= 34,032 ÷ 11,710 = 2.91

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Solvency ratio	Description	The company
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Raytheon Co. adjusted financial leverage ratio decreased from 2017 to 2018 but then slightly increased from 2018 to 2019.

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Raytheon Company	3,343)	2,909)	2,024)	2,211)	2,074)
Total Raytheon Company stockholders’ equity	12,223)	11,472)	9,963)	10,066)	10,128)
Profitability Ratio
ROE¹	27.35%	25.36%	20.32%	21.97%	20.48%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Raytheon Company	3,315)	2,885)	2,276)	2,320)	2,018)
Adjusted total Raytheon Company stockholders’ equity	11,710)	11,143)	9,431)	9,320)	9,241)
Profitability Ratio
Adjusted ROE²	28.31%	25.89%	24.13%	24.89%	21.84%

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

2019 Calculations

¹ ROE = 100 × Net income attributable to Raytheon Company ÷ Total Raytheon Company stockholders’ equity
= 100 × 3,343 ÷ 12,223 = 27.35%

² Adjusted ROE = 100 × Adjusted net income attributable to Raytheon Company ÷ Adjusted total Raytheon Company stockholders’ equity
= 100 × 3,315 ÷ 11,710 = 28.31%

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Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Raytheon Co. adjusted ROE improved from 2017 to 2018 and from 2018 to 2019.

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Raytheon Company	3,343)	2,909)	2,024)	2,211)	2,074)
Total assets	34,566)	31,864)	30,860)	30,052)	29,281)
Profitability Ratio
ROA¹	9.67%	9.13%	6.56%	7.36%	7.08%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Raytheon Company	3,315)	2,885)	2,276)	2,320)	2,018)
Adjusted total assets	34,032)	31,533)	30,323)	29,299)	28,375)
Profitability Ratio
Adjusted ROA²	9.74%	9.15%	7.51%	7.92%	7.11%

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

2019 Calculations

¹ ROA = 100 × Net income attributable to Raytheon Company ÷ Total assets
= 100 × 3,343 ÷ 34,566 = 9.67%

² Adjusted ROA = 100 × Adjusted net income attributable to Raytheon Company ÷ Adjusted total assets
= 100 × 3,315 ÷ 34,032 = 9.74%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Raytheon Co. adjusted ROA improved from 2017 to 2018 and from 2018 to 2019.

Raytheon Co. (NYSE:RTN)

Analysis of Income Taxes

Income Tax Expense (Benefit)

Effective Income Tax Rate (EITR)

Components of Deferred Tax Assets and Liabilities

Adjustments to Financial Statements: Removal of Deferred Taxes

Raytheon Co., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Raytheon Co., Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)