Todd Ernst - Raytheon Co. Thomas A. Kennedy - Raytheon Co. Anthony F. O'Brien - Raytheon Co.

Jason Gursky - Citigroup Global Markets, Inc. Cai von Rumohr - Cowen & Company, LLC Douglas Stuart Harned - Sanford C. Bernstein & Co. LLC Richard T. Safran - The Buckingham Research Group, Inc. Robert Stallard - Vertical Research Partners LLC George D. Shapiro - Shapiro Research LLC Robert M. Spingarn - Credit Suisse Securities (USA) LLC Samuel J. Pearlstein - Wells Fargo Securities LLC Seth M. Seifman - JPMorgan Securities LLC Peter J. Arment - Robert W. Baird & Co., Inc. Sheila Kahyaoglu - Jefferies LLC

Good day, ladies and gentlemen, and welcome to the Raytheon Third Quarter 2017 Earnings Conference Call. My name is Katina, and I will be your operator for today. As a reminder, this conference is being recorded for replay proposes. I would now like to turn the call over to Mr. Todd Ernst, Vice President of Investor Relations. Please proceed. Todd Ernst - Raytheon Co.: Thank you, Katina. Good morning, everyone. Thank you for joining us today on our third quarter conference call. The results that we announced this morning, the audio feed of this call and the slides that we'll reference are available on our website at raytheon.com. Following this morning's call, an archive of both the audio replay and a printable version of the slides will be available in the Investor Relations section of our website. With me today are Tom Kennedy, our Chairman and Chief Executive Officer; and Toby O'Brien, our Chief Financial Officer. We'll start with some brief remarks by Tom and Toby and then move on to questions. Before I turn the call over to Tom, I'd like to caution you regarding our forward-looking statements. Any matters discussed today that are not historical facts, particularly comments regarding the company's future plans, objectives and expected performance, constitute forward-looking statements. These statements are based on a wide range of assumptions that the company believes are reasonable, but are subject to a range of uncertainties and risks that are summarized at the end of our earnings release and are discussed in detail in our SEC filings. With that, I'll turn the call over to Tom. Tom? Thomas A. Kennedy - Raytheon Co.: Thank you, Todd. Good morning, everyone. Raytheon once again delivered strong operating performance in the third quarter. Our revenue increased by 4.5%, driven equally by both domestic and international growth. We also achieved solid operating margins. Earnings per share was well ahead of our prior guidance for the quarter, allowing us to increase our EPS guidance for the year. We continue to see strong global demand for our advanced solutions. Book-to-bill in the third quarter was 1.11. This drove an increase in backlog of nearly $1 billion year-over-year. Given this and opportunities we see in the fourth quarter, we are again increasing our bookings outlook for the year by another $500 million. It's worth noting that since the beginning of this year, we have increased our bookings outlook by a total of $1.5 billion over our original expectation and now expect the full year book-to-bill ratio of 1.07. So as you can see, our growth strategy remains on track, which positions us well as we head into 2018. Toby will discuss additional details about our third quarter performance, updates to guidance, as well as our initial 2018 outlook in a few minutes. Over the past couple of months, I've met face to face with many of our global customers including just this past Tuesday when I attended the Future Investment Initiative conference in Riyadh, Saudi Arabia. The conference was a unique opportunity for global business and Saudi leaders to discuss industry and company investment opportunities in the Kingdom. My takeaway from that dialogue and others I've had around the globe over the past several months is that Raytheon's broad portfolio of capabilities remains well aligned with these customers' rapidly evolving requirements. One area where we are seeing strong demand is within our Integrated Air and Missile Defense portfolio both domestically and internationally. We have a wide range of solutions to address threats ranging from short-range rockets, all the way to intercontinental ballistic missiles. Raytheon has developed some of the strongest domain expertise derived from decades of experience designing and building interceptors, radars and command and control networks. There are several notable third quarter achievements in this area that I'd like to point out. We received a booking of $492 million for the development of the Redesigned Kill Vehicle also known as the RKV. RKV is the next-generation kill vehicle for the Ground-based Midcourse Defense System. As you may know, GMD is the United States' anti-ballistic missile system for intercepting incoming warheads in space during the midcourse phase of flight. It is a major component of our country's defense strategy to counter intercontinental ballistic missile threats. In addition, in August, the Air and Missile Defense Radar we're developing for the U.S. Navy successfully searched for, acquired and tracked a ballistic missile target. Also known as AMDR, this was the radar's second test against a live target and featured a more complex, threat-representative ballistic missile target than prior engagements. And in September, during a third AMDR test, the radar successfully tracked multiple simultaneous missile targets. We're very pleased with the performance of this new radar against increasingly complex threat scenarios. Also in August, a Standard Missile-6 successfully intercepted a medium range ballistic missile at sea in its terminal phase. This shows that the SM-6 is a highly versatile missile that can perform missions from anti-air to anti-surface warfare and now even more advanced sea-based ballistic missile defense. And after the quarter, in early October, Raytheon interceptors downed four missiles in a NATO test exercise over European waters that showcased our multiple innovative solutions to protect against ever-advancing threats. Our Standard Missile-2 and the evolved SeaSparrow missile successfully knocked down anti-ship cruise missiles, while our Standard Missile-3 IB successfully intercepted a medium-range ballistic missile target, an important milestone that paves the way for full-rate production. We also continue to see very strong demand for Integrated Air and Missile Defense solutions in the international market. For example, earlier this month, Congress was notified of a $15 billion sale of seven THAAD fire units and related equipment to Saudi Arabia. Critical to the THAAD system capability is a long-range TPY-2 radar which Raytheon produces. With each fire unit having one TPY-2 radar, we believe the opportunity for us is in the $3 billion to $4 billion range. While the timing of international awards is always difficult to predict, we currently expect an award for this opportunity in the late 2018 or 2019 timeframe. In addition, Japan has indicated that it is pursuing missile defense solutions to protect its homeland, creating opportunities for us with our AMDR, SM-3 Block IIA missiles and SM-6 missiles. I would add that we co-produce SM-3 Block IIA missiles with Japan. Beyond this, we continue to make progress on several large Patriot opportunities in Europe and we see additional demand signal for early warning sensing and missile defense offerings in the Middle East. Let me point out several other areas where we're seeing strong demand. In the third quarter, we had significant bookings for TOW, Excalibur, training as well as strong classified bookings in Missiles, SAS and IIS. We also received an award for the Long-Range Standoff Missile that leverages Raytheon's domain expertise in this area. In ISR, we were selected by DigitalGlobe as the provider of the next-generation imaging payload for its WorldView Legion satellite constellation. Raytheon's new payload extends our expertise in defense imaging solutions into the commercial markets. And in a big milestone for our cybersecurity business, after the close of the third quarter, the Government Accountability Office dismissed the DOMino protest on all grounds and IIS is now actively working with the Department of Homeland Security on cybersecuring the .gov domain. DOMino is over $1 billion IDIQ contract that is vital to U.S. national and economic security. It's one of the largest single cybersecurity contracts ever awarded. As I look to the future, I'm excited about the strong customer interest we're generating in some of our newest technologies, some of them which were on display at AUSA earlier this month. One example is our new SkyHunter system, a collaboration between Raytheon and Israel's Rafael Advanced Defense Systems. This system is designed to help protect U.S. forces and their allies from short-range threats including short-range rockets. SkyHunter is based on a combat-proven Iron Dome system, which has more than 1,500 intercepts to date. The SkyHunter variant recently completed successful testing at White Sands and is available for procurement and rapid deployment. Another product that was well received at AUSA was our vehicle-mounted High-Energy Laser, which can knock drones out of the sky, an increasingly important capability in theater. We have already begun field tests of this advanced capability and we will be demonstrating it in an upcoming U.S. Army event in December. Before concluding, I would like to take a moment to briefly touch on the U.S. defense budget in the current environment in Washington. As most of you know, we are again operating under a continuing resolution through early December as we had anticipated when we last gave guidance in July. We are cautiously optimistic that a final defense appropriations bill will be completed by the end of December or shortly thereafter. We continue to see strong support for the fiscal year 2018 defense spending in congressional committee markups. Lastly, during the third quarter, Raytheon celebrated its 95th anniversary. And while our products and systems may have changed over the decades, what has remained the same is our focus on providing innovative technologies and solutions for the success of our customers, company and shareholders. Thank you to the generations of Raytheon teammates, past and present, who have made it all possible. Now let me turn the call over to Toby. Anthony F. O'Brien - Raytheon Co.: Thanks, Tom. I have a few opening remarks, starting with the third quarter highlights. And then we'll move on to questions. During my remarks, I'll be referring to the web slides that we issued earlier this morning. If everyone would please turn to page 3. We are pleased with the strong performance the team delivered in the third quarter, with bookings, sales, EPS and operating cash flow all at or better than our expectations. We had strong bookings in the third quarter of $7 billion, resulting in a book-to-bill ratio of 1.11. Sales were $6.3 billion in the quarter, up 4.5% with growth across all of our businesses. Our EPS from continuing operations was $1.97, which I'll give a little more color on in a few minutes. We generated solid operating cash flow of $382 million in the third quarter. Operating cash flow was lower than last year's third quarter, as expected, primarily due to higher required pension contributions in the third quarter 2017. This was partially offset by the timing of collections. During the quarter, the company repurchased 1.1 million shares of common stock for $200 million, bringing the year-to-date share repurchase to 4.4 million shares for $700 million. I also want to point out, based on our strong performance to date, that we're raising our full-year 2017 outlook for bookings and EPS that we provided in July. We are also updating the expected sales growth range from 4% to 6% to 5% to 6%, as well as making other updates. I'll discuss guidance further in just a few minutes. Turning now to page 4, let me start by providing some detail on our third quarter results. Company bookings continue to be strong. For the third quarter, bookings were $7 billion, and on a year-to-date basis, were $19.2 billion. It's worth noting that on a trailing four-quarter basis, our book-to-bill ratio was 1.08. Total backlog at the end of the third quarter was $36.7 billion, an increase of approximately $950 million compared to the end of the third quarter 2016. If you'd now move to page 5, third quarter 2017 sales were in line with the guidance we set in July. Our international sales were approximately 32% of total sales. Looking now at sales by business. IDS had third quarter 2017 net sales of $1.4 billion, up 4% compared with the same quarter last year. The increase in net sales for the quarter was driven primarily by higher net sales on an International Early Warning Radar Program. Missile Systems had third quarter 2017 net sales of $1.9 billion. The 10% increase from the third quarter 2016 was primarily due to the Paveway and Excalibur programs. And at IIS, SAS and Forcepoint, sales were up slightly compared with the same period last year. Moving ahead to page 6. Overall, the company continues to perform well. Our operating margin was 13.7% for the total company and 13% on a business segment basis. So looking now at the business margins. IDS third quarter 2017 operating margin was strong at 16.6%, an increase of 80 basis points year-over-year. The increase was driven by improved program performance. The decrease in operating margin at IIS in the third quarter compared with the same period last year, as expected, was primarily driven by a change in program mix and other performance. Missiles margin was up 110 basis points in the quarter compared with the same period last year, primarily driven by higher net program efficiencies. This increase was driven by favorable adjustments on a couple of international contracts due to a change in requirements, partially offset by an unfavorable contract modification. SAS operating margin was in line with last year's third quarter. And at Forcepoint, the third quarter 2017 operating margin, as expected, was lower than last year's comparable quarter primarily due to investments to expand the sales force capacity, increase the new business pipeline and improve brand awareness. Additionally, I want to point out that our third quarter operating income was unfavorably impacted by $26 million for the annual actuarial update to our pension plans. I'll touch on this more in a minute. Turning now to page 7. Third quarter 2017 EPS was $1.97, better than expected, primarily driven by strong margin performance as we accelerated some program efficiencies that were previously expected later in the year. On page 8, as I mentioned earlier, we are updating the company's financial outlook for 2017 to reflect our improved operating performance to date and our expectations for the fourth quarter. We have increased the low end of our full year 2017 net sales by $200 million and we now expect net sales to be between $25.3 billion and $25.6 billion, up 5% to 6% from 2016. The increase over 2016 is driven by growth in both our domestic and international business. As I just mentioned, and as we have done in prior years, during the third quarter, we updated our actuarial estimates related to our pension plans. As a result of this update, the FAS/CAS adjustment for the year decreased by $39 million from $428 million to $389 million or an unfavorable impact of approximately $0.09 per share. Again, $26 million or $0.06 per share was recorded in the third quarter 2017 and $13 million or $0.03 per share is expected to be recorded in the fourth quarter 2017. Turning to share count. We continue to see our average diluted shares outstanding at approximately 292 million shares for 2017, a 2% year-over-year reduction, consistent with what we said in July. We are reducing the range of our net interest expense to be between $185 million and $190 million to reflect higher average cash balances and interest rates on cash. This is worth about $0.02 to EPS compared to our prior guidance. We have slightly lowered our effective tax rate to reflect an update to the assumed tax benefit associated with stock-based compensation and for some additional tax planning items within the second half of the year. The total benefit is worth about $0.05 per share for the full year. We now expect our effective tax rate to be approximately 30% for the year. We've increased our full year 2017 EPS, raising the low end by $0.10 and the high end by $0.05 from our prior guidance, after absorbing the $0.09 per share unfavorable pension impact I just discussed. We now expect our EPS to be in the range of $7.45 to $7.55. The increase is primarily driven by our improved performance to-date as well as the improvement to the effective tax rate and lower net interest expense. Our operating cash flow in the third quarter was in line with our prior expectations. We continue to see our 2017 operating cash flow outlook between $2.8 billion and $3.1 billion. Similar to last year, and as I mentioned on the last earnings call, our cash flow profile is more heavily weighted toward the fourth quarter due to the timing of program milestones and collections on some of our larger contracts. And as you can see on page 9, we've included guidance by business. We've increased the low end of the guidance range for the full year sales outlook at IDS, IIS, Missiles and SAS to reflect a combination of stronger bookings performance to-date and fourth quarter expectations. Looking at margins, at the business segment level compared to our prior guidance, we have raised the low end of the range by 10 basis points and now see business segment operating margin in a range of 12.5% to 12.6% for the full year. And at the company level, as a result of the actuarial update to the pension plans that I previously discussed, we have narrowed the margin range from our prior guidance and now see our company operating margin to be in a range of 13.2% to 13.3% for the full year. Before moving on to page 10. As Tom mentioned earlier, given our year-to-date bookings strength and our expectation for a solid fourth quarter, we are now raising our full-year 2017 bookings outlook to a range of between $26.5 billion to $27.5 billion. This $500 million increase to the prior range is driven by strong demand from our global customers and positions us well for 2018. We expect international to be about a third of total bookings this year. On page 10, we have provided guidance on how we currently see the fourth quarter for sales, earnings per share and operating cash flow from continuing operations. We expect our fourth quarter sales to be in a range of $6.7 billion to $7 billion and EPS from continuing operations is expected to be in a range of $1.86 to $1.96. We expect operating cash flow to be in a range of $1.7 billion to $2 billion. Now turning to next year, as we have done in the past, we intend to provide detailed 2018 guidance on our fourth quarter earnings call in January. As we sit here today, we currently see the book-to-bill ratio in 2018 above 1 and strong sales growth for 2018 of 3% to 5% over the midpoint of our 2017 outlook. We expect business segment margin to be up slightly in 2018 compared to 2017, driven primarily by improved program mix. We expect our effective tax rate to be approximately 31% in 2018. I would note that this tax rate guidance reflects current law. In addition, we expect solid operating cash flow in 2018, in line with 2017 as improvement from the businesses is offset by higher cash taxes, and as expected, higher required pension contributions. Of course, I want to caveat all this by saying our assumptions are based on a defense budget being approved in Washington before year end, thereby avoiding an extended CR or a government shutdown. So, if you could please move to page 11. We have provided a combined FAS/CAS adjustment matrix for 2018. As we sit here today, the discount rate is approximately 30 basis points to 40 basis points lower than it was at the end of 2016 and would be roughly 4%. And our return on assets through October 25 is a little above 11%. And just to be clear, the final discount rate and the actual asset returns won't be known until we close out 2017. Before moving on, I want to point out that consistent with our public filings, we plan to adopt the new retirement benefits standard in the first quarter of 2018, which moves the presentation of certain components of FAS, pension and postretirement benefit expense from operating to non-operating income. We expect the standard to increase operating income due to the removal of all components of SAS expense other than service costs. Likewise, we expect non-operating income to decrease by the same amount with no impact to net income. As a result, our FAS/CAS adjustment will be split into FAS/CAS operating income and FAS/CAS non-operating expense. We'll provide a more detailed pension outlook on our year-end call in January. Before concluding, as we have discussed on past earnings calls, with regard to our capital deployment strategy, we continue to expect to generate strong free cash flow for the year and are targeting returning approximately 80% of free cash flow to shareholders, while maintaining a strong balance sheet. In summary, we had another strong quarter. Our bookings, sales, EPS and operating cash flow were at or above our expectations. We remain well positioned with both our domestic and international customers' priority areas. We increased our full-year 2017 outlook for bookings and EPS, updated the sales growth range to 5% to 6% and have a solid foundation for continued growth in 2018. With that, Tom and I will open the call up for questions.

Thank you. The first question comes from the line of Jason Gursky representing Citi. Please proceed. Jason Gursky - Citigroup Global Markets, Inc.: Thank you. Good morning. Thomas A. Kennedy - Raytheon Co.: Good morning, Jason. Anthony F. O'Brien - Raytheon Co.: Good morning. Jason Gursky - Citigroup Global Markets, Inc.: Hey, Tom, I was wondering if you could talk a little bit about the backlog – or the bookings outlook, I should say, for 2018. Maybe you talk a little bit about the major pursuits that you have there and maybe the international domestic mix that you expect. And then finally, in the context of other bookings pursuits, talk a little bit about the contract vehicles that you've been experiencing in weight (26:37) and kind of what you expect going forward and whether there are any significant changes that you're seeing being used by any of your customers that might inform us about the risk profile or the margins on a go-forward basis? Thanks. Thomas A. Kennedy - Raytheon Co.: That's a great question. It's going to take a little while to answer all of it. But let me start off on 2018. I mean it's all a good new story here. In 2018, we do expect a solid bookings year. We do believe it will be a book-to-bill above 1, looking into the overall year. Right now, we are seeing roughly 40 opportunities, 40 opportunities that are greater than $100 million. About one-third of our total bookings are expected to come from our international customers and I'm going to tie that back into your question about contract vehicles later as it is important. For IDS, we see around two-thirds of their bookings being international, that's made up of Patriot-related bookings in Europe and the Middle East, plus other Integrated Air and Missile Defense opportunities. The balance of the international is comprised of other spares, upgrades, sustainment and training contracts. And we also expect IDS to have solid domestic bookings on various naval systems, missile defense and Patriot programs. IDS has a good mix on classified, Intel, cyber training, missions support. The domestic bookings for IAS will make up about 85% of their bookings; at least that's our plan to date. And Missiles, we see a solid mix of both international and domestic awards and that's going to be throughout the year and it's across their entire portfolio. Every one of their franchises has significant demand signals in 2018. On the domestic side, we see over about $1.5 billion on SM-3, AMRAAM and also the SM-6. In addition, there is significant opportunities for AIM-9X, Tomahawk and Phalanx. Now about one third of their bookings will be coming from international customers, including $1 billion on Paveway in addition to other opportunities for AMRAAM, Stinger, TOW and Phalanx. And then for SAS, we see about $3 billion related to electronic warfare and ISR, along with opportunities in classified space and tactical airborne systems and their total international should be about one-fifth of their business. Now I'm going to answer your question relative to contract vehicles. So on our domestic work, a majority of the contract vehicles are either cost plus, either fixed fee or incentive fee and that's usually associated with development programs. Transitioning into production, the LRIPs, we see a majority of those contracts going into fixed-price incentive-fee and then into full rate production, either fixed price incentive fee or firm-fixed-price. On the international side, we have our set of FMS contracts and about half of our international business is on the, I would call it, the FMS-type contract vehicles. And those FMS contract vehicles, they range very similar to domestic. There are some cost-plus contracts. There are fixed price incentive fee contracts and also firm-fixed-price. And I would say it's a mix of those three types of contract vehicles. But we also have half of our international business is direct commercial sale. So it's a true commercial contract and that's where we do see our highest margins in the business.

Your next question comes from the line of Cai von Rumohr representing Cowen & Company. Please proceed. Cai von Rumohr - Cowen & Company, LLC: Yes. Thank you very much. So your full-year guidance for Forcepoint assumes – looks like it assumes the profits are down in the fourth quarter. Maybe give us some color overall in terms of how is Forcepoint doing, why is the fourth quarter down and what does all of this imply for 2018. Thank you. Anthony F. O'Brien - Raytheon Co.: Yeah. Hi Cai, it's Toby. I'll start and then Tom can jump in here if he wants to add some color to it. I'll maybe start with 2018 and work my way back here a little bit. But for 2018, we're early in our process. But I'll tell you for Forcepoint, we are looking at about a 10% plus or minus top-line growth and double-digit margins. Okay. So that's kind of how we're thinking of things going forward. In the quarter, the sales at Forcepoint were up about 2%. If you adjust for their legacy filtering business that we've talked about in the past has been dwindling, it was about a 5% increase in the quarter. We're seeing good growth around network security and also for data and in cyber threat security. We've also seen a little bit of a challenge from timing, both in the Global Governments business here in the third quarter, and as we've talked about, as we've tried to move further up the food chain on the commercial side, selling into large and very large enterprises, that sales cycle time has become a little bit longer and a little bit harder to predict. And that's what you're seeing here, both in Q3 and the outlook for the year. I will say that in the third quarter, the margin was within our expectations. The team did a good job driving the margin in the quarter. And as I said in my opening remarks, a year-over-year decrease was expected because, taking it back to the beginning of the year, we talked about a $25 million investment in the business, a lot of that focused in the areas of sales and marketing. And therefore, what you see in the fourth quarter is the continuation of that investment, okay, which is, you're right, is driving the margins down on a sequential basis. But again, that all said, we feel everything that we've done this year between the investments, a couple bolt-on acquisitions, is positioning the business for that 10% plus or minus top-line growth, and double-digit margin in 2018.

Your next question comes from the line of Doug Harned representing Bernstein. Please proceed. Douglas Stuart Harned - Sanford C. Bernstein & Co. LLC: Thank you. Good morning. Thomas A. Kennedy - Raytheon Co.: Good morning, Doug. Anthony F. O'Brien - Raytheon Co.: Good morning, Doug. Douglas Stuart Harned - Sanford C. Bernstein & Co. LLC: I wanted to get a sense from you on really how governments right now are looking at missile defense opportunities. Because this has clearly been a good growth area for you. But in the past, particularly in the Middle East, you've seen decision making take a long time. These can get deployed over a very long period of time. Can you talk about what's becoming typical given how serious many of the threats are around the world, how the governments are thinking about the scale of system they want to use and the urgency of deployment? Because I'm thinking when are we going to see these situations translate into revenues on an earlier basis perhaps than we've seen in the past? Thomas A. Kennedy - Raytheon Co.: Yeah, Doug. Let me take that since I just came back from my wild – total world tour here. Let me start off in Europe. We're seeing, especially relative to Eastern Europe, significant concerns relative to their sovereignty and the security of their citizens. A large portion of their needs is, I would say, is in the Integrated Air and Missile Defense area and relative to Raytheon, a big strong demand for Patriot. We're also seeing in Europe and we just had a major test with NATO, I mentioned that in my remarks, a strong demand for our Standard Missile vehicles and also the ESSM missile. Again these are systems that shoot down other missiles and other unmanned systems and even aircraft if they do try to invade a country. So that's in Europe. Right now, we see several countries, two big countries out there that we mentioned; one is Romania and the other one is Poland that are pushing forward working through the FMS process with the U.S. government to procure the system. I can tell you they're putting pressure on us to deliver as fast as we can possibly deliver. And so we're really working that in our factory to accelerate delivery of the systems for Romania and also Poland. Switching over to the MENA region, Middle East North Africa, again a significant demand for a lot of our products, our Paveways, our TOW systems, on the Integrated Air and Missile Defense, it's Patriot, and big demand for additional fire units from countries and upgrades of their existing systems and then also our GEM-T missiles. It turns out that since about 2015, there has been over 220 tactical ballistic missiles fired in the region. The ones that were headed towards areas where there are civilians was over 150 and those 150 were all shot down by Patriot systems. So the system is working very well in that region, which is causing additional demand. But the threat's also increasing, which is even driving the demand signal even higher in that region. So the question is not about buying, the question that we get is how fast you can deliver. So that's a different story and so maybe that's answering your question on why it's taking long. And then I just also came back from the Asia-Pacific region. I'm sure you've read about the landslide victory that Abe had recently. And again, he went, he called that election, that snap election because he was looking for support in making a modification to their constitution to allow them to take their defense group from a homeland, purely homeland defense and a passive defense into an active defense type of forces. And in that case, they're looking for additional capabilities, obviously Patriot standard missiles. We do co-produce the Standard Missile-3 Block IIA with Japan. They're also looking for Standard Missile-6. And also, they want our Air and Missile Defense Radar, the SPY-6 as part of an Aegis Ashore type system there. And other countries in the Asia-Pacific region are also looking for our capabilities. So that's the international market and again, half of that's direct commercial sale and the other half is FMS.

Your next question comes from the line of Richard Safran representing Buckingham Research. Please proceed. Richard T. Safran - The Buckingham Research Group, Inc.: Hey, good morning, Tom, Toby and Todd, how are you? Thomas A. Kennedy - Raytheon Co.: Good morning, Rich. Anthony F. O'Brien - Raytheon Co.: How are you doing? Todd Ernst - Raytheon Co.: How are you doing? Richard T. Safran - The Buckingham Research Group, Inc.: Tom, Toby, so you were pretty clear in your remarks about what's it (38:12) about 2018 and I also know you take – sometimes take a, maybe a conservative outlook here. I was wondering if your outlook for 2018 was based on the President's request or some meshing of the bills making into way (38:28) through the House and Senate. Now, the reason why I ask is that both congressional bills appear to be above the President's request. So I'm just wondering, if based on the outlook and on the President's request, could be some upside here to your guide if we end up with a bill closer to what's in the House or the Senate, do you think that Raytheon fares better in the House or Senate version? And just separately, if you could comment on international, if that's – if you say it's one-third of bookings this year, how you think that might trend next year? Thanks. Anthony F. O'Brien - Raytheon Co.: Yeah, Rich, it's Toby and Tom can jump in here. But as far as the initial outlook for 2018, think of it more towards the President's request and keep in mind to the degree that we may have any upside from that, given that it would be the instant year, it's more likely to be a favorable impact on the bookings where we said we'd have a book-to-bill ratio of greater of 1. The sales profit impact from that would really, if we do see something higher than the President's request, would really materialize more in 2019 and beyond. Thomas A. Kennedy - Raytheon Co.: Yeah, and let me just jump on that. So if you, relative to the modernization budget, if you add in both the base budget and OCO, the President's request was about $35.5 billion over the BCA limits. And then if you go into the HASC, the SASC and HAC-D, they're all actually pretty close to what they're shooting for. They're anywhere for $24 billion to $25 billion over the President's request. As Toby said, we're really looking more at the President's request in terms of our outlook for 2018. I can tell you that I have spent quite a bit of time on the Hill talking, on a bipartisan basis talking to two members. And there is a strong support for defense moving forward because, I'm hopeful you recognize, the world's become a much more dangerous place here in the last several years. And there are some capabilities that the U.S. needs to bring onboard here pretty quick in terms of advanced technologies. And so there's a strong support in Congress for an increased budget over and above the BCA limits.

Your next question comes from the line of Robert Stallard representing Vertical Research. Please proceed. Robert Stallard - Vertical Research Partners LLC: Thanks so much, good morning. Thomas A. Kennedy - Raytheon Co.: Good morning, Rob. Anthony F. O'Brien - Raytheon Co.: Hi, Rob. Robert Stallard - Vertical Research Partners LLC: Tom, I thought I'd just follow up on your comments about the demand environment and the news that's come out of Turkey that they are moving forward with a Russian air defense system. Do you think these will actually come to pass, and if it does, does it create more competitive pressure around the world? Thomas A. Kennedy - Raytheon Co.: Well, I would say the following: I'd say, this is the second round for Turkey, you remember, they initially selected a Chinese system a while back. So we'll see how that plays out. Turkey is not in our forecast for 2018 or 2019 or 2020. So we really – haven't really pursued Turkey relative to this offering and they knew (41:40) they've been – they have – I don't believe they've really settled down in terms of what they really want. But you're right. Right now, they are saying they're going to go forward with an S-400 sale with Russia, that has significant issues relative to NATO. They will not be able to interconnect that system in with any NATO system. There was an article out today of NATO very, very concerned about the sale itself. When we compete internationally, we do compete against countries and – because most of the companies we compete against are owned by other countries. So there is always a geopolitical aspect of some of these, I would call it, competitions. I think right now, we think we're in a very good position. We have really some firm orders that are lining up for 2018 and a significant amount of opportunities. And I've been in each of the major regions, Europe, MENA region and Asia-Pacific and I've looked the leaders of those countries we do business with in the eye and have had firm handshakes and contracts following. So I feel very positive about our outlook for 2018 and beyond relative to our international business.

Your next question comes from the line of George Shapiro representing Shapiro Research. Please proceed. George D. Shapiro - Shapiro Research LLC: Good morning. Quickly, Toby, my typical question, $165 million lower backlog on a sequential basis than bookings. But my real question is, your fourth quarter guidance for sales assumes 7% sales growth at the low end and 12% at the high end, a significant uptick from what we've been seeing. And a lot of it looks like it comes from the fact that Missiles, you've got to step up in growth to either between 16% and 21% in the quarter. So if you could just expand a little bit what the growth – where the growth comes from. Anthony F. O'Brien - Raytheon Co.: Yeah. Sure, George. No problem. And yes, we had about $165 million of adjustments. One thing on that I'll just remind everybody that the majority of those adjustments are when we have under-runs on cost-type programs and we do continually work with our customers to convert those under-runs into new work, new scope, i.e., new bookings, either on current programs or future bookings. And again, we increased our bookings outlook for the year by $500 million, so we're pleased with where we're positioned right now. You got the numbers right on the Q4 revenue growth, I think from an overall company point of view and also for Missile Systems. And at Missiles for the year, we have improved our guidance range on the low-end and see Missiles total year sales growing by about 10%. As you noted, Q4 is strong with high double-digit growth expected. We're well positioned across the entire Missiles portfolio with the strong backlog and we do expect to see that additional sales volume really coming from the startup of some recent awards as well as some Q4 awards, some of which will relieve inventory balances and this kind of gets back to Tom's point about where our customers, from a demand perspective, want our products and they want them sooner or they want them quicker. So, where it makes sense, we've been working with our customers to try to do that and part of the growth in the fourth quarter at Missiles, as I said, is the – is reflective of that, with inventory being converted to revenue to drive that growth.

Your next question comes from the line of Robert Spingarn representing Credit Suisse. Please proceed. Robert M. Spingarn - Credit Suisse Securities (USA) LLC: Good morning. Thomas A. Kennedy - Raytheon Co.: Hey, Rob. Robert M. Spingarn - Credit Suisse Securities (USA) LLC: Toby, I wanted to get a clarification on Forcepoint. And then Tom, on the back of George's question, I wanted – focusing on Missiles, you mentioned AUSA and you were talking about SHORAD, but I wanted to go back to the emphasis at AUSA on readiness with regard to North Korea. I mean, it was a very strong message, almost surprisingly strong coming out of the Army at that event. And I see the 10% growth in Missiles and Excalibur is part of that. I think Toby mentioned that earlier. I wanted to see how sustainable this kind of a rate might be, especially if we uptick the readiness. And in that context, I was going to ask you for the latest update on DeepStrike, just given that Long-Range Precision Fires is now one of the six pillars of the latest acquisition strategy. And then Toby, the clarification was just on Forcepoint. If you could speak to the revenue seasonality that we keep seeing in the third quarter. Anthony F. O'Brien - Raytheon Co.: Yeah. Do you want me to – Tom, if you want, I'll cover the Forcepoint question. Thomas A. Kennedy - Raytheon Co.: Do Forcepoint. Then I'll hit the other 10 questions. Anthony F. O'Brien - Raytheon Co.: Yeah. So Forcepoint does have a couple elements of seasonality. So in Q3, typically it's the peak quarter from a government booking perspective and we saw that again here this year and in Q4, it's really the peak for commercial. So we did see the spike-up in revenue in Q3 driven by our government orders, but also some strength on the commercial side. We do expect strong commercial bookings in Q4, which typically convert to sales at a bit slower pace than the rest of the business, think more leaning towards some subscription-based sales versus licenses in the fourth quarter. Thomas A. Kennedy - Raytheon Co.: And let me, back to your readiness, you're absolutely correct. At AUSA, there was a definite, I would say, position by the Army that we need to kick in on readiness. The good news is Raytheon is very well-positioned to support the Army in achieving the readiness across our entire set of our franchises, for example, TOW, Paveway, just to name a few, obviously the Patriot system, getting that ready. And then even in these future systems that you did mention, we are in a competition for the next-generation replacement to the ATACMS system, which is called the Long-Range Precision Fire missile. We have, I think, a very interesting solution for the Army there that actually doubles their capability and significantly increasing the range at the same time. So we are working hand in glove with the Army and to bring that system online now. It is a competition and it will be a down-select here in the next couple years. But we feel very, very optimistic about the solution that we're offering for the Army on that. And just one other element, we have been seeing an intake relative to efforts on being able to support this readiness. And across many of our systems, we have tripled the production capacity. So we've been able to meet the demand with our supply base. We believe there's additional capability to increase and that goes all the way through our supply base and have been working with our suppliers to ensure that they can even increase their material to us over and above what they're already doing. So we feel in a very good position here relative to meeting demands for the Army relative to readiness.

Your next question comes from the line of Sam Pearlstein representing Wells Fargo. Please proceed. Samuel J. Pearlstein - Wells Fargo Securities LLC: Good morning. Anthony F. O'Brien - Raytheon Co.: Good morning, Sam. Thomas A. Kennedy - Raytheon Co.: Good morning, Sam. Samuel J. Pearlstein - Wells Fargo Securities LLC: I was hoping you could help me kind of square a few things, which is talking about governments and a desire to see more missile defense and you've raised your bookings a couple times and still talking about a strong bookings environment. But if I look at IDS backlog at a little over $9 billion, looks like it's the lowest we've seen in quite a number of years and actually year-to-date, the backlog for the total company is down a little bit. Like why aren't we seeing book-to-bill over 1 driving us to see backlog increases and what does that mean about the sustainability of that 3% to 5% organic growth? Anthony F. O'Brien - Raytheon Co.: So, Sam, this is Toby. I'll take a crack at that starting out. I mean we've said it before, Tom or I might have mentioned it earlier on, in any given period, bookings can be lumpy. We are expecting, as an example, you mentioned IDS, right, and they had a strong Q1 for bookings. There was nothing significant in Q3, but we do expect their book-to-bill, as an example, in the fourth quarter to be well over 1 and approaching 1 for the year. They have some significant opportunities in front of them. Tom alluded to a few of them when he was kind of going around the world talking about the threat and the demand environment. And then when you take it down to a total company perspective, 1.11 in the quarter, last year was 1.16, 1.08 book-to-bill on a rolling four-quarters basis and our outlook for the year at 1.07, there's nothing there other than positive news relative to be able to sustain, certainly, for 2018 that 3% to 5% growth that I talked about earlier. Samuel J. Pearlstein - Wells Fargo Securities LLC: Thanks. Anthony F. O'Brien - Raytheon Co.: Thank you.

Your next question comes from the line of Seth Seifman representing JPMorgan. Please proceed. Seth M. Seifman - JPMorgan Securities LLC: Thanks very much, and good morning everyone. Thomas A. Kennedy - Raytheon Co.: Good morning, Seth. Anthony F. O'Brien - Raytheon Co.: Good morning. Seth M. Seifman - JPMorgan Securities LLC: Good morning. Toby, you had a nice increase in the guidance for profitability in IDS. You talked about companywide what the kind of modest margin expansion you're expecting next year. I wonder if you could talk about, A, whether that includes further growth off of this new baseline at IDS, and B, as you look to capture these new Patriot wins next year, and we think about the maturity of Patriot programs across the portfolio, does adding in the new programs kind of create kind of a new cycle, kind of like what we saw in 2015, I guess, or so when you booked a whole bunch of new Patriot programs and kind of ramped up on those? Anthony F. O'Brien - Raytheon Co.: Sure. And maybe – I know your question's largely focused around the margins, but maybe I'll kind of give you a little bit more color across all the metrics here. Keeping in mind that our intent today is give everybody a high-level look at how we're thinking about 2018. And as we continue to work through our process through the balance of the year, we'll obviously give you details, more details by business in January. But if I start at the front end of the business, as I said, another book-to-bill ratio over 1, again even on the higher expected sales that as I mentioned, 3% to 5% growth. I would tell you that the growth next year is a little bit more weighted towards Missiles, but we do see growth in every segment and we also continue to see both domestic and international growth again next year. Specifically, on your question around margins, again, up slightly from 2017 for segment margins. And just to give a little bit of color, at this point, we do see some incremental improvement next year at IDS, to your question, they're executing well. We expect to get a little bit more of a lift in 2018 from IDS and also some improvement at IIS. Right now, we'd look at Missiles to be in line with 2017 and we do have some mix-driven headwind, if you will, at SAS. As I talked about earlier, strong cash flow in line with 2017. We're looking at higher cash flow being generated by the businesses, partially offsetting as we expected and have talked about before, higher pension contributions and higher cash taxes, mentioned the tax rate at 31%. And of course, we gave you the grid. I gave you the outlook or at least not the outlook, but the current status as of today for discount rate as well as the asset returns which – I know doesn't pinpoint it exactly, but think of it a little bit ahead of where the new outlook for 2017 is, plus or minus in the $400 million range for the FAS/CAS and I talked about Forcepoint. So hopefully, that helps you a little bit understand how we're thinking about things and again we'll go through more details by business in January.

Your next question comes from the line of Peter Arment representing Baird. Please proceed. Peter J. Arment - Robert W. Baird & Co., Inc.: Yeah. Good morning Tom, Toby. Thomas A. Kennedy - Raytheon Co.: Good morning, Peter. Anthony F. O'Brien - Raytheon Co.: Hi, Peter. Peter J. Arment - Robert W. Baird & Co., Inc.: Tom, now that DOMino finally is under the Raytheon umbrella... Thomas A. Kennedy - Raytheon Co.: Hallelujah. Peter J. Arment - Robert W. Baird & Co., Inc.: It's great, great to see. How are you thinking about, just kind of similar kind of opportunities where you're doing this, protecting international – other international opportunities, I'm thinking about Raytheon Arabia, other kind of opportunities that you've kind of set up, where maybe you can bring a lot of the Raytheon cyber capabilities to – other countries? Thomas A. Kennedy - Raytheon Co.: Yeah. So Peter, it's a great question. So, we'd actually have in another country implemented something very similar to the DOMino. And so, we're already off on the international side relative to cyber and doing those type of capabilities in terms of providing cybersecurity to governments. DOMino obviously gives us additional creds or credentials that will help us gain, I would say, more cybersecurity work worldwide. And so, we're already off leveraging that moving forward.

Your next question comes from the line of Sheila Kahyaoglu representing Jefferies. Please proceed. Sheila Kahyaoglu - Jefferies LLC: Hi, good morning, everyone. Thanks for taking my question. Thomas A. Kennedy - Raytheon Co.: Good morning, Sheila. Sheila Kahyaoglu - Jefferies LLC: You mentioned this one in your prepared remarks, so I thought I'd go back to it with the award from DGI on the satellite image payload. Thomas A. Kennedy - Raytheon Co.: Yeah. Sheila Kahyaoglu - Jefferies LLC: And this has been typically business for one of your peers. Can you just discuss overall what you're seeing in that imaging market and how this might open up more opportunities? Thomas A. Kennedy - Raytheon Co.: Well, I think we're seeing is that the commercial marketplace is driving to higher accuracy and much, much better data and they also want to be able to collect more data. And we're set up to do that, we've been doing that for decades for our government customers. One of the elements was getting our price point to a position where we could be competitive against commercial suppliers who, in this case, don't really have the same capabilities that we have. And so we're hitting the price point, but providing them a significantly enhanced performance and capability, which then they can then sell and package and add value relative to their customers. Todd Ernst - Raytheon Co.: All right, I think we're going to have to leave it there. Thank you for joining us this morning. We'll look forward to speaking with you again on our fourth quarter conference call on January. Katina.

Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.