Good day, ladies and gentlemen. And welcome to the Raytheon's Fourth Quarter 2019 Earnings Conference Call. My name is De Tamara, and I will be your operator for today. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the call over to Ms. Kelsey DeBriyn, Vice President of Investor Relations. Please go ahead.

Thank you to De Tamara. Good morning, everyone. Thank you for joining us today on our fourth 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 Web site. 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 and the proposed merger with UTC, 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 risk that are summarized at the end of our earnings release and are discussed in detail in our SEC filings, and with respect to the proposed merger and related matters in the definitive merger proxy statement filed with us with the SEC on September 10, 2019. With that, I'll turn the call over to Tom.

Thank you, Kelsey. Good morning, everyone. Raytheon had a very successful year in 2019 and our global growth strategy is delivering record results for our shareholders and customers. We had many highlights and set many company records. So let me start by touching on some of our financial results. In 2019, we continue to see strong global demand for innovative solutions, illustrated by our book to bill ratio of 1.54 in the fourth quarter and 1.25 for the full year. And for the third time in 2019, we achieved record backlog, which rose to almost $49 billion at the end of the year. This drove an increase in backlog of more than $6 billion year-over-year or up 15% and it positions us well for the future. Sales are up 6.5% in the fourth quarter and 7.8% for the full year. And in 2019, we accelerated our sales growth for the fifth time since 2015. This year in the new company record for annual sales of $29 billion EPS exceeded our expectations for the quarter and for the year. Cash flow is better than we expected and we achieved a new company record for operating cash flow for the full year. Toby will review additional details about the fourth quarter and our 2020 outlook in a few minutes. Now, with all of our successes in 2019, I wanted to share what I see and some of Raytheon's key milestones during the year, successes from across the company that will drive future growth. First, let me highlight the strength at both our classified business and our international business. In 2019, we achieved record classified bookings for the full year of almost $8 billion and we saw strong classified bookings across the businesses, including $2.8 billion in both missiles and IIS and $2.1 billion at SAS. Raytheon also had record classified sales, which grew 15% versus 2018 and represented 20% of company sales. Our strength in classified is driven in large part by the need of our domestic customers to address advanced threats as outlined in the national defense strategy. As we've said before, classified business is crucial for Raytheon's growth and success. It funds next generation technology development that is integral to the long term growth of our future franchises and production awards. We also achieved company records in our international business, both international bookings and sales and record levels for the year. International sales are $8.6 billion for the year and year-over-year, international sales have now increased for 16 consecutive years. Turning to our franchises, we further strengthened many of them in 2019 to be long term value generators for years and decades to come. The newest example of this is our clean sheet offering for the U.S. Army's next generation Air and Missile Defense radar. In October, we were pleased to be selected to develop the lower tier Air and Missile Defense sensor, which extends Raytheon's position as the world's premier Air and Missile Defense radar capability provider for decades to come. We expect LTAMDS to have potential lifetime value of over $20 billion from sale to domestic and international customers. LTAMDS will operate on the Army's integrated air and missile defense network. Our Patriot franchise continued its momentum with the Kingdom of Bahrain signing an agreement in August to purchase Patriot. This letter of offer and acceptance allows the U.S. government to begin contract negotiations with our Patriot team. Bahrain is the 17th nation to procure Patriot. With the U.S. approval, all 17 of these Patriot partners will have the opportunity to add the LTAMDS capability to each of their fire units. This will enhance the performance and extend the life of their systems for many decades. In addition, the capabilities of the LTAMDS radar also opens up a market for standalone forward deployed applications. Our Patriot system fires multiple interceptors, including our guidance enhanced missiles or GEM-Ts. And during the fourth quarter, we booked over $700 million on a direct commercial contract to provide GEM-T missiles for an international customer. Demand for integrated air and missile defense solutions is also furthering growth in our NASAMS franchise, a mid range solution, jointly manufactured by Raytheon and Kongsberg. In 2019, we added two new countries to the NASAMS family. In May, we booked over $500 million to provide NASAMS for Australia. And in July, we received $1.8 billion award to provide Qatar with NASAMS. Qatar is the 11th country to procure NASAMS, which uses a Raytheon radar, and will be capable of firing multiple interceptors, including our AMRAAM-Extended Range and AIM-9X missiles. As a result, NASAMS help support the growth of additional franchises AMRAAM and AIM-9X. For AMRAAM Raytheon is continuing the development of AMRAAM ER and expanding its capabilities to support land based applications. This significantly extends both the range of AMRAAM and the market of the NASAMS system. Qatar will be the launch customer of AMRAAM ER. As part of the procurement of the NASAMS systems, we expect the foreign military sales contract award from Qatar for AMRAAM ER in 2021. Our airborne radar franchise was extended in July with our selection as a radar supplier for the B-52 radar modernization program, displacing the incumbent. Under the contract, Raytheon will design, develop, produce and sustain the use of radar systems for the entire U.S. Air Force B-52 fleet. With improved navigation reliability, mapping and detection range, the advanced radar upgrade will ensure the aircraft remains mission ready through 2050 and beyond. And we continue to see strength across our standard missile franchise, including the multiyear award for SM-6 and then the bundle award for SM-3 Block IIA, both of which were booked in December for a total award value of around $3 billion. We still expect a multiyear contract award for another SM-3 variant. SM-3 Block IB, worth about $2 billion in the first half of 2020. The endo-atmospheric SM-6 delivers a proven over the horizon offensive and defensive capability, and it supports anti air warfare, anti surface warfare and sea based terminal ballistic missile defense in one solution. In the next generation SM-3 Block IIA, interceptor defeats missile threats outside the Earth's atmosphere and is produced in cooperation with Japan. With the recent and expected awards for our Standard Missile product lines, we have production visibility until at least 2026. Both the SM-3 Block IA and IB are integral to MDA's position in missile defense. This month, after the quarter closed, IIS was selected by the U.S. Air Force to develop the future operationally resilient ground evolution program, also known as FORGE. This newly developed open framework will be capable of processing overhead persistent infrared satellite data from both the U.S. Air Force's evolving SBIRS constellation and the future Next Gen OPIR constellation for missile warning. Also in January, we were awarded the fourth element terminal by the U.S. Air Force, which extends our protected communications franchise at SAS. Finally, one of our most notable highlights of 2019 was announcing our transformational merger of equals with United Technologies. These two industry leading companies will create one of the best positioned aerospace and defense companies. Raytheon Technologies will have a diversified platform agnostic suite of offerings that are balanced across end markets, which is a key differentiator through business cycles. The combined company will also have a vast global footprint. By combining our complimentary technologies, we can go after and win and increase number of new franchises. We expect the revenue synergy opportunities from our combined technologies to continue to be value generators for decades to come, positioning the company to increase market share and outgrow the aerospace and defense markets. Integration planning for the merger is progressing well and the merger is targeted to close early in the second quarter of 2020. As we start the New Year, we feel optimistic about the future and our ability to continue to grow, both domestically and internationally. We are pleased with the fiscal year '20 appropriations bill enacted in December with our Raytheon programs fairing well, and the DoD monetization account up versus fiscal year '19. Fiscal year '21 budget control act caps were increased last year, so we have top line certainty and include a modest increase in a DoD base budget. Perhaps best of all, fiscal year '21 is the last year on the BCA. Bottom line, we have a strong foundation for the future. And this is recognized last week in Fortune magazine's annual survey. Raytheon was ranked the number one company in the aerospace and defense industry in the 2020 study of the World's Most Admired Companies. And it's included number one rankings in key attribute categories, such as innovation, financial soundness, global competitiveness and social responsibility. Let me close by thanking all the members of the Raytheon team worldwide. When I think about our many successes in 2019, I do so with deep appreciation for my dedicated colleagues who made it possible. They are the ones helping the company grow and meet its commitments, the ones creating value for shareholders and the one providing the trusted, innovative solutions our customers depend upon. Given the expected timing of the merger's close, this could well be the last earnings call for me and for Raytheon Company. For nearly 100 years, this company has provided mission critical technologies to our customers, supported a diverse and engaged workforce and has been a good corporate citizen. That legacy built on a foundation of trust, respect, collaboration, innovation and accountability, will continue. And we are excited to redefine the future of the aerospace and defense industry as Raytheon Technologies. With that, let me turn the call over to Toby. Toby O'Brien: Thanks, Tom. I have a few opening remarks, starting with the fourth quarter and full year results. Then I'll discuss our outlook for 2020. After that, we'll open up the call for questions. During my remarks, I'll be referring to the Web slides that we issued earlier this morning, which are posted on our Web site. On Pages 2 and 3, we have our fourth quarter and full year highlights and summary results for the year. We are pleased with the strong performance the team delivered in both the fourth quarter and the full year with bookings, sales, operating income, EPS and operating cash flow that all met or exceeded our expectations. We had record bookings in the fourth quarter at $12.1 billion, resulting in a book-to-bill ratio of 1.54. And for the year, we also had record bookings of $36.3 billion, resulting in a book-to-bill ratio of 1.25. This sets the stage for continued strong growth in 2020, which I'll discuss in more detail in just a few minutes. And we achieved record backlog of $48.8 billion, up 15% year-over-year. Sales were $7.8 billion in the quarter, up 6.5% from the same period last year, and we saw growth across all of our businesses. For the year, sales were up 7.8%, reaching a new company record of $29.2 billion. Our EPS from continuing operations was $3.16 for the quarter and $11.92 for the full year. I will give a little more color on EPS in a few minutes. We also generated strong operating cash flow of $2.8 billion for the quarter and $4.5 billion for the year. It's worth noting that we exceeded our operating cash flow guidance by approximately $400 million at the midpoint and achieved new company record for operating cash flow. This increase was driven by operations and improved working capital. The company ended the year with a strong balance sheet and net debt of approximately $500 million. Now turning to Page 4. Let me go through some of the details of our fourth quarter and full year results. As I mentioned earlier, we had strong bookings of $12.1 billion in the quarter and $36.3 billion for the full year, resulting in a record backlog of $48.8 billion. This is an increase to backlog of over $6 billion or 15% over year-end 2018, and provides us with a strong foundation for the future. International orders represented 28% of our total company bookings for both the quarter and the full year. At the end of 2019, approximately 38% of our total backlog was international. Turning now to Page 5. We had fourth quarter sales of $7.8 billion, an increase of 6.5% compared with the fourth quarter of 2018 and in line with our expectations. International sales continue to be strong, representing 31% of our total sales for the fourth quarter and 29% for the full year of 2019. So looking at the businesses. IDS had net sales of $2 billion in the quarter, up 18% from the same period in 2018, primarily due to higher net sales on an international air and missile defense system program awarded in the third quarter 2019 and an international missile defense radar program. IIS had net sales of $1.7 billion in Q4, up 2% compared with Q4, 2018. Net sales at missile systems in the fourth quarter were $2.3 billion, up compared with the same period in 2018. And for the full year, missile sales of $8.7 billion were up 5% over 2018. It's worth noting that missiles had strong bookings performance for the full year 2019 with bookings up 23% over the prior year. In the fourth quarter 2019, SAS had net sales of $2 billion. The 7% increase from the fourth quarter 2018 was primarily driven by higher sales on classified programs, the Next Gen OPIR program and tactical communication systems programs. For the full year, total company sales were $29.2 billion, up 7.8% over full year 2018. Moving ahead to Page 6, we delivered strong operational performance in the quarter. Our operating margin was 16.3% for the total company. On a business segment basis, our operating margin was 12.7%, up 70 basis points and higher than Q4, 2018, primarily due to higher net program efficiencies. Total business segment operating income of $993 million grew $109 million or 12% in the quarter. So now looking at the business margins. IDS fourth quarter 2019 operating margin was strong at 15.5%, up 80 basis points compared to the fourth quarter of 2018. IIS operating margin of 8.6% was up 20 basis points compared to the fourth quarter of 2018 and better than expectations. Missiles operating margin was 12.7% in the quarter, up 90 basis points compared to Q4 2018. The fourth quarter of 2019 benefited from a favorable change in program mix and higher net program efficiencies. SAS fourth quarter 2019 operating margin was 13.8% and in line with the fourth quarter of 2018. And SAS had a $21 million gain from the sale of real estate, which was assumed in our fourth quarter 2019 guidance. Turning to Page 7, we have solid operating margin performance for the year. Our operating margin was 16.4% for the total company and 12.1% on a business segment basis, an increase of 10 basis points compared with 2018.Total business segment operating income was $3.5 billion in 2019 and was up $290 million for the year or 9% over full year 2018. On Page 8, you'll see both the fourth quarter and full year EPS. In the fourth quarter 2019, our EPS was $3.16 and for the full year was $11.92. Both the quarter and full year were higher than the comparable periods in 2018, primarily driven by operational improvements from higher sales volume and favorable pension related items. Overall, we have strong operating performance for both the quarter and full year. Now, let me update you on our 2020 outlook on Page 9. As we sit here today, we currently see the book-to-bill ratio above one, and would expect to achieve another record backlog year. We also see strong sales growth for 2020 for the underlying Raytheon business of 6% to 8% over our 2019 results. Additionally, we expect growth across all of our businesses. We would expect IDS and SAS, our highest margin businesses, to have higher growth rate than the others, both with expected sales growth of 6% to 8% versus 2019. And at IIS, we'd expect sales growth of 4% to 6%. At missiles, we would expect sales growth of 5% to 7%. Although not on the page, I want to spend a minute talking about our expectations for the first quarter of 2020. We remain confident in our growth rate of 6% to 8% for the full year 2020. We expect the first quarter sales growth to be in the low-single-digits due to a tough comp with last year's first quarter. We see the sales growth profile of 2020 second half weighted with sales ramping up throughout the year, which is driven by the strong bookings in the second half of 2019. Before concluding, I want to touch on the pending merger with United Technologies. The collaborative merger efforts and integration planning between Raytheon and United Technologies are continuing to progress well. We look forward to the next steps in the process, including continuing to work closely with regulatory authorities in the U.S. and other jurisdictions to secure the required clearances and approvals for the merger. We are targeting the merger to close early in the second quarter of 2020. And post closing, we look forward to Raytheon Technologies delivering strong free cash flow growth and deploying a significant amount of its free cash flow to its shareholders in the form of share repurchases and dividends. Let me conclude by saying that 2019 was a very successful year for Raytheon where we once again delivered strong financial results. We set many new company records in 2019, including record operating cash flow, backlog, bookings and sales and records for both sales and bookings in the classified and international areas. We have a strong balance sheet, which gives us a strong foundation as we move forward with the merger. And our business segments are well positioned to grow in 2020 and beyond. So with that, we'll open the call up for questions.

[Operator Instructions]. The first question will come from the line of Carter Copeland.

So just a quick clarification and a question, just on the IDS growth, Toby, seems like for 3Q '19 award, the impact on the topline is pretty fast. Was that work that was done that got on contract? I just wanted you to help us with that. And then Tom, I wondered if you could give us some color on where the customer is kind of thinking or heading on [three dealer] [ph] and the change there? Thanks. A - Toby O'Brien: So on IDS, you know Carter, we're real pleased with their performance for the quarter and the year. The 12% growth they delivered in '19 was real strong. But yes, you got it right. There was some inventory liquidation that took place in order to ensure we had the right schedule cadence on the program going forward.

On the [three dealer] [ph], you may remember we initially won that back in 2014. And it was a bunch of protests and everything else like that, so it's kind of a program that kind of got off to kind of an interesting start with the protest. In any case, the technology baseline was back in about 2008 when essentially the whole solicitation efforts started with the Air Force. And as you can imagine, by the time we got started after the protest, there were many advancements in technology since then, but we had a baseline that was kind of rigid. And as also under the older, call it the acquisition strategies or techniques that the department had. And so couple of things they want to do, one is they wanted to refresh on the technology and then the other one is to get more into an OTA structure where they thought they could get the program through faster. And so they're going to go off and conduct an industry day here, surely lot more details. Part of that is they're going to try to do a sense off that was very similar what the United States Army did with the LTAMDS radar. And if you guys remember that last year, they conducted a sense off and in the end game, we went one up winning that program with the solution that we brought to the sense off. Toby O'Brien: The only thing I would add, given the state of where the program was at from a development point of view, it doesn't have a material impact on our financial results for 2020 and even the next year or two beyond that.

Thank you. Your next response is from Sheila Kahyaoglu. Please go ahead.

Tom, while we have you. How do we think about IDS and profitability mix, given FMS sales pick up and just the cadence of those? And related to that, how do we think about Patriot international opportunities with the LTAMDS win in the U.S.

I think IDS has a really bright future. And the number one is there they have the largest content of international. But they've also developed some key franchises here recently, the Air Missile Defense Radar or the Spy 6 for the DEG-51s, they also developed the enterprise air surveillance radar for the Navy. And as you know, the Navy is pushing for 350 ships, a lot of them are going to be frigates and the EASR has been already designated as the radar for those frigates. So I think that's a good for there for moving forward. They also won the lower tier air missile defense sensor, which is the LTAMDS for Patriot. And as we mentioned during the scripts, that's got about a $20 billion future here, both of between domestic and international customers. Just last year, Bahrain became our 17th country that has the Patriot system. So we have 17 countries that we work with on the Patriot system. Obviously, they're buying spares, aftermarket efforts in those areas. But they also continue to buy new solutions for the Patriot System. And now we have a brand new solution to bring in and it significantly enhances the capability of the Patriot system, called the LTAMDS radar. And there's about an opportunity for over 240 of those radars here over the next decade or so. So they're very strong all across the board in terms of new franchises coming on board, refreshing the Patriot franchise. On the international marketplace, they've done quite well by balancing both the FMS, which has higher margins than the domestic but also bringing on quite a bit of what we call DCS, Direct Commercial Sales business, which has higher margins than the FMS. So all-in-all, I think IDS is on a very strong foundation but they built, I call a launch pad for increased success through the decade. Toby O'Brien: And maybe I can just add a little bit and I'll start at the highest level of a company. So we're not giving guidance for 2020 consistent what we said back in October. But that said, I would tell you specifically around margins, nothing's changed. We still see the opportunity to improve margins incrementally going forward, improve our operating income overall, number one. As far as IDS in there, FMS, DCS mix. In the near-term, yes, that's a headwind. It's a good problem to have given the volume of the FMS work coming in. And we still have solid DCS work. I would tell you and remind you I think you all know IDS has been historically our highest margin business. We expect that to continue in the future. And we talked about the improved margin in Q4 for the company, a lot of it through net program efficiencies, IDS was a big contributor to that and we'd expect strong performance from IDS going forward. Let me just expand too a little bit on LTAMDS, because back when we were awarded in October we mentioned that the contract vehicle here is an OTA. Given that I think as folks know that does require periods of investment and we're going to experience that here for Raytheon. We have been spending on this for a while. As Tom alluded to leading up to the sense off and the hardware we delivered there. We're delivering six represent -- production representative units under the contract, it's about three year effort. The majority of the costs are going to be incurred in 2020. And you might have seen in our release, we took $13 million expense at the corporate level related to LTAMDS. We're managing this as a corporate project given the strategic significance tie back to the $20 billion opportunity, the standalone opportunities. And consistent with that, we'll be recording an expense throughout the year at the corporate level, probably in the $200 million range plus or minus and then it would tail off into 2021 as well. There's no impact on the IDS margins or the IDS segment margins as a result of that.

Your next response is from Cai Von Rumohr. Please go ahead.

So you'd mentioned that your fastest growth is IDS and SAS, which are your higher margin -- highest margin business excluding the $200 million investment in LTAMDS. I mean, should we assume that your margins if you were a standalone company would be up? Toby O'Brien: So I think Cai, again, both for 2020 and beyond, I think we've been consistent. We are on a path to incrementally on an annual basis improve margins. Our segment margins were up 10 basis points in 2019 compared to 2018. That said we do have to think about mix impacts. And as Sheila asked and I just mentioned, we do see some mix with more FMS, less DCS and IDS, but we are focused on operational excellence and driving more efficiencies through the business. Missiles as an example, we expect their margins to be improved after some of the challenges they had in 2019. We expect their margins to improve in 2020. But they're still dealing with more development work, more classified work. Again, big picture kind of punch line is yes, there a standalone business. We would expect the company segment margins to incrementally improve in 2020 and beyond.

Thank you. Your next question is from the line of Myles Walton. Please go ahead.

Just on the remaining 19% for fourth quarter. Just curious if that now allows you to or pushes you to pursue process there. And also how indicative is the price you pay Vista to what you think you'll get in the open market? And maybe Toby, can you just give us where the pension ended? Thanks. Toby O'Brien: So let me start with the fourth point part of your question. So look back to when we acquired Websense almost five years ago, we had disclosed the liquidity rights that both sides had. I think we and Vista hadn't been aligned all along. So ultimately the end game here was to monetize the investment in Forcepoint. They chose to do it through the foot process. We followed a very stipulated process per our agreement with Vista. We had outside advisors involved. And amongst other things, it took into account market conditions, comparable trading companies, et cetera. So at the time, yes, we think -- if we think it is indicative of that, obviously, at the end of the day, we still want to monetize the asset. We're going to do that in a smart way, evaluate all of our options. The whole software security market continues to trade pretty favorably here. And as we move along, we'll be looking to do what makes the most sense for the company and shareholders around that. Switching over to the pension, we had a return of about 19% for last year compared to our 7.5% long term assumptions. The discount rate that we're using for 2020 now is down about 100 basis points from what it was last year, it's at 3.3%. And we also did, through our normal process, update our long term return on asset assumptions and we reduced that from 7.5% to 7%. That all said, I'll just remind everyone that once the merger closes, because of purchase accounting, there will be some significant changes in this area. SAS operating and non-operating expense will improve as a result of that. And I think also to keep in mind there will not be an impact on our CAS recovery if you want to think about from a cash flow perspective that the CAS recovery stays intact.

Your next response is from David Strauss. Please go ahead.

I want to ask about the cash flow. Obviously, very strong performance this year, I think it came in $700 million or so above what you were thinking or what was in the S-4. Does any of that represent any sort of working capital pull forward that you had expected to come through in '20? Because I know what's in the S-4, looks like it reflects some pretty big working capital benefit. And then I think CapEx came in a little lighter than what you were thinking. Can you just address kind of the CapEx profile from here as well? Thanks. Toby O'Brien: So on the cash flow, I'm real pleased with how the company performed and delivered and overachieved in this area. And it was from improvements in working capital, all program operational related. That said, again, we're not giving guidance for 2020. But I would expect excluding the effects of the merger, so taking the merger related costs and cash impacts out of it, I'd expect stronger cash flow in 2020 despite the over performance in 2019. So said another way, it's not a timing issue. It's not -- you're not moving from one year to another. And again, I think that's indicative of our focus on running the business, executing the business and obviously, having a strong balance sheet here for the first part of your question. Secondly, on CapEx, a couple things. We had talked about 2019 being a peak year for capital spending. We still feel that way even though it did come in a little below what the original expectation was. As far as 2020 goes, we'd expect it to be down a little bit further, albeit slightly of the reduction compared to what we were expecting in 2019. Some of that was permanent where we found ways to do things more efficiently and a little bit of it was timing that moved from 2019 to 2020. But again, we're on a downward trajectory consistent with what we have said this time last year.

Your next response is from George Shapiro. Please go ahead.

Toby, can you tell us what's actually happened in missiles? I mean, the sales growth this quarter was clearly came below your revised guidance and for 2020, we're not expecting a lot of growth on the positive. The margin got a lot better. But what's happened on the sales side for kind of what was compared to what we're seeing? Toby O'Brien: So for Q4 overall at the company level, the 6.5% growth that contributed to 7.8% for the year, that was within the range we expected. You're right, missiles was a bit lower than we previously expected. We saw a little bit more strength than some of the other businesses. The way to think of missile sales in the fourth quarter was really some supplier delivery volume on a couple of production programs that we were expecting didn't materialize. And we had a few awards that had some inventory liquidations that again were a little less than expected. That said, the way to think of missiles going forward is they closed the year real strong, as I mentioned, relative to their bookings being up 23% year-over-year. Tom, in his opening comments, spoke about $3 billion worth of awards in the Standard Missile family that came in in the fourth quarter. We have the -- and one of those was -- one of the two multiyears that we had previously talked about, the second multiyear for the SM31B, we expect in the first half of this year. So we believe all that taken as a whole supports and provides for a foundation for missiles to grow and at a higher rate than we saw in Q4 again in the 5% to 7% rate for the year.

Your next response is from Robert Stallard. Please go ahead.

Thomas, this could be your last opportunity. And I was wondering if you give us your usual run through of what you're seeing at the moment in some of these key export markets. You've seen another good year of bookings. I was wondering how that could progress from here?

I'll start off -- let's start off in Europe. We have seen significant uptick over the last several years in Europe. A lot of it's been the pressure from our administration to push these countries to get to 2% -- the NATO countries do 2% of the GDP for defense. So we have seen an uptick there in Patriot, countries like Romania and Sweden buying the Patriot system was part of that. But we also have additional opportunities in that region for integrated air and missile defense and upgrading their systems, military systems across the board. Over in the Middle East, that continues to be an issue of significant demand for our solution set. As we recently saw in Iraq, anyone who has forces in that region needed to have integrated air missile defense capabilities and defender troops and their resources and their infrastructure. So we're seeing significant demands across the region for integrated air and missile defense solutions that range all the way from countering drones to, to ballistic missiles, to cruise missiles. So it's right in our sweet spot. And again, we're doing quite well in that region already but we see significant upside potential in the Middle East. And in the Asia Pacific region, North Korea has not quieted down, they're still doing testing. So there is considerable concern relative to, for example, South Korea and also Japan. Also in Korea, you don't see it out there in the press a lot but there is going to be a handoff of defense of South Korea from the South Korean government -- from the U.S. to the South Korean government. And that's going to provide an uptick requirement for us to be able to help provide the South Koreans the solutions they need to maintain their defense in that region as a primary defender. And then also relative to Japan significant uptick there, not just from the North Korea issue but also from the pressures from China. I think there's considerable push from China as we know expansionism relative to the first and second island chains. Japan wants to make sure they have a defense against that. So that is requiring some higher end solution sets that we are working with the Japanese government to provide. So in all the regions that we really participate in, in Europe and the Middle East and also in the Asia Pacific region, we're seeing significant demand singles for solution sets across the board. Obviously, we have created a bunch of new solution sets, like the SPY-6 radar, the EASR, now with the LTAMDS radar. So we had new solutions to bring to those markets and that we're working that very hard. Toby O'Brien: And Rob, I just from a quantitative point of view, just reinforce and we mentioned last year was a record year for international, including bookings. So we're seeing the results of that threat environment that Tom just walked through materialized in our results. We talked about 1.25 book-to-bill, both the domestic and international book-to-bill were plus or minus in that ballpark. So it was not one side of the house, if you will, driving the growth. We said 28% of the bookings were international 38% of the backlog, 29% of the sales and plus or minus we'd expect that same level of contribution from both in 2020 as well.

Your next response is from Seth Seifman.

Toby, if I just look at the guidance for the individual segments and proportion of the company, looks like the growth for 2020 would come in more at the 6-end than 8-end. Is that the right takeaway at this point? And where might there be potential upside? Toby O'Brien: No, I think the way I think of it, you got to think is that range is 6% to 8%. We're not specific beyond that. Don't forget that's total sales, don't have on the chart, we didn't talk about what would happen with eliminations. So those numbers exclude eliminations, which are close to in line, we expect them to be more in line with 2019. So I think that may be part of what is drove you to the question, you did there from the 6% versus either a midpoint or something else. That said, I mean we're confident in the range, the 6% to 8%, the strong backlog, the $49 billion in backlog, up 15% growth across all the businesses where we see that happening consistent with what we've laid out there, so no concerns on our end.

Your next response is from Peter Arment.

Tom, we know you're not going anywhere. So -- but thanks for all your guidance over the years. But Toby, just back to kind of, I guess, follow up on Seth's question. If we look at the 6% to 8% and off of the base of 2019 and we compare it against 4$, really seems closer to 2021 numbers that you had out there, not the 2020, I guess. What would you highlight as the differences? I assume the LTAMDS might be one of them or so. Thanks. Toby O'Brien: So LTAMDS would not be one, Peter, just because of the nature of the OTA and kind of as I described before, the funded R&D concept. Right now, we're not recording revenue on that. We're really treating it as funded R&D and the related expense that I talked about earlier. Just as a reminder from the origin of that S-4 data, we talked about in the S-4 the process that led to the merger and the timeline around that. And that S-4 data, the origin of it predated that. So you got to go back to the 2018 timeframe for when we pulled that together. And I think the simplest way to think of it is last year, we ended 2018 with a backlog growth of 11% that was better than our expectations, because our bookings were higher and a similar thing happened here with the 15% increase, including multiple increases in the bookings outlook throughout 2019. So really tie it back to the strong bookings growth and the translation into the $49 billion in backlog that's driving and ask as you did the math, the absolute dollar profile compared to the data in the S4. This shows the underlying strength of the business and how well positioned the portfolio was.

Your next response is from Hunter Keay. Please go ahead.

Obviously, much you can say on this topic, but at high level. How is the classified arena evolving as you think about areas of priority? And can you just help us understand the pro forma RTS exposure that market once the deal is closed? I asked the question, because I didn't really hear you guys talk about hypersonics in your prepared remarks either. So if you want to somehow pull that in. Thanks.

Hunter, let me just talk a little bit about the classified. I mean, obviously, you're right. It's classified if you can't talk about it. But in any case, it's really driven out of the national defense strategy, which really outline this next generation capability that the United States needs to be able to defend itself against these new evolving threats. And that really sets, I would say, the overarching requirement. And then from there, we go down to what actually has to occur. And there's all the areas of -- the NDS calls out the fact that we need to protect space. And so there's a whole set of efforts going on to ensure we protect space or space assets, the assets that we need to just do in our economy, but also for the defense of our nation. So that's a large area there. There's also a large area in the, I would call it missile defense capabilities and how do we defend our nation against the missile, intercontinental ballistic missile threat or other types of threats like hypersonic weapons. So there's a whole counter hypersonics and counter advanced intercontinental ballistic missile threat type work that's going on. And then there's the whole issue of the South China Sea and our ability to be able to maintain a presence there, keep those sea lanes open, and what type of technologies we need there and what advance capabilities we need. So that's the other major threat. But it all starts with the national defense strategy. And it's driven our business up. We have a solid set of, not just franchises but we also have a solid set of technical capabilities across the company that we're seeing in significant demand to satisfy these needs, I would call classified requirements needs, driven out of the national defense strategy. And that's driven our sales up 20% of our company's sales this year, has been classified. And I've said this on calls in the past but this classified work, we use this term as the sea corn of our -- for our future franchises. What I mean by that is this classified work allows us to take are our technical capabilities and resources and IP, and work hand in glove with our customers to evolve the next set for our sake, the franchises that will enable our customers to meet their mission needs, especially relative to the NDS. And so I think one way of looking at this for Raytheon is the greater, the amount of classified work we have, the stronger our future will be and our ability to generate new franchises that last for decades to come. And the classified bookings represented 22% of our total bookings in '19. It was up 17% over 2018, again, setting a new company record. And I think it just sets the company up for a great future to come.

That's all the time we have today. Thank you for joining us this morning.