RAYTHEON COMPANY 333 P37 333 CONSOLIDATED STATEMENTS OF CASH FLOWS 33333333333333333333333333 (In millions) Years Ended December 31: 2003 2002 2001 Cash flows from operating activities Income from continuing operations  $ 535 $ 756 $ 2 Adjustments to reconcile income from continuing operations to net cash provided by operating activities from continuing operations, net of the effect of acquisitions  and divestitures Depreciation and amortization  393 364 677 Deferred federal and foreign income taxes 94 264 7 Net gain on sales of operating units and investments (82) (4) (74) Savings and investment plan activity 190 181 193 Decrease (increase) in accounts receivable 193 (20) (20) Decrease in contracts in process 285 152 528 Decrease (increase) in inventories 110 10 (288) Decrease (increase) in prepaid expenses and other current assets 78 124 (74) Increase (decrease) in advance payments 136 (52) (268) Increase (decrease) in accounts payable 26 (105) (109) Increase in accrued salaries and wages 60 137 57 (Decrease) increase in other accrued expenses (163) 223 251 Other adjustments, net 247 205 (131) Net cash provided by operating activities from continuing operations 2,102 2,235 751 Net cash used in operating activities from discontinued operations (533) (1,196) (596) Net cash provided by operating activities 1,569 1,039 155 Cash flows from investing activities Origination of financing receivables (402) (431) (663) Sale of financing receivables 279 263 696 Repurchase of financing receivables — (347) (329) Collection of financing receivables not sold 588 156 121 Buy-out of off balance sheet receivables facility — (1,029) — Expenditures for property, plant, and equipment (428) (458) (461) Synthetic lease maturity payment (125) — — Proceeds from sales of property, plant, and equipment 25 11 9 Capitalized expenditures for internal use software (98) (138) (149) Increase in other assets (3) (36) (6) Space Imaging debt guarantee payment (130) — — Proceeds from sales of operating units and investments  111 1,166 266 Payment for purchases of acquired companies, net of cash received (60) (10) — Hughes Defense settlement — 134 500 Net cash used in investing activities from continuing operations (243) (719) (16) Net cash used in investing activities from discontinued operations — — (31) Net cash used in investing activities (243) (719) (47) Cash flows from financing activities Dividends (331) (321) (281) (Decrease) increase in short-term debt and other notes — (163) 140 Issuance of long-term debt, net of offering costs 1,113 566 — Repayments of long-term debt (2,078) (1,294) (1,910) Issuance of equity security units — — 837 Issuance of common stock 74 147 1,426 Proceeds under common stock plans 13 75 25 Net cash (used in) provided by financing activities from continuing operations (1,209) (990) 237 Net cash used in financing activities from discontinued operations — — (2) Net cash (used in) provided by financing activities (1,209) (990) 235 Net increase (decrease) in cash and cash equivalents 117 (670) 343 Cash and cash equivalents at beginning of year 544 1,214 871 Cash and cash equivalents at end of year $ 661 $ 544 $ 1,214 The accompanying notes are an integral part of the financial statements.