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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): April 19, 2001
RAYTHEON COMPANY
(Exact name of registrant as specified in its charter)
Delaware 1-13699 95-1778500
(State of Incorporation) (Commission File Number) (IRS Employer
Identification Number)
141 Spring Street
Lexington, Massachusetts 02421
------------------------ -----
(Address of principal executive offices (Zip Code)
Registrant's telephone number, including area code: (781) 862-6600
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Item 5. Other Events.
On April 18, 2001, the Registrant announced financial results for its
fiscal quarter ended April 1, 2001. In connection with this
announcement, the Registrant issued a press release, a copy of which is
attached hereto as Exhibit 99.1 and is specifically incorporated herein
by reference.
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits
(c) The following exhibit is filed as part of this report:
99.1 Press release dated April 19, 2001.
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
Dated: April 19, 2001
RAYTHEON COMPANY
By: /S/ Thomas D. Hyde
Thomas D. Hyde
Senior Vice President and
General Counsel
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EXHIBIT 99.1
Raytheon Company
Corporate Communications
141 Spring Street
Lexington, MA 02421
http://www.raytheon.com
News release
FOR IMMEDIATE RELEASE
Contact:
David Polk
781.860.2386
Raytheon reports first quarter EPS from continuing operations of $0.28; Income
from continuing operations up 21 percent
LEXINGTON, Mass., (April 18, 2001) - Raytheon Company (NYSE: RTNA, RTNB)
today reported sales of $4.0 billion for the first quarter of 2001, a slight
decline from $4.2 billion in sales in the first quarter a year ago. Income from
continuing operations was $97 million, or $0.28 per diluted share, compared with
$80 million, or $0.24 per diluted share, in last year's first quarter. Backlog
at the end of the quarter was $25.9 billion, up $1.4 billion over the course of
the last year.
Sales were down due to the impact of divestitures and a decline in
aircraft shipments. Stronger profits in the company's defense electronics
businesses pushed income from continuing operations up 21 percent from last
year. Cash outflow from operations was $573 million in the quarter, compared
with $520 million a year ago. Excluding the effects of discontinued operations,
cash outflow from Raytheon's core businesses was $530 million, a significant
improvement from $706 million in the first quarter of 2000. Cash flow at the
company is usually negative in the first calendar quarter. Net debt at the end
of the quarter was $9.6 billion, compared with $10.0 billion at the end of the
first quarter 2000.
"The improvement in earnings and operating cash flow from continuing
operations year-over-year is the latest demonstration that we're making real
progress in transforming the company," said Raytheon's Chairman and Chief
Executive Officer Daniel P. Burnham. "The performance within defense electronics
was particularly strong, contributing to higher margins relative to both last
year and to our plan."
Including the impact of discontinued operations the company posted a net
loss in the first quarter of $124 million, or $0.36 per diluted share, versus a
net loss of $181 million, or $0.54 per diluted share, in the first quarter of
2000.
Electronic Systems
Electronic Systems (ES) reported first quarter sales of $1.9 billion, up
slightly compared with last year, after adjusting for the fourth quarter 2000
divestiture of the optical systems business. Operating income was $234 million,
up 28 percent from $183 million in the first quarter of 2000, continuing the
margin improvement that began in 2000. ES had backlog of $11.7 billion at the
end of the quarter.
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During the quarter, ES was awarded a $119 million contract from the U.S.
Navy for Standard Missile 2 production. The business also had a successful
flight test of a Standard Missile 3 (SM-3) as part of the Navy's Theater Wide
Ballistic Missile Defense program. SM-3 is designed to intercept an incoming
theater ballistic missile outside the earth's atmosphere.
Command, Control, Communication and Information Systems
Command, Control, Communication and Information Systems (C3I) had first
quarter sales of $855 million, up 4 percent after adjusting for the February
2000 divestiture of the flight simulation business. Operating income in the
quarter was $84 million, up 22 percent from $69 million last year. The increase
was driven by lower business development expenses and higher contract margins.
C3I had backlog of $5.3 billion at the end of the quarter.
During the quarter, C3I announced that its Standard Terminal Automation
Replacement System (STARS) is ready for test and deployment, and that plans to
produce and field the full STARS are on schedule. STARS, the next generation of
air traffic control systems, is the largest and one of the most critical pieces
of the Federal Aviation Administration's (FAA) attempt to modernize the National
Airspace System for the 21st century.
Technical Services
Technical Services (TS) reported sales of $479 million for the first
quarter, up 20 percent after adjusting for the February 2000 divestiture of the
flight simulation business. Operating income was $37 million, up 37 percent from
$27 million in the first quarter of 2000. The business had backlog of $2.0
billion at the end of the quarter.
During the quarter, TS was selected to provide information technology
services to NASA's Langley Research Center under the U.S. General Services
Administration's Federal Technology Service Millennia contract. The task order
is valued at $183 million and includes a one year base period and seven one year
options.
Aircraft Integration Systems
Aircraft Integration Systems (AIS) had sales of $264 million for the
quarter, compared with $298 million a year ago. Operating income in the
quarter was $13 million, off slightly from $15 million in the first quarter of
2000. The decrease in sales was due primarily to lower bookings in 2000 and
delays in new 2001 programs. AIS had backlog of $2.0 billion at the end of the
quarter.
Commercial Electronics
Commercial Electronics reported sales of $121 million for the quarter,
compared with $174 million in the first quarter last year. The decrease in sales
is due to the divestiture of the Recreational Marine business during the first
quarter of 2001, combined with a favorable settlement on a commercial training
contract during the first quarter of 2000. The business posted an operating loss
of $6 million for the quarter, compared with operating income of $20 million a
year ago. The decrease in income was driven by the favorable settlement in
commercial training last year, approximately $6 million in new technology
investments, and lower volume at the RF Components unit, primarily due to
reduced industry-wide demand for cellular handset components.
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Raytheon Aircraft Company
Raytheon Aircraft Company (RAC) reported sales of $637 million, compared
with $815 million for the first quarter of 2000. RAC had a first quarter
operating loss of $4 million, compared with operating income of $30 million in
the first quarter of 2000. RAC shipped 92 aircraft in the quarter, compared with
137 a year ago. Operating income was down primarily due to lower volume and a
contract cost adjustment on a fixed price T-6A military trainer option (Lot 8)
that was exercised earlier than the company had expected. Lot 8 is the last
outstanding T-6A fixed-price purchase option. The business had backlog of $4.3
billion at the end of the quarter.
On March 23, RAC's Premier I entry-level business jet won FAA
certification. RAC expects to deliver 36 of the jets this year and has orders
for more than 300 of the $5.3 million jets.
Raytheon has agreed to divest a majority stake in Raytheon Aerospace
Company, a subsidiary of RAC, to Veritas Capital Inc. Raytheon will receive $153
million in cash at closing, which is expected in the second quarter of 2001. In
addition to the cash, Raytheon will retain $47 million in receivables and $70
million in preferred and common equity in the Mississippi-based aviation support
and logistics business. The impact of the divestiture on net debt is expected to
be approximately $200 million this year.
As previously announced, RAC plans a workforce reduction in administrative
and managerial staff in its Kansas operations. The action is a precautionary
move to help the business stay ahead of a downturn in the economy.
Discontinued Operations
The company recorded a first quarter charge to discontinued operations of
$325 million pretax, or $0.61 per diluted share, which reflects the company's
current best estimate, based on information provided by Washington Group
International (WGI), of the cost to complete two Massachusetts construction
projects on which WGI defaulted and Raytheon has performance guarantees. As
previously announced, Raytheon expects consolidated operating cash flow to be
affected by the full amount of the charge over the next four to six quarters.
The company's outlook for earnings from continuing operations is not affected by
the charge. The total first quarter loss from discontinued operations was $221
million after-tax, or $0.64 per diluted share.
With headquarters in Lexington, Mass., Raytheon Company is a global
technology leader in defense, government and commercial electronics, and
business and special mission aircraft.
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Forward-Looking Statements
Certain statements made in this release contain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995
regarding the company's future plans, objectives, and expected performance.
Specifically, statements that are not historical facts, including statements
accompanied by words such as "believe," "expect," "estimate," "intend," or
"plan" are intended to identify forward-looking statements and convey the
uncertainty of future events or outcomes. The company cautions readers that any
such forward-looking statements are based on assumptions that the company
believes are reasonable, but are subject to a wide range of risks, and actual
results may differ materially. Important factors that could cause actual results
to differ include, but are not limited to: differences in anticipated and actual
program results; risks inherent with large long-term fixed price contracts,
particularly the ability to contain cost growth; the ultimate resolution of
contingencies and legal matters; the ability to realize anticipated cost
efficiencies; timely development and certification of new aircraft; the effect
of market conditions, particularly in relation to the general aviation and
commuter aircraft markets; the impact on recourse obligations of RAC due to
changes in the collateral values of financed aircraft, particularly commuter
aircraft; the ability to finance ongoing operations at attractive rates;
government customers' budgetary constraints; government import and export
policies; termination of government contracts; financial and governmental risks
related to international transactions; delays and uncertainties regarding the
timing of the award of international programs; the integration of acquisitions;
the impact of competitive products and pricing; and risks associated with the
continuing project obligations and retained assets and liabilities of Raytheon
Engineers & Constructors, including the final determination by the company of
the required expenditures to complete the two Massachusetts construction
projects, the confirmation of the actual physical progress completed at the time
of WGI's abandonment of those projects, the impacts associated with the
re-mobilization of the projects and WGI's compliance with its contractual
obligations and cooperation with Duke Fluor Daniel, the contractor hired by
Raytheon to complete the two projects, in Duke Fluor Daniel's assumption of the
construction activities, among other things. Further information regarding the
factors that could cause actual results to differ materially from projected
results can be found in the company's reports filed with the Securities and
Exchange Commission, including "Item 1-Business" in the company's Annual Report
on Form 10-K for the year ended December 31, 2000.
Conference Call on First Quarter 2001 Financial Results
There will be a live webcast of Raytheon's earnings teleconference on
www.raytheon.com beginning at 9 a.m. ET on April 19 to review the company's
first quarter results. Financial analysts may participate in the call and the
question and answer session that follows the review. A Real Audio player or
Windows Media (TM) player is required to access the webcast.
A replay of the conference will be run from Noon ET April 19 through Noon April
23. The replay number is 800-633-8284 for U.S. callers and 858-812-6440 for
international callers. The reservation number for the replay is 18526505.
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Attachment A
Raytheon Company
Financial Information
First Quarter 2001
(In millions, except per share amounts) Three Months
Ended
-----------------------
01-Apr-01 02-Apr-00
--------- ---------
Net sales $ 3,968 $ 4,231
------- -------
Cost of sales 3,232 3,481
Administrative and selling expenses 294 311
Research and development expenses 126 123
------- -------
Total operating expenses 3,652 3,915
------- -------
Operating income 316 316
------- -------
Interest expense, net 180 180
Other income, net (30) (5)
------- -------
Non-operating expense, net 150 175
------- -------
Income from continuing operations before taxes 166 141
Federal and foreign income taxes 69 61
------- -------
Income from continuing operations 97 80
------- -------
Discontinued operations
Loss from discontinued operations, net of tax - (70)
Loss on disposal of discontinued operations, net of tax (221) (191)
------- -------
(221) (261)
------- -------
Net loss $ (124) $ (181)
======= =======
Earnings per share from continuing operations
Basic $ 0.29 $ 0.24
Diluted $ 0.28 $ 0.24
Loss per share from discontinued operations
Basic $ (0.65) $ (0.77)
Diluted $ (0.64) $ (0.77)
Loss per share
Basic $ (0.36) $ (0.54)
Diluted $ (0.36) $ (0.54)
Average shares outstanding
Basic 340.0 338.3
Diluted 345.1 338.7
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Attachment B
Raytheon Company
Segment Information
First Quarter 2001
Operating Income
As a Percent
Net Sales Operating Income of Sales
(In millions) Three Months Ended Three Months Ended Three Months Ended
1-Apr-01 2-Apr-00 1-Apr-01 2-Apr-00 1-Apr-01 2-Apr-00
Electronic Systems $1,864 $1,878 $234 $183 12.6% 9.7%
Command, Control,
Communication and
Information
Systems 855 846 84 69 9.8% 8.2%
Technical Services 479 421 37 27 7.7% 6.4%
Aircraft Integration 264 298 13 15 4.9% 5.0%
Systems
Commercial
Electronics 121 174 (6) 20 -5.0% 11.5%
Aircraft 637 815 (4) 30 -0.6% 3.7%
Corporate and
Eliminations (252) (201) (42) (28)
------ ------ ---- ----
Total $3,968 $4,231 $316 $316 8.0% 7.5%
Note: Corporate and Eliminations includes certain company-wide activities that
have not been attributed to a particular segment and intercompany eliminations.
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Attachment C
Raytheon Company
Other Information
First Quarter 2001
(In millions, except total employees and aircraft shipments)
Backlog
01-Apr-01 02-Apr-00
Electronic Systems $ 11,738 $ 10,953
Command, Control, Communication
and Information Systems 5,305 4,764
Technical Services 2,006 1,913
Aircraft Integration Systems 2,048 2,262
Commercial Electronics 488 505
Aircraft 4,280 4,143
-------- --------
$ 25,865 $ 24,540
======== ========
U.S. government backlog included above $ 17,099 $ 15,512
======== ========
Total Employees
01-Apr-01 02-Apr-00
Total employees 92,300 94,200
======== ========
Aircraft Shipments (Units)
Three Months Ended
01-Apr-01 02-Apr-00
Hawker 13 15
Beechjet (Commercial) 8 13
King Air 29 50
1900D Commuter 3 12
Pistons 28 40
T-6A 9 7
Special Mission 2 -
-------- --------
Total aircraft shipments 92 137
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Attachment D
Raytheon Company
Preliminary Financial Information
First Quarter 2001
(In millions)
Balance sheets
--------- --------- ---------
01-Apr-01 31-Dec-00 02-Apr-00
--------- --------- ---------
Assets
Cash and cash equivalents $ 483 $ 871 $ 181
Accounts receivable 447 505 834
Contracts in process 3,951 4,061 4,448
Inventories 2,218 1,908 1,935
Deferred federal and foreign income taxes 533 476 430
Prepaid expenses and other current assets 156 178 232
Net assets from discontinued operations - 14 127
------ ------ -------
Total current assets 7,788 8,013 8,187
Property, plant and equipment, net 2,498 2,491 2,451
Goodwill, net 13,182 13,281 13,562
Other assets, net 3,059 2,992 2,802
------- ------- -------
Total assets $26,527 $26,777 $27,002
======= ======= =======
Liabilities and Stockholders' Equity
Notes payable and current portion
of long-term debt $ 1,185 $ 877 $ 1,109
Advance payments, less contracts in process 941 1,135 993
Accounts payable 969 1,099 1,114
Accrued salaries and wages 545 549 575
Other accrued expenses 1,029 1,205 1,582
Net liabilities from discontinued operations 281 - -
------- ------- -------
Total current liabilities 4,950 4,865 5,373
Accrued retiree benefits and other
long-term liabilities 1,271 1,262 1,348
Deferred federal and foreign income taxes 748 773 507
Long-term debt 8,858 9,054 9,042
Stockholders' equity 10,700 10,823 10,732
------- ------- -------
Total liabilities and
stockholders' equity $26,527 $26,777 $27,002
======= ======= =======
Debt-to-capital ratio
--------- --------- ---------
01-Apr-01 31-Dec-00 02-Apr-00
--------- --------- ---------
Debt $ 10,043 $ 9,931 $10,151
Capital 20,743 20,754 20,883
-------- ------- -------
Debt-to-capital ratio 48.4% 47.9% 48.6%
======== ======= =======
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Attachment E
Raytheon Company
Preliminary Cash Flow Information
First Quarter 2001
(In millions)
Cash flow information
Three
Months Ended
--------------------------
01-Apr-01 02-Apr-00
------------ ------------
Income from continuing operations $ 97 $ 80
Depreciation 72 67
Amortization 105 104
Working capital (702) (713)
Capital spending (103) (113)
Internal use software spending (35) (31)
Discontinued operations (43) 186
Other 36 (100)
------ -----
Subtotal - operating cash flow (573) (520)
Net activity in financing receivables 28 4
Divestitures 111 160
Dividends (68) (68)
Other 2 (7)
------ -----
Change in net debt $ (500) $(431)
====== =====
Restructuring amounts included in ------ -----
operating cash flow above $ 16 $ 88
====== =====
Segment operating cash flow information
Three Months Ended
------------------------
01-Apr-01 02-Apr-00
------------ ----------
Electronic Systems $ 77 $ (44)
Command, Control, Communication
and Information Systems (158) (150)
Technical Services (29) (38)
Aircraft Integration Systems (112) 15
Commercial Electronics (12) 56
Aircraft (242) (341)
Discontinued operations (43) 186
Other (54) (204)
------- ------
$ (573) $ (520)
====== ======