UNITED STATES
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): February 2, 2006
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) |
| 870 Winter Street | ||
| Waltham, Massachusetts | 02451 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (781) 522-3000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On February 2, 2006, Raytheon Company issued a press release announcing financial results for the fiscal quarter and year ended December 31, 2005. A copy of the press release is furnished with this report as Exhibit 99.1. The information in this Current Report on Form 8–K, including Exhibit 99.1, is furnished in accordance with SEC Release No. 33–8216 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing.
ITEM 9.01 FINANCIAL STATEMENT AND EXHIBITS
(c) Exhibits
| Exhibit 99.1 | Press Release issued by Raytheon Company dated February 2, 2006. |
SIGNATURE
Pursuant to the requirements 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: February 2, 2006
| RAYTHEON COMPANY | ||
| By: |
/s/ BIGGS C. PORTER | |
| Biggs C. Porter Vice President and Corporate Controller, | ||
| Acting Chief Financial Officer | ||
Exhibit 99.1
 |
Media Relations |
News release
FOR IMMEDIATE RELEASE
| Media Contact: | Investor Relations Contact: | |||
| Steve Brecken | Greg Smith | |||
| 781-522-5127 | 781-522-5141 |
Raytheon Reports Strong Fourth Quarter and Full-Year 2005 Results
| • | Sales of $6.2 billion, up 9 percent in quarter; $21.9 billion, up 8 percent for year |
| • | Free cash flow from continuing operations of $1.0 billion in quarter and $2.1 billion for year |
| • | Net debt of $3.3 billion; reduction of $1.3 billion for year – lowest level in ten years |
| • | EPS from continuing operations of $0.63 in quarter, up $0.09; $2.08 for year, up $1.09. |
| • | Strong bookings of $7.3 billion in quarter; backlog of $34.4 billion up $1.9 billion from $32.5 billion in 2004 |
WALTHAM, Mass., (Feb. 2, 2006) – Raytheon Company (NYSE: RTN) reported fourth quarter 2005 income from continuing operations of $282 million or $0.63 per diluted share compared to $246 million or $0.54 per diluted share in the fourth quarter 2004. Fourth quarter 2005 net income was $276 million or $0.61 per diluted share compared to $245 million or $0.54 per diluted share in the fourth quarter 2004.
“Raytheon had another good year,” said William H. Swanson, Raytheon’s Chairman and CEO. “We had strong results across the Company and ended the year with the lowest net debt in ten years. This once again demonstrates our continued commitment to our customers and shareholders.”
Fourth quarter 2005 results included an after-tax $30 million gain ($45 million pretax) or $0.07 per diluted share from the sale of the Company’s stake in its Indra ATM S.L., a Spanish joint venture. Fourth quarter 2005 results also included an after-tax $19 million impairment
1
charge ($22 million pretax) or $0.04 per diluted share related to the Company’s investment in Flight Options. Also, during the fourth quarter 2005, the Company recorded an after-tax $7 million charge ($10 million pretax) or $0.02 per diluted share from the early redemption of debt. Fourth quarter 2004 results included a net after-tax $13 million charge or $0.03 per diluted share related to a charge for the early redemption of debt partially offset by a benefit from the change in the tax law.
Net sales for the fourth quarter 2005 were $6.2 billion, up 9 percent from $5.7 billion in the fourth quarter 2004. Government and Defense sales for the quarter (after the elimination of intercompany sales) increased 5 percent to $4.9 billion from $4.7 billion in the fourth quarter 2004. Raytheon Aircraft Company (RAC) sales for the quarter increased 27 percent to $1,085 million from $853 million in the fourth quarter 2004.
Free cash flow from continuing operations for the fourth quarter 2005 was $1,033 million versus $760 million for the fourth quarter 2004. Free cash flow is defined by the Company as operating cash flow less capital spending and internal use software spending and constitutes a non-GAAP financial measure. See Attachment F “Non-GAAP Financial Measures” for a reconciliation of free cash flow to operating cash flow and a discussion of the Company’s use of non-GAAP financial information.
During the fourth quarter 2005, the Company repurchased 1.2 million shares of common stock for $46 million as part of the Company’s previously announced $700 million share repurchase program. The Company repurchased 11.2 million shares of common stock in 2005 for $436 million. Also during the quarter, the Company retired $196 million of debt, bringing the total year debt reduction to $678 million. Net debt was $3.3 billion at the end of 2005 compared with $4.6 billion at the end of 2004.
Full Year Financial Results
For the full year the Company reported income from continuing operations of $942 million or $2.08 per diluted share compared to $439 million or $0.99 per diluted share in 2004. The Company reported 2005 net income of $871 million or $1.92 per diluted share compared to $417 million or $0.94 per diluted share in 2004. Net income for 2005 included a $71 million after-tax loss in discontinued operations or $0.16 per diluted share, versus $63 million or $0.14 per diluted share in 2004. The 2004 results also included an after-tax charge of $222 million or $0.50 per diluted share for the settlement of a class action shareholder lawsuit.
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Total 2005 net sales for the Company were $21.9 billion compared to $20.2 billion for 2004, an increase of 8 percent. Government and Defense sales for the year (after the elimination of intercompany sales) increased 6 percent to $18.2 billion from $17.2 billion in 2004. RAC sales for the year increased 18 percent to $2.9 billion from $2.4 billion in 2004.
Free cash flow from continuing operations was $2.1 billion in 2005 compared to $1.6 billion in 2004.
| Summary Financial Results (in millions, except per share data)
|
4th Quarter |
% Change |
Full Year |
% Change |
||||||||||||||
| 2005 |
2004 |
2005 |
2004 |
|||||||||||||||
| Net Sales |
$ | 6,210 | $ | 5,704 | 9 | % | $ | 21,894 | $ | 20,245 | 8 | % | ||||||
| Total Operating Expenses |
5,741 | 5,264 | 20,207 | 18,857 | ||||||||||||||
| Operating Income |
469 | 440 | 7 | % | 1,687 | 1,388 | 22 | % | ||||||||||
| Non-operating Expenses |
35 | 148 | 247 | 809 | ||||||||||||||
| Income from Cont. Ops. before Taxes |
$ | 434 | $ | 292 | 49 | % | $ | 1,440 | $ | 579 | 149 | % | ||||||
| Income from Continuing Operations |
$ | 282 | $ | 246 | 15 | % | $ | 942 | $ | 439 | 115 | % | ||||||
| Net Income |
$ | 276 | $ | 245 | 13 | % | $ | 871 | $ | 417 | 109 | % | ||||||
| Diluted EPS from Continuing Operations |
$ | 0.63 | $ | 0.54 | 17 | % | $ | 2.08 | $ | 0.99 | 110 | % | ||||||
| Diluted EPS |
$ | 0.61 | $ | 0.54 | 13 | % | $ | 1.92 | $ | 0.94 | 104 | % | ||||||
| Free Cash Flow from Cont. Operations |
$ | 1,033 | $ | 760 | $ | 2,133 | $ | 1,648 | ||||||||||
3
Bookings and Backlog
| Bookings (in millions)
|
4th Quarter |
Full Year | ||||||||||
| 2005 |
2004 |
2005 |
2004 | |||||||||
| Bookings |
||||||||||||
| Government and Defense |
$ | 5,230 | $ | 4,200 | $ | 20,546 | $ | 21,867 | ||||
| Commercial |
2,094 | 1,275 | 4,282 | 3,833 | ||||||||
| Total Bookings |
$ | 7,324 | $ | 5,475 | $ | 24,828 | $ | 25,700 | ||||
| Backlog (in millions)
|
Period ending | |||||
| 12/31/05 |
12/31/04 | |||||
| Backlog |
$ | 34,419 | $ | 32,543 | ||
| Funded Backlog |
$ | 17,580 | $ | 18,403 | ||
The Government and Defense businesses reported fourth quarter 2005 bookings of $5.2 billion with full-year 2005 bookings of $20.5 billion. The Government and Defense businesses ended 2005 with a backlog of $31.2 billion, an increase of $1.6 billion over year end 2004.
RAC’s fourth quarter 2005 bookings were $1.8 billion compared to $1.1 billion in the fourth quarter 2004. During the quarter, NetJets Inc. placed an order with a value in excess of $1 billion for 50 new Hawker 4000 super-midsize business jets and a related maintenance program. Full-year 2005 bookings were $3.5 billion versus $3.1 billion for 2004.
Raytheon ended the year with a total backlog of $34.4 billion compared to $32.5 billion at the end of 2004.
4
Outlook
| 2006 Financial Outlook
|
Prior * |
Current | ||
| Bookings |
$22.0B - $23.0B | $22.0B - $23.0B | ||
| Net Sales |
$23.1B - $23.6B | $23.1B - $23.6B | ||
| FAS/CAS Pension Expense |
$362M | $360M | ||
| Interest Expense, net |
$250M - $260M | $245M - $255M | ||
| Diluted Shares |
451M | 449M | ||
| EPS from Cont. Ops. |
$2.40 - $2.50 | $2.45 - $2.55 | ||
| Net Debt |
$3.1B - $3.3B | $2.6B - $2.8B | ||
| Operating Cash Flow |
$1.7B - $1.9B | $1.7B - $1.9B |
| * | As of December 1, 2005 |
The Company has increased full-year 2006 guidance for earnings per share from continuing operations primarily as a result of a $16 million after-tax gain in 2006 ($25 million pretax) or $0.04 per diluted share from the sale of the Company’s interest in Space Imaging. Charts containing additional information on the Company’s 2006 guidance are available on the Company’s website at www.raytheon.com.
Segment Results
Integrated Defense Systems
| 4th Quarter |
% Change |
Full Year |
% Change |
|||||||||||||||||||
| (in millions, except margin percent)
|
2005 |
2004 |
2005 |
2004 |
||||||||||||||||||
| Net Sales |
$ | 1,042 | $ | 914 | 14 | % | $ | 3,807 | $ | 3,456 | 10 | % | ||||||||||
| Operating Income |
$ | 154 | $ | 119 | 29 | % | $ | 548 | $ | 417 | 31 | % | ||||||||||
| Operating Margin |
14.8 | % | 13.0 | % | 14.4 | % | 12.1 | % | ||||||||||||||
Integrated Defense Systems (IDS) had fourth quarter 2005 net sales of $1,042 million, up 14 percent compared to $914 million in the fourth quarter 2004, primarily due to growth in international programs, DD(X), and the Cobra Judy program. IDS recorded $154 million of fourth quarter 2005 operating income compared to $119 million in the fourth quarter 2004. Operating income was higher primarily due to increased sales on international programs and program performance improvements.
During the quarter, IDS booked $379 million for ship integration and detail design for the U.S. Navy’s DD(X) Destroyer. IDS also booked $308 million for Joint Land Attack Cruise Missile Defense Elevated Netted Sensor System (JLENS) development for the U.S. Army.
5
Intelligence and Information Systems
| 4th Quarter |
% Change |
Full Year |
% Change |
|||||||||||||||||||
| (in millions, except margin percent)
|
2005 |
2004 |
2005 |
2004 |
||||||||||||||||||
| Net Sales |
$ | 688 | $ | 630 | 9 | % | $ | 2,509 | $ | 2,334 | 7 | % | ||||||||||
| Operating Income |
$ | 63 | $ | 53 | 19 | % | $ | 229 | $ | 203 | 13 | % | ||||||||||
| Operating Margin |
9.2 | % | 8.4 | % | 9.1 | % | 8.7 | % | ||||||||||||||
Intelligence and Information Systems (IIS) had fourth quarter 2005 net sales of $688 million, up 9 percent compared to $630 million in the fourth quarter 2004, primarily due to continued growth in classified programs. IIS recorded $63 million of operating income compared to $53 million in the fourth quarter 2004.
During the quarter, IIS booked $336 million on a number of classified contracts, bringing the total classified bookings for the year to over $1.5 billion.
Missile Systems
| 4th Quarter |
% Change |
Full Year |
% Change |
|||||||||||||||||||
| (in millions, except margin percent)
|
2005 |
2004 |
2005 |
2004 |
||||||||||||||||||
| Net Sales |
$ | 1,122 | $ | 1,012 | 11 | % | $ | 4,124 | $ | 3,844 | 7 | % | ||||||||||
| Operating Income |
$ | 118 | $ | 114 | 4 | % | $ | 431 | $ | 436 | -1 | % | ||||||||||
| Operating Margin |
10.5 | % | 11.3 | % | 10.5 | % | 11.3 | % | ||||||||||||||
Missile Systems (MS) had fourth quarter 2005 net sales of $1,122 million, up 11 percent compared to $1,012 million in the fourth quarter 2004, primarily due to a ramp up on Tactical Tomahawk and several developmental programs. MS recorded $118 million of operating income compared to $114 million in the fourth quarter 2004. Last year’s fourth quarter operating income included cost recovery for previous years’ restructuring actions.
During the quarter, MS booked $236 million for the production of Standard Missile-2 (SM-2) for foreign military sales. MS also booked $152 million for the production of 198 Evolved SeaSparrow Missiles (ESSM) for the U.S. Navy and six allied nations.
6
Network Centric Systems
| 4th Quarter |
% Change |
Full Year |
% Change |
|||||||||||||||||||
| (in millions, except margin percent)
|
2005 |
2004 |
2005 |
2004 |
||||||||||||||||||
| Net Sales |
$ | 806 | $ | 824 | -2 | % | $ | 3,205 | $ | 3,050 | 5 | % | ||||||||||
| Operating Income |
$ | 89 | $ | 87 | 2 | % | $ | 333 | $ | 269 | 24 | % | ||||||||||
| Operating Margin |
11.0 | % | 10.6 | % | 10.4 | % | 8.8 | % | ||||||||||||||
Network Centric Systems (NCS) had fourth quarter 2005 net sales of $806 million compared to $824 million in the fourth quarter 2004. NCS recorded operating income of $89 million compared to $87 million in the fourth quarter 2004.
During the quarter, NCS booked $109 million to provide Command and Independent Viewer (CIV) Systems for the Bradley Program. NCS also booked $97 million for Firefinder locating radars for the U.S. Army, bringing the total Firefinder bookings for the year to $240 million.
Space and Airborne Systems
| 4th Quarter |
% Change |
Full Year |
% Change |
|||||||||||||||||||
| (in millions, except margin percent)
|
2005 |
2004 |
2005 |
2004 |
||||||||||||||||||
| Net Sales |
$ | 1,145 | $ | 1,141 | 0 | % | $ | 4,175 | $ | 4,068 | 3 | % | ||||||||||
| Operating Income |
$ | 162 | $ | 159 | 2 | % | $ | 606 | $ | 568 | 7 | % | ||||||||||
| Operating Margin |
14.1 | % | 13.9 | % | 14.5 | % | 14.0 | % | ||||||||||||||
Space and Airborne Systems (SAS) had fourth quarter 2005 net sales of $1,145 million compared to $1,141 million in the fourth quarter 2004. SAS recorded $162 million of operating income compared to $159 million in the fourth quarter 2004.
During the quarter, SAS booked $142 million for the production of F-15 radars for Singapore. SAS also booked $119 million for the production of Advanced Targeting Forward Looking Infrared (ATFLIR) pods and spares for the U.S. Navy.
7
Technical Services
| 4th Quarter |
% Change |
Full Year |
% Change |
|||||||||||||||||||
| (in millions, except margin percent)
|
2005 |
2004 |
2005 |
2004 |
||||||||||||||||||
| Net Sales |
$ | 525 | $ | 570 | -8 | % | $ | 1,980 | $ | 1,987 | 0 | % | ||||||||||
| Operating Income |
$ | 39 | $ | 44 | -11 | % | $ | 146 | $ | 148 | -1 | % | ||||||||||
| Operating Margin |
7.4 | % | 7.7 | % | 7.4 | % | 7.4 | % | ||||||||||||||
Technical Services (TS) had fourth quarter 2005 net sales of $525 million compared to $570 million in the fourth quarter 2004. This decline is consistent with our projected reduction in sales due to the completion of several large programs. TS recorded operating income of $39 million in the fourth quarter of 2005 compared to $44 million in the fourth quarter 2004.
During the quarter, TS booked $86 million on the Live Training Program with the U.S. Army.
Aircraft
| 4th Quarter |
% Change |
Full Year |
% Change |
|||||||||||||||||||
| (in millions, except margin percent)
|
2005 |
2004 |
2005 |
2004 |
||||||||||||||||||
| Net Sales |
$ | 1,085 | $ | 853 | 27 | % | $ | 2,856 | $ | 2,421 | 18 | % | ||||||||||
| Operating Income |
$ | 73 | $ | 47 | 55 | % | $ | 142 | $ | 63 | 125 | % | ||||||||||
| Operating Margin |
6.7 | % | 5.5 | % | 5.0 | % | 2.6 | % | ||||||||||||||
Raytheon Aircraft Company (RAC) had fourth quarter 2005 net sales of $1,085 million, up 27 percent compared to $853 million in the fourth quarter 2004, primarily due to higher new commercial and special mission aircraft deliveries. RAC recorded operating income of $73 million in the quarter compared to $47 million in the fourth quarter 2004. Operating income was higher due to commercial and special mission volume and delivery mix, and continued improved operating performance.
During the quarter, RAC received an order from NetJets Inc. for 50 new Hawker 4000 super-midsize business jets. These aircraft will be delivered in the 2007 - 2015 timeframe and have an aggregate value totaling more than $1 billion including the related maintenance program. Also during the quarter, RAC received a $270 million contract modification from the U.S. government for the Lot 13 option exercise of JPATS T-6A.
8
Other
Net sales for the Other segment in the fourth quarter 2005 were $215 million compared to $183 million in the fourth quarter 2004. The segment recorded an operating loss of $51 million in the fourth quarter 2005 compared to an operating loss of $11 million in the comparable quarter in 2004. The fourth quarter 2005 included the impairment charge related to the Company’s investment in Flight Options.
Discontinued Operations
During the quarter, the Company recorded an after-tax loss from discontinued operations of $6 million. In January 2006, the Company resolved the purchase price dispute related to the Company’s $1.1 billion sale of its Aircraft Integration Systems business (AIS) in 2002 and recorded a $17 million after-tax charge in the fourth quarter 2005. The Company also recorded an $11 million after-tax benefit at its former engineers and constructors business primarily related to the receipt of insurance proceeds from the class action lawsuit settled earlier in 2005.
Raytheon Company (NYSE: RTN), with 2005 sales of $21.9 billion, is an industry leader in defense and government electronics, space, information technology, technical services, and business and special mission aircraft. With headquarters in Waltham, Mass., Raytheon employs 80,000 people worldwide.
Disclosure Regarding Forward-looking Statements
This release and the attachments contain forward-looking statements, including information regarding the Company’s 2006 financial outlook, future plans, objectives, business prospects and anticipated financial performance. These forward-looking statements are not statements of historical facts and represent only the Company’s current expectations regarding such matters. These statements inherently involve a wide range of known and unknown risks and uncertainties. The Company’s actual actions and results could differ materially from what is expressed or implied by these statements. Specific factors that could cause such a difference include, but are not limited to: risks associated with the Company’s U.S. government sales, including changes or shifts in defense spending, uncertain funding of programs, potential termination of contracts, and difficulties in contract performance; the ability to procure
9
new contracts; the risks of conducting business in foreign countries; the ability to comply with extensive governmental regulation, including import and export policies and procurement, aircraft manufacturing and other regulations; the impact of competition; the ability to develop products and technologies; the risk of cost overruns, particularly for the Company’s fixed-price contracts; dependence on component availability, subcontractor performance and key suppliers; risks of a negative government audit; the use of accounting estimates in the Company’s financial statements; the potential impairment of the Company’s goodwill; risks associated with the general aviation, commuter and fractional ownership aircraft markets; accidents involving the Company’s aircraft; the outcome of contingencies and litigation matters, including government investigations; the ability to recruit and retain qualified personnel; risks associated with acquisitions, joint ventures and other business arrangements; the impact of changes in the Company’s credit ratings; and other factors as may be detailed from time to time in the Company’s public announcements and Securities and Exchange Commission filings. The Company undertakes no obligation to make any revisions to the forward-looking statements contained in this release and the attachments or to update them to reflect events or circumstances occurring after the date of this release.
Conference Call on the Fourth Quarter 2005 Financial Results
Raytheon’s financial results conference call will be Thursday, February 2, 2006 at 9 a.m. ET. Participants will be William H. Swanson, Chairman and CEO, Biggs C. Porter, vice president and corporate controller, and acting CFO, and other Company executives.
The dial-in number for the conference call will be (866) 800 - 8651. The conference call will also be audiocast on the Internet at www.raytheon.com. Individuals may listen to the call and download charts that will be used during the call. These charts will be available for printing prior to the call.
Interested parties are urged to check the website ahead of time to ensure their computers are configured for the audio stream. Instructions for obtaining the free required downloadable software are posted on the site.
# # #
10
Attachment A
Raytheon Company
Financial Information
Fourth Quarter 2005
(In millions except per share amounts)
| Three Months Ended |
Twelve Months Ended |
|||||||||||||||
| 31-Dec-05 |
31-Dec-04 |
31-Dec-05 |
31-Dec-04 |
|||||||||||||
| Net sales |
$ | 6,210 | $ | 5,704 | $ | 21,894 | $ | 20,245 | ||||||||
| Cost of sales |
5,177 | 4,739 | 18,230 | 16,981 | ||||||||||||
| Administrative and selling expenses |
421 | 399 | 1,474 | 1,385 | ||||||||||||
| Research and development expenses |
143 | 126 | 503 | 491 | ||||||||||||
| Total operating expenses |
5,741 | 5,264 | 20,207 | 18,857 | ||||||||||||
| Operating income |
469 | 440 | 1,687 | 1,388 | ||||||||||||
| Interest expense |
75 | 92 | 312 | 418 | ||||||||||||
| Interest income |
(14 | ) | (12 | ) | (52 | ) | (45 | ) | ||||||||
| Other (income) expense, net |
(26 | ) | 68 | (13 | ) | 436 | ||||||||||
| Non-operating expense, net |
35 | 148 | 247 | 809 | ||||||||||||
| Income from continuing operations before taxes |
434 | 292 | 1,440 | 579 | ||||||||||||
| Federal and foreign income taxes |
152 | 46 | 498 | 140 | ||||||||||||
| Income from continuing operations |
282 | 246 | 942 | 439 | ||||||||||||
| Loss from discontinued operations, net of tax |
(6 | ) | (1 | ) | (71 | ) | (63 | ) | ||||||||
| Income before accounting change |
276 | 245 | 871 | 376 | ||||||||||||
| Cumulative effect of change in accounting principle, net of tax |
— | — | — | 41 | ||||||||||||
| Net income |
$ | 276 | $ | 245 | $ | 871 | $ | 417 | ||||||||
| Earnings per share from continuing operations |
||||||||||||||||
| Basic |
$ | 0.64 | $ | 0.55 | $ | 2.11 | $ | 1.00 | ||||||||
| Diluted |
$ | 0.63 | $ | 0.54 | $ | 2.08 | $ | 0.99 | ||||||||
| Loss per share from discontinued operations |
||||||||||||||||
| Basic |
$ | (0.02 | ) | $ | — | $ | (0.16 | ) | $ | (0.14 | ) | |||||
| Diluted |
$ | (0.02 | ) | $ | — | $ | (0.16 | ) | $ | (0.14 | ) | |||||
| Earnings per share from cumulative effect of change in accounting principle |
||||||||||||||||
| Basic |
$ | — | $ | — | $ | — | $ | 0.09 | ||||||||
| Diluted |
$ | — | $ | — | $ | — | $ | 0.09 | ||||||||
| Earnings per share |
||||||||||||||||
| Basic |
$ | 0.62 | $ | 0.54 | $ | 1.95 | $ | 0.95 | ||||||||
| Diluted |
$ | 0.61 | $ | 0.54 | $ | 1.92 | $ | 0.94 | ||||||||
| Average shares outstanding |
||||||||||||||||
| Basic |
442.6 | 450.2 | 447.0 | 438.1 | ||||||||||||
| Diluted |
449.0 | 456.4 | 453.3 | 442.2 | ||||||||||||
Attachment B
Raytheon Company
Segment Information
Fourth Quarter 2005
(In millions)
| Net Sales Three Months Ended |
Operating Income Three Months Ended |
Operating Income As a Percent of Sales Three Months Ended |
||||||||||||||||||||
| 31-Dec-05 |
31-Dec-04 |
31-Dec-05 |
31-Dec-04 |
31-Dec-05 |
31-Dec-04 |
|||||||||||||||||
| Integrated Defense Systems |
$ | 1,042 | $ | 914 | $ | 154 | $ | 119 | 14.8 | % | 13.0 | % | ||||||||||
| Intelligence and Information Systems |
688 | 630 | 63 | 53 | 9.2 | % | 8.4 | % | ||||||||||||||
| Missile Systems |
1,122 | 1,012 | 118 | 114 | 10.5 | % | 11.3 | % | ||||||||||||||
| Network Centric Systems |
806 | 824 | 89 | 87 | 11.0 | % | 10.6 | % | ||||||||||||||
| Space and Airborne Systems |
1,145 | 1,141 | 162 | 159 | 14.1 | % | 13.9 | % | ||||||||||||||
| Technical Services |
525 | 570 | 39 | 44 | 7.4 | % | 7.7 | % | ||||||||||||||
| Aircraft |
1,085 | 853 | 73 | 47 | 6.7 | % | 5.5 | % | ||||||||||||||
| Other |
215 | 183 | (51 | ) | (11 | ) | -23.7 | % | -6.0 | % | ||||||||||||
| FAS/CAS Pension Adjustment |
— | — | (116 | ) | (118 | ) | ||||||||||||||||
| Corporate and Eliminations |
(418 | ) | (423 | ) | (62 | ) | (54 | ) | ||||||||||||||
| Total |
$ | 6,210 | $ | 5,704 | $ | 469 | $ | 440 | 7.6 | % | 7.7 | % | ||||||||||
| Net Sales Twelve Months Ended |
Operating Income Twelve Months Ended |
Operating Income As a Percent of Sales Twelve Months Ended |
||||||||||||||||||||
| 31-Dec-05 |
31-Dec-04 |
31-Dec-05 |
31-Dec-04 |
31-Dec-05 |
31-Dec-04 |
|||||||||||||||||
| Integrated Defense Systems |
$ | 3,807 | $ | 3,456 | $ | 548 | $ | 417 | 14.4 | % | 12.1 | % | ||||||||||
| Intelligence and Information Systems |
2,509 | 2,334 | 229 | 203 | 9.1 | % | 8.7 | % | ||||||||||||||
| Missile Systems |
4,124 | 3,844 | 431 | 436 | 10.5 | % | 11.3 | % | ||||||||||||||
| Network Centric Systems |
3,205 | 3,050 | 333 | 269 | 10.4 | % | 8.8 | % | ||||||||||||||
| Space and Airborne Systems |
4,175 | 4,068 | 606 | 568 | 14.5 | % | 14.0 | % | ||||||||||||||
| Technical Services |
1,980 | 1,987 | 146 | 148 | 7.4 | % | 7.4 | % | ||||||||||||||
| Aircraft |
2,856 | 2,421 | 142 | 63 | 5.0 | % | 2.6 | % | ||||||||||||||
| Other |
781 | 675 | (117 | ) | (40 | ) | -15.0 | % | -5.9 | % | ||||||||||||
| FAS/CAS Pension Adjustment |
— | — | (465 | ) | (474 | ) | ||||||||||||||||
| Corporate and Eliminations |
(1,543 | ) | (1,590 | ) | (166 | ) | (202 | ) | ||||||||||||||
| Total |
$ | 21,894 | $ | 20,245 | $ | 1,687 | $ | 1,388 | 7.7 | % | 6.9 | % | ||||||||||
Attachment C
Raytheon Company
Other Information
Fourth Quarter 2005
| Backlog (In millions) |
Funded Backlog (In millions) | |||||||||||
| 31-Dec-05 |
31-Dec-04 |
31-Dec-05 |
31-Dec-04 | |||||||||
| Integrated Defense Systems |
$ | 8,010 | $ | 6,628 | $ | 3,009 | $ | 3,454 | ||||
| Intelligence and Information Systems |
4,077 | 4,066 | 642 | 811 | ||||||||
| Missile Systems |
8,040 | 8,341 | 4,443 | 4,517 | ||||||||
| Network Centric Systems |
4,307 | 3,587 | 2,839 | 2,623 | ||||||||
| Space and Airborne Systems |
5,220 | 5,216 | 2,851 | 3,127 | ||||||||
| Technical Services |
1,594 | 1,773 | 916 | 939 | ||||||||
| Aircraft |
2,891 | 2,638 | 2,600 | 2,638 | ||||||||
| Other |
280 | 294 | 280 | 294 | ||||||||
| $ | 34,419 | $ | 32,543 | $ | 17,580 | $ | 18,403 | |||||
| Government and Defense businesses |
$ | 31,248 | $ | 29,611 | $ | 14,700 | $ | 15,471 | ||||
| U.S. government backlog included above |
$ | 27,171 | $ | 25,525 | ||||||||
| Bookings (In millions) Three Months Ended |
Bookings (In millions) Twelve months ended | |||||||||||
| 31-Dec-05 |
31-Dec-04 |
31-Dec-05 |
31-Dec-04 | |||||||||
| Government and Defense businesses |
$ | 5,230 | $ | 4,200 | $ | 20,546 | $ | 21,867 | ||||
| Commercial businesses |
2,094 | 1,275 | 4,282 | 3,833 | ||||||||
| $ | 7,324 | $ | 5,475 | $ | 24,828 | $ | 25,700 | |||||
| New Aircraft Deliveries (Units) Three Months Ended |
New Aircraft Deliveries (Units) Twelve months ended | |||||||||||
| 31-Dec-05 |
31-Dec-04 |
31-Dec-05 |
31-Dec-04 | |||||||||
| Hawker 800XP |
26 | 17 | 58 | 50 | ||||||||
| Premier I / IA |
19 | 14 | 30 | 37 | ||||||||
| Hawker 400XP |
19 | 14 | 53 | 28 | ||||||||
| King Air |
46 | 46 | 114 | 104 | ||||||||
| 1900D Commuter |
— | — | — | 1 | ||||||||
| Pistons |
53 | 35 | 99 | 93 | ||||||||
| T-6A |
14 | 16 | 62 | 67 | ||||||||
| Total |
177 | 142 | 416 | 380 | ||||||||
| New Aircraft Bookings (Units) Three Months Ended |
New Aircraft Bookings (Units) Twelve months ended | |||||||||||
| 31-Dec-05 |
31-Dec-04 |
31-Dec-05 |
31-Dec-04 | |||||||||
| Hawker 4000 |
50 | 2 | 52 | 4 | ||||||||
| Hawker 800XP |
12 | 17 | 43 | 79 | ||||||||
| Premier I / IA |
17 | 13 | 34 | 34 | ||||||||
| Hawker 400XP |
18 | 11 | 39 | 43 | ||||||||
| King Air |
36 | 45 | 138 | 139 | ||||||||
| 1900D Commuter |
— | — | — | 1 | ||||||||
| Pistons |
12 | 35 | 70 | 157 | ||||||||
| T-6A |
54 | 50 | 60 | 57 | ||||||||
| Total |
199 | 173 | 436 | 514 | ||||||||
Attachment D
Raytheon Company
Preliminary Financial Information
Fourth Quarter 2005
(In millions)
Balance sheets
| 31-Dec-05 |
31-Dec-04 | |||||
| Assets |
||||||
| Cash and cash equivalents |
$ | 1,202 | $ | 556 | ||
| Accounts receivable, less allowance for doubtful accounts |
425 | 478 | ||||
| Contracts in process |
3,469 | 3,514 | ||||
| Inventories |
1,722 | 1,745 | ||||
| Deferred federal and foreign income taxes |
435 | 469 | ||||
| Prepaid expenses and other current assets |
314 | 343 | ||||
| Assets from discontinued operations |
— | 19 | ||||
| Total current assets |
7,567 | 7,124 | ||||
| Property, plant and equipment, net |
2,675 | 2,738 | ||||
| Deferred federal and foreign income taxes |
— | 71 | ||||
| Goodwill |
11,554 | 11,516 | ||||
| Other assets, net |
2,585 | 2,704 | ||||
| Total assets |
$ | 24,381 | $ | 24,153 | ||
| Liabilities and Stockholders’ Equity |
||||||
| Notes payable and current portion of long-term debt |
$ | 79 | $ | 516 | ||
| Subordinated notes payable |
408 | — | ||||
| Advance payments and billings in excess of costs incurred |
2,012 | 1,900 | ||||
| Accounts payable |
962 | 867 | ||||
| Accrued salaries and wages |
987 | 934 | ||||
| Other accrued expenses |
1,403 | 1,403 | ||||
| Liabilities from discontinued operations |
49 | 24 | ||||
| Total current liabilities |
5,900 | 5,644 | ||||
| Accrued retiree benefits and other long-term liabilities |
3,559 | 3,224 | ||||
| Deferred federal and foreign income taxes |
125 | — | ||||
| Long-term debt |
3,969 | 4,229 | ||||
| Subordinated notes payable |
— | 408 | ||||
| Minority interest |
119 | 97 | ||||
| Stockholders’ equity |
10,709 | 10,551 | ||||
| Total liabilities and stockholders’ equity |
$ | 24,381 | $ | 24,153 | ||
Attachment E
Raytheon Company
Preliminary Cash Flow Information
Fourth Quarter 2005
(In millions)
| Cash flow information | ||||||||||||||||
| Three Months Ended |
Twelve Months Ended |
|||||||||||||||
| 31-Dec-05 |
31-Dec-04 |
31-Dec-05 |
31-Dec-04 |
|||||||||||||
| Income from continuing operations |
$ | 282 | $ | 246 | $ | 942 | $ | 439 | ||||||||
| Depreciation |
92 | 94 | 354 | 361 | ||||||||||||
| Amortization |
25 | 19 | 90 | 73 | ||||||||||||
| Working capital |
530 | 435 | 424 | 650 | ||||||||||||
| Discontinued operations |
25 | (11 | ) | (31 | ) | (43 | ) | |||||||||
| Capital spending |
(155 | ) | (154 | ) | (338 | ) | (363 | ) | ||||||||
| Internal use software spending |
(14 | ) | (30 | ) | (75 | ) | (103 | ) | ||||||||
| Net activity in financing receivables |
40 | 48 | 119 | 193 | ||||||||||||
| Other |
233 | 102 | 617 | 398 | ||||||||||||
| Subtotal—free cash flow (a) |
1,058 | 749 | 2,102 | 1,605 | ||||||||||||
| Sale of short-term investments |
— | 74 | — | — | ||||||||||||
| Acquisitions |
(26 | ) | (42 | ) | (125 | ) | (112 | ) | ||||||||
| Investment activity and divestitures |
71 | 43 | 78 | 47 | ||||||||||||
| Dividends |
(98 | ) | (91 | ) | (387 | ) | (349 | ) | ||||||||
| Issuance of common stock |
— | — | — | 867 | ||||||||||||
| Repurchase of common stock |
(46 | ) | — | (436 | ) | — | ||||||||||
| Debt repayments |
(585 | ) | (1,253 | ) | (678 | ) | (2,254 | ) | ||||||||
| Other |
8 | 27 | 92 | 91 | ||||||||||||
| Total cash flow |
$ | 382 | $ | (493 | ) | $ | 646 | $ | (105 | ) | ||||||
| Segment free cash flow information | ||||||||||||||||
| Three Months Ended |
Twelve Months Ended |
|||||||||||||||
| 31-Dec-05 |
31-Dec-04 |
31-Dec-05 |
31-Dec-04 |
|||||||||||||
| Integrated Defense Systems |
$ | 63 | $ | 126 | $ | 338 | $ | 399 | ||||||||
| Intelligence and Information Systems |
106 | 57 | 169 | 169 | ||||||||||||
| Missile Systems |
(24 | ) | 65 | 274 | 285 | |||||||||||
| Network Centric Systems |
154 | 167 | 371 | 234 | ||||||||||||
| Space and Airborne Systems |
247 | 80 | 267 | 237 | ||||||||||||
| Technical Services |
42 | 38 | 114 | 58 | ||||||||||||
| Aircraft |
155 | 101 | 73 | 234 | ||||||||||||
| Other |
10 | 45 | 52 | 8 | ||||||||||||
| Discontinued operations |
25 | (11 | ) | (31 | ) | (43 | ) | |||||||||
| Corporate |
280 | 81 | 475 | 24 | ||||||||||||
| Total free cash flow |
$ | 1,058 | $ | 749 | $ | 2,102 | $ | 1,605 | ||||||||
(a) See Attachment F for a description of free cash flow.
Attachment F
Raytheon Company
Non-GAAP Financial Measures
Fourth Quarter 2005
Free cash flow is a “non-GAAP” financial measure under SEC regulations. The Company defines free cash flow as operating cash flow less capital spending and internal use software spending. Our definition may differ from similarly titled measures used by others. The Company uses free cash flow to facilitate management’s internal comparisons to the Company’s historical operating results and to competitors’ operating results and as an element of management incentive compensation. The Company believes disclosure of free cash flow performance provides investors greater transparency with respect to information used by management in its financial and operational decision making. While this information may be useful in evaluating the Company, it should be considered supplemental to and not as a substitute for financial information prepared in accordance with generally accepted accounting principles.
| Free cash flow | ||||||||||||||||
| Three Months Ended |
Twelve Months Ended |
|||||||||||||||
| 31-Dec-05 |
31-Dec-04 |
31-Dec-05 |
31-Dec-04 |
|||||||||||||
| Operating cash flow |
$ | 1,227 | $ | 933 | $ | 2,515 | $ | 2,071 | ||||||||
| Less: Capital spending |
(155 | ) | (154 | ) | (338 | ) | (363 | ) | ||||||||
| Internal use software spending |
(14 | ) | (30 | ) | (75 | ) | (103 | ) | ||||||||
| Free cash flow |
1,058 | 749 | 2,102 | 1,605 | ||||||||||||
| Plus: Discontinued operations |
(25 | ) | 11 | 31 | 43 | |||||||||||
| Free cash flow from continuing operations |
$ | 1,033 | $ | 760 | $ | 2,133 | $ | 1,648 | ||||||||