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Amendment No. 1 to Form 10-K
Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 10-K/A

(Amendment No. 1)

 

 

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended December 31, 2004.

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                      to                     

 

Commission File Number 1-13699

 

 

RAYTHEON COMPANY

(Exact Name of Registrant as Specified in its Charter)

 

 

DELAWARE   95-1778500
(State or Other Jurisdiction of Incorporation or Organization)   (I.R.S. Employer Identification No.)

 

870 WINTER STREET, WALTHAM, MASSACHUSETTS 02451

(Address of Principal Executive Offices) (Zip Code)

 

(781) 522-3000

Registrant’s telephone number, including area code

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class

  

Name of Each Exchange on Which Registered

Common Stock, $.01 par value  

New York Stock Exchange

Chicago Stock Exchange

Pacific Exchange

 

 

Securities registered pursuant to Section 12(g) of the Act:

None

 

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   x    No   ¨

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K   ¨

 

Indicate by check mark whether the registrant is an accelerated filer.    Yes   x    No   ¨

 

The aggregate market value of the voting stock held by non-affiliates of the Registrant, as of June 27, 2004, was approximately $15.5 billion.

 

Number of shares of Common Stock outstanding as of December 31, 2004: 453,096,000.

 

Documents incorporated by reference and made a part of this Form 10-K:

 

Portions of the Definitive Proxy Statement for Raytheon’s 2005 Annual Meeting are incorporated by reference in Part III of this Form 10-K.

 

Table of Contents

EXPLANATORY NOTE

 

Raytheon Company (the “Company” or “Raytheon”) is filing this Amendment No. 1 to its Annual Report on Form 10-K for the fiscal year ended December 31, 2004 solely to revise Item 6 (Selected Financial Data) by deleting the selected financial data relating to 2001 and 2000 and to make a similar change to Exhibit 12 (Computation of Ratio of Earnings to Fixed Charges).

 

In April 2005, the Company submitted an offer of settlement to the staff of the Enforcement Division of the Securities and Exchange Commission, which the Enforcement Division staff has agreed to recommend to the Commission, to resolve a pending investigation of the Company’s disclosures and accounting practices, primarily related to its Raytheon Aircraft Corporation (“RAC”) commuter aircraft business during the period from 1997 to 2001. This offer of settlement was previously disclosed in a press release and in a Form 8-K dated April 15, 2005. In connection with its investigation, the staff of the Enforcement Division has alleged that, among other matters, approximately $67 million to $240 million of the total $693 million charge the Company took in the third quarter of 2001 related to losses on its commuter assets (the “commuter loss provision”) should have been taken at year-end 2000, and that the commuter loss provision taken in 2001 was thus overstated by a corresponding amount. In offering to settle the pending matter, Raytheon neither admits nor denies these allegations.

 

In connection with the settlement, the Company acknowledges certain past inadequate documentation, disclosure, and accounting practices, and further acknowledges that, in the exercise of reasonable judgment, a portion of the total $693 million charge taken in 2001 should have been recorded at year-end 2000. The Company has not, however, conducted a current detailed analysis for such periods for the purpose of attempting to allocate the commuter loss provision between the two years. The Company believes that such an undertaking now would be unreasonably difficult and burdensome.

 

RAC has not manufactured new commuter aircraft since 2002. The Company formed Raytheon Airline Aviation Services, LLC (“RAAS”) to manage the commuter portfolio, and since the fourth quarter of 2003, the Company has included the financial results of RAAS in the “Other” reporting segment. The Company believes that it would be unduly difficult and burdensome to restate the five-year statistical summary table, particularly when such a restatement would relate to a non-core line of business. RAAS accounted for 0.5%, 0.5% and 0.7%, of the Company’s net sales during 2004, 2003 and 2002, respectively, and accounted for 2% and 3% of the Company’s total assets at December 31, 2004 and December 31, 2003, respectively. Accordingly, the Company is omitting the selected financial data for 2001 and 2000 previously included in the table (and in Exhibit 12) and such financial data should no longer be relied upon.

 

As previously disclosed, the Company recorded a $12 million after-tax charge related to the offer of settlement in its 2005 first quarter.

 

2

Table of Contents

INDEX

 

          Page

PART II

          

Item 6.

    Selected Financial Data    4

PART IV

          

Item 15.

    Exhibits and Financial Statement Schedules    5

 

3

Table of Contents

PART II

 

Item 6. Selected Financial Data

 

FIVE-YEAR STATISTICAL SUMMARY

 

(In millions except share amounts and total employees)

    2004
     2003
     2002
     20011
    20001

Results of Operations

                                  

Net sales

    $ 20,245     $ 18,109     $ 16,760           

Operating income

      1,388       1,316       1,783           

Interest expense

      418       537       497           

Income from continuing operations

      439       535       756           

Loss from discontinued operations, net of tax

      (63 )     (170 )     (887 )         

Cumulative effect of change in accounting principle, net of tax

      41       —         (509 )         

Net income (loss)

      417       365       (640 )         

Net cash provided by operating activities from continuing operations

      2,114       2,567       847           

Net cash provided by (used in) operating activities

      2,071       2,034       (349 )         

Diluted earnings per share from continuing operations

    $ 0.99     $ 1.29     $ 1.85           

Diluted earnings (loss) per share

      0.94       0.88       (1.57 )         

Dividends declared per share

      0.80       0.80       0.80           

Average diluted shares outstanding (in thousands)

      442,201       415,429       408,031           
    
 
 
        

Financial Position at Year-End

                                  

Cash and cash equivalents

    $ 556     $ 661     $ 544           

Current assets

      7,124       7,125       7,922           

Property, plant, and equipment, net

      2,738       2,711       2,396           

Total assets

      24,153       24,208       24,678           

Current liabilities

      5,644       4,322       5,839           

Long-term liabilities (excluding debt)

      3,224       3,281       2,831           

Long-term debt

      4,229       6,517       6,280           

Subordinated notes payable

      408       859       858           

Total debt

      5,153       7,391       8,291           

Stockholders’ equity

      10,551       9,162       8,870           
    
 
 
        

General Statistics

                                  

Total backlog

    $ 32,543     $ 27,542     $ 25,666           

U.S. government backlog included above

      25,525       21,353       18,254           

Capital expenditures

      363       428       458           

Depreciation and amortization

      434       393       364           

Total employees from continuing operations

      79,400       77,700       76,400           
    
 
 
        

 

(1) In April 2005, the Company submitted an offer of settlement to the staff of the Enforcement Division of the Securities and Exchange Commission, which the Enforcement Division staff has agreed to recommend to the Commission, to resolve a pending investigation of the Company’s disclosures and accounting practices, primarily related to its Raytheon Aircraft Corporation (“RAC”) commuter aircraft business during the period from 1997 to 2001. This offer of settlement was previously disclosed in a press release and in a Form 8-K dated April 15, 2005. In connection with its investigation, the staff of the Enforcement Division has alleged that, among other matters, approximately $67 million to $240 million of the total $693 million charge the Company took in the third quarter of 2001 related to losses on its commuter assets (the “commuter loss provision”) should have been taken at year-end 2000, and that the commuter loss provision taken in 2001 was thus overstated by a corresponding amount. In offering to settle the pending matter, Raytheon neither admits nor denies these allegations.

 

In connection with the settlement, the Company acknowledges certain past inadequate documentation, disclosure, and accounting practices, and further acknowledges that, in the exercise of reasonable judgment, a portion of the total $693 million charge taken in 2001 should have been recorded at year-end 2000. The Company has not, however, conducted a current detailed analysis for such periods for the purpose of attempting to allocate the commuter loss provision between the two years. The Company believes that such an undertaking now would be unreasonably difficult and burdensome.

 

RAC has not manufactured new commuter aircraft since 2002. The Company formed Raytheon Airline Aviation Services, LLC (“RAAS”) to manage the commuter portfolio, and since the fourth quarter of 2003, the Company has included the financial results of RAAS in the “Other” reporting segment. The Company believes that it would be unduly difficult and burdensome to restate the five-year statistical summary table, particularly when such a restatement would relate to a non-core line of business. RAAS accounted for 0.5%, 0.5% and 0.7%, of the Company’s net sales during 2004, 2003 and 2002, respectively, and accounted for 2% and 3% of the Company’s total assets at December 31, 2004 and December 31, 2003, respectively. Accordingly, the Company is omitting the selected financial data for 2001 and 2000 previously included in the table and such financial data should no longer be relied upon.

 

Certain prior year amounts have been reclassified to conform with the current year presentation.

 

4

Table of Contents

PART IV

 

Item 15. Exhibits and Financial Statements Schedules

 

(b) Exhibits:

 

12    Statement regarding Computation of Ratio of Earnings to Combined Fixed Charges for the year ended December 31, 2004.
31.1    Certification of William H. Swanson pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2    Certification of Biggs C. Porter pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

5

Table of Contents

SIGNATURE

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

RAYTHEON COMPANY
By:     /s/  Biggs C. Porter          
   

Biggs C. Porter

Vice President and Corporate Controller,

Acting Chief Financial Officer

 

Dated: February 8, 2006

 

6

Table of Contents

Exhibit Index

 

12    Statement regarding Computation of Ratio of Earnings to Combined Fixed Charges for the year ended December 31, 2004.
31.1    Certification of William H. Swanson pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2    Certification of Biggs C. Porter pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

7

Statement re Computation of Ratio of Earnings

Exhibit 12

 

RAYTHEON COMPANY

STATEMENT REGARDING COMPUTATION OF

RATIO OF EARNINGS TO COMBINED FIXED CHARGES

(dollar amounts in millions except for ratio)

(excludes RE&C and AIS for all periods

except for Interest costs, which includes RE&C and AIS)

 

     2000 (1)
    2001 (1)
    2002
    2003
    2004

Income from continuing operations before taxes per statements of income

              1,076    762    579

Add:

                         

Fixed charges

              658    611    497

Amortization of capitalized interest

              2    2    1

Less:

                         

Capitalized interest

              0    0    0
              
  
  

Income as adjusted

              1,736    1,375    1,077
              
  
  

Fixed charges:

                         

Portion of rents representative of interest factor

              82    74    79

Interest costs

              576    537    418

Capitalized interest

              0    0    0
              
  
  

Fixed charges

              658    611    497
              
  
  

Equity security distributions

              15    15    5
              
  
  

Combined fixed charges

              673    627    502
              
  
  

Ratio of earnings to combined fixed charges

              2.6    2.2    2.1
              
  
  
(1) The Company is omitting the financial data for 2001 and 2000 previously included in Exhibit 12 for the reasons discussed in the Explanatory Note and in Item 6 (Selected Financial Data.)
Certification of William H. Swanson pursuant to Section 302

Exhibit 31.1

 

CERTIFICATION

 

I, William H. Swanson, Chairman and Chief Executive Officer, certify that:

 

1. I have reviewed this Amendment No. 1 to annual report on Form 10-K of Raytheon Company;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: February 8, 2006

 

/S/    WILLIAM H. SWANSON        

William H. Swanson
Chairman and Chief Executive Officer
Certification of Biggs C. Porter pursuant to Section 302

Exhibit 31.2

 

CERTIFICATION

 

I, Biggs C. Porter, Vice President and Corporate Controller, Acting Chief Financial Officer, certify that:

 

1. I have reviewed this Amendment No. 1 to annual report on Form 10-K of Raytheon Company;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: February 8, 2006

 

/S/    BIGGS C. PORTER        

Biggs C. Porter
Vice President and Corporate Controller,
Acting Chief Financial Officer