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): January 31, 2008
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)
(781) 522-3000
(Registrant’s telephone number, including area code)
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 January 31, 2008, Raytheon Company issued a press release announcing financial results for the fiscal quarter and year ended December 31, 2007. A copy of the press release is furnished with this report as Exhibit 99.1. The information in this report, 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 Statements and Exhibits |
(d) Exhibits
| 99.1 | Press Release issued by Raytheon Company dated January 31, 2008. |
SIGNATURES
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.
| RAYTHEON COMPANY | ||||
| Date: January 31, 2008 | By: | /s/ Michael J. Wood | ||
| Michael J. Wood | ||||
| Vice President and Chief Accounting Officer | ||||
EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | Press release issued by Raytheon Company dated January 31, 2008. |
Exhibit 99.1
FOR IMMEDIATE RELEASE
| Media Contact: | Investor Relations Contact: | |||
| Jon Kasle | Greg Smith | |||
| 781-522-5110 | 781-522-5141 |
Raytheon Reports Strong Fourth Quarter and Full-Year 2007 Results; Increases 2008 Full-Year Guidance
Highlights
| • | Record bookings of $9.2 billion in quarter and $25.5 billion for year; record backlog of $36.6 billion |
| • | Sales of $6.0 billion in quarter and $21.3 billion for year, both up 8 percent |
| • | Operating income of $646 million in quarter, up 17 percent; $2.3 billion for year, up 20 percent |
| • | Earnings per share (EPS) from continuing operations of $1.45 in quarter and $3.80 for year |
| • |
Adjusted EPS from continuing operations of $0.96 in quarter and $3.31 for year, both up 26 percent (1) |
| • | Repurchased 5.4 million shares for $341 million in quarter; 28.7 million shares for $1.6 billion for year |
WALTHAM, Mass., (January 31, 2008) – Raytheon Company (NYSE: RTN) reported fourth quarter 2007 income from continuing operations of $634 million or $1.45 per diluted share compared to $344 million or $0.76 per diluted share in the fourth quarter 2006. Fourth quarter 2007 income from continuing operations was higher primarily due to operational improvements, combined with lower net interest and pension expense as well as tax-related benefits of $214 million or $0.49 per diluted share.
| (1) |
Adjusted EPS from continuing operations is EPS from continuing operations excluding tax-related benefits of $0.49 ($214 million) in Q4 ’07 and $0.49 ($219 million) in full-year 2007. Adjusted EPS from continuing operations is a non-GAAP financial measure. See attachment G for a reconciliation of this measure to EPS from continuing operations under GAAP and a discussion of why the Company is presenting this information. |
“2007 was a very successful year for the Company; we grew sales 8% in 2007 while increasing operating income by 20%,” said William H. Swanson, Raytheon Chairman and CEO. “We ended the year with record bookings and backlog, which positions us well for 2008 and beyond.”
Fourth quarter 2007 net income was $598 million or $1.37 per diluted share compared to $365 million or $0.81 per diluted share in the fourth quarter 2006. Net income for the fourth quarter 2007 included an after-tax loss of $36 million or $0.08 per diluted share in discontinued operations compared to income of $21 million or $0.05 per diluted share in the fourth quarter 2006. As previously disclosed, fourth quarter 2007 discontinued operations results included an after-tax charge of $44 million related to the sale of Flight Options LLC (FO), which was completed in the fourth quarter 2007. Fourth quarter 2006 discontinued operations included a full quarter of the results of FO and Raytheon Aircraft Company (RAC), which was sold in the second quarter 2007.
Net sales for the fourth quarter 2007 were $6.0 billion, up 8 percent from $5.6 billion in the fourth quarter 2006, with growth across all of the Company’s businesses.
Operating cash flow from continuing operations for the fourth quarter 2007 was $941 million compared to $1,293 million for the fourth quarter 2006. This decrease is primarily due to the acceleration of a $500 million discretionary cash contribution originally planned to be made to the Company’s pension plans in the first quarter 2008 and the timing of certain customer advances, partially offset by $381 million in tax refunds received during the quarter from the resolution of various tax matters.
Full-Year Financial Results
For the full year the Company reported income from continuing operations of $1.7 billion or $3.80 per diluted share compared to $1.2 billion or $2.63 per diluted share in 2006, primarily due to operational improvements combined with lower net interest and pension expense, and tax-related benefits. Full-year 2007 adjusted EPS from continuing
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operations was $3.31(1).
In 2007 the Company sold Raytheon Aircraft Company (RAC) and Flight Options LLC (FO), which together contributed $885 million or $1.99 per diluted share (in discontinued operations) to net income. Net income for 2007 also included tax-related benefits of $219 million or $0.49 per diluted share. The Company reported net income for 2007 of $2.6 billion or $5.79 per diluted share compared to $1.3 billion or $2.85 per diluted share in 2006.
Total 2007 net sales for the Company were $21.3 billion compared to $19.7 billion for 2006, an increase of 8 percent, primarily due to Integrated Defense Systems (IDS), Intelligence and Information Systems (IIS), Missile Systems (MS) and Network Centric Systems (NCS).
Operating cash flow from continuing operations was $1,249 million in 2007 compared to $2,477 million in 2006. The decrease in operating cash flow in 2007 compared to 2006 was primarily due to higher cash tax payments and discretionary pension cash contributions made in 2007. The Company paid $1,115 million in cash taxes in 2007 ($631 million attributable to the gain on the sale of RAC) compared to $375 million in 2006. Also, the Company made $900 million in discretionary cash contributions to the Company’s pension plans in 2007 compared to $200 million in 2006. The Company also received tax refunds of $381 million during the fourth quarter 2007.
As part of the Company’s previously announced share repurchase program, during the fourth quarter 2007 the Company repurchased 5.4 million shares of common stock for $341 million, and for the year repurchased 28.7 million shares for $1.6 billion.
| (1) |
Adjusted EPS from continuing operations is EPS from continuing operations excluding tax-related benefits of $0.49 ($214 million) in Q4 ’07 and $0.49 ($219 million) in full-year 2007. Adjusted EPS from continuing operations is a non-GAAP financial measure. See attachment G for a reconciliation of this measure to EPS from continuing operations under GAAP and a discussion of why the Company is presenting this information. |
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Summary Financial Results
| 4th Quarter | % Change |
Full-Year | % Change |
||||||||||||||||
| ($ in millions, except per share data) | 2007 | 2006 | 2007 | 2006 | |||||||||||||||
| Net Sales |
$ | 6,000 | $ | 5,561 | 8 | % | $ | 21,301 | $ | 19,707 | 8 | % | |||||||
| Total Operating Expenses |
5,354 | 5,008 | 18,973 | 17,763 | |||||||||||||||
| Operating Income |
646 | 553 | 17 | % | 2,328 | 1,944 | 20 | % | |||||||||||
| Non-operating Expenses |
7 | 40 | 103 | 153 | |||||||||||||||
| Income from Cont. Ops. before Taxes |
$ | 639 | $ | 513 | 25 | % | $ | 2,225 | $ | 1,791 | 24 | % | |||||||
| Income from Continuing Operations |
$ | 634 | $ | 344 | 84 | % | $ | 1,693 | $ | 1,187 | 43 | % | |||||||
| (Loss) income from Disc. Operations |
(36 | ) | 21 | NM | 885 | 96 | NM | ||||||||||||
| Net Income |
$ | 598 | $ | 365 | 64 | % | $ | 2,578 | $ | 1,283 | 101 | % | |||||||
| Diluted EPS from Continuing Operations |
$ | 1.45 | $ | 0.76 | 91 | % | $ | 3.80 | $ | 2.63 | 44 | % | |||||||
| Adjusted EPS from Cont. Ops.(1) |
$ | 0.96 | $ | 0.76 | 26 | % | $ | 3.31 | $ | 2.63 | 26 | % | |||||||
| Diluted EPS |
$ | 1.37 | $ | 0.81 | 69 | % | $ | 5.79 | $ | 2.85 | 103 | % | |||||||
| Operating Cash Flow from Cont. Ops. |
$ | 941 | $ | 1,293 | $ | 1,249 | $ | 2,477 | |||||||||||
| (1) | Adjusted EPS from continuing operations is EPS from continuing operations excluding tax-related benefits of $0.49 ($214M) in Q4 ‘07 and $0.49 ($219M) in full-year ‘07. Adjusted EPS from continuing operations is a non-GAAP financial measure. See attachment G for a reconciliation of this measure to EPS from continuing operations under GAAP and a discussion of why the Company is presenting this information. |
Bookings and Backlog
| Bookings |
||||||||||||
| 4th Quarter | Full-Year | |||||||||||
| (in millions) | 2007 | 2006 | 2007 | 2006 | ||||||||
| Total Bookings |
$ | 9,181 | $ | 7,633 | $ | 25,498 | $ | 22,417 | ||||
| Backlog |
||||||||||||
| (in millions) | 12/31/07 | 12/31/06 | ||||||||||
| Backlog |
$ | 36,614 | $ | 33,838 | ||||||||
| Funded Backlog |
$ | 20,518 | $ | 18,186 | ||||||||
The Company reported total bookings for the fourth quarter 2007 of $9.2 billion compared to $7.6 billion in the fourth quarter 2006, an increase driven primarily by two international multi-year programs, the Australian Air Warfare Destroyer program and the U.K.
e-Borders contract. The Company reported full-year 2007 bookings of $25.5 billion, up 14 percent compared to $22.4 billion for full-year 2006.
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The Company ended 2007 with a record backlog of $36.6 billion, up 8 percent compared to $33.8 billion at the end of 2006.
Outlook
| 2008 Financial Outlook |
||||
| Current | Prior (10/25/07) | |||
| Net Sales ($B) |
22.4 - 22.9 | 22.1 - 22.6 | ||
| FAS/CAS Pension Expense ($M) |
150 | Not provided | ||
| Interest Expense, net ($M) |
45 - 60 | Not provided | ||
| Diluted Shares (M) |
427 - 429 | Not provided | ||
| EPS from Cont. Ops. |
$3.65 - $3.80 | $3.45 - $3.65 | ||
| Operating Cash Flow from Cont. Ops. ($B) |
2.0 - 2.2 | 1.5 - 1.7 | ||
| ROIC (%) |
9.6 - 10.1 | Not provided |
The Company has updated full-year 2008 guidance. Charts containing additional information on the Company’s 2008 guidance are available on the Company’s website at www.raytheon.com. See attachment F for the Company’s calculation and use of Return on Invested Capital (ROIC), a non-GAAP financial measure.
Segment Results
Integrated Defense Systems
| 4th Quarter | % Change |
Full-Year | % Change |
|||||||||||||||||||
| ($ in millions) | 2007 | 2006 | 2007 | 2006 | ||||||||||||||||||
| Net Sales |
$ | 1,290 | $ | 1,189 | 8 | % | $ | 4,695 | $ | 4,220 | 11 | % | ||||||||||
| Operating Income |
$ | 211 | $ | 189 | 12 | % | $ | 828 | $ | 691 | 20 | % | ||||||||||
| Operating Margin |
16.4 | % | 15.9 | % | 17.6 | % | 16.4 | % | ||||||||||||||
Integrated Defense Systems (IDS) had fourth quarter 2007 net sales of $1,290 million, up 8 percent compared to $1,189 million in the fourth quarter 2006, primarily due to growth on Missile Defense Agency, U.S. Army, and international programs. IDS recorded $211 million of operating income compared to $189 million in the fourth quarter 2006. The increase in operating income was primarily due to higher volume and improved performance on several international and domestic programs.
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During the quarter, IDS booked $1.3 billion for the Air Warfare Destroyer program for the Australian Navy. IDS also booked $233 million for the Patriot Pure Fleet program for the U.S. Army.
Intelligence and Information Systems
| 4th Quarter | % Change |
Full-Year | % Change |
|||||||||||||||||||
| ($ in millions) | 2007 | 2006 | 2007 | 2006 | ||||||||||||||||||
| Net Sales |
$ | 808 | $ | 690 | 17 | % | $ | 2,742 | $ | 2,560 | 7 | % | ||||||||||
| Operating Income |
$ | 66 | $ | 63 | 5 | % | $ | 248 | $ | 234 | 6 | % | ||||||||||
| Operating Margin |
8.2 | % | 9.1 | % | 9.0 | % | 9.1 | % | ||||||||||||||
Intelligence and Information Systems (IIS) had fourth quarter 2007 net sales of $808 million, up 17 percent compared to $690 million in the fourth quarter 2006, primarily due to new programs, including e-Borders. IIS recorded $66 million of operating income compared to $63 million in the fourth quarter 2006. The increase in operating income was primarily due to higher volume partially offset by certain costs associated with the Oakley Networks acquisition.
During the quarter, IIS booked $1.4 billion for the U.K. e-Borders contract, an advanced border control and security program and $160 million for the Global Positioning System Operational Control Segment (GPS-OCX) contract for the U.S. Air Force. IIS also booked $538 million on a number of classified contracts, including $246 million on a major classified contract.
Missile Systems
| 4th Quarter | % Change |
Full-Year | % Change |
|||||||||||||||||||
| ($ in millions) | 2007 | 2006 | 2007 | 2006 | ||||||||||||||||||
| Net Sales |
$ | 1,362 | $ | 1,316 | 3 | % | $ | 4,993 | $ | 4,503 | 11 | % | ||||||||||
| Operating Income |
$ | 148 | $ | 138 | 7 | % | $ | 541 | $ | 479 | 13 | % | ||||||||||
| Operating Margin |
10.9 | % | 10.5 | % | 10.8 | % | 10.6 | % | ||||||||||||||
Missile Systems (MS) had fourth quarter 2007 net sales of $1,362 million, up 3 percent compared to $1,316 million in the fourth quarter 2006, primarily due to higher volume on
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the Standard Missile program. MS recorded $148 million of operating income compared to $138 million in the fourth quarter 2006. The increase in operating income was primarily due to higher volume and a royalty on a foreign military sale.
During the quarter, MS booked $242 million for Phalanx Weapons Systems for the U.S. Navy, $234 million for the design and development of the Mid Range Munition (MRM) system and $196 million for the production of Tube-launched Optically guided Wire controlled (TOW) missiles for the U.S. Army. MS also booked $145 million for the production of Enhanced Paveway™ for an international customer.
Network Centric Systems
| 4th Quarter | % Change |
Full-Year | % Change |
|||||||||||||||||||
| ($ in millions) | 2007 | 2006 | 2007 | 2006 | ||||||||||||||||||
| Net Sales |
$ | 1,147 | $ | 1,011 | 13 | % | $ | 4,164 | $ | 3,561 | 17 | % | ||||||||||
| Operating Income |
$ | 127 | $ | 117 | 9 | % | $ | 506 | $ | 379 | 34 | % | ||||||||||
| Operating Margin |
11.1 | % | 11.6 | % | 12.2 | % | 10.6 | % | ||||||||||||||
Network Centric Systems (NCS) had fourth quarter 2007 net sales of $1,147 million, up 13 percent compared to $1,011 million in the fourth quarter 2006, primarily due to increased volume on certain U.S. Army programs. NCS recorded $127 million of operating income compared to $117 million in the fourth quarter 2006. The increase in operating income was primarily due to higher volume.
During the quarter, NCS booked $150 million to deliver SATCOM on the Move (SOTM) systems to the U.S. Army for use on Mine Resistant Ambush Protected (MRAP) vehicles.
Space and Airborne Systems
| 4th Quarter | % Change |
Full-Year | % Change |
|||||||||||||||||||
| ($ in millions) | 2007 | 2006 | 2007 | 2006 | ||||||||||||||||||
| Net Sales |
$ | 1,243 | $ | 1,175 | 6 | % | $ | 4,288 | $ | 4,319 | -1 | % | ||||||||||
| Operating Income |
$ | 177 | $ | 159 | 11 | % | $ | 560 | $ | 604 | -7 | % | ||||||||||
| Operating Margin |
14.2 | % | 13.5 | % | 13.1 | % | 14.0 | % | ||||||||||||||
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Space and Airborne Systems (SAS) had fourth quarter 2007 net sales of $1,243 million, up 6 percent compared to $1,175 million in the fourth quarter 2006, primarily due to growth on airborne radar and sensor programs. SAS recorded $177 million of operating income compared to $159 million in the fourth quarter 2006. The increase in operating income was primarily due to higher volume and improved program performance.
SAS booked $460 million on a number of classified contracts, including $381 million on a major classified contract.
Technical Services
| 4th Quarter | % | Full-Year | % | |||||||||||||||||||
| ($ in millions) | 2007 | 2006 | Change | 2007 | 2006 | Change | ||||||||||||||||
| Net Sales |
$ | 643 | $ | 639 | 1 | % | $ | 2,174 | $ | 2,153 | 1 | % | ||||||||||
| Operating Income |
$ | 47 | $ | 50 | -6 | % | $ | 139 | $ | 153 | -9 | % | ||||||||||
| Operating Margin |
7.3 | % | 7.8 | % | 6.4 | % | 7.1 | % | ||||||||||||||
Technical Services (TS) had fourth quarter 2007 net sales of $643 million compared to $639 million in the fourth quarter 2006. TS recorded operating income of $47 million in the fourth quarter 2007 compared to $50 million in the fourth quarter 2006.
During the quarter, TS booked $118 million for the initial work on the Warfighter Field Operations Customer Support (FOCUS) contract for the U.S. Army to provide live, virtual and constructive training services.
Discontinued Operations
During the quarter, the Company recorded an after-tax loss from discontinued operations of $36 million, which as previously disclosed, included an after-tax charge of $44 million related to the sale of Flight Options LLC. The transaction was completed in the fourth quarter 2007.
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Raytheon Company (NYSE: RTN), with 2007 sales of $21.3 billion, is a technology leader specializing in defense, homeland security and other government markets throughout the world. With a history of innovation spanning more than 85 years, Raytheon provides state-of-the-art electronics, mission systems integration and other capabilities in the areas of sensing; effects; and command, control, communications and intelligence systems, as well as a broad range of mission support services. With headquarters in Waltham, Mass., Raytheon employs 72,000 people worldwide.
Disclosure Regarding Forward-looking Statements
This release and the attachments contain forward-looking statements, including information regarding the Company’s 2008 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: the Company’s dependence on the U.S. government for a significant portion of its business and the risks associated with 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 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 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 outcome of contingencies and litigation matters, including government investigations; the ability to recruit and retain qualified personnel; risks associated with acquisitions, dispositions, joint ventures and other business arrangements; and other factors as may be detailed from time to time in the Company’s public announcements and Securities and Exchange Commission filings. In addition, these statements do not give effect to the potential impact of any acquisitions, dispositions or business combinations that may be announced or closed after the date hereof. 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. This release and the attachments also contain non-GAAP financial measures. A GAAP reconciliation and a discussion of the Company’s use of these measures are included in this release or the attachments.
Conference Call on the Fourth Quarter and Full-Year 2007 Financial Results
Raytheon’s financial results conference call will be held on Thursday, January 31, 2008 at 9 a.m. ET. Participants will include William H. Swanson, Chairman and CEO, David C. Wajsgras, senior vice president and CFO, and other Company executives.
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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 encouraged 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.
# # #
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Attachment A
Raytheon Company
Preliminary Statement of Operations Information
Fourth Quarter 2007
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| (In millions except per share amounts) | 31-Dec-07 | 31-Dec-06 | 31-Dec-07 | 31-Dec-06 | ||||||||||||
| Net sales |
$ | 6,000 | $ | 5,561 | $ | 21,301 | $ | 19,707 | ||||||||
| Cost of sales |
4,837 | 4,525 | 17,037 | 15,977 | ||||||||||||
| Administrative and selling expenses |
392 | 361 | 1,434 | 1,322 | ||||||||||||
| Research and development expenses |
125 | 122 | 502 | 464 | ||||||||||||
| Total operating expenses |
5,354 | 5,008 | 18,973 | 17,763 | ||||||||||||
| Operating income |
646 | 553 | 2,328 | 1,944 | ||||||||||||
| Interest expense |
41 | 70 | 196 | 272 | ||||||||||||
| Interest income |
(36 | ) | (28 | ) | (163 | ) | (75 | ) | ||||||||
| Other expense (income), net |
2 | (2 | ) | 70 | (44 | ) | ||||||||||
| Non-operating expense, net |
7 | 40 | 103 | 153 | ||||||||||||
| Income from continuing operations before taxes |
639 | 513 | 2,225 | 1,791 | ||||||||||||
| Federal and foreign income taxes |
5 | 169 | 532 | 604 | ||||||||||||
| Income from continuing operations |
634 | 344 | 1,693 | 1,187 | ||||||||||||
| Income (loss) from discontinued operations, net of tax |
8 | 21 | (57 | ) | 96 | |||||||||||
| (Loss) gain on sales of discontinued operations, net of tax |
(44 | ) | — | 942 | — | |||||||||||
| (Loss) income from discontinued operations |
(36 | ) | 21 | 885 | 96 | |||||||||||
| Net income |
$ | 598 | $ | 365 | $ | 2,578 | $ | 1,283 | ||||||||
| Earnings per share from continuing operations |
||||||||||||||||
| Basic |
$ | 1.50 | $ | 0.78 | $ | 3.91 | $ | 2.69 | ||||||||
| Diluted |
$ | 1.45 | $ | 0.76 | $ | 3.80 | $ | 2.63 | ||||||||
| (Loss) earnings per share from discontinued operations |
||||||||||||||||
| Basic |
$ | (0.09 | ) | $ | 0.05 | $ | 2.04 | $ | 0.22 | |||||||
| Diluted |
$ | (0.08 | ) | $ | 0.05 | $ | 1.99 | $ | 0.21 | |||||||
| Earnings per share |
||||||||||||||||
| Basic |
$ | 1.41 | $ | 0.83 | $ | 5.95 | $ | 2.90 | ||||||||
| Diluted |
$ | 1.37 | $ | 0.81 | $ | 5.79 | $ | 2.85 | ||||||||
| Average shares outstanding |
||||||||||||||||
| Basic |
423.2 | 440.1 | 433.0 | 441.8 | ||||||||||||
| Diluted |
436.8 | 452.3 | 445.7 | 450.9 | ||||||||||||
Attachment B
Raytheon Company
Preliminary Segment Information
Fourth Quarter 2007
(In millions)
| Net Sales Three Months Ended |
Operating Income Three Months Ended |
Operating Income As a Percent of Sales Three Months Ended |
||||||||||||||||||||
| 31-Dec-07 | 31-Dec-06 | 31-Dec-07 | 31-Dec-06 | 31-Dec-07 | 31-Dec-06 | |||||||||||||||||
| Integrated Defense Systems |
$ | 1,290 | $ | 1,189 | $ | 211 | $ | 189 | 16.4 | % | 15.9 | % | ||||||||||
| Intelligence and Information Systems |
808 | 690 | 66 | 63 | 8.2 | % | 9.1 | % | ||||||||||||||
| Missile Systems |
1,362 | 1,316 | 148 | 138 | 10.9 | % | 10.5 | % | ||||||||||||||
| Network Centric Systems |
1,147 | 1,011 | 127 | 117 | 11.1 | % | 11.6 | % | ||||||||||||||
| Space and Airborne Systems |
1,243 | 1,175 | 177 | 159 | 14.2 | % | 13.5 | % | ||||||||||||||
| Technical Services |
643 | 639 | 47 | 50 | 7.3 | % | 7.8 | % | ||||||||||||||
| FAS/CAS Pension Adjustment |
— | — | (67 | ) | (91 | ) | ||||||||||||||||
| Corporate and Eliminations |
(493 | ) | (459 | ) | (63 | ) | (72 | ) | ||||||||||||||
| Total |
$ | 6,000 | $ | 5,561 | $ | 646 | $ | 553 | 10.8 | % | 9.9 | % | ||||||||||
| Net Sales Twelve Months Ended |
Operating Income Twelve Months Ended |
Operating Income As a Percent of Sales Twelve Months Ended |
||||||||||||||||||||
| 31-Dec-07 | 31-Dec-06 | 31-Dec-07 | 31-Dec-06 | 31-Dec-07 | 31-Dec-06 | |||||||||||||||||
| Integrated Defense Systems |
$ | 4,695 | $ | 4,220 | $ | 828 | $ | 691 | 17.6 | % | 16.4 | % | ||||||||||
| Intelligence and Information Systems |
2,742 | 2,560 | 248 | 234 | 9.0 | % | 9.1 | % | ||||||||||||||
| Missile Systems |
4,993 | 4,503 | 541 | 479 | 10.8 | % | 10.6 | % | ||||||||||||||
| Network Centric Systems |
4,164 | 3,561 | 506 | 379 | 12.2 | % | 10.6 | % | ||||||||||||||
| Space and Airborne Systems |
4,288 | 4,319 | 560 | 604 | 13.1 | % | 14.0 | % | ||||||||||||||
| Technical Services |
2,174 | 2,153 | 139 | 153 | 6.4 | % | 7.1 | % | ||||||||||||||
| FAS/CAS Pension Adjustment |
— | — | (259 | ) | (362 | ) | ||||||||||||||||
| Corporate and Eliminations |
(1,755 | ) | (1,609 | ) | (235 | ) | (234 | ) | ||||||||||||||
| Total |
$ | 21,301 | $ | 19,707 | $ | 2,328 | $ | 1,944 | 10.9 | % | 9.9 | % | ||||||||||
Attachment C
Raytheon Company
Other Preliminary Information
Fourth Quarter 2007
| Backlog (In millions) |
Funded Backlog (In millions) | |||||||||||
| 31-Dec-07 | 31-Dec-06 | 31-Dec-07 | 31-Dec-06 | |||||||||
| Integrated Defense Systems |
$ | 9,296 | $ | 7,934 | $ | 4,781 | $ | 4,088 | ||||
| Intelligence and Information Systems |
5,636 | 3,935 | 2,325 | 893 | ||||||||
| Missile Systems |
9,379 | 9,504 | 5,218 | 5,135 | ||||||||
| Network Centric Systems |
5,102 | 5,059 | 3,957 | 4,037 | ||||||||
| Space and Airborne Systems |
5,276 | 5,591 | 3,037 | 2,770 | ||||||||
| Technical Services |
1,925 | 1,815 | 1,200 | 1,263 | ||||||||
| Total |
$ | 36,614 | $ | 33,838 | $ | 20,518 | $ | 18,186 | ||||
| Bookings (In millions) Three Months Ended |
Bookings (In millions) Twelve Months Ended | |||||||||||
| 31-Dec-07 | 31-Dec-06 | 31-Dec-07 | 31-Dec-06 | |||||||||
| Total Bookings |
$ | 9,181 | $ | 7,633 | $ | 25,498 | $ | 22,417 | ||||
Attachment D
Raytheon Company
Preliminary Balance Sheet Information
Fourth Quarter 2007
| (In millions) | 31-Dec-07 | 31-Dec-06 | ||||
| Assets |
||||||
| Cash and cash equivalents |
$ | 2,655 | $ | 2,460 | ||
| Accounts receivable, less allowance for doubtful accounts |
126 | 141 | ||||
| Contracts in process |
3,821 | 3,600 | ||||
| Inventories |
386 | 376 | ||||
| Deferred taxes |
432 | 257 | ||||
| Prepaid expenses and other current assets |
196 | 108 | ||||
| Assets held for sale |
— | 2,575 | ||||
| Total current assets |
7,616 | 9,517 | ||||
| Property, plant and equipment, net |
2,058 | 2,025 | ||||
| Deferred taxes |
— | 170 | ||||
| Prepaid retiree benefits |
617 | 527 | ||||
| Goodwill |
11,627 | 11,461 | ||||
| Other assets, net |
1,363 | 1,417 | ||||
| Assets held for sale |
— | 374 | ||||
| Total assets |
$ | 23,281 | $ | 25,491 | ||
| Liabilities and Stockholders’ Equity |
||||||
| Notes payable and current portion of long-term debt |
$ | — | $ | 687 | ||
| Advance payments and billings in excess of costs incurred |
1,845 | 1,885 | ||||
| Accounts payable |
1,141 | 910 | ||||
| Accrued employee compensation |
902 | 937 | ||||
| Other accrued expenses |
900 | 1,043 | ||||
| Liabilities held for sale |
— | 1,253 | ||||
| Total current liabilities |
4,788 | 6,715 | ||||
| Accrued retiree benefits and other long-term liabilities |
3,016 | 4,053 | ||||
| Deferred taxes |
451 | — | ||||
| Long-term debt |
2,268 | 3,278 | ||||
| Liabilities held for sale |
— | 179 | ||||
| Minority interest |
216 | 165 | ||||
| Stockholders’ equity |
12,542 | 11,101 | ||||
| Total liabilities and stockholders’ equity |
$ | 23,281 | $ | 25,491 | ||
Attachment E
Raytheon Company
Preliminary Cash Flow Information
Fourth Quarter 2007
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| (In millions) | 31-Dec-07 | 31-Dec-06 | 31-Dec-07 | 31-Dec-06 | ||||||||||||
| Net income |
$ | 598 | $ | 365 | $ | 2,578 | $ | 1,283 | ||||||||
| Less: Loss (income) from discontinued operations, net of tax |
36 | (21 | ) | (885 | ) | (96 | ) | |||||||||
| Income from continuing operations |
634 | 344 | 1,693 | 1,187 | ||||||||||||
| Depreciation |
74 | 76 | 288 | 285 | ||||||||||||
| Amortization |
23 | 20 | 84 | 76 | ||||||||||||
| Working capital |
444 | 824 | (85 | ) | 377 | |||||||||||
| Discontinued operations |
(8 | ) | 258 | (51 | ) | 266 | ||||||||||
| Net activity in financing receivables |
17 | 72 | 88 | 168 | ||||||||||||
| Other |
(251 | ) | (43 | ) | (819 | ) | 384 | |||||||||
| Net operating cash flow |
933 | 1,551 | 1,198 | 2,743 | ||||||||||||
| Capital spending |
(153 | ) | (149 | ) | (313 | ) | (294 | ) | ||||||||
| Internal use software spending |
(34 | ) | (27 | ) | (85 | ) | (77 | ) | ||||||||
| Acquisitions |
(211 | ) | — | (211 | ) | (87 | ) | |||||||||
| Investment activity and divestitures |
26 | 3 | 3,143 | 53 | ||||||||||||
| Dividends |
(109 | ) | (107 | ) | (440 | ) | (420 | ) | ||||||||
| Repurchase of common stock |
(341 | ) | — | (1,642 | ) | (352 | ) | |||||||||
| Debt repayments |
(118 | ) | (16 | ) | (1,724 | ) | (437 | ) | ||||||||
| Discontinued operations |
— | (21 | ) | (29 | ) | (73 | ) | |||||||||
| Other |
53 | 64 | 298 | 202 | ||||||||||||
| Total cash flow |
$ | 46 | $ | 1,298 | $ | 195 | $ | 1,258 | ||||||||
Attachment F
Raytheon Company
Preliminary Return on Invested Capital Non-GAAP Financial Measure
Fourth Quarter 2007
We define Return on Invested Capital (ROIC) as income from continuing operations plus after-tax net interest expense plus one-third of operating lease expense after-tax (estimate of interest portion of operating lease expense) divided by average invested capital after capitalizing operating leases (operating lease expense times a multiplier of 8), adding financial guarantees less net investment in Discontinued Operations, and adding back the cumulative minimum pension liability/impact of FAS 158. ROIC is not a measure of financial performance under generally accepted accounting principles (GAAP) and may not be defined and calculated by other companies in the same manner. ROIC should be considered supplemental to and not a substitute for financial information prepared in accordance with GAAP. We use ROIC as a measure of efficiency and effectiveness of our use of capital and as an element of management compensation.
Return on Invested Capital
| 2008 Guidance | ||||||||
| (In millions) | Low end of range |
High end of range |
||||||
| Income from continuing operations |
||||||||
| Net interest expense, after-tax* |
Combined | Combined | ||||||
| Lease expense, after-tax* |
||||||||
| Return |
$ | 1,655 | $ | 1,720 | ||||
| Net debt ** |
||||||||
| Equity less investment in discontinued operations |
||||||||
| Lease expense x 8 plus financial guarantees |
Combined | Combined | ||||||
| Minimum pension liability (cumulative) |
||||||||
| Invested capital from continuing operations*** |
$ | 17,300 | $ | 17,100 | ||||
| ROIC |
9.6 | % | 10.1 | % | ||||
| * | Effective 2008 tax rate: 34.1% (2008 guidance) |
| ** | Net debt is defined as total debt less cash and cash equivalents and is calculated using a 2 point average |
| *** | Calculated using a 2 point average |
Attachment G
Raytheon Company
Preliminary Adjusted EPS from Continuing Operations Non-GAAP Reconciliation
Fourth Quarter 2007
| Three Months Ended | Twelve Months Ended | |||||||||||||
| 31-Dec-07 | 31-Dec-06 | 31-Dec-07 | 31-Dec-06 | |||||||||||
| Diluted EPS from continuing operations as reported under GAAP |
$ | 1.45 | $ | 0.76 | $ | 3.80 | $ | 2.63 | ||||||
| Less: Diluted EPS from tax-related benefits |
(0.49 | ) | — | (0.49 | ) | — | ||||||||
| Adjusted EPS from continuing operations * |
$ | 0.96 | $ | 0.76 | $ | 3.31 | $ | 2.63 | ||||||
| * | Adjusted EPS from continuing operations is not a measure of financial performance under generally accepted accounting principles (GAAP). It should be considered supplemental to and not a substitute for financial performance in accordance with GAAP. We use Adjusted EPS from continuing operations to facilitate management’s internal comparisons to the Company’s historical operating results, to competitors’ operating results, and to provide greater transparency to investors of supplemental information used by management in its financial and operational decision-making, including management’s evaluation of the Company’s operating performance. Adjusted EPS from continuing operations excludes the tax-related benefits recognized in the fourth quarter of 2007 because the Company believes that such items are not indicative of its core operating results, are not indicative of trends, and do not provide meaningful comparisons with other reporting periods. |