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): July 24, 2008
RAYTHEON COMPANY
(Exact name of registrant as specified in its charter)
| Delaware | 1-13699 | 95-1778500 | ||
| (State or other jurisdiction 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 July 24, 2008, Raytheon Company issued a press release announcing financial results for the fiscal quarter ended June 29, 2008. 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 July 24, 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: July 24, 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 July 24, 2008. | |
|
|
||||||
| News release |
| FOR IMMEDIATE RELEASE |
||
| Media Contact: |
Investor Relations Contact: | |
| Jon Kasle |
Jim Singer | |
| 781-522-5110 |
781-522-5136 | |
Raytheon Increases Full-year Guidance; Reports Strong Second Quarter 2008
Highlights
| • | Sales of $5.9 billion, up 11 percent |
| • | Operating income of $662 million, up 12 percent |
| • | Earnings per share (EPS) from continuing operations of $1.00, up 27 percent |
| • | Solid bookings of $6.0 billion; backlog of $37.5 billion |
| • | Strong operating cash flow from continuing operations of $767 million |
| • | Full-year guidance increased for sales, EPS, operating cash flow and ROIC |
WALTHAM, Mass., (July 24, 2008) – Raytheon Company (NYSE: RTN) reported second quarter 2008 income from continuing operations of $426 million or $1.00 per diluted share compared to $355 million or $0.79 per diluted share in the second quarter 2007. Second quarter 2008 income from continuing operations was higher primarily due to operational improvements and lower pension expense, as well as a prior-year $39 million charge ($59 million pretax) or $0.09 per diluted share for the early retirement of debt.
“All of our businesses performed well and the Company had a strong second quarter,” said William H. Swanson, Raytheon’s Chairman and CEO. “We are increasing our financial outlook for the year as a result of our solid performance.”
Second quarter 2008 net income was $426 million or $1.00 per diluted share compared to $1,335 million or $2.97 per diluted share in the second quarter 2007. Net income for the second quarter 2007 included $980 million in discontinued operations or $2.18 per diluted share primarily due to the sale of Raytheon Aircraft Company (RAC), which was completed in the second quarter 2007.
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Net sales for the second quarter 2008 were $5.9 billion, up 11 percent from $5.3 billion in the second quarter 2007, with growth across all of the Company’s businesses.
Operating cash flow from continuing operations for the second quarter 2008 was a positive $767 million compared to an outflow of $30 million for the second quarter 2007. The improvement in the second quarter 2008 was primarily due to cash tax payments of $316 million made in the second quarter 2007 attributable to the gain on the sale of RAC and a reduction in working capital items in the second quarter 2008.
In the second quarter 2008 the Company repurchased 5.2 million shares of common stock for $340 million, as part of the Company’s previously announced share repurchase program. The Company has repurchased 10.7 million shares of common stock year-to-date for $680 million.
| Summary Financial Results | |||||||||||||||||||||
| 2nd Quarter | % | Six Months | % | ||||||||||||||||||
| ($ in millions, except per share data) |
2008 | 2007 | Change | 2008 | 2007 | Change | |||||||||||||||
| Net Sales |
$ | 5,870 | $ | 5,278 | 11 | % | $ | 11,224 | $ | 10,082 | 11 | % | |||||||||
| Total Operating Expenses |
5,208 | 4,689 | 9,954 | 8,972 | |||||||||||||||||
| Operating Income |
662 | 589 | 12 | % | 1,270 | 1,110 | 14 | % | |||||||||||||
| Non-operating Expenses |
15 | 53 | 31 | 88 | |||||||||||||||||
| Income from Cont. Ops. before Taxes |
$ | 647 | $ | 536 | 21 | % | $ | 1,239 | $ | 1,022 | 21 | % | |||||||||
| Income from Continuing Operations |
$ | 426 | $ | 355 | 20 | % | $ | 826 | $ | 679 | 22 | % | |||||||||
| Inc. (Loss) from Disc. Ops., Net of Tax* |
— | 980 | NM | (2 | ) | 1,002 | NM | ||||||||||||||
| Net Income |
$ | 426 | $ | 1,335 | NM | $ | 824 | $ | 1,681 | NM | |||||||||||
| Diluted EPS from Continuing Ops. |
$ | 1.00 | $ | 0.79 | 27 | % | $ | 1.92 | $ | 1.51 | 27 | % | |||||||||
| Diluted EPS |
$ | 1.00 | $ | 2.97 | NM | $ | 1.92 | $ | 3.73 | NM | |||||||||||
| Operating Cash Flow from Cont. Ops.** |
$ | 767 | $ | (30 | ) | $ | 834 | $ | (383 | ) | |||||||||||
| Workdays in Fiscal Reporting Calendar |
64 | 64 | 127 | 123 | |||||||||||||||||
| * | Includes after-tax net gain of $986 million on sale of Raytheon Aircraft Company (RAC) in Q2 ’07 |
| ** | Includes $316 million cash tax payment related to the completion of the RAC sale in Q2 ’07 |
NM – Not meaningful for comparison purposes due to the gain on sale of RAC in Q2 ’07
2
Bookings and Backlog
| Bookings | ||||||||||||
| 2nd Quarter | Six Months | |||||||||||
| (in millions) |
2008 | 2007 | 2008 | 2007 | ||||||||
| Total Bookings |
$ | 6,008 | $ | 4,832 | $ | 12,524 | $ | 9,990 | ||||
| Backlog | ||||||||||||
| Period Ending | ||||||||||||
| (in millions) |
06/29/08 | 12/31/07 | ||||||||||
| Backlog |
$ | 37,527 | $ | 36,614 | ||||||||
| Funded Backlog |
$ | 22,226 | $ | 20,518 | ||||||||
The Company reported total bookings for the second quarter 2008 of $6.0 billion compared to $4.8 billion in the second quarter 2007. The Company ended the second quarter 2008 with a backlog of $37.5 billion compared to $36.6 billion at the end of 2007 and $33.3 billion at the end of the second quarter 2007.
Outlook
| 2008 Financial Outlook | ||||
| Current | Prior* | |||
| Net Sales ($B) |
22.6 - 23.1 | 22.4 - 22.9 | ||
| FAS/CAS Pension Expense ($M) |
150 | 150 | ||
| Interest Expense, net ($M) |
40 - 55 | 45 - 60 | ||
| Diluted Shares (M) |
426 - 428 | 427 - 429 | ||
| EPS from Cont. Ops. |
$3.80 - $3.95 | $3.65 - $3.80 | ||
| Operating Cash Flow from Cont. Ops. ($B) |
2.2 - 2.4 | 2.0 - 2.2 | ||
| ROIC (%) |
9.9 - 10.4 | 9.6 - 10.1 |
| * | As of April 24, 2008 |
The Company has increased full-year 2008 guidance for net sales, earnings per share from continuing operations, operating cash flow from continuing operations and Return on Invested Capital (ROIC), and updated net interest expense and diluted shares. 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 ROIC, a non-GAAP financial measure.
3
Segment Results
Integrated Defense Systems
| 2nd Quarter | % Change |
Six Months | % Change |
|||||||||||||||||||
| ($ in millions) |
2008 | 2007 | 2008 | 2007 | ||||||||||||||||||
| Net Sales |
$ | 1,257 | $ | 1,166 | 8 | % | $ | 2,449 | $ | 2,258 | 8 | % | ||||||||||
| Operating Income |
$ | 209 | $ | 212 | -1 | % | $ | 420 | $ | 411 | 2 | % | ||||||||||
| Operating Margin |
16.6 | % | 18.2 | % | 17.1 | % | 18.2 | % | ||||||||||||||
Integrated Defense Systems (IDS) had second quarter 2008 net sales of $1,257 million, up 8 percent compared to $1,166 million in the second quarter 2007, primarily due to growth on U.S. Army programs. IDS recorded $209 million of operating income compared to $212 million in the second quarter 2007. The change in operating income was primarily due to program mix and favorable performance adjustments taken on certain programs in the second quarter 2007.
During the quarter, IDS booked $179 million for the upgrade and support of the Patriot system for Kuwait and South Korea. IDS also booked $143 million for the Rapid Aerostat Initial Deployment (RAID) program for the U.S. Army.
Intelligence and Information Systems
| 2nd Quarter | % Change |
Six Months | % Change |
|||||||||||||||||||
| ($ in millions) |
2008 | 2007 | 2008 | 2007 | ||||||||||||||||||
| Net Sales |
$ | 829 | $ | 666 | 24 | % | $ | 1,521 | $ | 1,254 | 21 | % | ||||||||||
| Operating Income |
$ | 67 | $ | 63 | 6 | % | $ | 119 | $ | 118 | 1 | % | ||||||||||
| Operating Margin |
8.1 | % | 9.5 | % | 7.8 | % | 9.4 | % | ||||||||||||||
Intelligence and Information Systems (IIS) had second quarter 2008 net sales of $829 million, up 24 percent compared to $666 million in the second quarter 2007, primarily due to the U.K. e-Borders program. IIS recorded $67 million of operating income compared to $63 million in the second quarter 2007. The increase in operating income was primarily due to higher volume, partially offset by certain acquisition costs and other investments in cyber operations and information security capabilities.
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During the quarter, IIS booked $497 million on a number of classified contracts, including $379 million on a major classified program.
Missile Systems
| 2nd Quarter | % Change |
Six Months | % Change |
|||||||||||||||||||
| ($ in millions) |
2008 | 2007 | 2008 | 2007 | ||||||||||||||||||
| Net Sales |
$ | 1,355 | $ | 1,244 | 9 | % | $ | 2,666 | $ | 2,384 | 12 | % | ||||||||||
| Operating Income |
$ | 156 | $ | 134 | 16 | % | $ | 293 | $ | 254 | 15 | % | ||||||||||
| Operating Margin |
11.5 | % | 10.8 | % | 11.0 | % | 10.7 | % | ||||||||||||||
Missile Systems (MS) had second quarter 2008 net sales of $1,355 million, up 9 percent compared to $1,244 million in the second quarter 2007, primarily due to higher volume on the Phalanx, PavewayTM, and Advanced Medium-Range Air-to-Air Missile (AMRAAM) programs. MS recorded $156 million of operating income compared to $134 million in the second quarter 2007. The increase in operating income was primarily due to higher volume and program performance.
During the quarter, MS booked $412 million for the production of AMRAAM for international customers and the U.S. Air Force. MS also booked $376 million for the production of Standard Missile-3 (SM-3) for the U.S. Navy and the Missile Defense Agency and $245 million for the production of Evolved Sea Sparrow Missiles (ESSM) for international customers and the U.S. Navy.
Network Centric Systems
| 2nd Quarter | % Change |
Six Months | % Change |
|||||||||||||||||||
| ($ in millions) |
2008 | 2007 | 2008 | 2007 | ||||||||||||||||||
| Net Sales |
$ | 1,173 | $ | 1,052 | 12 | % | $ | 2,240 | $ | 1,981 | 13 | % | ||||||||||
| Operating Income |
$ | 145 | $ | 139 | 4 | % | $ | 268 | $ | 256 | 5 | % | ||||||||||
| Operating Margin |
12.4 | % | 13.2 | % | 12.0 | % | 12.9 | % | ||||||||||||||
Network Centric Systems (NCS) had second quarter 2008 net sales of $1,173 million, up 12 percent compared to $1,052 million in the second quarter 2007, primarily due to increased volume on certain U.S. Army programs. NCS recorded $145 million of
5
operating income compared to $139 million in the second quarter 2007. The increase in operating income was primarily due to higher volume.
During the quarter, NCS booked $115 million for the Airborne, Maritime and Fixed Site (AMF) Joint Tactical Radio System (JTRS) program.
Space and Airborne Systems
| 2nd Quarter | % Change |
Six Months | % Change |
|||||||||||||||||||
| ($ in millions) |
2008 | 2007 | 2008 | 2007 | ||||||||||||||||||
| Net Sales |
$ | 1,096 | $ | 1,065 | 3 | % | $ | 2,091 | $ | 2,029 | 3 | % | ||||||||||
| Operating Income |
$ | 144 | $ | 133 | 8 | % | $ | 265 | $ | 262 | 1 | % | ||||||||||
| Operating Margin |
13.1 | % | 12.5 | % | 12.7 | % | 12.9 | % | ||||||||||||||
Space and Airborne Systems (SAS) had second quarter 2008 net sales of $1,096 million, up 3 percent compared to $1,065 million in the second quarter 2007. SAS recorded $144 million of operating income compared to $133 million in the second quarter 2007. The increase in operating income was primarily due to improved program performance.
SAS booked $325 million on a number of classified contracts.
Technical Services
| 2nd Quarter | % Change |
Six Months | % Change |
|||||||||||||||||||
| ($ in millions) |
2008 | 2007 | 2008 | 2007 | ||||||||||||||||||
| Net Sales |
$ | 647 | $ | 514 | 26 | % | $ | 1,168 | $ | 977 | 20 | % | ||||||||||
| Operating Income |
$ | 45 | $ | 32 | 41 | % | $ | 80 | $ | 55 | 45 | % | ||||||||||
| Operating Margin |
7.0 | % | 6.2 | % | 6.8 | % | 5.6 | % | ||||||||||||||
Technical Services (TS) had second quarter 2008 net sales of $647 million, up 26 percent compared to $514 million in the second quarter 2007, primarily due to training programs. TS recorded operating income of $45 million in the second quarter 2008 compared to $32 million in the second quarter 2007. The increase in operating income was primarily due to higher volume and improved program performance.
6
During the quarter, TS booked $309 million for work on the Warfighter Field Operations Customer Support (FOCUS) contract for the U.S. Army to provide live, virtual and constructive training services, bringing the year-to-date bookings on the program to $419 million.
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 86 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; risks associated with acquisitions, dispositions, joint ventures and other business arrangements; risks of an impairment of goodwill or other intangible assets; the outcome of contingencies and litigation matters, including government investigations; the ability to recruit and retain qualified personnel; the impact of potential security threats and other disruptions; 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, including any acquisitions, dispositions or other business arrangements that may be announced or closed after such date. 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.
7
Conference Call on the Second Quarter 2008 Financial Results
Raytheon’s financial results conference call will be held on Thursday, July 24, 2008 at 9 a.m. EDT. Participants will include William H. Swanson, Chairman and CEO, David C. Wajsgras, senior vice president and CFO, and other Company executives.
The dial-in number for the conference call will be (800) 901 – 5217. 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.
# # #
8
Attachment A
Raytheon Company
Preliminary Statement of Operations Information
Second Quarter 2008
| Three Months Ended | Six Months Ended | |||||||||||||||
| (In millions, except per share amounts) |
29-Jun-08 | 24-Jun-07 | 29-Jun-08 | 24-Jun-07 | ||||||||||||
| Net sales |
$ | 5,870 | $ | 5,278 | $ | 11,224 | $ | 10,082 | ||||||||
| Cost of sales |
4,670 | 4,194 | 8,929 | 8,050 | ||||||||||||
| Administrative and selling expenses |
396 | 357 | 776 | 687 | ||||||||||||
| Research and development expenses |
142 | 138 | 249 | 235 | ||||||||||||
| Total operating expenses |
5,208 | 4,689 | 9,954 | 8,972 | ||||||||||||
| Operating income |
662 | 589 | 1,270 | 1,110 | ||||||||||||
| Interest expense |
34 | 54 | 68 | 114 | ||||||||||||
| Interest income |
(17 | ) | (57 | ) | (40 | ) | (85 | ) | ||||||||
| Other (income) expense, net |
(2 | ) | 56 | 3 | 59 | |||||||||||
| Non-operating expense, net |
15 | 53 | 31 | 88 | ||||||||||||
| Income from continuing operations before taxes |
647 | 536 | 1,239 | 1,022 | ||||||||||||
| Federal and foreign income taxes |
221 | 181 | 413 | 343 | ||||||||||||
| Income from continuing operations |
426 | 355 | 826 | 679 | ||||||||||||
| Income (loss) from discontinued operations, net of tax |
— | (6 | ) | (2 | ) | 16 | ||||||||||
| Gain on sale of discontinued operation, net of tax |
— | 986 | — | 986 | ||||||||||||
| Income (loss) from discontinued operations, net of tax |
— | 980 | (2 | ) | 1,002 | |||||||||||
| Net income |
$ | 426 | $ | 1,335 | $ | 824 | $ | 1,681 | ||||||||
| Earnings per share from continuing operations |
||||||||||||||||
| Basic |
$ | 1.03 | $ | 0.81 | $ | 1.99 | $ | 1.55 | ||||||||
| Diluted |
$ | 1.00 | $ | 0.79 | $ | 1.92 | $ | 1.51 | ||||||||
| Earnings per share from discontinued operations |
||||||||||||||||
| Basic |
$ | — | $ | 2.24 | $ | — | $ | 2.28 | ||||||||
| Diluted |
$ | — | $ | 2.18 | $ | — | $ | 2.22 | ||||||||
| Earnings per share |
||||||||||||||||
| Basic |
$ | 1.03 | $ | 3.06 | $ | 1.98 | $ | 3.83 | ||||||||
| Diluted |
$ | 1.00 | $ | 2.97 | $ | 1.92 | $ | 3.73 | ||||||||
| Average shares outstanding |
||||||||||||||||
| Basic |
414.0 | 436.7 | 416.1 | 438.9 | ||||||||||||
| Diluted |
427.7 | 448.8 | 430.0 | 451.0 | ||||||||||||
Attachment B
Raytheon Company
Preliminary Segment Information
Second Quarter 2008
| Net Sales Three Months Ended |
Operating Income Three Months Ended |
Operating Income As a Percent of Sales Three Months Ended |
||||||||||||||||||||
| (In millions) |
29-Jun-08 | 24-Jun-07 | 29-Jun-08 | 24-Jun-07 | 29-Jun-08 | 24-Jun-07 | ||||||||||||||||
| Integrated Defense Systems |
$ | 1,257 | $ | 1,166 | $ | 209 | $ | 212 | 16.6 | % | 18.2 | % | ||||||||||
| Intelligence and Information Systems |
829 | 666 | 67 | 63 | 8.1 | % | 9.5 | % | ||||||||||||||
| Missile Systems |
1,355 | 1,244 | 156 | 134 | 11.5 | % | 10.8 | % | ||||||||||||||
| Network Centric Systems |
1,173 | 1,052 | 145 | 139 | 12.4 | % | 13.2 | % | ||||||||||||||
| Space and Airborne Systems |
1,096 | 1,065 | 144 | 133 | 13.1 | % | 12.5 | % | ||||||||||||||
| Technical Services |
647 | 514 | 45 | 32 | 7.0 | % | 6.2 | % | ||||||||||||||
| FAS/CAS Pension Adjustment |
— | — | (34 | ) | (63 | ) | ||||||||||||||||
| Corporate and Eliminations |
(487 | ) | (429 | ) | (70 | ) | (61 | ) | ||||||||||||||
| Total |
$ | 5,870 | $ | 5,278 | $ | 662 | $ | 589 | 11.3 | % | 11.2 | % | ||||||||||
| Net Sales Six Months Ended |
Operating Income Six Months Ended |
Operating Income As a Percent of Sales Six Months Ended |
||||||||||||||||||||
| 29-Jun-08 | 24-Jun-07 | 29-Jun-08 | 24-Jun-07 | 29-Jun-08 | 24-Jun-07 | |||||||||||||||||
| Integrated Defense Systems |
$ | 2,449 | $ | 2,258 | $ | 420 | $ | 411 | 17.1 | % | 18.2 | % | ||||||||||
| Intelligence and Information Systems |
1,521 | 1,254 | 119 | 118 | 7.8 | % | 9.4 | % | ||||||||||||||
| Missile Systems |
2,666 | 2,384 | 293 | 254 | 11.0 | % | 10.7 | % | ||||||||||||||
| Network Centric Systems |
2,240 | 1,981 | 268 | 256 | 12.0 | % | 12.9 | % | ||||||||||||||
| Space and Airborne Systems |
2,091 | 2,029 | 265 | 262 | 12.7 | % | 12.9 | % | ||||||||||||||
| Technical Services |
1,168 | 977 | 80 | 55 | 6.8 | % | 5.6 | % | ||||||||||||||
| FAS/CAS Pension Adjustment |
— | — | (67 | ) | (125 | ) | ||||||||||||||||
| Corporate and Eliminations |
(911 | ) | (801 | ) | (108 | ) | (121 | ) | ||||||||||||||
| Total |
$ | 11,224 | $ | 10,082 | $ | 1,270 | $ | 1,110 | 11.3 | % | 11.0 | % | ||||||||||
Attachment C
Raytheon Company
Other Preliminary Information
Second Quarter 2008
| Backlog | Funded Backlog | |||||||||||
| (In millions) |
29-Jun-08 | 31-Dec-07 | 29-Jun-08 | 31-Dec-07 | ||||||||
| Integrated Defense Systems |
$ | 8,882 | $ | 9,296 | $ | 5,044 | $ | 4,781 | ||||
| Intelligence and Information Systems |
5,756 | 5,636 | 2,554 | 2,325 | ||||||||
| Missile Systems |
10,250 | 9,379 | 5,873 | 5,218 | ||||||||
| Network Centric Systems |
5,479 | 5,102 | 4,244 | 3,957 | ||||||||
| Space and Airborne Systems |
5,102 | 5,276 | 3,301 | 3,037 | ||||||||
| Technical Services |
2,058 | 1,925 | 1,210 | 1,200 | ||||||||
| Total |
$ | 37,527 | $ | 36,614 | $ | 22,226 | $ | 20,518 | ||||
| Bookings Three Months Ended | ||||||
| 29-Jun-08 | 24-Jun-07 | |||||
| Total Bookings |
$ | 6,008 | $ | 4,832 | ||
Attachment D
Raytheon Company
Preliminary Balance Sheet Information
Second Quarter 2008
| (In millions) |
29-Jun-08 | 31-Dec-07 | ||||||
| Assets |
||||||||
| Cash and cash equivalents |
$ | 2,554 | $ | 2,655 | ||||
| Accounts receivable, net |
113 | 126 | ||||||
| Contracts in process |
4,366 | 3,821 | ||||||
| Inventories |
379 | 386 | ||||||
| Deferred taxes |
440 | 432 | ||||||
| Prepaid expenses and other current assets |
129 | 196 | ||||||
| Total current assets |
7,981 | 7,616 | ||||||
| Property, plant and equipment, net |
2,021 | 2,058 | ||||||
| Prepaid retiree benefits |
645 | 617 | ||||||
| Goodwill |
11,657 | 11,627 | ||||||
| Other assets, net |
1,293 | 1,363 | ||||||
| Total assets |
$ | 23,597 | $ | 23,281 | ||||
| Liabilities and Stockholders’ Equity |
||||||||
| Advance payments and billings in excess of costs incurred |
$ | 1,933 | $ | 1,845 | ||||
| Accounts payable |
1,128 | 1,141 | ||||||
| Accrued employee compensation |
846 | 902 | ||||||
| Other accrued expenses |
903 | 900 | ||||||
| Total current liabilities |
4,810 | 4,788 | ||||||
| Accrued retiree benefits and other long-term liabilities |
3,006 | 3,016 | ||||||
| Deferred taxes |
543 | 451 | ||||||
| Long-term debt |
2,269 | 2,268 | ||||||
| Minority interest |
233 | 216 | ||||||
| Stockholders’ equity |
||||||||
| Common stock |
4 | 4 | ||||||
| Additional paid-in capital |
10,788 | 10,544 | ||||||
| Accumulated other comprehensive loss |
(1,856 | ) | (1,956 | ) | ||||
| Treasury stock, at cost |
(3,225 | ) | (2,502 | ) | ||||
| Retained earnings |
7,025 | 6,452 | ||||||
| Total stockholders’ equity |
12,736 | 12,542 | ||||||
| Total liabilities and stockholders’ equity |
$ | 23,597 | $ | 23,281 | ||||
Attachment E
Raytheon Company
Preliminary Cash Flow Information
Second Quarter 2008
| Three Months Ended | Six Months Ended | |||||||||||||||
| (In millions) |
29-Jun-08 | 24-Jun-07 | 29-Jun-08 | 24-Jun-07 | ||||||||||||
| Net income |
$ | 426 | $ | 1,335 | $ | 824 | $ | 1,681 | ||||||||
| (Income) loss from discontinued operations, net of tax |
— | (980 | ) | 2 | (1,002 | ) | ||||||||||
| Income from continuing operations |
426 | 355 | 826 | 679 | ||||||||||||
| Depreciation |
73 | 73 | 142 | 140 | ||||||||||||
| Amortization |
24 | 21 | 47 | 40 | ||||||||||||
| Working capital (excluding pension and taxes)* |
318 | (39 | ) | (385 | ) | (692 | ) | |||||||||
| Discontinued operations |
(6 | ) | (20 | ) | (16 | ) | (83 | ) | ||||||||
| Net activity in financing receivables |
5 | 35 | 25 | 56 | ||||||||||||
| Other |
(79 | ) | (475 | ) | 179 | (606 | ) | |||||||||
| Net operating cash flow |
761 | (50 | ) | 818 | (466 | ) | ||||||||||
| Capital spending |
(56 | ) | (57 | ) | (99 | ) | (95 | ) | ||||||||
| Internal use software spending |
(13 | ) | (19 | ) | (30 | ) | (34 | ) | ||||||||
| Acquisitions |
(33 | ) | — | (34 | ) | — | ||||||||||
| Investment activity and divestitures |
9 | 3,117 | 9 | 3,117 | ||||||||||||
| Dividends |
(118 | ) | (113 | ) | (227 | ) | (220 | ) | ||||||||
| Repurchases of common stock |
(340 | ) | (526 | ) | (680 | ) | (801 | ) | ||||||||
| Debt repayments |
— | (1,041 | ) | — | (1,038 | ) | ||||||||||
| Discontinued operations |
— | — | — | (28 | ) | |||||||||||
| Other |
57 | 74 | 142 | 150 | ||||||||||||
| Total cash flow |
$ | 267 | $ | 1,385 | $ | (101 | ) | $ | 585 | |||||||
| * | Working capital (excluding pension and taxes) is a summation of changes in: accounts receivable, net, contracts in process and advance payments and billings in excess of costs incurred, inventories, prepaid expenses and other current assets, accounts payable, accrued employee compensation, and other accrued expenses from the Statements of Cash Flows. |
Attachment F
Raytheon Company
Preliminary Return on Invested Capital Non-GAAP Financial Measure
Second Quarter 2008
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 impact of Statement of Financial Accounting Standards No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans (SFAS No. 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 Current Guidance | 2008 Prior Guidance | |||||||||||||||
| (In millions) |
Low end of range |
High end of range |
Low end of range |
High end of range |
||||||||||||
| Income from continuing operations |
||||||||||||||||
| Net interest expense, after-tax* |
Combined | Combined | Combined | Combined | ||||||||||||
| Lease expense, after-tax* |
||||||||||||||||
| Return |
$ | 1,715 | $ | 1,780 | $ | 1,655 | $ | 1,720 | ||||||||
| Net debt ** |
||||||||||||||||
| Equity less investment in discontinued operations |
||||||||||||||||
| Lease expense x 8, plus financial guarantees |
Combined | Combined | Combined | Combined | ||||||||||||
| SFAS No. 158 impact |
||||||||||||||||
| Invested capital from continuing operations*** |
$ | 17,300 | $ | 17,100 | $ | 17,300 | $ | 17,100 | ||||||||
| ROIC |
9.9 | % | 10.4 | % | 9.6 | % | 10.1 | % | ||||||||
| * | Effective 2008 tax rate: 33.5% (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 |