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 23, 2009
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 July 23, 2009, Raytheon Company issued a press release announcing financial results for the fiscal quarter ended June 28, 2009. 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 23, 2009. |
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 23, 2009
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 23, 2009. |
Exhibit 99.1
FOR IMMEDIATE RELEASE
| Media Contact: | Investor Relations Contact: | |||
| Jon Kasle | Marc Kaplan | |||
| 781-522-5110 | 781-522-5141 |
Raytheon Reports Strong Second Quarter Results; Increases Full-Year Guidance
Highlights
| • | Earnings per share (EPS) from continuing operations of $1.24, up 25 percent |
| • | Income from continuing operations of $504 million, up 17 percent |
| • | Continued strong bookings of $7.6 billion; sales of $6.1 billion |
| • | Solid operating cash flow from continuing operations of $512 million |
| • | Increased full-year 2009 guidance for net sales, EPS, and return on invested capital (ROIC) |
WALTHAM, Mass., (July 23, 2009) – Raytheon Company (NYSE: RTN) reported second quarter 2009 income from continuing operations of $504 million, up 17 percent compared to $432 million in the second quarter 2008. EPS from continuing operations for the second quarter 2009 was $1.24, up 25 percent compared to $0.99 in the second quarter 2008.
“We are pleased with the Company’s continued, solid performance and strong financial position,” said William H. Swanson, Raytheon’s Chairman and CEO. “We are well positioned domestically and internationally on a broad base of programs which create long-term shareholder value.”
Net sales for the second quarter 2009 were $6.1 billion, up from $5.9 billion in the second quarter 2008.
1
Operating cash flow from continuing operations in the second quarter 2009 was $512 million compared to $767 million for the second quarter 2008, primarily due to the timing of $395 million of cash contributions made to the Company’s pension plans in the second quarter of 2009.
In the second quarter 2009 the Company repurchased 6.6 million shares of common stock for $300 million, as part of the Company’s previously announced share repurchase program. Year-to-date 2009, the Company repurchased 13.4 million shares of common stock for $600 million.
The Company ended the second quarter 2009 with $96 million of net debt. Net debt is defined as total debt less cash and cash equivalents.
| Summary Financial Results | 2nd Quarter | % | Six Months | % | ||||||||||||||||
| ($ in millions, except per share data) | 2009 | 2008 | Change | 2009 | 2008 | Change | ||||||||||||||
| Net sales |
$ | 6,125 | $ | 5,870 | 4 | % | $ | 12,009 | $ | 11,224 | 7 | % | ||||||||
| Total operating expenses |
5,360 | 5,202 | 10,532 | 9,947 | ||||||||||||||||
| Operating income |
765 | 668 | 15 | % | 1,477 | 1,277 | 16 | % | ||||||||||||
| Non-operating expenses, net |
15 | 15 | 48 | 31 | ||||||||||||||||
| Income from cont. ops. before taxes |
$ | 750 | $ | 653 | 15 | % | $ | 1,429 | $ | 1,246 | 15 | % | ||||||||
| Income from continuing operations |
$ | 504 | $ | 432 | 17 | % | $ | 961 | $ | 833 | 15 | % | ||||||||
| Income from continuing operations attributable to Raytheon Company |
$ | 492 | $ | 426 | 15 | % | $ | 941 | $ | 826 | 14 | % | ||||||||
| Net income attributable to Raytheon Company |
$ | 489 | $ | 426 | 15 | % | $ | 941 | $ | 824 | 14 | % | ||||||||
| Diluted EPS from cont. ops. |
$ | 1.24 | $ | 0.99 | 25 | % | $ | 2.35 | $ | 1.91 | 23 | % | ||||||||
| Operating cash flow from cont. ops. |
$ | 512 | $ | 767 | $ | 923 | $ | 834 | ||||||||||||
| FAS/CAS pension adj. Inc./(Exp.) |
$ | 11 | $ | (34 | ) | $ | 22 | $ | (67 | ) | ||||||||||
| Workdays in fiscal reporting calendar |
64 | 64 | 125 | 127 | ||||||||||||||||
2
Bookings and Backlog
| Bookings | 2nd Quarter | Six Months | ||||||||||
| ($ in millions) | 2009 | 2008 | 2009 | 2008 | ||||||||
| Total Bookings |
$ | 7,647 | $ | 6,008 | $ | 12,856 | $ | 12,524 | ||||
| Backlog | Period Ending | |||||||||||
| ($ in millions) | 06/28/09 | 12/31/08 | 06/29/08 | |||||||||
| Backlog |
$ | 37,312 | $ | 38,884 | $ | 37,527 | ||||||
| Funded Backlog |
$ | 23,881 | $ | 21,986 | $ | 22,226 | ||||||
The Company reported total bookings for the second quarter 2009 of $7.6 billion compared to $6.0 billion in the second quarter 2008. The Company ended the second quarter 2009 with a backlog of $37.3 billion compared to $38.9 billion at the end of 2008 and $37.5 billion at the end of the second quarter 2008. Due to a change in Missile Defense Agency priorities, on June 10, 2009 the Kinetic Energy Interceptor (KEI) program was terminated for convenience, resulting in a $2.4 billion reduction of the Company’s backlog at the end of the second quarter 2009. Bookings during the second quarter of 2009 largely offset the impact of the KEI program.
Outlook
| 2009 Financial Outlook | Current | Prior (4/23/09) | ||
| Net Sales ($B) |
24.5 - 25.0* | 24.4 - 24.9 | ||
| FAS/CAS Pension Income ($M) |
47 | 47 | ||
| Interest Inc./(Exp.), net ($M) |
(105) - (115) | (105) - (115) | ||
| Diluted Shares (M) |
398 - 401 | 398 - 401 | ||
| EPS from Continuing Operations |
$4.60 - $4.75* | $4.55 - $4.70 | ||
| Operating Cash Flow from Cont. Ops. ($B) |
2.2 - 2.4 | 2.2 - 2.4 | ||
| ROIC (%) |
11.2 - 11.7* | 11.1 - 11.6 |
| * | Denotes change from prior guidance. |
The Company has increased full-year 2009 guidance for net sales, earnings per share from continuing operations and return on invested capital (ROIC). Charts containing additional information on the Company’s 2009 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 | % | Six Months | % | |||||||||||||||||||
| ($ in millions) | 2009 | 2008 | Change | 2009 | 2008 | Change | ||||||||||||||||
| Net Sales |
$ | 1,335 | $ | 1,257 | 6 | % | $ | 2,597 | $ | 2,449 | 6 | % | ||||||||||
| Operating Income |
$ | 205 | $ | 209 | -2 | % | $ | 393 | $ | 420 | -6 | % | ||||||||||
| Operating Margin |
15.4 | % | 16.6 | % | 15.1 | % | 17.1 | % | ||||||||||||||
Integrated Defense Systems (IDS) had second quarter 2009 net sales of $1,335 million, up 6 percent compared to $1,257 million in the second quarter 2008, primarily due to growth on international Patriot programs. IDS recorded $205 million of operating income compared to $209 million in the second quarter 2008. As expected, the change in operating income was primarily due to contract mix, driven by the completion of certain programs in 2008.
During the quarter, IDS booked $877 million to provide advanced Patriot air and missile defense capability for several domestic and international customers, including the U.S. Army, the United Arab Emirates (UAE), Taiwan and Kuwait. IDS also booked $157 million to provide Finland with Surface Launched Medium Range Air-to-Air Missile (SL-AMRAAM) systems, $150 million for Joint Land Attack Cruise Missile Defense Elevated Netted Sensor Systems (JLENS) for the U.S. Army, and $142 million for two Volume Search Radar (VSR) arrays for the U.S. Navy, one for the Zumwalt-class destroyer program and one for the CVN 78 aircraft carrier.
4
Intelligence and Information Systems
| 2nd Quarter | % | Six Months | % | |||||||||||||||||||
| ($ in millions) | 2009 | 2008 | Change | 2009 | 2008 | Change | ||||||||||||||||
| Net Sales |
$ | 812 | $ | 829 | -2 | % | $ | 1,596 | $ | 1,521 | 5 | % | ||||||||||
| Operating Income |
$ | 66 | $ | 67 | -1 | % | $ | 127 | $ | 119 | 7 | % | ||||||||||
| Operating Margin |
8.1 | % | 8.1 | % | 8.0 | % | 7.8 | % | ||||||||||||||
Intelligence and Information Systems (IIS) had second quarter 2009 net sales of $812 million compared to $829 million in the second quarter 2008. As expected, the change in sales was primarily due to lower volume on the e-Borders program. IIS recorded $66 million of operating income compared to $67 million in the second quarter 2008.
During the quarter, IIS booked $342 million on a number of classified contracts.
Missile Systems
| 2nd Quarter | % | Six Months | % | |||||||||||||||||||
| ($ in millions) | 2009 | 2008 | Change | 2009 | 2008 | Change | ||||||||||||||||
| Net Sales |
$ | 1,384 | $ | 1,363 | 2 | % | $ | 2,752 | $ | 2,682 | 3 | % | ||||||||||
| Operating Income |
$ | 147 | $ | 158 | -7 | % | $ | 305 | $ | 297 | 3 | % | ||||||||||
| Operating Margin |
10.6 | % | 11.6 | % | 11.1 | % | 11.1 | % | ||||||||||||||
Missile Systems (MS) had second quarter 2009 net sales of $1,384 million compared to $1,363 million in the second quarter 2008. MS recorded $147 million of operating income compared to $158 million in the second quarter 2008, primarily due to higher award fees recognized in the second quarter 2008 as a result of a successful flight test milestone on Standard Missile-3.
During the quarter, MS booked $521 million for the production of Advanced Medium Range Air-to-Air Missiles (AMRAAM) for the U.S. Air Force and international customers and $260 million for Phalanx Weapon Systems for the U.S. Navy and U.S. Army. MS also booked $207 million for the production of Tactical Tomahawk cruise missiles and $167 million for AIM-9X short range air-to-air missiles for the U.S. Navy and international customers.
5
Network Centric Systems
| 2nd Quarter | % | Six Months | % | |||||||||||||||||||
| ($ in millions) | 2009 | 2008 | Change | 2009 | 2008 | Change | ||||||||||||||||
| Net Sales |
$ | 1,197 | $ | 1,173 | 2 | % | $ | 2,351 | $ | 2,240 | 5 | % | ||||||||||
| Operating Income |
$ | 170 | $ | 151 | 13 | % | $ | 333 | $ | 275 | 21 | % | ||||||||||
| Operating Margin |
14.2 | % | 12.9 | % | 14.2 | % | 12.3 | % | ||||||||||||||
Network Centric Systems (NCS) had second quarter 2009 net sales of $1,197 million compared to $1,173 million in the second quarter 2008. NCS recorded $170 million of operating income compared to $151 million in the second quarter 2008. The increase in operating income was primarily due to improved program performance.
During the quarter, NCS booked $82 million for the Global Positioning Satellite-Aided Geosynchronous Augmented Navigation (GAGAN) system for the India Space Research Organization (ISRO).
Space and Airborne Systems
| 2nd Quarter | % | Six Months | % | |||||||||||||||||||
| ($ in millions) | 2009 | 2008 | Change | 2009 | 2008 | Change | ||||||||||||||||
| Net Sales |
$ | 1,136 | $ | 1,072 | 6 | % | $ | 2,182 | $ | 2,049 | 6 | % | ||||||||||
| Operating Income |
$ | 175 | $ | 141 | 24 | % | $ | 314 | $ | 258 | 22 | % | ||||||||||
| Operating Margin |
15.4 | % | 13.2 | % | 14.4 | % | 12.6 | % | ||||||||||||||
Space and Airborne Systems (SAS) had second quarter 2009 net sales of $1,136 million, up 6 percent compared to $1,072 million in the second quarter 2008, primarily due to growth on international airborne tactical radar programs and classified business. SAS recorded $175 million of operating income compared to $141 million in the second quarter 2008. The increase in operating income was primarily due to higher volume, improved program performance and a favorable contractual settlement.
During the quarter, SAS booked $1,019 million on a number of space and airborne sensor contracts, including $110 million on the Integrated Sensor Is Structure (ISIS) radar program for the Defense Advanced Research Projects Agency (DARPA).
6
Technical Services
| 2nd Quarter | % | Six Months | % | |||||||||||||||||||
| ($ in millions) | 2009 | 2008 | Change | 2009 | 2008 | Change | ||||||||||||||||
| Net Sales |
$ | 780 | $ | 647 | 21 | % | $ | 1,476 | $ | 1,168 | 26 | % | ||||||||||
| Operating Income |
$ | 53 | $ | 45 | 18 | % | $ | 97 | $ | 80 | 21 | % | ||||||||||
| Operating Margin |
6.8 | % | 7.0 | % | 6.6 | % | 6.8 | % | ||||||||||||||
Technical Services (TS) had second quarter 2009 net sales of $780 million, up 21 percent compared to $647 million in the second quarter 2008, due to strong growth in training programs, primarily Warfighter Field Operations Customer Support (FOCUS) and Air Traffic Control Optimum Training Solution (ATCOTS). TS recorded $53 million of operating income compared to $45 million in the second quarter 2008. The increase in operating income was primarily due to higher volume.
During the quarter, TS booked $553 million for work on the Warfighter FOCUS contract for the U.S. Army, bringing the year-to-date bookings on the program to $731 million. TS also booked $160 million to upgrade Phalanx Weapon Systems for the Royal Canadian Navy and $100 million on a contract for the Defense Threat Reduction Agency (DTRA).
Raytheon Company (NYSE: RTN), with 2008 sales of $23.2 billion, is a technology and innovation leader specializing in defense, homeland security and other government markets throughout the world. With a history of innovation spanning 87 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 73,000 people worldwide.
7
Conference Call on the Second Quarter 2009 Financial Results
Raytheon’s financial results conference call will be held on Thursday, July 23, 2009 at 9:00 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 (866) 543-6405 in the U.S. or (617) 213-8897 outside of the U.S. 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
Disclosure Regarding Forward-looking Statements
This release and the attachments contain forward-looking statements, including information regarding the Company’s 2009 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, the Foreign Corrupt Practices Act, the International Traffic in Arms Regulations, and procurement and other regulations; the impact of competition; the ability to develop products and technologies; the impact of the current downturn in the financial markets; the risk that actual pension returns are significantly different than the Company’s assumptions; 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.
# # #
9
Attachment A
Raytheon Company
Preliminary Statement of Operations Information
Second Quarter 2009
| (In millions, except per share amounts) | Three Months Ended | Six Months Ended | ||||||||||||||
| 28-Jun-09 | 29-Jun-08 | 28-Jun-09 | 29-Jun-08 | |||||||||||||
| Net sales |
$ | 6,125 | $ | 5,870 | $ | 12,009 | $ | 11,224 | ||||||||
| Operating expenses |
||||||||||||||||
| Cost of sales |
4,839 | 4,664 | 9,536 | 8,922 | ||||||||||||
| Administrative and selling expenses |
370 | 396 | 734 | 776 | ||||||||||||
| Research and development expenses |
151 | 142 | 262 | 249 | ||||||||||||
| Total operating expenses |
5,360 | 5,202 | 10,532 | 9,947 | ||||||||||||
| Operating income |
765 | 668 | 1,477 | 1,277 | ||||||||||||
| Interest expense |
31 | 34 | 63 | 68 | ||||||||||||
| Interest income |
(3 | ) | (17 | ) | (7 | ) | (40 | ) | ||||||||
| Other (income) expense, net |
(13 | ) | (2 | ) | (8 | ) | 3 | |||||||||
| Non-operating expense, net |
15 | 15 | 48 | 31 | ||||||||||||
| Income from continuing operations before taxes |
750 | 653 | 1,429 | 1,246 | ||||||||||||
| Federal and foreign income taxes |
246 | 221 | 468 | 413 | ||||||||||||
| Income from continuing operations |
504 | 432 | 961 | 833 | ||||||||||||
| (Loss) income from discontinued operations, net of tax |
(3 | ) | — | — | (2 | ) | ||||||||||
| Net income |
501 | 432 | 961 | 831 | ||||||||||||
| Less: Net income attributable to noncontrolling interests |
12 | 6 | 20 | 7 | ||||||||||||
| Net income attributable to Raytheon Company |
$ | 489 | $ | 426 | $ | 941 | $ | 824 | ||||||||
| Basic earnings (loss) per share attributable to Raytheon Company common stockholders: |
||||||||||||||||
| Income from continuing operations |
$ | 1.25 | $ | 1.02 | $ | 2.38 | $ | 1.96 | ||||||||
| (Loss) income from discontinued operations |
(0.01 | ) | — | — | — | |||||||||||
| Net income |
1.24 | 1.02 | 2.38 | 1.95 | ||||||||||||
| Diluted earnings (loss) per share attributable to Raytheon Company common stockholders: |
||||||||||||||||
| Income from continuing operations |
$ | 1.24 | $ | 0.99 | $ | 2.35 | $ | 1.91 | ||||||||
| (Loss) income from discontinued operations |
(0.01 | ) | — | — | — | |||||||||||
| Net income |
1.23 | 0.99 | 2.35 | 1.91 | ||||||||||||
| Amounts attributable to Raytheon Company common stockholders: |
||||||||||||||||
| Income from continuing operations |
$ | 492 | $ | 426 | $ | 941 | $ | 826 | ||||||||
| (Loss) income from discontinued operations, net of tax |
(3 | ) | — | — | (2 | ) | ||||||||||
| Net income |
$ | 489 | $ | 426 | $ | 941 | $ | 824 | ||||||||
| Average shares outstanding |
||||||||||||||||
| Basic |
392.5 | 419.7 | 395.7 | 421.8 | ||||||||||||
| Diluted |
397.3 | 430.0 | 400.6 | 432.3 | ||||||||||||
Attachment B
Raytheon Company
Preliminary Segment Information
Second Quarter 2009
| (In millions, except percentages) | Net Sales Three Months Ended |
Operating Income Three Months Ended |
Operating Income As a Percent of Sales Three Months Ended |
|||||||||||||||||||
| 28-Jun-09 | 29-Jun-08 | 28-Jun-09 | 29-Jun-08 | 28-Jun-09 | 29-Jun-08 | |||||||||||||||||
| Integrated Defense Systems |
$ | 1,335 | $ | 1,257 | $ | 205 | $ | 209 | 15.4 | % | 16.6 | % | ||||||||||
| Intelligence and Information Systems |
812 | 829 | 66 | 67 | 8.1 | % | 8.1 | % | ||||||||||||||
| Missile Systems |
1,384 | 1,363 | 147 | 158 | 10.6 | % | 11.6 | % | ||||||||||||||
| Network Centric Systems |
1,197 | 1,173 | 170 | 151 | 14.2 | % | 12.9 | % | ||||||||||||||
| Space and Airborne Systems |
1,136 | 1,072 | 175 | 141 | 15.4 | % | 13.2 | % | ||||||||||||||
| Technical Services |
780 | 647 | 53 | 45 | 6.8 | % | 7.0 | % | ||||||||||||||
| FAS/CAS Pension Adjustment |
— | — | 11 | (34 | ) | |||||||||||||||||
| Corporate and Eliminations |
(519 | ) | (471 | ) | (62 | ) | (69 | ) | ||||||||||||||
| Total |
$ | 6,125 | $ | 5,870 | $ | 765 | $ | 668 | 12.5 | % | 11.4 | % | ||||||||||
| (In millions, except percentages) | Net Sales Six Months Ended |
Operating Income Six Months Ended |
Operating Income As a Percent of Sales Six Months Ended |
|||||||||||||||||||
| 28-Jun-09 | 29-Jun-08 | 28-Jun-09 | 29-Jun-08 | 28-Jun-09 | 29-Jun-08 | |||||||||||||||||
| Integrated Defense Systems |
$ | 2,597 | $ | 2,449 | $ | 393 | $ | 420 | 15.1 | % | 17.1 | % | ||||||||||
| Intelligence and Information Systems |
1,596 | 1,521 | 127 | 119 | 8.0 | % | 7.8 | % | ||||||||||||||
| Missile Systems |
2,752 | 2,682 | 305 | 297 | 11.1 | % | 11.1 | % | ||||||||||||||
| Network Centric Systems |
2,351 | 2,240 | 333 | 275 | 14.2 | % | 12.3 | % | ||||||||||||||
| Space and Airborne Systems |
2,182 | 2,049 | 314 | 258 | 14.4 | % | 12.6 | % | ||||||||||||||
| Technical Services |
1,476 | 1,168 | 97 | 80 | 6.6 | % | 6.8 | % | ||||||||||||||
| FAS/CAS Pension Adjustment |
— | — | 22 | (67 | ) | |||||||||||||||||
| Corporate and Eliminations |
(945 | ) | (885 | ) | (114 | ) | (105 | ) | ||||||||||||||
| Total |
$ | 12,009 | $ | 11,224 | $ | 1,477 | $ | 1,277 | 12.3 | % | 11.4 | % | ||||||||||
Attachment C
Raytheon Company
Other Preliminary Information
Second Quarter 2009
| (In millions) | Funded Backlog | Total Backlog | ||||||||||
| 28-Jun-09 | 31-Dec-08 | 28-Jun-09 | 31-Dec-08 | |||||||||
| Integrated Defense Systems |
$ | 5,776 | $ | 4,802 | $ | 10,342 | $ | 9,883 | ||||
| Intelligence and Information Systems |
1,843 | 1,890 | 4,678 | 5,137 | ||||||||
| Missile Systems* |
6,288 | 6,082 | 7,644 | 9,937 | ||||||||
| Network Centric Systems |
4,504 | 4,593 | 5,558 | 5,733 | ||||||||
| Space and Airborne Systems |
3,585 | 2,731 | 6,153 | 5,442 | ||||||||
| Technical Services |
1,885 | 1,888 | 2,937 | 2,752 | ||||||||
| Total |
$ | 23,881 | $ | 21,986 | $ | 37,312 | $ | 38,884 | ||||
| Bookings Three Months Ended |
||||||||||||
| 28-Jun-09 | 29-Jun-08 | |||||||||||
| Total Bookings |
$ | 7,647 | $ | 6,008 | ||||||||
| * | In the second quarter of 2009, Kinetic Energy Interceptor (KEI), a developmental program with the Missile Defense Agency (MDA), was terminated for convenience, which resulted in a backlog adjustment of approximately $2.4 billion at Missile Systems. The program was cancelled by the MDA due to a change in missile defense priorities. We expect that the change in focus to “early intercept” will lead to additional opportunities for a number of our products and technologies, including Standard Missile-3. Total backlog for Missile Systems and the total Company at December 31, 2008 above are presented unadjusted. For comparability, total backlog for Missile Systems and the total Company without KEI would have been $7,572 million and $36,519 million, respectively, at December 31, 2008. |
Attachment D
Raytheon Company
Preliminary Balance Sheet Information
Second Quarter 2009
| (In millions) | 28-Jun-09 | 31-Dec-08 | ||||||
| Assets |
||||||||
| Cash and cash equivalents |
$ | 2,199 | $ | 2,259 | ||||
| Accounts receivable, net |
115 | 105 | ||||||
| Contracts in process |
4,493 | 3,793 | ||||||
| Inventories |
294 | 325 | ||||||
| Current tax asset |
13 | 441 | ||||||
| Deferred taxes |
387 | 395 | ||||||
| Prepaid expenses and other current assets |
93 | 99 | ||||||
| Total current assets |
7,594 | 7,417 | ||||||
| Property, plant and equipment, net |
1,961 | 2,024 | ||||||
| Deferred taxes |
572 | 735 | ||||||
| Prepaid retiree benefits |
72 | 56 | ||||||
| Goodwill |
11,665 | 11,662 | ||||||
| Other assets, net |
1,186 | 1,240 | ||||||
| Total assets |
$ | 23,050 | $ | 23,134 | ||||
| Liabilities and Equity |
||||||||
| Current liabilities |
||||||||
| Advance payments and billings in excess of costs incurred |
$ | 1,968 | $ | 1,970 | ||||
| Accounts payable |
1,189 | 1,201 | ||||||
| Accrued employee compensation |
912 | 913 | ||||||
| Other accrued expenses |
1,016 | 1,065 | ||||||
| Total current liabilities |
5,085 | 5,149 | ||||||
| Accrued retiree benefits and other long-term liabilities |
6,131 | 6,488 | ||||||
| Long-term debt |
2,295 | 2,309 | ||||||
| Equity |
||||||||
| Raytheon Company stockholders’ equity |
||||||||
| Common stock |
4 | 4 | ||||||
| Additional paid-in capital |
10,899 | 10,873 | ||||||
| Accumulated other comprehensive loss |
(4,962 | ) | (5,182 | ) | ||||
| Treasury stock, at cost |
(4,844 | ) | (4,254 | ) | ||||
| Retained earnings |
8,344 | 7,646 | ||||||
| Total Raytheon Company stockholders’ equity |
9,441 | 9,087 | ||||||
| Noncontrolling interest in subsidiaries |
98 | 101 | ||||||
| Total equity |
9,539 | 9,188 | ||||||
| Total liabilities and equity |
$ | 23,050 | $ | 23,134 | ||||
Attachment E
Raytheon Company
Preliminary Cash Flow Information
Second Quarter 2009
| (In millions) | Three Months Ended | Six Months Ended | ||||||||||||||
| 28-Jun-09 | 29-Jun-08 | 28-Jun-09 | 29-Jun-08 | |||||||||||||
| Net income |
$ | 501 | $ | 432 | $ | 961 | $ | 831 | ||||||||
| Loss (income) from discontinued operations, net of tax |
3 | — | — | 2 | ||||||||||||
| Income from continuing operations |
504 | 432 | 961 | 833 | ||||||||||||
| Depreciation |
73 | 73 | 144 | 142 | ||||||||||||
| Amortization |
24 | 24 | 50 | 47 | ||||||||||||
| Income attributable to noncontrolling interests |
(12 | ) | (6 | ) | (20 | ) | (7 | ) | ||||||||
| Working capital (excluding pension and taxes)* |
313 | 318 | (625 | ) | (385 | ) | ||||||||||
| Discontinued operations |
(3 | ) | (6 | ) | (9 | ) | (16 | ) | ||||||||
| Net activity in financing receivables |
6 | 5 | 15 | 25 | ||||||||||||
| Other |
(396 | ) | (79 | ) | 398 | 179 | ||||||||||
| Net operating cash flow |
509 | 761 | 914 | 818 | ||||||||||||
| Capital spending |
(48 | ) | (56 | ) | (81 | ) | (99 | ) | ||||||||
| Internal use software spending |
(21 | ) | (13 | ) | (34 | ) | (30 | ) | ||||||||
| Acquisitions |
— | (33 | ) | — | (34 | ) | ||||||||||
| Investment activity and divestitures |
— | 9 | — | 9 | ||||||||||||
| Dividends |
(122 | ) | (118 | ) | (234 | ) | (227 | ) | ||||||||
| Repurchases of common stock |
(300 | ) | (340 | ) | (600 | ) | (680 | ) | ||||||||
| Other |
(29 | ) | 57 | (25 | ) | 142 | ||||||||||
| Total cash flow |
$ | (11 | ) | $ | 267 | $ | (60 | ) | $ | (101 | ) | |||||
| * | 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 2009
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
| (In millions, except percentages) | 2009 Current Guidance | |||||||
| Low end of range |
High end of range |
|||||||
| Income from continuing operations |
||||||||
| Net interest expense, after-tax* |
Combined | Combined | ||||||
| Lease expense, after-tax* |
||||||||
| Return |
$ | 1,990 | $ | 2,050 | ||||
| Net debt ** |
||||||||
| Equity less investment in discontinued operations |
||||||||
| Lease expense x 8, plus financial guarantees |
Combined | Combined | ||||||
| SFAS No. 158 impact |
||||||||
| Invested capital from continuing operations*** |
$ | 17,700 | $ | 17,500 | ||||
| ROIC |
11.2 | % | 11.7 | % | ||||
| * | Effective 2009 tax rate: Approximately 33% (2009 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 |