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Raytheon Reports Strong Third Quarter 2018 Results

- Strong bookings of $8.7 billion; book-to-bill ratio of 1.28

- Net sales of $6.8 billion, up 8.3 percent

- EPS from continuing operations of $2.25, up 14.2 percent

- Updated full-year 2018 guidance

WALTHAM, Mass., Oct. 25, 2018 /PRNewswire/ -- Raytheon Company (NYSE: RTN) today announced net sales for the third quarter 2018 of $6.8 billion, up 8.3 percent compared to $6.3 billion in the third quarter 2017. Third quarter 2018 EPS from continuing operations was $2.25 compared to $1.97 in the third quarter 2017. The increase in the third quarter 2018 EPS from continuing operations was primarily driven by operational improvements, and lower taxes primarily associated with tax reform. This was partially offset by the previously disclosed non-operating expense associated with the pension plan annuity transaction, which had an unfavorable $0.80 per share impact.

"I'm pleased with the company's operating performance in the third quarter. We delivered bookings, sales, EPS and cash flow ahead of our expectations," said Thomas A. Kennedy, Raytheon Chairman and CEO. "Strong domestic and international bookings throughout the year drove record backlog and positions us well for continued growth in 2019."

Operating cash flow from continuing operations for the third quarter 2018 was an outflow of $444 million compared to an inflow of $382 million for the third quarter 2017. The decrease in operating cash flow from continuing operations in the third quarter 2018 was primarily due to the previously disclosed $1.25 billion pretax discretionary pension contribution, partially offset by lower net cash taxes.

In the third quarter 2018, the company repurchased 0.6 million shares of common stock for $125 million. Year-to-date 2018, the company repurchased 4.5 million shares of common stock for $925 million.

The company had bookings of $8.7 billion in the third quarter 2018, resulting in a book-to-bill ratio of 1.28. Third quarter 2017 bookings were $7.0 billion.

Summary Financial Results

                       
 

3rd Quarter

 

%

 

Nine Months

 

%

 

($ in millions, except per share data)

2018

 

2017

 

Change

 

2018

 

2017

 

Change

 

Bookings

$

8,710

 

$

6,957

 

25.2%

 

$

23,715

 

$

19,177

 

23.7%

 

Net Sales

$

6,806

 

$

6,284

 

8.3%

 

$

19,698

 

$

18,565

 

6.1%

 

Income from Continuing Operations attributable to

                               

   Raytheon Company1

$

644

 

$

573

 

12.4%

 

$

2,077

 

$

1,629

 

27.5%

 

EPS from Continuing Operations1

$

2.25

 

$

1.97

 

14.2%

 

$

7.23

 

$

5.59

 

29.3%

 

Operating Cash Flow from Continuing Operations2

$

(444)

 

$

382

     

$

995

 

$

1,123

     

Workdays in Fiscal Reporting Calendar

63

 

62

     

191

 

190

     

1 As previously disclosed, in the third quarter 2018, some of the company's pension plans purchased a group annuity contract to transfer $923 million of outstanding pension benefit obligations related to certain U.S. retirees and beneficiaries of the company's previously discontinued operations. In connection with this transaction, the company recognized a non-cash, non-operating pension settlement charge of $288 million pretax, $228 million after tax, primarily related to the accelerated recognition of actuarial losses in those plans. Third quarter and nine months 2018 EPS from Continuing Operations included an unfavorable $0.80 and $0.79 impact, respectively, related to the settlement charge.

 

2 As previously disclosed, the company made a $1.25 billion pretax discretionary pension plan contribution in the third quarter 2018.

 
                                         

Backlog at the end of the third quarter 2018 was a record $41.6 billion, an increase of $4.9 billion or 13.4 percent compared to the end of the third quarter 2017.

Backlog

                                                                     
                                                             

Period Ending

($ in millions)

                                                           

Q3 2018

 

Q3 2017

 

2017

Backlog

                                                           

$

41,599

 

$

36,676

 

$

38,210

                                                                                   

Outlook

The company has updated its financial outlook for 2018. Charts containing additional information on the company's 2018 outlook are available on the company's website.

2018 Financial Outlook

       
 

Current

 

Prior (7/26/18)

 

Net Sales ($B)

27.0 - 27.3*

 

26.7 - 27.2

 

Deferred Revenue Adjustment ($M)

(10)

 

(10)

 

Amortization of Acquired Intangibles ($M)

(118)

 

(118)

 

FAS/CAS Operating Adjustment ($M)1

1,430*

 

1,416

 

Retirement Benefits Non-service Expense, non-operating ($M)2

(1,232)*

 

(1,246)

 

Interest Expense, net ($M)

 (165) - (170)*

 

 (180) - (185)

 

Diluted Shares (M)

~287

 

~287

 

Effective Tax Rate

 ~10.5%

 

 ~10.5%

 

EPS from Continuing Operations

$10.01 - $10.11*

 

$9.77 - $9.97

 

Operating Cash Flow from Continuing Operations ($B)

 2.6 - 3.0

 

 2.6 - 3.0

 

*Denotes change from prior guidance

       

1The full-year 2018 FAS/CAS Operating Adjustment had a $14 million ($0.04 per share) favorable adjustment, of which approximately $11 million ($0.03 per share) was recorded in the third quarter 2018 and approximately $3 million ($0.01 per share) is expected to be recorded in the fourth quarter 2018. This is due to the update in the third quarter 2018 of the actuarial estimates for pension and other postretirement benefit plans.

 

2The full-year 2018 Retirement Benefits Non-service Expense had a $14 million ($0.04 per share) favorable adjustment, all of which was recorded in the third quarter 2018. This is due to the update in the third quarter 2018 of the actuarial estimates for pension and other postretirement benefit plans.

 

Segment Results

The company's reportable segments are: Integrated Defense Systems (IDS); Intelligence, Information and Services (IIS); Missile Systems (MS); Space and Airborne Systems (SAS); and Forcepoint™.

Integrated Defense Systems

       

3rd Quarter

     

Nine Months

     

($ in millions)

     

2018

 

2017

 

% Change

 

2018

 

2017

 

% Change

 

Net Sales

     

$

1,493

 

$

1,391

 

7%

 

$

4,496

 

$

4,251

 

6%

 

Operating Income

     

$

241

 

$

231

 

4%

 

$

776

 

$

688

 

13%

 

Operating Margin

     

16.1%

 

16.6%

     

17.3%

 

16.2%

     

Integrated Defense Systems (IDS) had third quarter 2018 net sales of $1,493 million, up 7 percent compared to $1,391 million in the third quarter 2017. The increase in net sales for the quarter was primarily driven by higher net sales from an international Patriot® program awarded in the first quarter 2018.

IDS recorded $241 million of operating income in the third quarter 2018 compared to $231 million in the third quarter 2017. The increase in operating income for the quarter was primarily driven by a favorable change in program mix and higher volume, partially offset by lower net program efficiencies.

During the quarter, IDS booked $1.3 billion to provide advanced Patriot air and missile defense capabilities for Poland. IDS also booked $191 million for the Forward Expeditionary Advanced Vehicle Radar (FEAVR) program for the U.S. Army and $75 million for a lightweight torpedo program for the U.S. Navy and international customers.

Intelligence, Information and Services

                       
       

3rd Quarter

     

Nine Months

     

($ in millions)

     

2018

 

2017

 

% Change

 

2018

 

2017

 

% Change

 

Net Sales

     

$

1,742

 

$

1,543

 

13%

 

$

5,011

 

$

4,605

 

9%

 

Operating Income

     

$

149

 

$

112

 

33%

 

$

394

 

$

338

 

17%

 

Operating Margin

     

8.6%

 

7.3%

     

7.9%

 

7.3%

     

Intelligence, Information and Services (IIS) had third quarter 2018 net sales of $1,742 million, up 13 percent compared to $1,543 million in the third quarter 2017. The increase in net sales for the quarter was primarily driven by higher net sales on classified programs in both the cyber and space business areas, the Development, Operations and Maintenance (DOMino) cyber program, and the Warfighter FOCUS program.

IIS recorded $149 million of operating income in the third quarter 2018 compared to $112 million in the third quarter 2017. The increase in operating income for the quarter was primarily driven by higher net program efficiencies and higher volume.

During the quarter, IIS booked $787 million on a number of classified contracts. IIS also booked $299 million on domestic and foreign training programs in support of Warfighter FOCUS activities; $108 million to provide intelligence, surveillance and reconnaissance (ISR) support to the U.S. Air Force; and $99 million on the Air and Space Operations Center Weapon System (AOC WS) program for the U.S. Air Force.

Missile Systems

                       
       

3rd Quarter

     

Nine Months

     

($ in millions)

     

2018

 

2017

 

% Change

 

2018

 

2017

 

% Change

 

Net Sales

     

$

2,082

 

$

1,945

 

7%

 

$

5,981

 

$

5,602

 

7%

 

Operating Income

     

$

257

 

$

280

 

(8)%

 

$

700

 

$

732

 

(4)%

 

Operating Margin

     

12.3%

 

14.4%

     

11.7%

 

13.1%

     

Missile Systems (MS) had third quarter 2018 net sales of $2,082 million, up 7 percent compared to $1,945 million in the third quarter 2017. The increase in net sales for the quarter was primarily driven by higher net sales on classified programs.

MS recorded $257 million of operating income in the third quarter 2018 compared to $280 million in the third quarter 2017. The decrease in operating income for the quarter was primarily due to lower net program efficiencies, partially offset by higher volume.

During the quarter, MS booked $499 million for Phalanx® Close-In Defense Systems (CIDS); $424 million for Standard Missile-6 (SM-6®); $115 million for Javelin; $113 million on the High-speed Unmanned Long-range Kinetic-kill (HULK) program; $89 million for Paveway™; $84 million for Horizontal Technology Integration (HTI) forward looking infrared kits; and $84 million for Rolling Airframe Missile (RAM™). MS also booked $155 million on a number of classified contracts.

Space and Airborne Systems

                       
       

3rd Quarter

     

Nine Months

     

($ in millions)

     

2018

 

2017

 

% Change

 

2018

 

2017

 

% Change

 

Net Sales

     

$

1,695

 

$

1,597

 

6%

 

$

4,868

 

$

4,760

 

2%

 

Operating Income

     

$

223

 

$

212

 

5%

 

$

622

 

$

620

 

-

 

Operating Margin

     

13.2%

 

13.3%

     

12.8%

 

13.0%

     

Space and Airborne Systems (SAS) had third quarter 2018 net sales of $1,695 million, up 6 percent compared to $1,597 million in the third quarter 2017. The increase in net sales for the quarter was driven by higher net sales on surveillance and targeting systems programs.

SAS recorded $223 million of operating income in the third quarter 2018 compared to $212 million in the third quarter 2017. The increase in operating income for the quarter was primarily due to higher volume.

During the quarter, SAS booked $282 million on the Multi-Spectral Targeting System (MTS) for the U.S. Air Force; $136 million on the Next Generation Jammer (NGJ) program for the U.S. Navy; $103 million for Active Electronically Scanned Array (AESA) radars for the U.S. Air Force; and $92 million for radar components for the U.S. Navy. SAS also booked $374 million on a number of classified contracts.

Forcepoint

                             
         

3rd Quarter

     

Nine Months

     

($ in millions)

       

2018

 

2017

 

% Change

 

2018

 

2017

 

% Change

 

Net Sales

       

$

173

 

$

170

 

2%

 

$

462

 

$

452

 

2%

 

Operating Income

       

$

18

 

$

23

 

(22)%

 

$

3

 

$

41

 

(93)%

 

Operating Margin

       

10.4%

 

13.5%

     

0.6%

 

9.1%

     

Forcepoint had third quarter 2018 net sales of $173 million, up 2 percent compared to $170 million in the third quarter 2017.

Forcepoint recorded $18 million of operating income in the third quarter 2018 compared to $23 million in the third quarter 2017. As expected, the decrease in operating income for the quarter was primarily driven by higher operating costs.

About Raytheon
Raytheon Company, with 2017 sales of $25 billion and 64,000 employees, is a technology and innovation leader specializing in defense, civil government and cybersecurity solutions. With a history of innovation spanning 96 years, Raytheon provides state-of-the-art electronics, mission systems integration, C5I™ products and services, sensing, effects, and mission support for customers in more than 80 countries. Raytheon is headquartered in Waltham, Massachusetts. Follow us on Twitter.

Conference Call on the Third Quarter 2018 Financial Results
Raytheon's financial results conference call will be held on Thursday, October 25, 2018 at 9 a.m. ET. Participants will include Thomas A. Kennedy, Chairman and CEO; Anthony F. O'Brien, vice president and CFO; and other company executives.

The dial-in number for the conference call will be (866) 588-8312 in the U.S. or (409) 220-9941 outside of the U.S. The conference call will also be audiocast on the Internet at www.raytheon.com/ir. 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.

Disclosure Regarding Forward-looking Statements
This release and the attachments contain forward-looking statements, including information regarding the company's 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 due to budgetary constraints, spending cuts resulting from sequestration, a government shutdown, or otherwise, uncertain funding of programs, potential termination of contracts and performance under undefinitized contract awards; difficulties in contract performance; the resolution of program terminations; the ability to procure new contracts; the risks of conducting business in foreign countries; the unpredictability of timing of international bookings; the ability to comply with extensive governmental regulation, including export and import requirements such as the International Traffic in Arms Regulations and the Export Administration Regulations, anti-bribery and anti-corruption requirements including the Foreign Corrupt Practices Act, industrial cooperation agreement obligations, and procurement and other regulations; the ability to obtain timely U.S. government approvals for international contracts; changes in government procurement practices; the impact of competition; the ability to develop products and technologies, and the impact of associated investments and costs; the ability to recruit and retain qualified personnel; the impact of potential security and cyber threats, and other disruptions; the risk that actual pension returns, discount rates or other actuarial assumptions, including the long-term return on asset assumption, are significantly different than the company's current assumptions; the risk of cost overruns, particularly for the company's fixed-price contracts; dependence on component availability, subcontractor and partner performance and key suppliers; risks of a negative government audit; risks associated with acquisitions, investments, dispositions, joint ventures and other business arrangements; the ability to grow in the government and commercial cybersecurity markets; risks of an impairment of goodwill or other intangible assets; the impact of financial markets and global economic conditions; the use of accounting estimates in the company's financial statements, including with respect to the provisional impact of the Tax Cuts and Jobs Act of 2017; the outcome of contingencies and litigation matters, including government investigations; the risk of environmental liabilities; 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.

 

 

 

Attachment A
Raytheon Company
Preliminary Statement of Operations Information

Third Quarter 2018
(In millions, except per share amounts)

 
                   
   

Three Months Ended

 

Nine Months Ended

 
   

30-Sep-18

 

1-Oct-17

 

30-Sep-18

 

1-Oct-17

 
                   

Net sales

 

$

6,806

   

$

6,284

   

$

19,698

   

$

18,565

   

Operating expenses

                 

Cost of sales

 

4,871

   

4,468

   

14,180

   

13,355

   

General and administrative expenses

 

752

   

688

   

2,194

   

2,079

   

Total operating expenses

 

5,623

   

5,156

   

16,374

   

15,434

   

Operating income

 

1,183

   

1,128

   

3,324

   

3,131

   

Non-operating (income) expense, net

                 

Retirement benefits non-service expense

 

516

   

270

   

993

   

683

   

Interest expense

 

45

   

48

   

138

   

157

   

Interest income

 

(6)

   

(4)

   

(21)

   

(14)

   

Other (income) expense, net

 

(8)

   

(2)

   

(6)

   

26

   

Total non-operating (income) expense, net

 

547

   

312

   

1,104

   

852

   

Income from continuing operations before taxes

 

636

   

816

   

2,220

   

2,279

   

Federal and foreign income taxes

 

(5)

   

248

   

165

   

667

   

Income from continuing operations

 

641

   

568

   

2,055

   

1,612

   

Income (loss) from discontinued operations, net of tax

 

   

(1)

   

   

2

   

Net income

 

641

   

567

   

2,055

   

1,614

   

Less: Net income (loss) attributable to noncontrolling interests

                         

   in subsidiaries

 

(3)

   

(5)

   

(22)

   

(17)

   

Net income attributable to Raytheon Company

 

$

644

   

$

572

   

$

2,077

   

$

1,631

   
                   

Basic earnings per share attributable to Raytheon Company

                 

   common stockholders:

                 

Income from continuing operations

 

$

2.25

   

$

1.97

   

$

7.24

   

$

5.59

   

Income (loss) from discontinued operations, net of tax

 

   

   

   

0.01

   

Net income

 

2.25

   

1.97

   

7.23

   

5.60

   
                   

Diluted earnings per share attributable to Raytheon Company

                 

   common stockholders:

                 

Income from continuing operations

 

$

2.25

   

$

1.97

   

$

7.23

   

$

5.59

   

Income (loss) from discontinued operations, net of tax

 

   

   

   

0.01

   

Net income

 

2.25

   

1.97

   

7.23

   

5.60

   
                   

Amounts attributable to Raytheon Company common

                 

   stockholders:

                 

Income from continuing operations

 

$

644

   

$

573

   

$

2,077

   

$

1,629

   

Income (loss) from discontinued operations, net of tax

 

   

(1)

   

   

2

   

Net income

 

$

644

   

$

572

   

$

2,077

   

$

1,631

   
                   

Average shares outstanding

                 

Basic

 

285.7

   

290.7

   

287.2

   

291.6

   

Diluted

 

286.0

   

291.0

   

287.5

   

291.9

   

 

 

 

Attachment B

Raytheon Company

Preliminary Segment Information

Third Quarter 2018

(In millions, except percentages)

 
                   

Operating Income

 
   

Net Sales

 

Operating Income

 

 

As a Percent of Net Sales

 
   

Three Months Ended

 

Three Months Ended

 

Three Months Ended

 
   

30-Sep-18

 

1-Oct-17

 

30-Sep-18

 

1-Oct-17

 

30-Sep-18

 

1-Oct-17

 
                           

Integrated Defense Systems

 

$

1,493

   

$

1,391

   

$

241

   

$

231

   

16.1%

 

16.6%

 

Intelligence, Information and Services

 

1,742

   

1,543

   

149

   

112

   

8.6%

 

7.3%

 

Missile Systems

 

2,082

   

1,945

   

257

   

280

   

12.3%

 

14.4%

 

Space and Airborne Systems

 

1,695

   

1,597

   

223

   

212

   

13.2%

 

13.3%

 

Forcepoint

 

173

   

170

   

18

   

23

   

10.4%

 

13.5%

 

Eliminations

 

(377)

   

(355)

   

(45)

   

(39)

           

Total business segment

 

6,808

   

6,291

   

843

   

819

   

12.4%

 

13.0%

 

Acquisition Accounting Adjustments

 

(2)

   

(7)

   

(30)

   

(39)

           

FAS/CAS Operating Adjustment

 

   

   

365

   

348

           

Corporate

 

   

   

5

   

           

Total

 

$

6,806

   

$

6,284

   

$

1,183

   

$

1,128

   

17.4%

 

18.0%

 
                           
                   

Operating Income

 
   

Net Sales

 

Operating Income

 

 

As a Percent of Net Sales

 
   

Nine Months Ended

 

Nine Months Ended

 

Nine Months Ended

 
   

30-Sep-18

 

1-Oct-17

 

30-Sep-18

 

1-Oct-17

 

30-Sep-18

 

1-Oct-17

 
                           

Integrated Defense Systems

 

$

4,496

   

$

4,251

   

$

776

   

$

688

   

17.3%

 

16.2%

 

Intelligence, Information and Services

 

5,011

   

4,605

   

394

   

338

   

7.9%

 

7.3%

 

Missile Systems

 

5,981

   

5,602

   

700

   

732

   

11.7%

 

13.1%

 

Space and Airborne Systems

 

4,868

   

4,760

   

622

   

620

   

12.8%

 

13.0%

 

Forcepoint

 

462

   

452

   

3

   

41

   

0.6%

 

9.1%

 

Eliminations

 

(1,110)

   

(1,077)

   

(126)

   

(113)

           

Total business segment

 

19,708

   

18,593

   

2,369

   

2,306

   

12.0%

 

12.4%

 

Acquisition Accounting Adjustments

 

(10)

   

(28)

   

(97)

   

(123)

           

FAS/CAS Operating Adjustment

 

   

   

1,072

   

978

           

Corporate

 

   

   

(20)

   

(30)

           

Total

 

$

19,698

   

$

18,565

   

$

3,324

   

$

3,131

   

16.9%

 

16.9%

 

 

 

 

 

Attachment C

Raytheon Company

Other Preliminary Information

Third Quarter 2018

(In millions)

 
                     
                 

Backlog

           

30-Sep-18

 

31-Dec-17

 
                     

Integrated Defense Systems

           

$

11,148

   

$

9,186

   

Intelligence, Information and Services

         

6,563

   

6,503

   

Missile Systems

           

13,906

   

13,426

   

Space and Airborne Systems

           

9,483

   

8,611

   

Forcepoint

           

499

   

484

   

Total backlog

           

$

41,599

   

$

38,210

   
                     
                     
     

Three Months Ended

 

Nine Months Ended

 

Bookings

   

30-Sep-18

 

1-Oct-17

 

30-Sep-18

 

1-Oct-17

 
                     

Total bookings

   

$

8,710

   

$

6,957

   

$

23,715

   

$

19,177

   
                     
                     
     

Three Months Ended

 

Nine Months Ended

 

General and Administrative Expenses

   

30-Sep-18

 

1-Oct-17

 

30-Sep-18

 

1-Oct-17

 
                     

Administrative and selling expenses

 

$

533

   

$

510

   

$

1,601

   

$

1,547

   

Research and development expenses

 

219

   

178

   

593

   

532

   

Total general and administrative expenses

 

$

752

   

$

688

   

$

2,194

   

$

2,079

   
                     
                     

Cash, Cash Equivalents and Restricted Cash

           

30-Sep-18

 

31-Dec-17

 
                     

Cash and cash equivalents

         

$

2,073

   

$

3,103

   

Restricted cash

     

12

   

12

   

Cash, cash equivalents and restricted cash shown in Attachment E

     

$

2,085

   

$

3,115

   

 

 

Attachment D

Raytheon Company

Preliminary Balance Sheet Information

Third Quarter 2018

(In millions)

 
         
 

30-Sep-18

 

31-Dec-17

 

Assets

       

Current assets

       

Cash and cash equivalents

$

2,073

   

$

3,103

   

Short-term investments

   

297

   

Receivables, net

1,527

   

1,324

   

Contract assets

5,715

   

5,247

   

Inventories

804

   

594

   

Prepaid expenses and other current assets

516

   

761

   

Total current assets

10,635

   

11,326

   
         

Property, plant and equipment, net

2,639

   

2,439

   

Goodwill

14,865

   

14,871

   

Other assets, net

1,995

   

2,224

   

Total assets

$

30,134

   

$

30,860

   
         

Liabilities, Redeemable Noncontrolling Interest and Equity

       

Current liabilities

       

Commercial paper

$

300

   

$

300

   

Contract liabilities

2,931

   

2,927

   

Accounts payable

1,392

   

1,519

   

Accrued employee compensation

1,252

   

1,342

   

Other current liabilities

1,281

   

1,260

   

Total current liabilities

7,156

   

7,348

   
         

Accrued retiree benefits and other long-term liabilities

6,355

   

8,287

   

Long-term debt

4,753

   

4,750

   
         

Redeemable noncontrolling interest

560

   

512

   
         

Equity

       

Raytheon Company stockholders' equity

       

Common stock

3

   

3

   

Additional paid-in capital

   

   

Accumulated other comprehensive loss(1)

(8,413)

   

(7,935)

   

Retained earnings(1)

19,720

   

17,895

   

Total Raytheon Company stockholders' equity

11,310

   

9,963

   

Noncontrolling interests in subsidiaries

   

   

Total equity

11,310

   

9,963

   

Total liabilities, redeemable noncontrolling interest and equity

$

30,134

   

$

30,860

   

 

(1)

In the first quarter 2018 we adopted ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. As a result, we reclassified $1,451 million from accumulated other comprehensive loss to retained earnings related to the reclassification of stranded income tax effects of the Tax Cuts and Jobs Act of 2017.

 

 

 

 

Attachment E

Raytheon Company

Preliminary Cash Flow Information

Third Quarter 2018

(In millions)

 
 

Nine Months Ended

 
 

30-Sep-18

 

1-Oct-17

 

Cash flows from operating activities

       

Net income

$

2,055

   

$

1,614

   

(Income) loss from discontinued operations, net of tax

   

(2)

   

Income from continuing operations

2,055

   

1,612

   

Adjustments to reconcile to net cash provided by (used in) operating activities from continuing

       

  operations, net of the effect of acquisitions and divestitures

       

Depreciation and amortization

417

   

401

   

Stock-based compensation

137

   

127

   

Loss on repayment of long-term debt

   

39

   

Deferred income taxes

(16)

   

(137)

   

Changes in assets and liabilities

       

Receivables, net

(205)

   

(226)

   

Contract assets and contract liabilities

(468)

   

(962)

   

Inventories

(212)

   

(83)

   

Prepaid expenses and other current assets

72

   

148

   

Income taxes receivable/payable

194

   

66

   

Accounts payable

(64)

   

(191)

   

Accrued employee compensation

(91)

   

(68)

   

Other current liabilities

(44)

   

35

   

Accrued retiree benefits

(748)

   

452

   

Other, net

(32)

   

(90)

   

Net cash provided by (used in) operating activities from continuing operations

995

   

1,123

   

Net cash provided by (used in) operating activities from discontinued operations

1

   

(1)

   

Net cash provided by (used in) operating activities

996

   

1,122

   

Cash flows from investing activities

       

Additions to property, plant and equipment

(546)

   

(323)

   

Proceeds from sales of property, plant and equipment

   

31

   

Additions to capitalized internal use software

(42)

   

(49)

   

Purchases of short-term investments

   

(399)

   

Maturities of short-term investments

309

   

517

   

Payments for purchases of acquired companies, net of cash received

   

(93)

   

Proceeds from sale of business, net of transaction costs

11

   

   

Other

(9)

   

(2)

   

Net cash provided by (used in) investing activities

(277)

   

(318)

   

Cash flows from financing activities

       

Dividends paid

(728)

   

(679)

   

Net borrowings (payments) on commercial paper

   

300

   

Repayments of long-term debt

   

(591)

   

Loss on repayment of long-term debt

   

(38)

   

Repurchases of common stock under share repurchase programs

(925)

   

(700)

   

Repurchases of common stock to satisfy tax withholding obligations

(91)

   

(84)

   

Contribution from noncontrolling interests in Forcepoint

   

8

   

Other

(5)

   

   

Net cash provided by (used in) financing activities

(1,749)

   

(1,784)

   

Net increase (decrease) in cash, cash equivalents and restricted cash

(1,030)

   

(980)

   

Cash, cash equivalents and restricted cash at beginning of the year

3,115

   

3,303

   

Cash, cash equivalents and restricted cash at end of period

$

2,085

   

$

2,323

   

 

 

 

Attachment F

Raytheon Company

Supplemental EPS Information

Third Quarter 2018

(In millions, except per share amounts)

 
                   
   

Three Months Ended

 

Nine Months Ended

 
         

30-Sep-18

 

1-Oct-17

 

30-Sep-18

 

1-Oct-17

 
                         

Per share impact of the pension settlement charge (A)

$

0.80

   

$

   

$

0.79

   

$

   
                         

(A)

Pension settlement charge

$

288

   

$

   

$

288

   

$

   
   

Tax effect (at 21% statutory rate)

(60)

   

   

(60)

   

   
 

After-tax impact

228

   

   

228

   

   
 

Diluted shares

286.0

   

   

287.5

   

   
 

Per share impact

$

0.80

   

$

   

$

0.79

   

$

   
                         

Raytheon Company
Global Headquarters
Waltham, Mass.

Investor Relations Contact
Kelsey DeBriyn
781.522.5141

Media Contact
Corinne Kovalsky
781.522.5899

 

 

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SOURCE Raytheon Company

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