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Raytheon Reports Strong Third Quarter 2019 Results

- Bookings of $9.4 billion; book-to-bill ratio of 1.27

- Record net sales of $7.4 billion, up 9.4 percent

- EPS from continuing operations of $3.08, up 36.9 percent

- Operating cash flow from continuing operations of $1.3 billion

- Increased full-year 2019 guidance for sales, operating income and EPS

- Raytheon and United Technologies shareholders overwhelmingly approved merger of equals; expected close remains on track for first half of 2020

WALTHAM, Mass., Oct. 24, 2019 /PRNewswire/ -- Raytheon Company (NYSE: RTN) today announced net sales for the third quarter 2019 of $7.4 billion, up 9.4 percent compared to $6.8 billion in the third quarter 2018. Third quarter 2019 EPS from continuing operations was $3.08 compared to $2.25 in the third quarter 2018. The increase in the third quarter 2019 EPS from continuing operations was primarily driven by operational improvements and the unfavorable $0.80 per share impact in the third quarter 2018 related to the pension plan annuity transaction.

Raytheon logo (PRNewsfoto/Raytheon)

As previously announced, on October 11, 2019 at their respective special meetings, Raytheon and United Technologies shareholders overwhelmingly approved all of the proposals necessary to complete the merger of equals transaction. The expected close of the merger remains on track for the first half of 2020, subject to the satisfaction of customary closing conditions, including receipt of required regulatory approvals, as well as completion by United Technologies of the separation of its Otis and Carrier businesses.

"Raytheon delivered strong bookings, sales growth, EPS and cash generation in the third quarter," said Thomas A. Kennedy, Raytheon Chairman and CEO. "Bookings strength across our broad portfolio of proven technology solutions positions the company well for future growth.

"I am pleased that the shareholders of Raytheon and United Technologies voted in favor of our powerful strategic combination. The vote reflects a significant milestone on our path to unite two world-class companies with complementary technologies."

Operating cash flow from continuing operations for the third quarter 2019 was an inflow of $1,278 million compared to an outflow of $444 million for the third quarter 2018. The increase in operating cash flow from continuing operations in the third quarter 2019 was primarily due to the $1.25 billion pretax discretionary pension plan contribution in the third quarter 2018 and the timing of collections in the third quarter 2019. Operating cash flow from continuing operations for the third quarter 2019 was better than the company's prior guidance.

The company had bookings of $9.4 billion in the third quarter 2019, resulting in a book-to-bill ratio of 1.27. Third quarter 2018 bookings were $8.7 billion.

Summary Financial Results










3rd Quarter

%


Nine Months

%


($ in millions, except per share data)

2019

2018

Change


2019

2018

Change


Bookings

$

9,439

$

8,710

8.4%


$

24,282

$

23,715

2.4%


Net Sales

$

7,446

$

6,806

9.4%


$

21,334

$

19,698

8.3%


Total Business Segment Operating Income

$

901

$

843

6.9%


$

2,550

$

2,369

7.6%


Total Operating Income

$

1,206

$

1,183

1.9%


$

3,495

$

3,324

5.1%


Income from Continuing Operations attributable to













   Raytheon Company

$

861

$

644

33.7%


$

2,459

$

2,077

18.4%


EPS from Continuing Operations

$

3.08

$

2.25

36.9%


$

8.77

$

7.23

21.3%


Operating Cash Flow from Continuing Operations

$

1,278

$

(444)



$

1,690

$

995



Workdays in Fiscal Reporting Calendar

63

63



190

191



Backlog at the end of the third quarter 2019 was a record $44.6 billion, an increase of $3.0 billion or 7 percent compared to the end of the third quarter 2018.

Backlog




























































 Period Ending


($ in millions)




























Q3 2019

Q3 2018

2018


Backlog




























$

44,614

$

41,599

$

42,420





































Outlook

The company has increased its financial outlook for 2019. Charts containing additional information on the company's 2019 outlook are available on the company's website.

2019 Financial Outlook



























Current


Prior (7/25/19)

Net Sales ($B)












29.1 - 29.4

*

28.8 - 29.3

Total Business Segment Operating Income ($M)












3,525 - 3,615

*

3,480 - 3,600

Deferred Revenue Adjustment ($M)












(2)


(2)

Amortization of Acquired Intangibles ($M)












(110)


(110)

FAS/CAS Operating Adjustment ($M)1












1,454

*

1,463

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












(688)

*

(726)

Interest Expense, net ($M)












~(145)


~(145)

Diluted Shares (M)












~280

*

~281

Effective Tax Rate












17.0% - 17.5%


17.0% - 17.5%

EPS from Continuing Operations












$11.70 - $11.80

*

$11.50 - $11.70

Operating Cash Flow from Continuing Operations ($B)












4.0 - 4.2


4.0 - 4.2

*Denotes change from prior guidance















1 The full-year 2019 FAS/CAS Operating Adjustment had a $9 million ($0.03 per share) unfavorable adjustment, of which approximately $7 million
($0.02 per share) was recorded in the third quarter 2019 and approximately $2 million ($0.01 per share) is expected to be recorded in the fourth
quarter 2019. This is due to the update in the third quarter 2019 of the actuarial estimates for pension and other postretirement benefit plans.



2 The full-year 2019 Retirement Benefits Non-service Expense had a $38 million ($0.11 per share) favorable adjustment, of which approximately
$29 million ($0.08 per share) was recorded in the third quarter 2019 and approximately $9 million ($0.03 per share) is expected to be recorded in
the fourth quarter 2019. This is due to the update in the third quarter 2019 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)



2019

2018

% Change


2019

2018

% Change


Net Sales



$

1,755

$

1,493

18%


$

4,946

$

4,496

10%


Operating Income



$

282

$

241

17%


$

804

$

776

4%


Operating Margin



16.1%

16.1%



16.3%

17.3%



Integrated Defense Systems (IDS) had third quarter 2019 net sales of $1,755 million, up 18 percent compared to $1,493 million in the third quarter 2018. The increase in net sales for the quarter was primarily driven by higher net sales on an international air and missile defense system program awarded in the third quarter 2019.

IDS recorded $282 million of operating income in the third quarter 2019 compared to $241 million in the third quarter 2018. The increase in operating income for the quarter was primarily driven by higher volume.

During the quarter, as previously announced, IDS booked $1.8 billion on a direct commercial contract to provide National Advanced Surface-to-Air Missile System (NASAMS™) to the State of Qatar. IDS also booked $355 million to provide technical and logistics support for the Hawk and Patriot® air and missile defense program for the Kingdom of Saudi Arabia and $105 million to provide advanced Patriot air and missile defense capability for Germany.

After the quarter close, as previously announced, IDS was selected by the U.S. Army to develop the Lower Tier Air and Missile Defense Sensor (LTAMDS).

Intelligence, Information and Services





3rd Quarter



Nine Months



($ in millions)



2019

2018

% Change


2019

2018

% Change


Net Sales



$

1,855

$

1,742

6%


$

5,409

$

5,011

8%


Operating Income



$

161

$

149

8%


$

509

$

394

29%


Operating Margin



8.7%

8.6%



9.4%

7.9%



Intelligence, Information and Services (IIS) had third quarter 2019 net sales of $1,855 million, up 6 percent compared to $1,742 million in the third quarter 2018. The increase in net sales for the quarter was primarily driven by higher net sales on classified programs in both cyber and space.

IIS recorded $161 million of operating income in the third quarter 2019 compared to $149 million in the third quarter 2018. The increase in operating income for the quarter was primarily driven by higher volume and a gain on an investment.

During the quarter, IIS booked $582 million on a number of classified programs. IIS also booked $148 million on domestic and foreign training programs in support of Warfighter FOCUS activities; $133 million to perform operations and sustainment for the U.S. Air Force's Launch and Test Range System (LTRS); and $117 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)



2019

2018

% Change


2019

2018

% Change


Net Sales



$

2,165

$

2,082

4%


$

6,381

$

5,981

7%


Operating Income



$

219

$

257

(15)%


$

662

$

700

(5)%


Operating Margin



10.1%

12.3%



10.4%

11.7%



Missile Systems (MS) had third quarter 2019 net sales of $2,165 million, up 4 percent compared to $2,082 million in the third quarter 2018. The increase in net sales for the quarter was primarily due to higher net sales on classified programs.

MS recorded $219 million of operating income in the third quarter 2019 compared to $257 million in the third quarter 2018. The decrease in operating income for the quarter was primarily due to lower net program efficiencies.

During the quarter, MS booked $421 million for Phalanx® for the U.S. Navy, U.S. Army and international customers; $391 million for Tomahawk for the U.S. Navy and an international customer; $221 million for Evolved Seasparrow Missile (ESSM®) for the U.S. Navy and international customers;  $101 million for Paveway™ for the U.S. Air Force and international customers; and $92 million for Commander's Independent Thermal Viewers (CITV) for the U.S. Army. MS also booked $655 million on a number of classified contracts.

Space and Airborne Systems





3rd Quarter



Nine Months



($ in millions)



2019

2018

% Change


2019

2018

% Change


Net Sales



$

1,939

$

1,695

14%


$

5,409

$

4,868

11%


Operating Income



$

272

$

223

22%


$

713

$

622

15%


Operating Margin



14.0%

13.2%



13.2%

12.8%



Space and Airborne Systems (SAS) had third quarter 2019 net sales of $1,939 million, up 14 percent compared to $1,695 million in the third quarter 2018. The increase in net sales for the quarter included higher net sales on classified programs, protected communication systems programs, and the Next Generation Overhead Persistent Infrared (Next Gen OPIR) program.

SAS recorded $272 million of operating income in the third quarter 2019 compared to $223 million in the third quarter 2018. The increase in operating income for the quarter was primarily due to higher volume and a favorable change in mix.

During the quarter, SAS booked $175 million on the Global Aircrew Strategic Network Terminal (Global ASNT) program for the U.S. Air Force; $136 million for radar components for South Korea; $88 million on the Family of Advanced Beyond-Line-of-Sight Terminals (FAB-T) program for the U.S. Air Force; and $78 million on the Next Generation Jammer (NGJ) program for the U.S. Navy. SAS also booked $583 million on a number of classified contracts.

Forcepoint





3rd Quarter



Nine Months



($ in millions)



2019

2018

% Change


2019

2018

% Change


Net Sales



$

167

$

173

(3)%


$

481

$

462

4%


Operating Income (Loss)



$

14

$

18

(22)%


$

2

$

3

(33)%


Operating Margin



8.4%

10.4%



0.4%

0.6%



Forcepoint had third quarter 2019 net sales of $167 million compared to $173 million in the third quarter 2018.

Forcepoint recorded $14 million of operating income in the third quarter 2019 compared to $18 million in the third quarter 2018.

About Raytheon
Raytheon Company, with 2018 sales of $27 billion and 67,000 employees, is a technology and innovation leader specializing in defense, civil government and cybersecurity solutions. With a history of innovation spanning 97 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 2019 Financial Results
Raytheon's financial results conference call will be held on Thursday, October 24, 2019 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) 219-7829 in the U.S. or (478) 205-0667 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 (sometimes referred to as Raytheon) 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: risks associated with the announcement of the proposed merger with United Technologies Corporation (UTC), including its effect on our customer, supplier and other business relationships, employee retention and hiring, resources and management's attention, our ability to pursue new business and investment opportunities, our operating results and business generally, and the market price of our common stock; risks associated with the successful and timely completion of the proposed merger with UTC and the related integration, as described in more detail below; 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; dependence on 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 material and 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; the outcome of contingencies and litigation matters, including government investigations; the risk of environmental liabilities; changes in tax laws and regulations, or their interpretation; and other factors as may be detailed from time to time in the company's public announcements and Securities and Exchange Commission filings.

Risks associated with the successful and timely completion of the proposed merger with UTC and the related integration include: (1) the effect of economic conditions in the industries and markets in which UTC and Raytheon operate in the U.S. and globally and any changes therein, including financial market conditions, fluctuations in commodity prices, interest rates and foreign currency exchange rates, levels of end market demand in construction and in both the commercial and defense segments of the aerospace industry, levels of air travel, financial condition of commercial airlines, the impact of weather conditions and natural disasters, the financial condition of our customers and suppliers, 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, and uncertain funding of programs); (2) challenges in the development, production, delivery, support, performance and realization of the anticipated benefits (including our expected returns under customer contracts) of advanced technologies and new products and services; (3) the scope, nature, impact or timing of the proposed merger and the separation transactions and other merger, acquisition and divestiture activity, including among other things the integration of or with other businesses and realization of synergies and opportunities for growth and innovation and incurrence of related costs and expenses; (4) future levels of indebtedness, including indebtedness that may be incurred in connection with the proposed merger and the separation transactions, and capital spending and research and development spending; (5) future availability of credit and factors that may affect such availability, including credit market conditions and our capital structure; (6) the timing and scope of future repurchases by the combined company of its common stock, which may be suspended at any time due to various factors, including market conditions and the level of other investing activities and uses of cash; (7) delays and disruption in delivery of materials and services from suppliers; (8) company and customer-directed cost reduction efforts and restructuring costs and savings and other consequences thereof (including the potential termination of U.S. government contracts and performance under undefinitized contract awards and the potential inability to recover termination costs); (9) new business and investment opportunities; (10) the ability to realize the intended benefits of organizational changes; (11) the anticipated benefits of diversification and balance of operations across product lines, regions and industries; (12) the outcome of legal proceedings, investigations and other contingencies; (13) pension plan assumptions and future contributions; (14) the impact of the negotiation of collective bargaining agreements and labor disputes; (15) the effect of changes in political conditions in the U.S. and other countries in which UTC, Raytheon and the businesses of each operate, including the effect of changes in U.S. trade policies or the U.K.'s pending withdrawal from the European Union, on general market conditions, global trade policies and currency exchange rates in the near term and beyond; (16) the effect of changes in tax (including U.S. tax reform enacted on December 22, 2017, which is commonly referred to as the Tax Cuts and Jobs Act of 2017), environmental, regulatory and other laws and regulations (including, among other things, 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) in the U.S. and other countries in which UTC, Raytheon and the businesses of each operate; (17) negative effects of the announcement or pendency of the proposed merger or the separation transactions on the market price of UTC's and/or Raytheon's respective common stock and/or on their respective financial performance; (18) the ability of the parties to receive the required regulatory approvals for the proposed merger (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction) and to satisfy the other conditions to the closing of the merger on a timely basis or at all; (19) the occurrence of events that may give rise to a right of one or both of the parties to terminate the merger agreement; (20) risks relating to the value of the UTC shares to be issued in the proposed merger, significant transaction costs and/or unknown liabilities; (21) the possibility that the anticipated benefits from the proposed merger cannot be realized in full or at all or may take longer to realize than expected, including risks associated with third party contracts containing consent and/or other provisions that may be triggered by the proposed transaction; (22) risks associated with transaction-related litigation; (23) the possibility that costs or difficulties related to the integration of UTC's and Raytheon's operations will be greater than expected; (24) risks relating to completed merger, acquisition and divestiture activity, including UTC's integration of Rockwell Collins, including the risk that the integration may be more difficult, time-consuming or costly than expected or may not result in the achievement of estimated synergies within the contemplated time frame or at all; (25) the ability of each of Raytheon, UTC, the companies resulting from the separation transactions and the combined company to retain and hire key personnel; (26) the expected benefits and timing of the separation transactions, and the risk that conditions to the separation transactions will not be satisfied and/or that the separation transactions will not be completed within the expected time frame, on the expected terms or at all; (27) the intended qualification of (i) the merger as a tax-free reorganization and (ii) the separation transactions as tax-free to UTC and UTC's shareowners, in each case, for U.S. federal income tax purposes; (28) the possibility that any opinions, consents, approvals or rulings required in connection with the separation transactions will not be received or obtained within the expected time frame, on the expected terms or at all; (29) expected financing transactions undertaken in connection with the proposed merger and the separation transactions and risks associated with additional indebtedness; (30) the risk that dissynergy costs, costs of restructuring transactions and other costs incurred in connection with the separation transactions will exceed UTC's estimates; and (31) the impact of the proposed merger and the separation transactions on the respective businesses of Raytheon and UTC and the risk that the separation transactions may be more difficult, time-consuming or costly than expected, including the impact on UTC's resources, systems, procedures and controls, diversion of its management's attention and the impact on relationships with customers, suppliers, employees and other business counterparties.

There can be no assurance that the proposed merger, the separation transactions or any other transaction described above will in fact be consummated in the manner described or at all. For additional information on identifying factors that may cause actual results to vary materially from those stated in forward-looking statements, see the joint proxy statement/prospectus (defined below) and the reports of UTC and Raytheon on Forms 10-K, 10-Q and 8-K filed with or furnished to the Securities and Exchange Commission (the "SEC") from time to time.

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.

Additional Information and Where to Find It
In connection with the proposed merger, on September 4, 2019, UTC filed with the SEC an amendment to the registration statement on Form S-4 originally filed on July 17, 2019, which includes a joint proxy statement of UTC and Raytheon that also constitutes a prospectus of UTC (the "joint proxy statement/prospectus"). The registration statement was declared effective by the SEC on September 9, 2019, and UTC and Raytheon commenced mailing the joint proxy statement/prospectus to shareowners of UTC and stockholders of Raytheon on or about September 10, 2019. Each party will file other documents regarding the proposed merger with the SEC. In addition, in connection with the separation transactions, subsidiaries of UTC will file registration statements on Form 10 or Form S-1. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED OR THAT WILL BE FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders may obtain copies of the registration statements and the joint proxy statement/prospectus free of charge from the SEC's website or from UTC or Raytheon. The documents filed by UTC with the SEC may be obtained free of charge at UTC's website at www.utc.com or at the SEC's website at www.sec.gov. These documents may also be obtained free of charge from UTC by requesting them by mail at UTC Corporate Secretary, 10 Farm Springs Road, Farmington, CT, 06032, by telephone at 1-860-728-7870 or by email at corpsec@corphq.utc.com. The documents filed by Raytheon with the SEC may be obtained free of charge at Raytheon's website at www.raytheon.com or at the SEC's website at www.sec.gov. These documents may also be obtained free of charge from Raytheon by requesting them by mail at Raytheon Company, Investor Relations, 870 Winter Street, Waltham, MA, 02451, by telephone at 1-781-522-5123 or by email at invest@raytheon.com.

No Offer or Solicitation
This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.

 

Attachment A

Raytheon Company

Preliminary Statement of Operations Information

Third Quarter 2019

(In millions, except per share amounts)














Three Months Ended


Nine Months Ended




29-Sep-19


30-Sep-18


29-Sep-19


30-Sep-18












Net sales


$

7,446



$

6,806



$

21,334



$

19,698



Operating expenses










Cost of sales


5,499



4,871



15,581



14,180



General and administrative expenses


741



752



2,258



2,194



Total operating expenses


6,240



5,623



17,839



16,374



Operating income


1,206



1,183



3,495



3,324



Non-operating (income) expense, net










Retirement benefits non-service expense


152



516



514



993



Interest expense


45



45



134



138



Interest income


(10)



(6)



(30)



(21)



Other (income) expense, net


(17)



(8)



(45)



(6)



Total non-operating (income) expense, net


170



547



573



1,104



Income from continuing operations before taxes


1,036



636



2,922



2,220



Federal and foreign income taxes


175



(5)



473



165



Income from continuing operations


861



641



2,449



2,055



Income (loss) from discontinued operations, net of tax


(1)





(1)





Net income


860



641



2,448



2,055



Less: Net income (loss) attributable to noncontrolling interests


   in subsidiaries




(3)



(10)



(22)



Net income attributable to Raytheon Company


$

860



$

644



$

2,458



$

2,077













Basic earnings per share attributable to Raytheon Company


   common stockholders:










Income from continuing operations


$

3.08



$

2.25



$

8.78



$

7.24



Income (loss) from discontinued operations, net of tax










Net income


3.08



2.25



8.77



7.23













Diluted earnings per share attributable to Raytheon Company


   common stockholders:










Income from continuing operations


$

3.08



$

2.25



$

8.77



$

7.23



Income (loss) from discontinued operations, net of tax










Net income


3.08



2.25



8.77



7.23













Amounts attributable to Raytheon Company common


   stockholders:










Income from continuing operations


$

861



$

644



$

2,459



$

2,077



Income (loss) from discontinued operations, net of tax


(1)





(1)





Net income


$

860



$

644



$

2,458



$

2,077













Average shares outstanding










Basic


279.1



285.7



280.2



287.2



Diluted


279.4



286.0



280.5



287.5



 

 

Attachment B

Raytheon Company

Preliminary Segment Information

Third Quarter 2019

(In millions, except percentages)






Net Sales


Operating Income


Operating Income

As a Percent of Net Sales




Three Months Ended


Three Months Ended


Three Months Ended




29-Sep-19


30-Sep-18


29-Sep-19


30-Sep-18


29-Sep-19


30-Sep-18
















Integrated Defense Systems


$

1,755



$

1,493



$

282



$

241



16.1%


16.1%


Intelligence, Information and Services(1)


1,855



1,742



161



149



8.7%


8.6%


Missile Systems


2,165



2,082



219



257



10.1%


12.3%


Space and Airborne Systems


1,939



1,695



272



223



14.0%


13.2%


Forcepoint


167



173



14



18



8.4%


10.4%


Eliminations


(435)



(377)



(47)



(45)







Total business segment


7,446



6,808



901



843



12.1%


12.4%


Acquisition Accounting Adjustments




(2)



(28)



(30)







FAS/CAS Operating Adjustment






361



365







Corporate and Reclassification(1)






(28)



5







Total


$

7,446



$

6,806



$

1,206



$

1,183



16.2%


17.4%




















Net Sales


Operating Income


Operating Income

As a Percent of Net Sales




Nine Months Ended


Nine Months Ended


Nine Months Ended




29-Sep-19


30-Sep-18


29-Sep-19


30-Sep-18


29-Sep-19


30-Sep-18
















Integrated Defense Systems


$

4,946



$

4,496



$

804



$

776



16.3%


17.3%


Intelligence, Information and Services(1)


5,409



5,011



509



394



9.4%


7.9%


Missile Systems


6,381



5,981



662



700



10.4%


11.7%


Space and Airborne Systems


5,409



4,868



713



622



13.2%


12.8%


Forcepoint


481



462



2



3



0.4%


0.6%


Eliminations


(1,291)



(1,110)



(140)



(126)







Total business segment


21,335



19,708



2,550



2,369



12.0%


12.0%


Acquisition Accounting Adjustments


(1)



(10)



(83)



(97)







FAS/CAS Operating Adjustment






1,090



1,072







Corporate and Reclassification(1)






(62)



(20)







Total


$

21,334



$

19,698



$

3,495



$

3,324



16.4%


16.9%




(1)

In the third quarter of 2019, the company recognized a non-cash gain of $14 million on an investment, which is included in IIS's operating income and reclassified to other (income) expense,
net on the company's consolidated statements of operations.

 

 

Attachment C

Raytheon Company

Other Preliminary Information

Third Quarter 2019

(In millions)






















Backlog







29-Sep-19


31-Dec-18













Integrated Defense Systems







$

13,535



$

11,557



Intelligence, Information and Services






6,645



6,233



Missile Systems







12,702



13,976



Space and Airborne Systems







11,203



10,126



Forcepoint







529



528



Total backlog







$

44,614



$

42,420




























Three Months Ended


Nine Months Ended


Bookings



29-Sep-19


30-Sep-18


29-Sep-19


30-Sep-18













Total bookings



$

9,439



$

8,710



$

24,282



$

23,715




























Three Months Ended


Nine Months Ended


General and Administrative Expenses



29-Sep-19


30-Sep-18


29-Sep-19


30-Sep-18













Administrative and selling expenses


$

570



$

533



$

1,692



$

1,601



Research and development expenses


171



219



566



593



Total general and administrative expenses


$

741



$

752



$

2,258



$

2,194

























Cash, Cash Equivalents and Restricted Cash







29-Sep-19


31-Dec-18













Cash and cash equivalents






$

2,646



$

3,608



Restricted cash




16



16



Cash, cash equivalents and restricted cash shown in Attachment E




$

2,662



$

3,624



 

 

Attachment D

Raytheon Company

Preliminary Balance Sheet Information

Third Quarter 2019

(In millions)








29-Sep-19


31-Dec-18


Assets





Current assets





Cash and cash equivalents

$

2,646



$

3,608



Receivables, net

1,473



1,648



Contract assets

6,498



5,594



Inventories

802



758



Prepaid expenses and other current assets(1)

610



529



Total current assets

12,029



12,137








Property, plant and equipment, net

3,103



2,840



Operating lease right-of-use assets(1)

855



805



Goodwill

14,881



14,864



Other assets, net

1,949



2,024



Total assets

$

32,817



$

32,670








Liabilities, Redeemable Noncontrolling Interests and Equity





Current liabilities





Commercial paper and current portion of long-term debt

$

500



$

300



Contract liabilities

2,977



3,309



Accounts payable

1,470



1,964



Accrued employee compensation

1,445



1,509



Other current liabilities(1)

1,423



1,381



Total current liabilities

7,815



8,463








Accrued retiree benefits and other long-term liabilities(1)

6,642



6,922



Long-term debt

4,258



4,755



Operating lease liabilities(1)

692



647








Redeemable noncontrolling interests

428



411








Equity





Raytheon Company stockholders' equity





Common stock

3



3



Additional paid-in capital

34





Accumulated other comprehensive loss

(8,042)



(8,618)



Retained earnings

20,987



20,087



Total Raytheon Company stockholders' equity

12,982



11,472



Noncontrolling interests in subsidiaries





Total equity

12,982



11,472



Total liabilities, redeemable noncontrolling interests and equity

$

32,817



$

32,670





(1)

In the first quarter 2019 we adopted Accounting Standards Update (ASU) 2016-02, Leases (Topic 842). As a result we recast certain amounts on our balance sheet to reflect the recognition of operating lease right-of-use assets and operating lease liabilities and other reclassifications. Included in other current liabilities is $201 million and $194 million at September 29, 2019 and December 31, 2018, respectively, related to the current portion of operating lease liabilities.

 

 

Attachment E

Raytheon Company

Preliminary Cash Flow Information

Third Quarter 2019

(In millions)



Nine Months Ended



29-Sep-19


30-Sep-18


Cash flows from operating activities





Net income

$

2,448



$

2,055



(Income) loss from discontinued operations, net of tax

1





Income from continuing operations

2,449



2,055



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

446



417



Stock-based compensation

122



137



Deferred income taxes

(55)



(16)



Changes in assets and liabilities





Receivables, net

187



(205)



Contract assets and contract liabilities

(1,205)



(468)



Inventories

(44)



(212)



Prepaid expenses and other current assets

7



72



Income taxes receivable/payable

(192)



194



Accounts payable

(419)



(64)



Accrued employee compensation

(73)



(91)



Other current liabilities

90



(44)



Accrued retiree benefits

515



(748)



Other, net

(138)



(32)



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

1,690



995



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

(1)



1



Net cash provided by (used in) operating activities

1,689



996



Cash flows from investing activities





Additions to property, plant and equipment

(653)



(546)



Additions to capitalized internal-use software

(46)



(42)



Maturities of short-term investments



309



Payments for purchases of acquired companies, net of cash received

(8)





Proceeds from sale of business, net of transaction costs



11



Other

1



(9)



Net cash provided by (used in) investing activities

(706)



(277)



Cash flows from financing activities





Dividends paid

(773)



(728)



Net borrowings (payments) on commercial paper

(300)





Repurchases of common stock under share repurchase programs

(800)



(925)



Repurchases of common stock to satisfy tax withholding obligations

(67)



(91)



Other

(5)



(5)



Net cash provided by (used in) financing activities

(1,945)



(1,749)



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

(962)



(1,030)



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

3,624



3,115



Cash, cash equivalents and restricted cash at end of period

$

2,662



$

2,085



 

 

Attachment F

Raytheon Company

Supplemental EPS Information

Third Quarter 2019

(In millions, except per share amounts)














Three Months Ended


Nine Months Ended







29-Sep-19


30-Sep-18


29-Sep-19


30-Sep-18















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

279.4



286.0



280.5



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

SOURCE Raytheon Company

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