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Raytheon Reports Strong Fourth Quarter 2004 EPS of $0.54 from Continuing Operations

* Sales increase of 12 percent for the quarter and year * Free cash flow from continuing operations of $712 million in the quarter and $1.5 billion for the year * Net debt of $4.6 billion; reduction of $2.1 billion for year

    WALTHAM, Mass., Feb. 3, 2005  /PRNewswire-FirstCall/ -- Raytheon Company
(NYSE: RTN) reported fourth quarter 2004 income from continuing operations of
$246 million or $0.54 per diluted share compared to $217 million or $0.52 per
diluted share in the fourth quarter 2003.  Non-cash pension expense (FAS/CAS
Pension Adjustment) negatively affected the fourth quarter 2004 by $0.13 per
diluted share on a year-over-year basis.

    Income from continuing operations for the fourth quarter of 2004 and 2003
included a net after-tax charge of $13 million and $14 million, respectively.
The net charge in the fourth quarter 2004 consisted of an after-tax $55
million charge ($85 million pretax) from the early redemption of debt and a
$42 million benefit from the change in the tax law which extends the carry
forward period of foreign tax credits.  The net charge in the fourth quarter
2003 consisted of an after-tax $50 million charge ($77 million pretax) from
the early redemption of debt and an after-tax $36 million gain ($55 million
pretax) from the sale of the Company's remaining investment in its former
aviation support business.

    Fourth quarter 2004 net income, including the effects of discontinued
operations, was $245 million or $0.54 per diluted share compared to $205
million or $0.49 per diluted share in 2003.

    Net sales for the fourth quarter 2004 were $5.7 billion, up 12 percent
from $5.1 billion in the comparable period in 2003.  Government and Defense
sales for the quarter (after the elimination of intercompany sales) increased
12 percent to $4.7 billion from $4.2 billion in the comparable quarter.

    Free cash flow from continuing operations for the fourth quarter was $712
million versus $906 million for the comparable period in 2003.  Free cash flow
is defined by the Company as operating cash flow less capital spending and
internal use software spending.

    During the fourth quarter of 2004, the Company retired $1.2 billion of
debt, bringing the total year debt reduction to $2.2 billion.  Net debt was
$4.6 billion at the end of 2004 compared with $6.7 billion at the end of 2003.
Net debt is defined as total debt less cash and cash equivalents.

    "In 2004 we said we would focus on predictable performance, strong
relationships, and innovative customer solutions.  We did what we said we were
going to do and then some," said William H. Swanson, Raytheon Chairman and
CEO.  "This is our fifth consecutive quarter of predictable financial
performance.  Our focus on the customer is paying dividends and more
importantly, we continue to build on the trust and confidence they have in
Raytheon which is reflected in our growth."

    Full Year Financial Results

    For the full year the Company reported income from continuing operations
of $439 million or $0.99 per diluted share compared to $535 million or $1.29
per diluted share in 2003.  Income from continuing operations in 2004 was
negatively affected by an after-tax charge of $222 million or $0.50 per
diluted share for the second quarter settlement of a class action shareholder
lawsuit.  Non-cash pension expense negatively affected 2004 results by $0.75
per diluted share versus $0.18 per diluted share in 2003.  Income from
continuing operations in 2003 included third quarter after-tax charges of $158
million ($226 million pretax) or $0.38 per diluted share from Network Centric
Systems and Technical Services.

    The Company reported 2004 net income of $417 million or $0.94 per diluted
share compared to $365 million or $0.88 per diluted share in 2003.  Net income
for 2004 included a $63 million after-tax loss in discontinued operations or
$0.14 per diluted share, versus $170 million or $0.41 per diluted share in
2003.  Net income for 2004 also included a previously reported first quarter
$41 million or $0.09 per diluted share benefit from a cumulative effect of
change in accounting principle due to the change in the Company's pension and
other post-retirement benefit plans measurement date from Oct. 31 to Dec. 31.

    Total 2004 net sales for the Company were $20.2 billion compared to $18.1
billion for 2003, an increase of 12 percent.  Government and Defense sales for
the year (after the elimination of intercompany sales) increased 11 percent to
$17.2 billion from $15.5 billion in 2003.

    Free cash flow from continuing operations was $1.5 billion in 2004
compared to $1.6 billion in 2003.  Free cash flow, including discontinued
operations, for the full year 2004 was $1.4 billion versus $1.0 billion in
2003.

    Bookings and Backlog

    The Government and Defense businesses recorded fourth quarter bookings of
$4.2 billion and bookings for the full year 2004 of $21.9 billion.  Government
and Defense ended 2004 with a backlog of $29.6 billion, an increase of $4.5
billion over year end 2003.

    Raytheon Aircraft Company's bookings were $1.1 billion in the fourth
quarter of both 2004 and 2003.  Full year 2004 bookings were $3.1 billion
versus $2.2 billion for 2003.

    Outlook

    The Company reaffirmed its guidance for 2005 earnings per share from
continuing operations of $1.80 - $1.90.  This guidance includes higher pension
expense attributable to a lower discount rate offset by expected profit
improvements in 2005.  Charts containing the Company's guidance are available
on the Company's website at http://www.raytheon.com/.

  Segment Results

  Integrated Defense Systems

    Integrated Defense Systems (IDS) fourth quarter 2004 net sales were $914
million, up 16 percent compared to $791 million in the fourth quarter 2003,
due primarily to growth in Japan Patriot Product Improvement Program, DD(X),
and Cobra Judy.  IDS recorded $119 million of fourth quarter 2004 operating
income compared to $95 million in the comparable quarter a year ago.

    During the quarter, IDS booked $282 million for the award of Ballistic
Missile Defense System (BMDS) Radar Options 2 and 3 by the Missile Defense
Agency (MDA).  IDS also booked an additional $234 million for Japan Patriot
Product Improvement Program, for a total of $597 million for the year.

    Intelligence and Information Systems

    Intelligence and Information Systems (IIS) fourth quarter 2004 net sales
were $601 million, up 14 percent compared to $525 million in the fourth
quarter 2003, due primarily to continued growth in classified programs.  IIS
recorded $51 million of operating income compared to $53 million in the
comparable quarter a year ago.  Operating income in the fourth quarter 2004
included a charge for nonrecoverable costs.

    During the quarter, IIS booked $373 million on a number of classified
contracts, bringing total classified bookings for the year to over $1.3
billion.

    Missile Systems

    Missile Systems (MS) fourth quarter 2004 net sales were $1,012 million, up
7 percent compared to $943 million in the fourth quarter 2003.  MS recorded
$114 million of operating income compared to $108 million in the comparable
quarter a year ago.

    During the quarter, MS booked $201 million for the option exercise of
AMRAAM production and logistics support.  Also, MS was awarded a $116 million
contract for the continued production of AIM-9X Sidewinder short-range air-to-
air missiles.

    Network Centric Systems

    Network Centric Systems (NCS) fourth quarter 2004 net sales were $836
million, up 9 percent compared to $766 million in the fourth quarter 2003. NCS
recorded operating income of $88 million compared to $75 million in the
comparable quarter a year ago.

    During the quarter, NCS booked $132 million for the definitization of a
contract modification with the Federal Aviation Administration for the Wide
Area Augmentation System (WAAS).

    Space and Airborne Systems

    Space and Airborne Systems (SAS) fourth quarter 2004 net sales were $1,141
million, up 18 percent compared to $967 million in the fourth quarter 2003,
due primarily to an increase in classified and production programs.  SAS
recorded $159 million of operating income compared to $130 million in the
comparable quarter a year ago.  Operating income was higher due primarily to
productivity improvements on production programs and higher volume, partially
offset by a $55 million charge on an international program as a result of a
recent qualification test failure.

    During the quarter, SAS booked $102 million on a number of classified
contracts.  Also, SAS received an option to proceed with its X-band thin radar
aperture (XTRA) contract, allowing the Company to produce the next generation
radar antenna technology for the Joint Unmanned Combat Air System (J-UCAS).

    Technical Services

    Technical Services (TS) fourth quarter 2004 net sales were $593 million,
up 6 percent compared to $560 million in the fourth quarter 2003.  TS recorded
operating income of $46 million in the fourth quarter of 2004 compared to $39
million in the comparable quarter a year ago.

    During the quarter, TS booked $76 million on the Live Training Program
with the U.S. Army.  Also, TS was competitively awarded a contract with a
potential value of $94 million by the U.S. Navy to provide mission support for
Relocatable-Over-the-Horizon-Radar (ROTHR) systems.

    Aircraft

    Raytheon Aircraft Company (RAC) fourth quarter 2004 net sales were $853
million, up 19 percent from $717 million in the fourth quarter 2003.  RAC
recorded operating income of $47 million in the quarter compared to $29
million in the comparable quarter in 2003.  Operating income in the fourth
quarter 2004 included a favorable profit adjustment of $21 million on the T-6A
program.  Operating income in the fourth quarter 2003 included a favorable
profit adjustment on the T-6A program of $37 million, partially offset by a
$22 million charge on the Premier program.

    RAC delivered 117 commercial aircraft in the fourth quarter of 2004,
compared to 100 in the same quarter last year.  For the year, RAC delivered
300 commercial aircraft, compared to 259 in 2003.

    During the quarter, RAC received a $240 million contract modification to
provide for the Lot 12 option exercise of JPATS T-6A.

    As previously announced, during the quarter the Federal Aviation
Administration (FAA) granted a provisional type certification for the Hawker
Horizon.  Customer acceptance of the first Hawker Horizon was completed in
December.

    Other

    Net sales for this segment in the fourth quarter 2004 were $183 million
compared to $230 million in the fourth quarter 2003.  The segment recorded an
operating loss of $11 million in the fourth quarter 2004 compared to an
operating loss of $21 million in the comparable quarter in 2003.

    Discontinued Operations

    During the quarter, the Company recorded an after-tax loss from
discontinued operations of $1 million related to its former engineering and
construction and Aircraft Integration Systems businesses.

    Raytheon Company (NYSE: RTN), with 2004 sales of $20.2 billion, is an
industry leader in defense and government electronics, space, information
technology, technical services, and business and special mission aircraft.
With headquarters in Waltham, Mass., Raytheon employs 80,000 people worldwide.

    Disclosure Regarding Forward-looking Statements

    Certain statements included in this release, including any statements
relating to the Company's future plans, objectives, and projected future
financial performance, contain or are based on, forward-looking statements
within the meaning of the federal securities laws.  Specifically, statements
that are not historical facts, including statements accompanied by words such
as "believe," "expect," "estimate," "intend," or "plan," and variations of
these words and similar expressions, are intended to identify forward-looking
statements and convey the uncertainty of future events or outcomes.  The
Company cautions readers that any such forward-looking statements are based on
assumptions that the Company believes are reasonable, but are subject to a
wide range of risks, and actual results may differ materially.  The Company
expressly disclaims any current intention to provide updates to forward-
looking statements, and the estimates and assumptions associated with them,
after the date of this release.  Important factors that could cause actual
results to differ include, but are not limited to: the ability to obtain or
the timing of obtaining future government awards; the availability of
government funding; changes in government or customer priorities due to
program reviews or revisions to strategic objectives; difficulties in
developing and producing operationally advanced technology systems;
termination of government contracts; program performance, including resolution
of claims; timing of contract payments; the performance of critical
subcontractors; government import and export policies and other government
regulations; the ultimate resolution of contingencies and legal matters,
including government investigations and a securities class action lawsuit
related to the sale of our former engineering and construction business; the
ultimate resolution of insurance coverage for the class action shareholder and
derivative lawsuits against the Company; the effect of market conditions,
particularly in relation to the general aviation, commuter, and fractional
aircraft markets; cost growth risks inherent with large long-term fixed price
contracts; conflicts with other investors in joint ventures and less than
wholly-owned businesses; and risks associated with our former engineering and
construction business related to outstanding letters of credit, surety bonds,
guarantees and similar agreements and the resolution of claims and litigation.
Further information regarding the factors that could cause actual results to
differ materially from the projected results can be found in the Company's
filings with the Securities and Exchange Commission, including the Company's
Annual Report on Form 10-K for the year ended December 31, 2003 and quarterly
reports on Form 10-Q, copies of which may be obtained at the Company's website
at http://www.raytheon.com/.

    Conference Call on the Fourth Quarter 2004 Financial Results

    Raytheon's financial results conference call will be Thursday, February 3,
2005 at 9 a.m. EST.  Participants will be William H. Swanson, Chairman and
CEO, Edward Pliner, senior vice president and CFO, and other Company
executives.

    The dial-in number for the conference call will be (800) 265 - 0241.  The
conference call will also be audiocast on the Internet at
http://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 urged 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.

  Media Contact:                 Investor Relations Contact:
   James Fetig                    Greg Smith
   781-522-5111                   781-522-5141


  Attachment A

  Raytheon Company
  Financial Information
  Fourth Quarter 2004



  (In millions except per share amounts)
                                   Three Months Ended   Twelve Months Ended

                                   31-Dec-04 31-Dec-03 31-Dec-04   31-Dec-03

  Net sales                           $5,704  $5,101    $20,245     $18,109

  Cost of sales                        4,727   4,174     16,933      15,000
  Administrative and selling expenses    411     354      1,433       1,306
  Research and development expenses      126     121        491         487

  Total operating expenses             5,264   4,649     18,857      16,793

  Operating income                       440     452      1,388       1,316

  Interest expense                        92     122        418         537
  Interest income                        (12)    (17)       (45)        (50)
  Other expense, net                      68      40        436          67

  Non-operating expense, net             148     145        809         554

  Income from continuing operations
   before taxes                          292     307        579         762

  Federal and foreign income taxes        46      90        140         227

  Income from continuing operations      246     217        439         535

  Loss from discontinued
   operations, net of tax                 (1)    (12)       (63)       (170)

  Income before accounting change        245     205        376         365

  Cumulative effect of change in
   accounting principle, net of tax        -       -         41           -

  Net income                            $245    $205       $417        $365

  Earnings per share from
   continuing operations
      Basic                            $0.55   $0.52      $1.00       $1.30
      Diluted                          $0.54   $0.52      $0.99       $1.29

  Loss per share from discontinued
   operations
      Basic                             $-    $(0.03)    $(0.14)     $(0.41)
      Diluted                           $-    $(0.03)    $(0.14)     $(0.41)

  Earnings per share from
   cumulative effect of change in
   accounting principle
      Basic                             $-      $-        $0.09        $-
      Diluted                           $-      $-        $0.09        $-

  Earnings per share
      Basic                            $0.54   $0.49      $0.95       $0.88
      Diluted                          $0.54   $0.49      $0.94       $0.88

  Average shares outstanding
      Basic                            450.2   416.3      438.1       412.7
      Diluted                          456.4   418.7      442.2       415.4


  Attachment B

  Raytheon Company
  Segment Information
  Fourth Quarter 2004

  (In millions)

                                                         Operating Income
                                                            As a Percent
                        Net Sales      Operating Income       of Sales
                       Three Months      Three Months       Three Months
                          Ended             Ended              Ended
                     31-Dec     31-Dec  31-Dec   31-Dec   31-Dec   31-Dec
                       -04        -03     -04      -03      -04      -03

  Integrated Defense
   Systems           $ 914     $ 791   $ 119      $95     13.0%   12.0%
  Intelligence and
   Information Systems 601       525      51       53      8.5%   10.1%
  Missile Systems    1,012       943     114      108     11.3%   11.5%
  Network Centric
   Systems             836       766      88       75     10.5%    9.8%
  Space and Airborne
   Systems           1,141       967     159      130     13.9%   13.4%
  Technical Services   593       560      46       39      7.8%    7.0%
  Aircraft             853       717      47       29      5.5%    4.0%
  Other                183       230     (11)     (21)   -6.0%   -9.1%
  FAS/CAS Pension
   Adjustment            -         -    (118)     (27)
  Corporate and
   Eliminations       (429)     (398)    (55)     (29)

  Total             $5,704    $5,101   $ 440    $ 452      7.7%    8.9%


                                                         Operating Income
                                                           As a Percent
                         Net Sales     Operating Income       of Sales
                       Twelve Months     Twelve Months     Twelve Months
                          Ended              Ended             Ended
                     31-Dec    31-Dec   31-Dec   31-Dec   31-Dec  31-Dec
                       -04       -03      -04      -03      -04     -03

  Integrated Defense
   Systems          $3,456    $2,864    $417     $331     12.1%   11.6%
  Intelligence and
   Information
   Systems           2,215     2,045     198      194      8.9%    9.5%
  Missile Systems    3,844     3,538     436      424     11.3%   12.0%
  Network Centric
   Systems           3,113     2,809     274       19      8.8%    0.7%
  Space and Airborne
   Systems           4,068     3,677     568      492     14.0%   13.4%
  Technical Services 2,075     1,963     151      107      7.3%    5.5%
  Aircraft           2,421     2,088      63        2      2.6%    0.1%
  Other                675       573     (40)     (34)    -5.9%   -5.9%
  FAS/CAS Pension
   Adjustment            -         -    (474)    (109)
  Corporate and
   Eliminations     (1,622)   (1,448)   (205)    (110)

  Total            $20,245   $18,109  $1,388   $1,316      6.9%    7.3%


  Attachment C

  Raytheon Company
  Other Information
  Fourth Quarter 2004

                                                               Funded
                                          Backlog             Backlog
                                       (In millions)       (In millions)
                                    31-Dec-04  31-Dec-03 31-Dec-04 31-Dec-03

  Integrated Defense Systems          $6,628     $6,526   $3,454     $3,318
  Intelligence and Information
   Systems                             3,913      3,899      770        655
  Missile Systems                      8,341      5,028    4,517      4,069
  Network Centric Systems              3,595      3,259    2,627      2,488
  Space and Airborne Systems           5,216      4,865    3,127      3,801
  Technical Services                   1,918      1,510      976        858
  Aircraft                             2,638      2,279    2,638      2,279
  Other                                  294        176      294        176

                                     $32,543    $27,542  $18,403    $17,644

  Government and Defense businesses  $29,611    $25,087  $15,471    $15,189

  U.S. government backlog included
   above                             $25,525    $21,353



                                        Bookings             Bookings
                                     (In millions)        (In millions)
                                   Three months ended  Twelve months ended
                                  31-Dec-04  31-Dec-03 31-Dec-04  31-Dec-03

  Government and Defense
   businesses                       $4,200     $7,065   $21,867     $19,967
  Commercial businesses              1,275      1,319     3,833       2,726

                                    $5,475     $8,384   $25,700     $22,693


                                      New Aircraft         New Aircraft
                                   Deliveries (Units)   Deliveries (Units)
                                   Three Months Ended  Twelve months ended
                                  31-Dec-04  31-Dec-03 31-Dec-04   31-Dec-03

  Horizon                                -          -         -           -
  Hawker 800XP                          17         19        50          47
  Premier I                             14         11        37          29
  Hawker 400XP                          14          7        28          24
  King Air                              46         39       104          86
  1900D Commuter                         -          -         1           1
  Pistons                               35         26        93          82
  T-6A                                  16         18        67          68
    Total                              142        120       380         337


                                      New Aircraft         New Aircraft
                                    Bookings (Units)     Bookings (Units)
                                   Three Months Ended  Twelve months ended
                                  31-Dec-04  31-Dec-03 31-Dec-04   31-Dec-03

  Horizon                                2          2         4           5
  Hawker 800XP                          17         12        79          34
  Premier I                             13          8        34          17
  Hawker 400XP                          11         54        43          70
  King Air                              45         36       139          85
  1900D Commuter                         -          -         1           1
  Pistons                               35         30       157          71
  T-6A                                  50         47        57          51
    Total                              173        189       514         334


  Attachment D

  Raytheon Company
  Preliminary Financial Information
  Fourth Quarter 2004

  (In millions)

  Balance sheets
                                                31-Dec-04          31-Dec-03
  Assets
  Cash and cash equivalents                         $556               $661
  Accounts receivable                                478                485
  Contracts in process                             3,514              3,302
  Inventories                                      1,745              1,998
  Deferred federal and foreign income taxes          469                466
  Prepaid expenses and other current assets          343                154
  Assets from discontinued operations                 19                 59
    Total current assets                           7,124              7,125

  Property, plant and equipment, net               2,738              2,711
  Deferred federal and foreign income taxes           71                337
  Goodwill                                        11,516             11,479
  Other assets, net                                2,704              2,556
      Total assets                               $24,153            $24,208

  Liabilities and Stockholders' Equity
  Notes payable and current portion of
   long-term debt                                   $516                $15
  Advance payments, less contracts in process      1,900              1,578
  Accounts payable                                   867                833
  Accrued salaries and wages                         934                767
  Other accrued expenses                           1,403              1,086
  Liabilities from discontinued operations            24                 43
    Total current liabilities                      5,644              4,322

  Accrued retiree benefits and other
   long-term liabilities                           3,224              3,281
  Long-term debt                                   4,229              6,517
  Subordinated notes payable                         408                859
  Minority interest                                   97                 67
  Stockholders' equity                            10,551              9,162
      Total liabilities and
       stockholders' equity                      $24,153            $24,208


  Attachment E

  Raytheon Company
  Preliminary Cash Flow Information
  Fourth Quarter 2004

  (In millions)

  Cash flow information
                                   Three Months Ended   Twelve Months Ended
                                  31-Dec-04  31-Dec-03 31-Dec-04   31-Dec-03

  Income from continuing operations   $246      $217       $439        $535
  Depreciation                          94        97        361         333
  Amortization                          19        17         73          60
  Working capital                      435       702        650         708
  Discontinued operations              (11)      (48)       (43)       (533)
  Capital spending                    (154)     (185)      (363)       (428)
  Internal use software spending       (30)      (27)      (103)        (98)
  Other                                102        85        398         466
      Subtotal - free cash flow (a)    701       858      1,412       1,043

  Net activity in financing
   receivables                          48       309        193         465
  Sale of short-term investments        74         -          -           -
  Acquisitions                         (42)        -       (112)        (60)
  Divestitures and sale of investments  43        57         47         111
  Dividends                            (91)      (84)      (349)       (331)
  Issuance of common stock               -        11        867          74
  Debt repayments                   (1,253)     (706)    (2,254)       (965)
  Space Imaging debt guarantee           -         -          -        (130)
  Synthetic lease maturity               -         -          -        (125)
  Other                                 27        13         91          35
        Total cash flow              $(493)     $458      $(105)       $117


  Segment free cash flow information
                                  Three Months Ended    Twelve Months Ended
                                  31-Dec-04 31-Dec-03  31-Dec-04   31-Dec-03

  Integrated Defense Systems          $126       $99       $399        $318
  Intelligence and Information
   Systems                              57        71        152          88
  Missile Systems                       65       327        285         244
  Network Centric Systems              173       131        240         115
  Space and Airborne Systems            80       131        237         365
  Technical Services                    34        28         69         104
  Aircraft                              84        89        134          20
  Other                                 15       (37)       (83)        (55)
  Discontinued operations              (11)      (48)       (43)       (533)
  Corporate                             78        67         22         377
                                      $701      $858     $1,412      $1,043


  (a) See Attachment F for a description of free cash flow.


  Attachment F

  Raytheon Company
  Non-GAAP Financial Measures
  Fourth Quarter 2004

    Free cash flow is a "non-GAAP" financial measure under SEC regulations.
The Company defines free cash flow as operating cash flow less capital
spending and internal use software spending.  Our definition may differ from
similarly titled measures used by others.  The Company uses free cash flow to
facilitate management's internal comparisons to the Company's historical
operating results and to competitors' operating results and as an element of
management incentive compensation.  The Company believes disclosure of free
cash flow performance provides investors greater transparency with respect to
information used by management in its financial and operational decision
making.  While this information may be useful in evaluating the Company, it
should be considered supplemental to and not as a substitute for financial
information prepared in accordance with generally accepted accounting
principles.

  Free cash flow
                                     Three Months Ended  Twelve Months Ended
                                     31-Dec-04 31-Dec-03 31-Dec-04 31-Dec-03
  Operating cash flow                    $885    $1,070   $1,878    $1,569
  Less : Capital spending                (154)     (185)    (363)     (428)
         Internal use software spending   (30)      (27)    (103)      (98)
          Free cash flow                  701       858    1,412     1,043
  Plus : Discontinued operations           11        48       43       533
          Free cash flow from
           continuing operations         $712      $906   $1,455    $1,576


SOURCE: Raytheon Company



Web site:  http://www.raytheon.com/




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