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Raytheon Reports First Quarter 2004 EPS of $0.24 from Continuing Operations and Increases Full-year Guidance for EPS, Bookings, Sales and Free Cash Flow

-- Earnings per share of $0.30 including a cumulative effect of change in accounting principle and discontinued operations -- Government and Defense bookings of $7.9 billion in the quarter, backlog up $3.8 billion during the quarter to $28.9 billion -- Fr

    WALTHAM, Mass., April 29  /PRNewswire-FirstCall/ -- Raytheon Company (NYSE:
RTN) reported first quarter 2004 income from continuing operations of $101
million or $0.24 per diluted share compared to $111 million or $0.27 per
diluted share in the first quarter 2003.  Non-cash pension expense (FAS/CAS
Pension Adjustment) negatively affected the quarter by $0.15 per diluted share
on a year-over-year basis.

    First quarter 2004 net income was $128 million or $0.30 per diluted share
compared to $95 million or $0.23 per diluted share in 2003.  Net income for
the first quarter of 2004 includes a $14 million after-tax loss in
discontinued operations or $0.03 per diluted share versus $16 million or $0.04
per diluted share in 2003.  Net income for the first quarter of 2004 also
includes a $41 million or $0.10 per diluted share cumulative effect of change
in accounting principle due to the previously announced change in the
Company's pension and other post-retirement benefit plans measurement date
from Oct. 31 to Dec. 31.

    Net sales for the first quarter 2004 were $4.7 billion, up 11 percent from
$4.2 billion in the comparable period in 2003.  Government and Defense sales
for the quarter (after the elimination of intercompany sales) increased 9
percent to $4.1 billion from $3.8 billion in the comparable quarter.
Integrated Defense Systems, Missile Systems, and Space and Airborne Systems
generated double-digit sales growth in the quarter.

    Free cash flow from continuing operations for the first quarter was an
outflow of $295 million versus an outflow of $514 million for the comparable
period in 2003.  Free cash flow, including discontinued operations, for the
first quarter 2004 was an outflow of $286 million versus an outflow of $819
million in 2003.  Free cash flow was significantly better than prior guidance
due to a successful previously discussed financial system implementation in
the Northeast combined with the receipt of a large international collection
earlier than expected and continued focus on working capital. Free cash flow
is a non-GAAP financial measure that the Company defines as operating cash
flow less capital spending and internal use software spending.  Attachment F
contains a table reconciling this measure to operating cash flow, the most
directly comparable GAAP measure.

    The Government and Defense businesses recorded first quarter bookings of
$7.9 billion compared to bookings of $5.0 billion in the first quarter of
2003.  Government and Defense backlog reached a record $28.9 billion, an
increase of $3.8 billion over year end 2003.

    Raytheon Aircraft Company's (RAC) first quarter bookings were $425 million
compared to $306 million in 2003.

    "I am pleased with our strong start in the first quarter," said William H.
Swanson, Raytheon Chairman and CEO.  "We are encouraged by our record bookings
and better than expected free cash flow."

    Outlook

    The Company now expects 2004 earnings per share from continuing operations
to be $1.30-1.40, higher than its prior guidance of $1.25-1.35.  The Company
also raised its full year guidance for bookings to $23 billion from $22
billion, and for net sales to more than $20 billion from $19.5-20.0 billion.
The Company now expects full year free cash flow to exceed $1 billion.  A
chart summarizing these changes is being posted to the Company's website.


   Segment Results

  Integrated Defense Systems

    Integrated Defense Systems (IDS) first quarter 2004 net sales were $839
million, up 28 percent compared to $654 million in the first quarter 2003, due
primarily to continued growth in DD(X), the Navy's future destroyer program,
and strong missile defense sales.  IDS generated $94 million of first quarter
2004 operating income compared to $74 million in the 2003 comparable quarter.

    During the quarter, the U.S. Army Aviation and Missile Command awarded IDS
a $122 million contract for the design and development of the Surface Launched
Advanced Medium Range Air-to-Air Missile (SLAMRAAM) system.  IDS also received
a $148 million contract to provide Patriot engineering services support.

    Intelligence and Information Systems

    Intelligence and Information Systems (IIS) first quarter 2004 net sales
were $494 million, up 7 percent compared to $462 million in the first quarter
2003.  IIS earned $45 million of operating income compared to $41 million in
the comparable quarter a year ago.

    During the quarter, IIS booked nearly $400 million in classified contract
wins.

    Missile Systems

    Missile Systems (MS) first quarter 2004 net sales were $965 million, up 13
percent compared to $857 million in the first quarter 2003, driven by
increased volume on the Phalanx and Standard Missile-3 programs.  MS generated
$107 million of operating income compared to $101 million in the comparable
quarter a year ago.

    During the quarter, MS booked $2.1 billion for the Kinetic Energy
Interceptor system contract.  Also during the quarter, MS booked a $525
million contract for the development and demonstration of the Non-Line of
Sight Launch System (NLOS-LS), a $170 million contract to produce 225 Tactical
Tomahawk LRIP missiles and a contract for Paveway II Laser Guided Bomb Kits.

    Network Centric Systems

    Network Centric Systems (NCS) first quarter 2004 net sales were $720
million, down 7 percent compared to $771 million in the first quarter 2003.
This decline is consistent with our projected reduction in sales in the air
traffic management and communications product lines.  NCS recorded an
operating profit of $55 million compared to $62 million in the comparable
quarter a year ago.

    Space and Airborne Systems

    Space and Airborne Systems (SAS) first quarter 2004 net sales were $1,013
million, up 13 percent compared to $894 million in the first quarter 2003, due
to stronger classified and international programs including ASTOR.  SAS
generated $129 million of operating income compared to $104 million in the
comparable quarter a year ago.

    During the quarter, SAS received $1.7 billion in bookings including $1
billion on a number of classified contracts.

    Technical Services

    Technical Services (TS) first quarter 2004 net sales were $474 million,
down 3 percent from $491 million in the first quarter 2003, due primarily to
the completion of a major base and range contract in the first quarter 2003.
TS reported an operating profit of $31 million in the first quarter of 2004
compared to $36 million in the comparable quarter a year ago.

    After the quarter close, the U.S. Navy awarded TS a competitive $237
million contract to provide engineering and technical services for self-
defense systems aboard U.S. Navy ships, land-based test sites and ships sold
to foreign countries by the United States.

    Aircraft

    RAC's first quarter 2004 net sales were $374 million, up 4 percent from
$361 million in the first quarter 2003.  RAC recorded an operating loss of $28
million in the quarter compared to a loss of $35 million in the comparable
quarter in 2003.

    RAC delivered 25 commercial aircraft in the first quarter of 2004,
compared to 31 in the same quarter last year.

    Other

    Net sales for this segment in the first quarter 2004 were $175 million
compared to $40 million in the first quarter 2003.  The segment recorded an
operating loss of $15 million in the first quarter 2004 compared to a loss of
$3 million in the comparable quarter in 2003.  The consolidation of Flight
Options' results in this quarter account for $133 million of the increased
sales and $9 million of the increase in loss versus the prior year.

    Discontinued Operations

    During the quarter, the Company signed a final settlement agreement on the
two Massachusetts power plants and also settled a number of additional issues
on completed construction projects in its former engineering and construction
businesses.  The Company recorded an after-tax loss from discontinued
operations for the quarter of $14 million, related to its former engineering
and construction and Aircraft Integration Systems businesses.

    Raytheon Company (NYSE: RTN), with 2003 sales of $18.1 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 78,000 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 investigations; 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 outstanding letters of credit, surety
bonds, guarantees and other support agreements related to a number of
contracts and leases of our former engineering and construction business unit.
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.

    Conference Call on the First Quarter 2004 Financial Results

    Raytheon's financial results conference call will be Thursday, Apr. 29,
2004 at 9 a.m. EDT. Participants will be William 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) 901 - 5218.  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.

      Attachment A

   Raytheon Company
   Financial Information
   First Quarter 2004

  (In millions except per share amounts)


                                                     Three Months Ended
                                               28-Mar-04          30-Mar-03

  Net sales                                       $4,676             $4,201

  Cost of sales                                    3,984              3,480
  Administrative and selling expenses                326                302
  Research and development expenses                  115                106

  Total operating expenses                         4,425              3,888

  Operating income                                   251                313

  Interest expense                                   117                143
  Interest income                                    (12)               (12)
  Other expense, net                                   -                 23

  Non-operating expense, net                         105                154

  Income from continuing operations
   before taxes                                      146                159

  Federal and foreign income taxes                    45                 48

  Income from continuing operations                  101                111

  Loss from discontinued operations,
   net of tax                                        (14)               (16)

  Income before accounting change                     87                 95

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

  Net  income                                       $128                $95

  Earnings per share from continuing
   operations
      Basic                                        $0.24              $0.27
      Diluted                                      $0.24              $0.27

  Loss per share from discontinued
   operations
      Basic                                       $(0.03)            $(0.04)
      Diluted                                     $(0.03)            $(0.04)

  Earnings per share from cumulative
   effect of change in
    change in accounting principle
      Basic                                        $0.10               $-
      Diluted                                      $0.10               $-

  Earnings per share
      Basic                                        $0.31              $0.23
      Diluted                                      $0.30              $0.23

  Average shares outstanding
      Basic                                        418.6              408.5
      Diluted                                      421.3              411.1



  Attachment B

   Raytheon Company
   Segment Information
   First Quarter 2004

  (In millions)


                  Net Sales         Operating Income      Operating Margin
             Three Months Ended    Three Months Ended    Three Months Ended
            28-Mar-04  30-Mar-03  28-Mar-04  30-Mar-03  28-Mar-04  30-Mar-03

  Integrated
   Defense
   Systems      $ 839      $ 654       $ 94       $ 74      11.2%      11.3%
  Intelligence
  and Information
  Systems         494        462         45         41       9.1%       8.9%
  Missile Systems 965        857        107        101      11.1%      11.8%

  Network Centric
   Systems        720        771         55         62       7.6%       8.0%

  Space and
   Airborne
   Systems      1,013        894        129        104      12.7%      11.6%
  Technical
   Services       474        491         31         36       6.5%       7.3%

  Aircraft        374        361        (28)       (35)     -7.5%      -9.7%

  Other           175         40        (15)        (3)     -8.6%      -7.5%

  FAS/CAS Pension
   Adjustment       -          -       (121)       (28)
  Corporate and
   Eliminations  (378)      (329)       (46)       (39)

  Total       $ 4,676    $ 4,201      $ 251      $ 313       5.4%       7.5%


  Government
   and Defense
   businesses
   after
   eliminations $4,127   $ 3,800      $ 426      $ 390      10.3%      10.3%


  Attachment C

   Raytheon Company
   Other Information
   Continuing Operations
   First Quarter 2004


                                                         Backlog
                                                      (In millions)
                                              28-Mar-04          30-Mar-03

  Integrated Defense Systems                     $6,534             $5,364
  Intelligence and Information Systems            3,969              3,766
  Missile Systems                                 7,795              4,261
  Network Centric Systems                         3,447              2,946
  Space and Airborne Systems                      5,599              4,593
  Technical Services                              1,507              1,507
  Aircraft                                        2,233              4,027
  Other                                             161                220

                                                $31,245            $26,684

  Government and Defense businesses             $28,851            $22,437

  U.S. government backlog included
   above                                        $25,551            $19,359

  Funded backlog                                $17,934            $17,786



                                                        Bookings
                                                     (In millions)
                                                   Three months ended
                                              28-Mar-04           30-Mar-03

  Government and Defense businesses              $7,921              $5,044
  Commercial businesses                             584                 336

                                                 $8,505              $5,380


                                             New Aircraft Deliveries (Units)
                                                    Three Months Ended
                                              28-Mar-04           30-Mar-03

  Hawker                                              6                   8
  Premier I                                           3                   3
  Hawker 400XP                                        4                   3
  King Air                                            5                   8
  1900D Commuter                                      1                   -
  Pistons                                             8                  14
  T-6A                                               13                  14
     Total                                           40                  50


                                               New Aircraft Bookings (Units)
                                                    Three Months Ended
                                              28-Mar-04           30-Mar-03

  Hawker                                              7                   7
  Premier I                                           2                   3
  Hawker 400XP                                        2                   2
  King Air                                           17                   6
  1900D Commuter                                      1                   -
  Pistons                                            32                  13
  T-6A                                                7                   4
     Total                                           68                  35


  Attachment D

   Raytheon Company
   Balance Sheet Information
   First Quarter 2004

  (In millions)


                                               28-Mar-04          31-Dec-03
  Assets
  Cash and cash equivalents                         $340               $661
  Accounts receivable                                446                485
  Contracts in process                             3,441              2,762
  Inventories                                      2,003              1,998
  Deferred federal and foreign income
   taxes                                             524                466
  Prepaid expenses and other current
   assets                                            103                154
  Assets from discontinued operations                 55                 59
    Total current assets                           6,912              6,585

  Property, plant and equipment, net               2,681              2,711
  Deferred federal and foreign income
   taxes                                             244                337
  Goodwill                                        11,478             11,479
  Other assets, net                                2,447              2,556
      Total assets                               $23,762            $23,668

  Liabilities and Stockholders' Equity
  Notes payable and current portion of
   long-term debt                                    $13                $15
  Advance payments, less contracts in
   process                                         1,188              1,038
  Accounts payable                                   757                833
  Accrued salaries and wages                         711                767
  Other accrued expenses                           1,098              1,153
  Liabilities from discontinued
   operations                                         68                 43
    Total current liabilities                      3,835              3,849

  Accrued retiree benefits and other
   long-term liabilities                           3,237              3,281
  Long-term debt                                   6,538              6,517
  Subordinated notes payable                         859                859
  Stockholders' equity                             9,293              9,162
      Total liabilities and
       stockholders' equity                      $23,762            $23,668


  Attachment E

   Raytheon Company
   Cash Flow Information
   First Quarter 2004

  (In millions)

  Cash flow information
                                                      Three Months Ended
                                               28-Mar-04          30-Mar-03

  Income from continuing operations                 $101               $111
  Depreciation                                        85                 76
  Amortization                                        16                 13
  Working capital                                   (604)              (674)
  Discontinued operations                              9               (305)
  Capital spending                                   (60)               (58)
  Internal use software spending                     (25)               (21)
  Other                                              192                 39
        Subtotal - free cash flow (a)               (286)              (819)

  Net activity in financing receivables               95                104
  Acquisitions                                       (70)               (40)
  Divestitures and sale of investments                 4                  -
  Dividends                                          (83)               (83)
  Issuance of common stock                             4                 17
  Debt (repayments) issuances                         (3)               793
  Space Imaging debt guarantee                         -               (130)
  Other                                               18                  1
           Total cash flow                         $(321)             $(157)


  Segment free cash flow information
                                                       Three Months Ended
                                                28-Mar-04          30-Mar-03

  Integrated Defense Systems                       $(129)              $(13)
  Intelligence and Information Systems               (45)               (87)
  Missile Systems                                    (41)              (219)
  Network Centric Systems                           (129)              (173)
  Space and Airborne Systems                        (115)               (50)
  Technical Services                                  16                  6
  Aircraft                                           (20)                 4
  Other                                                -                  4
  Discontinued operations                              9               (305)
  Corporate                                          168                 14
                                                   $(286)             $(819)


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


  Attachment F

   Raytheon Company
   Reconciliation of Non-GAAP Financial Measures and Other Information
   First Quarter 2004

  (In millions)

  Free cash flow

                                                      Three Months Ended
                                               28-Mar-04           30-Mar-03
  Operating cash flow                             $(201)              $(740)
  Less: Capital spending                            (60)                (58)
        Internal use software
         spending                                   (25)                (21)
          Free cash flow                           (286)               (819)
  Less: Discontinued operations                       9                (305)
            Free cash flow from
             continuing operations                $(295)              $(514)

  Note:  Free cash flow represents a non-GAAP financial measure defined as
         operating cash flow less capital spending and internal use
         software spending.  The Company's management uses non-GAAP
         financial measures to evaluate the operating performance of its
         business and as a component for determining incentive-based
         compensation.  In addition, the Company believes that free cash
         flow is an important measure of performance used by some
         investors, equity analysts and others to make informed investment
         decisions.  The definitions used here may differ from those used
         by other companies.

  Debt-to-capital ratio

                                              28-Mar-04           31-Dec-03
  Notes payable and current portion
   of long-term debt                                $13                 $15
  Long-term debt                                  6,538               6,517
  Subordinated notes payable                        859                 859
            Total debt                           $7,410              $7,391

  Notes payable and current portion
   of long-term debt                                $13                 $15
  Long-term debt                                  6,538               6,517
  Subordinated notes payable                        859                 859
  Stockholders' equity                            9,293               9,162
            Total capital                       $16,703             $16,553

            Debt-to-capital ratio                 44.4%               44.7%


  Media Contact:
   James Fetig
   781-522-5111

  Investor Relations Contact:
   Tim Oliver
   781-522-5141


SOURCE: Raytheon Company

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



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