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Raytheon Reports Strong Third Quarter 2009 Results; Increases Full-Year Guidance
Highlights
Net sales of $6.2 billion, up 6 percent
Income from continuing operations of $499 million, up 14 percent
Earnings per share (EPS) from continuing operations of $1.25, up 24 percent
Strong operating cash flow from continuing operations of $749 million
Increased full-year 2009 guidance for EPS and return on invested capital (ROIC)
WALTHAM, Mass., Oct. 22, 2009 /PRNewswire-FirstCall/ -- Raytheon Company (NYSE: RTN) reported third quarter 2009 income from continuing operations of $499 million, up 14 percent compared to $437 million in the third quarter 2008. EPS from continuing operations for the third quarter 2009 was $1.25, up 24 percent compared to $1.01 in the third quarter 2008.
"Our continued solid performance and outlook for future growth demonstrate the strength of our Company," said William H. Swanson, Raytheon's Chairman and CEO. "Our technology and innovative solutions are well aligned with our U.S. and international customers' evolving priorities."
Net sales for the third quarter 2009 were $6.2 billion, up 6 percent from $5.9 billion in the third quarter 2008.
Operating cash flow from continuing operations in the third quarter 2009 was $749 million compared to $758 million in the third quarter 2008. In the third quarter 2009 the Company made $547 million in cash contributions to its pension plans compared to $137 million in the third quarter 2008. This substantially completed the Company's planned cash contributions to its pension plans of approximately $1.1 billion in 2009, consistent with the total cash contributions made in full-year 2008. The higher cash contributions in the third quarter 2009 were largely offset by a $397 million improvement in working capital.
In the third quarter 2009 the Company repurchased 6.4 million shares of common stock for $300 million, as part of the Company's previously announced share repurchase program. Year-to-date 2009, the Company repurchased 19.8 million shares of common stock for $900 million.
The Company ended the third quarter 2009 in a net cash position of $149 million ($2.4 billion in cash and cash equivalents less total debt of $2.3 billion).
Summary Financial
Results 3rd Quarter Nine Months
----------- -----------
($in millions,
except per % %
share data) 2009 2008 Change 2009 2008 Change
---- ---- ------ ---- ---- ------
Net sales $6,205 $5,864 6% $18,214 $17,088 7%
Total operating
expenses 5,440 5,174 15,972 15,121
----- ----- ------ ------
Operating income 765 690 11% 2,242 1,967 14%
Non-operating
expenses, net 18 31 66 62
----- ----- ----- -----
Income from cont.
ops. before taxes $747 $659 13% $2,176 $1,905 14%
Income from
continuing
operations $499 $437 14% $1,460 $1,270 15%
Income from
continuing
operations
attributable to
Raytheon Company $491 $427 15% $1,432 $1,253 14%
Net income
attributable to
Raytheon Company $490 $427 15% $1,431 $1,251 14%
Diluted EPS from
cont. ops. $1.25 $1.01 24% $3.60 $2.92 23%
Operating cash
flow from cont.
ops. $749 $758 $1,672 $1,592
FAS/CAS pension
adj. Inc./(Exp.) $(1) $(26) $21 $(93)
Workdays in fiscal
reporting calendar 63 63 188 190
Bookings and Backlog
Bookings 3rd Quarter Nine Months
----------- -----------
($in millions) 2009 2008 2009 2008
---- ---- ---- ----
Total Bookings $5,137 $5,766 $17,993 $18,290
======= ======= ======= =======
Backlog Period Ending
-------------
($in millions) 09/27/09 12/31/08 09/28/08
---------- ---------- ----------
Backlog* $36,212 $38,884 $36,985
Funded Backlog $23,751 $21,986 $21,145
* Due to a change in Missile Defense Agency priorities, on June 10,
2009 the Kinetic Energy Interceptor (KEI) program was terminated for
convenience, resulting in a $2.4 billion reduction of the Company's
backlog at the end of the second quarter 2009.
The Company reported total bookings for the third quarter 2009 of $5.1 billion compared to $5.8 billion in the third quarter 2008. The Company ended the third quarter 2009 with a backlog of $36.2 billion compared to $38.9 billion at the end of 2008 and $37.0 billion at the end of the third quarter 2008.
Outlook
2009 Financial Outlook Current Prior (7/23/09)
------- -------------
Net Sales ($B) 24.7 - 25.0* 24.5 - 25.0
FAS/CAS Pension Income ($M) 29* 47
Interest Inc./(Exp.), net ($M) (105) - (115) (105) - (115)
Diluted Shares (M) 397 - 400* 398 - 401
Effective Tax Rate approximately 33% approximately 33%
EPS from Continuing Operations $4.70 - $4.80* $4.60 - $4.75
FAS/CAS Adjusted EPS(1) $4.65 - $4.75* $4.52 - $4.67
Operating Cash Flow from Cont.
Ops. ($B) 2.2 - 2.4 2.2 - 2.4
ROIC (%)(1) 11.5 - 11.8* 11.2 - 11.7
* Denotes change from prior guidance.
(1) FAS/CAS Adjusted EPS is defined as EPS from continuing
operations excluding the earnings per share impact of the
FAS/CAS pension adjustment. FAS/CAS Adjusted EPS and ROIC are
non-GAAP financial measures. See attachment F for a
reconciliation of FAS/CAS Adjusted EPS to EPS from continuing
operations and attachment G for a calculation of ROIC and
discussions of why the Company is presenting this information.
The Company has increased full-year 2009 guidance for earnings per share from continuing operations and return on invested capital (ROIC), narrowed the range for net sales, and updated FAS/CAS pension income.
2009 Financial Outlook
Comparison 2008A 2009E Change
----- ----- ------
Net Sales ($B) 23.2 24.7 - 25.0 6% - 8%
EPS from Continuing Operations $4.04(1) $4.70 - $4.80 16% - 19%
FAS/CAS Adjusted EPS(2) $4.23(1) $4.65 - $4.75 10% - 12%
Operating Cash Flow from Cont.
Ops. ($B) 2.0 2.2 - 2.4 10% - 20%
ROIC (%)(2) 10.9(1) 11.5 - 11.8 60 - 90 bps.
(1) 2008 EPS from Continuing Operations and ROIC have been adjusted
to exclude the $45 million ($69 million pretax) or $0.11 per diluted
share unfavorable adjustment due to the impact of pension investment
returns on existing contracts (CAS pension adjustment).
(2) FAS/CAS Adjusted EPS is defined as EPS from continuing operations
excluding the earnings per share impact of the FAS/CAS pension
adjustment. FAS/CAS Adjusted EPS and ROIC are non-GAAP financial
measures. See attachment F for a reconciliation of FAS/CAS Adjusted
EPS to EPS from continuing operations and attachment G for a
calculation of ROIC and discussions of why the Company is presenting
this information.
The Company expects full-year 2009 sales growth of 6 percent to 8 percent and full-year 2009 FAS / CAS Adjusted EPS growth of 10 percent to 12 percent, compared to full-year 2008.
The Company has also provided its initial financial guidance for 2010.
2010 Initial Financial Outlook
2009E 2010E
----- -----
Net Sales ($B) 24.7 - 25.0 25.9 - 26.4
FAS/CAS Pension Inc./(Exp.) ($M) 29 (228)
Interest Inc./(Exp.), net ($M) (105) - (115) (90) - (105)
Diluted Shares (M) 397 - 400 377 - 382
Effective Tax Rate approximately 33% approximately 31.5%
EPS from Continuing Operations $4.70 - $4.80 $4.75 - $4.90
FAS/CAS Adjusted EPS(1) $4.65 - $4.75 $5.16 - $5.31
Operating Cash Flow from Cont.
Ops. ($B) 2.2 - 2.4 2.0 - 2.2
(1) FAS/CAS Adjusted EPS is defined as EPS from continuing operations
excluding the earnings per share impact of the FAS/CAS pension
adjustment. FAS/CAS Adjusted EPS is a non-GAAP financial
measure. See attachment F for a reconciliation of FAS/CAS
Adjusted EPS to EPS from continuing operations and a discussion
of why the Company is presenting this information.
Based on the mid-point of its financial outlook for 2009, the Company expects full-year 2010 sales growth of 4 percent to 6 percent and full-year 2010 FAS / CAS Adjusted EPS growth of 10 percent to 13 percent. Charts containing additional information on the Company's 2009 and 2010 financial guidance are available on the Company's website at www.raytheon.com. Additional information regarding the Company's 2010 guidance will be provided on the fourth quarter earnings conference call scheduled for January 28, 2010.
Segment Results
Integrated Defense Systems
3rd Quarter % Nine Months %
----------- -----------
($in millions) 2009 2008 Change 2009 2008 Change
---- ---- ------ ---- ---- ------
Net Sales $1,387 $1,276 9% $3,984 $3,725 7%
Operating
Income $217 $206 5% $610 $626 -3%
Operating
Margin 15.6% 16.1% 15.3% 16.8%
Integrated Defense Systems (IDS) had third quarter 2009 net sales of $1,387 million, up 9 percent compared to $1,276 million in the third quarter 2008, primarily due to growth on international Patriot programs. IDS recorded $217 million of operating income compared to $206 million in the third quarter 2008.
During the quarter, IDS booked a $75 million option related to two Volume Search Radars (VSR) for the U.S. Navy, one for the Zumwalt-class destroyer program and one for the CVN 78 aircraft carrier, bringing the year-to-date bookings on the program to $217 million. IDS also booked $81 million for the production of Airborne Low Frequency Sonar systems for the U.S. Navy.
Intelligence and Information Systems
3rd Quarter % Nine Months %
----------- -----------
($in millions) 2009 2008 Change 2009 2008 Change
---- ---- ------ ---- ---- ------
Net Sales $805 $801 - $2,401 $2,322 3%
Operating
Income $68 $67 1% $195 $186 5%
Operating
Margin 8.4% 8.4% 8.1% 8.0%
Intelligence and Information Systems (IIS) had third quarter 2009 net sales of $805 million compared to $801 million in the third quarter 2008. IIS recorded $68 million of operating income compared to $67 million in the third quarter 2008.
During the quarter, IIS booked $267 million on a number of classified contracts and shortly after the quarter close IIS booked $151 million on a U.S. Air Force contract to provide operation and maintenance support.
Missile Systems
3rd Quarter % Nine Months %
----------- -----------
($in millions) 2009 2008 Change 2009 2008 Change
---- ---- ------ ---- ---- ------
Net Sales $1,396 $1,360 3% $4,148 $4,042 3%
Operating
Income $145 $145 - $450 $442 2%
Operating
Margin 10.4% 10.7% 10.8% 10.9%
Missile Systems (MS) had third quarter 2009 net sales of $1,396 million compared to $1,360 million in the third quarter 2008. MS recorded $145 million of operating income in both the third quarter 2009 and the third quarter 2008.
During the quarter, MS booked $357 million for the production of Tube Launched, Optically Tracked, Wireless (TOW) missiles for the U.S. Army and the U.S. Marine Corps. MS also booked $140 million for the production of Evolved Sea Sparrow Missiles (ESSM) for the U.S. Navy and international customers.
Network Centric Systems
3rd Quarter % Nine Months %
----------- -----------
($in millions) 2009 2008 Change 2009 2008 Change
---- ---- ------ ---- ---- ------
Net Sales $1,212 $1,145 6% $3,563 $3,385 5%
Operating
Income $172 $152 13% $505 $427 18%
Operating
Margin 14.2% 13.3% 14.2% 12.6%
Network Centric Systems (NCS) had third quarter 2009 net sales of $1,212 million, up 6 percent compared to $1,145 million in the third quarter 2008, primarily due to higher volume on certain U.S. Army programs. NCS recorded $172 million of operating income compared to $152 million in the third quarter 2008. The increase in operating income was primarily due to improved program performance.
During the quarter, NCS booked $51 million on the Long-Range Advance Scout Surveillance System (LRAS3) program and shortly after the quarter close NCS booked an additional $127 million for a toll system replacement program.
Space and Airborne Systems
3rd Quarter % Nine Months %
----------- -----------
($in millions) 2009 2008 Change 2009 2008 Change
---- ---- ------ ---- ---- ------
Net Sales $1,134 $1,065 6% $3,316 $3,114 6%
Operating
Income $159 $144 10% $473 $402 18%
Operating
Margin 14.0% 13.5% 14.3% 12.9%
Space and Airborne Systems (SAS) had third quarter 2009 net sales of $1,134 million, up 6 percent compared to $1,065 million in the third quarter 2008, primarily due to growth on classified business. SAS recorded $159 million of operating income compared to $144 million in the third quarter 2008. The increase in operating income was primarily due to higher international volume.
During the quarter, SAS booked $201 million on a number of classified contracts.
Technical Services
3rd Quarter % Nine Months %
----------- -----------
($in millions) 2009 2008 Change 2009 2008 Change
---- ---- ------ ---- ---- ------
Net Sales $797 $689 16% $2,273 $1,857 22%
Operating
Income $60 $45 33% $157 $125 26%
Operating
Margin 7.5% 6.5% 6.9% 6.7%
Technical Services (TS) had third quarter 2009 net sales of $797 million, up 16 percent compared to $689 million in the third quarter 2008, due to strong growth in training programs, primarily Warfighter Field Operations Customer Support (FOCUS) and Air Traffic Control Optimum Training Solution (ATCOTS). TS recorded $60 million of operating income compared to $45 million in the third quarter 2008. The increase in operating income was primarily due to higher volume, timing of an award fee and a contract scope modification.
During the quarter, TS booked $511 million for work on the Warfighter FOCUS contract for the U.S. Army.
Raytheon Company (NYSE: RTN), with 2008 sales of $23.2 billion, is a technology and innovation leader specializing in defense, homeland security and other government markets throughout the world. With a history of innovation spanning 87 years, Raytheon provides state-of-the-art electronics, mission systems integration and other capabilities in the areas of sensing; effects; and command, control, communications and intelligence systems, as well as a broad range of mission support services. With headquarters in Waltham, Mass., Raytheon employs 73,000 people worldwide.
Conference Call on the Third Quarter 2009 Financial Results
Raytheon's financial results conference call will be held on Thursday, October 22, 2009 at 9:00 a.m. EDT. Participants will include William H. Swanson, Chairman and CEO, David C. Wajsgras, senior vice president and CFO, and other Company executives.
The dial-in number for the conference call will be (866) 543-6405 in the U.S. or (617) 213-8897 outside of the U.S. The conference call will also be audiocast on the Internet at www.raytheon.com. Individuals may listen to the call and download charts that will be used during the call. These charts will be available for printing prior to the call.
Interested parties are encouraged to check the website ahead of time to ensure their computers are configured for the audio stream. Instructions for obtaining the free required downloadable software are posted on the site.
Disclosure Regarding Forward-looking Statements
This release and the attachments contain forward-looking statements, including information regarding the Company's 2009 and 2010 financial outlook, future plans, objectives, business prospects and anticipated financial performance. These forward-looking statements are not statements of historical facts and represent only the Company's current expectations regarding such matters. These statements inherently involve a wide range of known and unknown risks and uncertainties. The Company's actual actions and results could differ materially from what is expressed or implied by these statements. Specific factors that could cause such a difference include, but are not limited to: the Company's dependence on the U.S. Government for a significant portion of its business and the risks associated with U.S. Government sales, including changes or shifts in defense spending, uncertain funding of programs, potential termination of contracts, and difficulties in contract performance; the ability to procure new contracts; the risks of conducting business in foreign countries; the ability to comply with extensive governmental regulation, including import and export policies, the Foreign Corrupt Practices Act, the International Traffic in Arms Regulations, and procurement and other regulations; the impact of competition; the ability to develop products and technologies; the impact of changes in the financial markets and global economic conditions; the risk that actual pension returns, discount rates or other actuarial assumptions are significantly different than the Company's assumptions; the risk of cost overruns, particularly for the Company's fixed-price contracts; dependence on component availability, subcontractor performance and key suppliers; risks of a negative government audit; the use of accounting estimates in the Company's financial statements; risks associated with acquisitions, dispositions, joint ventures and other business arrangements; risks of an impairment of goodwill or other intangible assets; the outcome of contingencies and litigation matters, including government investigations; the ability to recruit and retain qualified personnel; the impact of potential security threats and other disruptions; and other factors as may be detailed from time to time in the Company's public announcements and Securities and Exchange Commission filings. The Company undertakes no obligation to make any revisions to the forward-looking statements contained in this release and the attachments or to update them to reflect events or circumstances occurring after the date of this release, including any acquisitions, dispositions or other business arrangements that may be announced or closed after such date. This release and the attachments also contain non-GAAP financial measures. A GAAP reconciliation and a discussion of the Company's use of these measures are included in this release or the attachments.
Attachment A
Raytheon Company
Preliminary Statement of Operations Information
Third Quarter 2009
(In millions, except
per share amounts) Three Months Ended Nine Months Ended
------------------ -----------------
27-Sep-09 28-Sep-08 27-Sep-09 28-Sep-08
--------- --------- --------- ---------
Net sales $6,205 $5,864 $18,214 $17,088
------ ------ ------- -------
Operating expenses
Cost of sales 4,894 4,664 14,430 13,586
Administrative and
selling expenses 401 380 1,135 1,156
Research and development
expenses 145 130 407 379
--- --- --- ---
Total operating expenses 5,440 5,174 15,972 15,121
----- ----- ------ ------
Operating income 765 690 2,242 1,967
--- --- ----- -----
Interest expense 32 29 95 97
Interest income (4) (16) (11) (56)
Other (income) expense, net (10) 18 (18) 21
--- -- --- --
Non-operating expense, net 18 31 66 62
-- -- -- --
Income from continuing
operations before taxes 747 659 2,176 1,905
Federal and foreign income
taxes 248 222 716 635
--- --- --- ---
Income from continuing
operations 499 437 1,460 1,270
(Loss) income from discontinued
operations, net of tax (1) - (1) (2)
-- - -- --
Net income 498 437 1,459 1,268
--- --- ----- -----
Less: Net income attributable
to noncontrolling interests 8 10 28 17
- -- -- --
Net income attributable to
Raytheon Company $490 $427 $1,431 $1,251
==== ==== ====== ======
Basic earnings (loss) per
share attributable to Raytheon
Company common stockholders:
Income from continuing
operations $1.27 $1.03 $3.64 $2.99
Income (loss) from
discontinued operations - - - (0.01)
Net income 1.26 1.03 3.64 2.98
Diluted earnings (loss) per
share attributable to Raytheon
Company common stockholders:
Income from continuing
operations $1.25 $1.01 $3.60 $2.92
Income (loss) from
discontinued operations - - - (0.01)
Net income 1.25 1.00 3.59 2.91
Amounts attributable to
Raytheon Company
common stockholders:
Income from continuing
operations $491 $427 $1,432 $1,253
(Loss) income from
discontinued operations (1) - (1) (2)
-- - -- --
Net income $490 $427 $1,431 $1,251
==== ==== ====== ======
Average shares outstanding
Basic 388.1 415.6 393.2 419.6
Diluted 393.4 424.9 398.2 429.8
Attachment B
Raytheon Company
Preliminary Segment Information
Third Quarter 2009
Operating
Income
As a Percent
(In millions, Net Sales Operating Income of Sales
except Three Months Three Months Three Months
percentages) Ended Ended Ended
------------ ------------ ------------
27-Sep-09 28-Sep-08 27-Sep-09 28-Sep-08 27-Sep-09 28-Sep-08
--------- --------- --------- --------- --------- ---------
Integrated
Defense
Systems $1,387 $1,276 $217 $206 15.6% 16.1%
Intelligence
and
Information
Systems 805 801 68 67 8.4% 8.4%
Missile
Systems 1,396 1,360 145 145 10.4% 10.7%
Network
Centric
Systems 1,212 1,145 172 152 14.2% 13.3%
Space and
Airborne
Systems 1,134 1,065 159 144 14.0% 13.5%
Technical
Services 797 689 60 45 7.5% 6.5%
FAS/CAS
Pension
Adjustment - - (1) (26)
Corporate and
Elimi-
nations (526) (472) (55) (43)
---- ---- --- ---
Total $6,205 $5,864 $765 $690 12.3% 11.8%
====== ====== ==== ====
Operating
Income
As a Percent
(In millions, Net Sales Operating Income of Sales
except Nine Months Nine Months Nine Months
percentages) Ended Ended Ended
------------ ------------ ------------
27-Sep-09 28-Sep-08 27-Sep-09 28-Sep-08 27-Sep-09 28-Sep-08
--------- --------- --------- --------- --------- ---------
Integrated
Defense
Systems $3,984 $3,725 $610 $626 15.3% 16.8%
Intelligence
and
Information
Systems 2,401 2,322 195 186 8.1% 8.0%
Missile
Systems 4,148 4,042 450 442 10.8% 10.9%
Network
Centric
Systems 3,563 3,385 505 427 14.2% 12.6%
Space and
Airborne
Systems 3,316 3,114 473 402 14.3% 12.9%
Technical
Services 2,273 1,857 157 125 6.9% 6.7%
FAS/CAS
Pension
Adjustment - - 21 (93)
Corporate and
Elimi-
nations (1,471) (1,357) (169) (148)
------ ------ ---- ----
Total $18,214 $17,088 $2,242 $1,967 12.3% 11.5%
======= ======= ====== ======
Attachment C
Raytheon Company
Other Preliminary Information
Third Quarter 2009
(In millions) Funded Backlog Total Backlog
-------------- -------------
27-Sep-09 31-Dec-08 27-Sep-09 31-Dec-08
--------- --------- --------- ---------
Integrated Defense Systems $5,523 $4,802 $9,823 $9,883
Intelligence and
Information Systems 1,692 1,890 4,349 5,137
Missile Systems* 6,281 6,082 7,688 9,937
Network Centric Systems 4,068 4,593 5,123 5,733
Space and Airborne Systems 3,718 2,731 6,078 5,442
Technical Services 2,469 1,888 3,151 2,752
----- ----- ----- -----
Total $23,751 $21,986 $36,212 $38,884
======= ======= ======= =======
Bookings
Three Months Ended
------------------
27-Sep-09 28-Sep-08
--------- ---------
Total Bookings $5,137 $5,766
====== ======
* In the second quarter of 2009, Kinetic Energy Interceptor (KEI), a
developmental program with the Missile Defense Agency (MDA), was
terminated for convenience, which resulted in a backlog adjustment of
approximately $2.4 billion at Missile Systems. The program was
cancelled by the MDA due to a change in missile defense priorities.
We expect that the change in focus to "early intercept" will lead to
additional opportunities for a number of our products and
technologies, including Standard Missile-3. Total backlog for
Missile Systems and the total Company at December 31, 2008 above are
presented unadjusted. For comparability, total backlog for Missile
Systems and the total Company without KEI would have been $7,572
million and $36,519 million, respectively, at December 31, 2008.
Attachment D
Raytheon Company
Preliminary Balance Sheet Information
Third Quarter 2009
(In millions)
27-Sep-09 31-Dec-08
--------- ---------
Assets
Cash and cash equivalents $2,442 $2,259
Accounts receivable, net 105 105
Contracts in process 4,207 3,793
Inventories 317 325
Current tax asset - 441
Deferred taxes 382 395
Prepaid expenses and other current assets 96 99
-- --
Total current assets 7,549 7,417
Property, plant and equipment, net 1,945 2,024
Deferred taxes 445 735
Prepaid retiree benefits 66 56
Goodwill 11,668 11,662
Other assets, net 1,207 1,240
----- -----
Total assets $22,880 $23,134
======= =======
Liabilities and Equity
Current liabilities
Advance payments and billings in excess
of costs incurred $2,002 $1,970
Accounts payable 1,266 1,201
Accrued employee compensation 914 913
Other accrued expenses 988 1,065
--- -----
Total current liabilities 5,170 5,149
Accrued retiree benefits and other long-term
liabilities 5,778 6,488
Long-term debt 2,293 2,309
Equity
Raytheon Company stockholders' equity
Common stock 4 4
Additional paid-in capital 10,929 10,873
Accumulated other comprehensive loss (4,967) (5,182)
Treasury stock, at cost (5,145) (4,254)
Retained earnings 8,714 7,646
----- -----
Total Raytheon Company stockholders' equity 9,535 9,087
Noncontrolling interest in subsidiaries 104 101
--- ---
Total equity 9,639 9,188
----- -----
Total liabilities and equity $22,880 $23,134
======= =======
Attachment E
Raytheon Company
Preliminary Cash Flow Information
Third Quarter 2009
(In millions) Three Months Ended Nine Months Ended
-------------------- -------------------
27-Sep-09 28-Sep-08 27-Sep-09 28-Sep-08
--------- --------- --------- ---------
Net income $498 $437 $1,459 $1,268
Loss (income) from discontinued
operations, net of tax 1 - 1 2
- - - -
Income from continuing
operations 499 437 1,460 1,270
Depreciation 76 75 220 217
Amortization 25 24 75 71
Working capital (excluding
pension and taxes)* 400 3 (225) (382)
Discontinued operations (7) (5) (16) (21)
Net activity in financing
receivables 13 21 28 46
Other (264) 198 114 370
---- --- --- ---
Net operating cash flow 742 753 1,656 1,571
Capital spending (57) (68) (138) (167)
Internal use software spending (15) (28) (49) (58)
Acquisitions - (20) - (54)
Investment activity
and divestiture - - - 9
Dividends (121) (117) (355) (344)
Repurchases of common stock (300) (340) (900) (1,020)
Other (6) 27 (31) 169
-- -- --- ---
Total cash flow $243 $207 $183 $106
==== ==== ==== ====
* Working capital (excluding pension and taxes) is a summation of
changes in: accounts receivable, net, contracts in process and
advance payments and billings in excess of costs incurred,
inventories, prepaid expenses and other current assets, accounts
payable, accrued employee compensation, and other accrued expenses
from the Statements of Cash Flows.
Attachment F
Raytheon Company
Forecasted Non-GAAP Financial Measure - FAS/CAS Adjusted EPS
Third Quarter 2009
Forecasted FAS/CAS Adjusted EPS Non-GAAP Reconciliation - 2009
2009 Current Guidance
---------------------
Low end High end
of range of range
-------- --------
Diluted earnings per share from continuing
operations attributable to Raytheon Company
common stockholders $4.70 $4.80
Less: Per share impact of the FAS/CAS Pension
Adjustment * 0.05 0.05
---- ----
FAS/CAS Adjusted EPS ** $4.65 $4.75
===== =====
* FAS/CAS Pension Adjustment $29 $29
Tax effect (at effective rate) (10) (10)
--- ---
After-tax FAS/CAS Pension Adjustment 19 19
Diluted Shares 400 397
--- ---
Per share impact of the FAS/CAS Pension
Adjustment $0.05 $0.05
===== =====
** These amounts are not measures of financial performance under U.S.
generally accepted accounting principles (GAAP). They should be
considered supplemental to and not a substitute for financial
performance in accordance with GAAP. FAS/CAS Adjusted EPS is
defined as EPS from continuing operations attributable to Raytheon
Company common stockholders excluding the earnings per share impact
of the FAS/CAS Pension Adjustment. Management uses FAS/CAS
Adjusted EPS for the purposes of evaluating and forecasting the
Company's financial performance.
Forecasted FAS/CAS Adjusted EPS Non-GAAP Reconciliation - 2010
2010 Initial Guidance
---------------------
Low end High end
of range of range
-------- --------
Diluted earnings per share from continuing
operations attributable to Raytheon Company
common stockholders $4.75 $4.90
Less: Per share impact of the FAS/CAS
Pension Adjustment * (0.41) (0.41)
----- -----
FAS/CAS Adjusted EPS ** $5.16 $5.31
===== =====
* FAS/CAS Pension Adjustment $(228) $(228)
Tax effect (at effective rate) 72 72
-- --
After-tax FAS/CAS Pension Adjustment (156) (156)
Diluted Shares 382 377
--- ---
Per share impact of the FAS/CAS Pension
Adjustment $(0.41) $(0.41)
====== ======
** These amounts are not measures of financial performance under U.S.
generally accepted accounting principles (GAAP). They should be
considered supplemental to and not a substitute for financial
performance in accordance with GAAP. FAS/CAS Adjusted EPS is
defined as EPS from continuing operations attributable to Raytheon
Company common stockholders excluding the earnings per share impact
of the FAS/CAS Pension Adjustment. Management uses FAS/CAS
Adjusted EPS for the purposes of evaluating and forecasting the
Company's financial performance.
Attachment G
Raytheon Company
2008 Adjusted and 2009 Preliminary Return on Invested Capital Non-GAAP
Financial Measure
Third Quarter 2009
We define Return on Invested Capital (ROIC) as income from continuing
operations plus after-tax net interest expense plus one-third of
operating lease expense after-tax (estimate of interest portion of
operating lease expense) divided by average invested capital after
capitalizing operating leases (operating lease expense times a
multiplier of 8), adding financial guarantees less net investment in
Discontinued Operations, and adding back the impact of the new
accounting standard for employers' accounting for defined benefit
pension and other postretirement plans. ROIC is not a measure of
financial performance under generally accepted accounting principles
(GAAP) and may not be defined and calculated by other companies in the
same manner. ROIC should be considered supplemental to and not a
substitute for financial information prepared in accordance with GAAP.
We use ROIC as a measure of efficiency and effectiveness of our use of
capital and as an element of management compensation.
Return on Invested Capital
(In millions, except percentages) 2009 Current Guidance
---------------------
Adjusted Low end High end
ROIC 2008 * of range of range
----------- -------- --------
Income from continuing operations $1,743
Net interest expense, after-tax ** 44 Combined Combined
Lease expense, after-tax ** 68
-- ------ ------
Return $1,855 $2,030 $2,070
------ ------ ------
Net debt *** $(169)
Equity less investment in
discontinued operations 10,920
Lease expense x 8, plus financial
guarantees 2,728 Combined Combined
Minimum pension liability 3,550
------- ------- -------
Invested capital from continuing
operations **** $17,029 $17,700 $17,500
------- ------- -------
---- ---- ----
ROIC 10.9% 11.5% 11.8%
---- ---- ----
* 2008 Adjusted ROIC is ROIC excluding the $45 million ($69 million
pretax) or $0.11 per diluted share unfavorable adjustment due to
the impact of pension investment returns on existing contracts.
2008 Adjusted ROIC is a non-GAAP financial measure. The Company uses
2008 Adjusted ROIC to facilitate management's internal comparisons to
the Company's historical ROIC results, and to provide greater
transparency to investors of supplemental information used by
management in its financial and operational decision making,
including to evaluate the Company's operating performance.
** Effective tax rates: Adjusted 2008 - Approximately 33%
2009 - Approximately 33% (2009 guidance)
*** Net debt is defined as total debt less cash and cash equivalents
and is calculated using a 2 point average
**** Calculated using a 2 point average
Media Contact: Investor Relations Contact:
Jon Kasle Marc Kaplan
781-522-5110 781-522-5141
SOURCE Raytheon Company
SOURCE: Raytheon Company
Web site: http://www.raytheon.com/
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