WALTHAM, Mass., Oct. 24, 2013 /PRNewswire-FirstCall/ -- Raytheon Company (NYSE: RTN) announced third quarter 2013 Adjusted EPS¹ of $1.60 per diluted share compared to $1.62 per diluted share in the third quarter 2012.  EPS from continuing operations was $1.51 in both third quarters 2013 and 2012. The third quarter 2012 Adjusted EPS¹ has been revised to include the favorable $0.02 impact for the 2012 research and development (R&D) tax credit approved by Congress in January 2013. In addition, the third quarter 2013 and the third quarter 2012 Adjusted EPS¹ each excluded an unfavorable FAS/CAS Adjustment of $0.09.

"While the overall economic environment has been challenging, Raytheon's solid third quarter performance reflects our continued focus on the fundamentals," said William H. Swanson, Raytheon's Chairman and CEO. "Our company has continued to perform well by providing affordable solutions and advanced technology that meet our customers' current and future needs."

Net sales for the third quarter 2013 were $5,842 million compared to $6,045 million in the third quarter 2012. 

Operating cash flow from continuing operations for the third quarter 2013 was $895 million compared to $1,111 million for the third quarter 2012. The change in operating cash flow from continuing operations in the third quarter 2013 compared to the third quarter 2012 was primarily due to the timing of required pension contributions.

In the third quarter 2013, the Company repurchased 2.9 million shares of common stock for $225 million as part of its previously announced share repurchase program. Year-to-date 2013, the Company has repurchased 10.5 million shares of common stock for $675 million.

The Company ended the third quarter 2013 with $836 million of net debt. Net debt is defined as total debt less cash and cash equivalents and short-term investments.

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¹ Adjusted EPS is diluted EPS from continuing operations attributable to Raytheon Company common stockholders and Adjusted Operating Margin is total operating margin, in each case, excluding the after-tax impact of the FAS/CAS Adjustment, and from time to time, certain other items. In addition, the Q3 2012 Adjusted EPS amount has been revised to include the favorable $0.02 impact for the research and development (R&D) tax credit, approved by Congress in January 2013, that relates to 2012. Adjusted EPS and Adjusted Operating Margin are non-GAAP financial measures. See attachment F for a reconciliation of these measures and a discussion of why the Company is presenting this information.

 

 

 

 

 

The Company had bookings of $5.7 billion in the third quarter 2013 and ended the third quarter 2013 with a backlog of $32.2 billion. The Company had a book-to-bill ratio of .97 in the third quarter 2013.

Outlook

The Company has updated its financial outlook for 2013 and increased guidance for net sales, EPS and operating cash flow from continuing operations. The 2013 outlook reflects the Company's current expectations from the effects of sequestration under the Budget Control Act (BCA) of 2011 and the recent government shutdown. Charts containing additional information on the Company's 2013 outlook are available on the Company's website at www.raytheon.com/ir. 

 

 

Segment Results

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

 

Integrated Defense Systems (IDS) had third quarter 2013 net sales of $1,603 million compared to $1,610 million in the third quarter 2012. IDS recorded $286 million of operating income compared to $278 million in the third quarter 2012. The increase in operating income was primarily driven by international programs.

During the quarter, IDS booked $353 million on the Aegis weapon system for the U.S. Navy and $84 million on an international radar contract.

As previously announced on October 10, 2013, IDS was awarded $386 million for the Engineering and Manufacturing Development (EMD) phase of the Air and Missile Defense Radar (AMDR) for the U.S. Navy and includes options which could bring the cumulative value of this contract to $1.6 billion. This award was protested on October 22, 2013.

Intelligence, Information and Services (IIS) had third quarter 2013 net sales of $1,496 million compared to $1,547 million in the third quarter 2012. The change in net sales was primarily due to lower volume on classified and training programs. IIS recorded $134 million of operating income compared to $126 million in the third quarter 2012. The increase in operating income was primarily due to improved program performance.

During the quarter, IIS booked $253 million to design, develop and deliver technical training for a commercial customer, $162 million on a contract to provide intelligence, surveillance and reconnaissance (ISR) support to the U.S. Air Force, $145 million on domestic training programs and $85 million on foreign training programs in support of Warfighter FOCUS activities, and $87 million for a ground control system program for the U.S. Air Force. IIS also booked $417 million on a number of classified contracts.

Missile Systems (MS) had third quarter 2013 net sales of $1,635 million compared to $1,677 million in the third quarter 2012. The change in net sales was primarily driven by lower sales on U.S. Army sensor programs. MS recorded $202 million of operating income compared to $233 million in the third quarter 2012. The change in operating income was primarily due to a change in contract mix.

During the quarter, MS booked $312 million for Standard Missile-3 (SM-3) for the Missile Defense Agency (MDA), $232 million for AIM-9X Sidewinder short range air-to-air missiles for the U.S. Navy, U.S. Air Force and international customers, $222 million for Standard Missile-6 (SM-6) for the U.S. Navy, and $177 million for Phalanx Weapon Systems for the U.S. Navy and international customers. 

Space and Airborne Systems (SAS) had third quarter 2013 net sales of $1,556 million compared to $1,678 million in the third quarter 2012. The change in net sales was primarily due to lower volume on intelligence, surveillance and reconnaissance systems programs and on classified programs. SAS recorded $224 million of operating income compared to $236 million in the third quarter 2012. The change in operating income was primarily due to lower volume.

During the quarter, SAS booked $271 million to develop the Next Generation Jammer (NGJ) for the U.S. Navy, an award which is currently under protest. SAS also booked $170 million on the Joint Polar Satellite System (JPSS) program for NASA and $164 million on a number of classified contracts.

About Raytheon

Raytheon Company, with 2012 sales of $24 billion and 68,000 employees worldwide, is a technology and innovation leader specializing in defense, security and civil markets throughout the world. With a history of innovation spanning 91 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. Raytheon is headquartered in Waltham, Mass. For more about Raytheon, visit us at www.raytheon.com and follow us on Twitter @Raytheon.

Conference Call on the Third Quarter 2013 Financial Results

Raytheon's financial results conference call will be held on Thursday, October 24, 2013, at 9 a.m. ET. 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) 510-0712 in the U.S. or (617) 597-5380 outside of the U.S. The conference call will also be audiocast on the Internet at www.raytheon.com/ir. Individuals may listen to the call and download charts that will be used during the call. These charts will be available for printing prior to the call.

Interested parties are encouraged to check the website ahead of time to ensure their computers are configured for the audio stream.  Instructions for obtaining the free required downloadable software are posted on the site.

Disclosure Regarding Forward-looking Statements

This release and the attachments contain forward-looking statements, including information regarding the Company's financial outlook, future plans, objectives, business prospects and anticipated financial performance. These forward-looking statements are not statements of historical facts and represent only the Company's current expectations regarding such matters. These statements inherently involve a wide range of known and unknown risks and uncertainties. The Company's actual actions and results could differ materially from what is expressed or implied by these statements. Specific factors that could cause such a difference include, but are not limited to: the Company's dependence on the U.S. Government for a significant portion of its business and the risks associated with U.S. Government sales, including changes or shifts in defense spending due to budgetary constraints, spending cuts resulting from sequestration under the Budget Control Act of 2011, a government shutdown, or otherwise, uncertain funding of programs, potential termination of contracts, and difficulties in contract performance; the resolution of program terminations; 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 and cyber 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.

 

 

 

 

 

 

 

SOURCE Raytheon Company