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Raytheon Reports Strong Third Quarter 2007 Results; Announces New $2.0 Billion Share Repurchase Plan
Highlights
WALTHAM, Mass., Oct. 25, 2007 /PRNewswire-FirstCall/ -- Raytheon Company (NYSE: RTN) reported third quarter 2007 income from continuing operations of $304 million or $0.69 per diluted share compared to $267 million or $0.59 per diluted share in the third quarter 2006. Third quarter 2007 income from continuing operations was higher primarily due to operational improvements, combined with lower net interest and pension expense, partially offset by an after-tax impairment charge of $69 million ($84 million pretax) or $0.16 per diluted share in connection with the disposition process of Flight Options. Third quarter 2007 income from continuing operations excluding Flight Options was $380 million or $0.86 per diluted share compared to $274 million or $0.61 per diluted share in the third quarter 2006. (1)
Raytheon also announced that on October 15, 2007, it entered into a definitive agreement to sell Flight Options to H.I.G. Capital, a global private investment firm. This transaction is expected to close in the fourth quarter 2007.
"Our program execution, strong backlog and customer focus are driving the Company's performance and delivering value to our shareholders," said William H. Swanson, Raytheon Chairman and CEO. "With the pending sale of Flight Options, going forward our attention will be focused on our core business, leading technologies and Mission Support to our global customers."
Third quarter 2007 net income was $299 million or $0.68 per diluted share compared to $321 million or $0.71 per diluted share in the third quarter 2006. Net income for the third quarter 2007 included a $5 million after-tax loss in discontinued operations or $0.01 per diluted share versus a $54 million gain or $0.12 in the third quarter 2006. Third quarter 2006 discontinued operations results included Raytheon Aircraft Company (RAC), which was sold by the Company in the second quarter 2007.
Net sales for the third quarter 2007 were $5.4 billion, up 8 percent from $4.9 billion in the third quarter 2006 led primarily by Integrated Defense Systems (IDS), Missile Systems (MS) and Network Centric Systems (NCS).
Operating cash flow from continuing operations for the third quarter 2007 was $735 million versus $733 million for the third quarter 2006. The third quarter 2007 included $203 million in cash tax payments versus $53 million in cash tax payments in the third quarter 2006. Of the cash taxes paid in the third quarter 2007, $157 million was attributable to the gain on the sale of RAC.
Year-to-date operating cash flow from continuing operations was $310 million versus $1,159 million for the comparable period in 2006. The year-to- date decrease in operating cash flow was primarily due to $846 million in cash tax payments ($473 million attributable to the gain on the sale of RAC) versus $154 million of cash tax payments made in the comparable period in 2006 combined with the $400 million discretionary cash contribution made to the Company's pension plans in the first quarter 2007 versus the $200 million discretionary cash contribution made in the first quarter 2006.
During the third quarter 2007, the Company repurchased 8.6 million shares for $500 million as part of the Company's previously announced share repurchase program. The Company has repurchased 23.3 million shares of common stock year-to-date for $1.3 billion.
The Board of Directors, on October 24, 2007, authorized the repurchase of up to an additional $2.0 billion of the Company's outstanding common stock. Share repurchases will take place from time to time at management's discretion depending on market conditions.
(1) Income and EPS from continuing operations excluding Flight Options are
non-GAAP financial measures. See attachment G for a reconciliation of
these measures to income and EPS from continuing operations under
GAAP. We are providing these non-GAAP measures to provide insight on
how we expect continuing operations to appear when Flight Options is
reported as a discontinued operation in the fourth quarter 2007.
Summary Financial Results
($ in millions,
except per share 3rd Quarter % Nine Months %
data) 2007 2006 Change 2007 2006 Change
Net Sales $5,355 $4,936 8% $15,702 $14,569 8%
Total Operating
Expenses 4,878 4,480 14,127 13,219
Operating Income 477 (2) 456 5% 1,575 (2) 1,350 17%
Non-operating
Expenses 8 48 96 112
Income from Cont.
Ops. before Taxes $469 $408 15% $1,479 $1,238 19%
Income from
Continuing
Operations $304 $267 14% $974 $815 20%
Income from
Discontinued
Operations (5) 54 NM 1,006 (1) 103 NM
Net Income $299 $321 -7% $1,980 $918 116%
Diluted EPS from
Continuing
Operations $0.69 (2) $0.59 17% $2.17 (2) $1.81 20%
Diluted EPS $0.68 (2) $0.71 -4% $4.42 (2) $2.04 117%
Operating Cash
Flow from Cont.
Ops. $735 (3) $733 $310 (3) $1,159
(1) Includes after-tax net gain of $986 million on sale of Raytheon
Aircraft in Q2 '07
(2) Includes $84 million pretax or $0.16 after-tax impairment charges in
the Flight Options business in Q3 '07 and YTD '07
(3) Includes $157 million in Q3 '07 and $473 million in Q3 YTD of cash tax
payments related to the gain on the Raytheon Aircraft sale
Bookings and Backlog
Bookings 3rd Quarter Nine Months
(in millions) 2007 2006 2007 2006
Total Bookings $6,463 $5,403 $16,718 $15,207
Backlog
(in millions) 09/23/07 12/31/06
Backlog $33,889 $33,838
Funded Backlog $17,453 $18,186
The Company reported total bookings for the third quarter 2007 of $6.5 billion compared to $5.4 billion in the third quarter 2006. The Company ended the third quarter 2007 with backlog of $33.9 billion compared to $31.9 billion at the end of the third quarter 2006 and $33.8 billion at the end of 2006.
Outlook
2007 Financial Outlook (1) Current Prior
Bookings ($B) 21.4 - 22.4 21.4 - 22.4
Net Sales ($B) 20.8 - 21.3 20.8 - 21.3
FAS/CAS Pension Expense ($M) 260 270
Interest Expense, net ($M) 30 - 45 45 - 60
Diluted Shares (M) 446 - 448 446 - 448
EPS from Cont. Ops. ($) $3.05 - $3.20 $3.05 - $3.20
Operating Cash Flow from Cont.
Ops. ($B) (2) 0.9 - 1.1 0.9 - 1.1
ROIC (%) 8.6 - 9.1 8.6 - 9.1
(1) Reflects Flight Options as a discontinued operation for the full-year
2007
(2) Includes cash tax payments of approximately $630 million from the gain
on the Raytheon Aircraft sale
The Company has updated full-year 2007 guidance, including the reclassification of Flight Options as a discontinued operation for full-year 2007. Charts containing additional information on the Company's 2007 guidance are available on the Company's website at http://www.raytheon.com/. See attachment F for the Company's calculation and use of Return on Invested Capital (ROIC), a non-GAAP financial measure.
2008 Financial Outlook Net Sales ($B) 22.1 - 22.6 EPS from Cont. Ops. ($) 3.45 - 3.65 Operating Cash Flow ($B) 1.5 - 1.7
Additional information regarding the Company's 2008 guidance will be provided on the fourth quarter earnings conference call scheduled for January 31, 2008.
Segment Results
Integrated Defense Systems
3rd Quarter % Nine Months %
($ in millions) 2007 2006 Change 2007 2006 Change
Net Sales $1,147 $1,030 11% $3,405 $3,031 12%
Operating Income $206 $167 23% $617 $502 23%
Operating Margin 18.0% 16.2% 18.1% 16.6%
Integrated Defense Systems (IDS) had third quarter 2007 net sales of $1,147 million, up 11 percent compared to $1,030 million in the third quarter 2006, primarily due to growth on Missile Defense Agency and U.S. Army programs, as well as on international programs. IDS recorded $206 million of operating income compared to $167 million in the third quarter 2006. The increase in operating income was primarily due to higher volume and improved performance on several international and domestic programs.
During the quarter, IDS booked $958 million for the production phase of mission support equipment for the two lead Zumwalt-class destroyers for the U.S. Navy. IDS also booked $123 million for the Patriot Pure Fleet program for the U.S. Army.
After the quarter close, IDS was awarded $1.2 billion for the Australian Air Warfare Destroyer contract, which was booked in October 2007.
Intelligence and Information Systems
3rd Quarter % Nine Months %
($ in millions) 2007 2006 Change 2007 2006 Change
Net Sales $680 $626 9% $1,934 $1,870 3%
Operating Income $64 $58 10% $182 $171 6%
Operating Margin 9.4% 9.3% 9.4% 9.1%
Intelligence and Information Systems (IIS) had third quarter 2007 net sales of $680 million, up 9 percent compared to $626 million in the third quarter 2006, primarily due to increased volume on several U.S. Air Force and information systems programs. IIS recorded $64 million of operating income compared to $58 million in the third quarter 2006.
During the quarter, IIS booked $781 million for the National Polar- orbiting Operational Environmental Satellite System (NPOESS) program and $101 million for the U.S. Air Force's Consolidated Field Service (CFS) contract to provide global intelligence, surveillance and reconnaissance support. IIS also booked $279 million on a number of classified contracts.
After the quarter close, the Company acquired Oakley Networks, a leading developer of cyber-security technology, which will add to Raytheon's capabilities in information operations/information assurance solutions.
Missile Systems
3rd Quarter % Nine Months %
($ in millions) 2007 2006 Change 2007 2006 Change
Net Sales $1,247 $1,081 15% $3,631 $3,187 14%
Operating Income $139 $109 28% $393 $341 15%
Operating Margin 11.1% 10.1% 10.8% 10.7%
Missile Systems (MS) had third quarter 2007 net sales of $1,247 million, up 15 percent compared to $1,081 million in the third quarter 2006, primarily due to higher volume on the Standard Missile and Evolved Sea Sparrow Missile (ESSM) programs. MS recorded $139 million of operating income compared to $109 million in the third quarter 2006. The increase in operating income was primarily due to higher volume and improved performance.
During the quarter, MS booked $223 million for the production of ESSM and $201 million for Standard Missile-2 (SM-2). MS also booked $117 million for the production of Javelin for the U.S. Army and U.S. Marines.
Network Centric Systems
3rd Quarter % Nine Months %
($ in millions) 2007 2006 Change 2007 2006 Change
Net Sales $1,036 $879 18% $3,017 $2,550 18%
Operating Income $123 $87 41% $379 $262 45%
Operating Margin 11.9% 9.9% 12.6% 10.3%
Network Centric Systems (NCS) had third quarter 2007 net sales of $1,036 million, up 18 percent compared to $879 million in the third quarter 2006, primarily due to increased volume on certain U.S. Army programs. NCS recorded $123 million of operating income compared to $87 million in the third quarter 2006. The increase in operating income was primarily due to higher volume and improved program performance.
During the quarter, NCS booked $116 million to provide Long Range Advanced Scout Surveillance Systems (LRAS3) and $104 million for Horizontal Technology Integration (HTI) forward-looking infrared kits to the U.S. Army. NCS also booked $106 million on the Long Range Radar Service Life Extension Program (LRR SLEP).
Also during the quarter, the U.S. Navy directed Raytheon to proceed with the development of the Navy Multiband Terminal (NMT).
Space and Airborne Systems
3rd Quarter % Nine Months %
($ in millions) 2007 2006 Change 2007 2006 Change
Net Sales $1,016 $1,069 -5% $3,045 $3,144 -3%
Operating Income $121 $148 -18% $383 $445 -14%
Operating Margin 11.9% 13.8% 12.6% 14.2%
Space and Airborne Systems (SAS) had third quarter 2007 net sales of $1,016 million, down 5 percent compared to $1,069 million in the third quarter 2006, primarily due to lower volume on some airborne systems programs and a reduction in classified space bookings due to customer reprioritization. SAS recorded $121 million of operating income compared to $148 million in the third quarter 2006. Operating income was lower primarily due to profit adjustments taken on certain programs in both the third quarter 2006 and 2007 and reduced volume.
During the quarter, SAS booked over $123 million on a number of classified contracts.
Technical Services
3rd Quarter % Nine Months %
($ in millions) 2007 2006 Change 2007 2006 Change
Net Sales $513 $500 3% $1,412 $1,416 NM
Operating Income $34 $35 -3% $84 $96 -13%
Operating Margin 6.6% 7.0% 5.9% 6.8%
Technical Services (TS) had third quarter 2007 net sales of $513 million compared to $500 million in the third quarter 2006. TS recorded operating income of $34 million in the third quarter 2007 compared to $35 million in the third quarter 2006.
Other
Net sales in the third quarter 2007 were $191 million compared to $190 million in the third quarter 2006. The segment recorded an operating loss of $96 million in the third quarter 2007 compared to an operating loss of $10 million in the third quarter 2006. During the third quarter 2007, the Company initiated a process to dispose of its Flight Options (FO) business. The Company recorded an after-tax impairment charge of $69 million ($84 million pretax), which includes all of FO's remaining goodwill and a portion of its intangible assets, as a result of the disposition process.
On October 15, 2007, Raytheon entered into a definitive agreement to sell FO to H.I.G. Capital, a global private investment firm. In the fourth quarter 2007, the Company expects to record an additional after-tax charge of approximately $45 million, subject to purchase price adjustments, to write down the net assets of FO to the expected final net sales price. The Company will present FO as a discontinued operation in the fourth quarter 2007 and for all periods presented.
Raytheon Company (NYSE: RTN), with 2006 sales of $20.3 billion, is a technology leader specializing in defense, homeland security and other government markets throughout the world. With a history of innovation spanning 85 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.
Disclosure Regarding Forward-looking Statements
This release and the attachments contain forward-looking statements, including information regarding the Company's 2007 and 2008 financial outlook, future plans, objectives, business prospects and anticipated financial performance. These forward-looking statements are not statements of historical facts and represent only the Company's current expectations regarding such matters. These statements inherently involve a wide range of known and unknown risks and uncertainties. The Company's actual actions and results could differ materially from what is expressed or implied by these statements. Specific factors that could cause such a difference include, but are not limited to: risks associated with the Company's 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 and procurement and other regulations; the impact of competition; the ability to develop products and technologies; 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; potential further charges relating to Flight Options; risks associated with the Company's sale of Flight Options; risks associated with the commuter and fractional ownership aircraft markets; the outcome of contingencies and litigation matters, including government investigations; the ability to recruit and retain qualified personnel; risks associated with acquisitions, joint ventures and other business arrangements; the impact of changes in the Company's credit ratings; and other factors as may be detailed from time to time in the Company's public announcements and Securities and Exchange Commission filings. In addition, these statements do not give effect to the potential impact of any acquisitions, divestitures or business combinations that may be announced or closed after the date hereof. 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. 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.
Conference Call on the Third Quarter 2007 Financial Results
Raytheon's financial results conference call will be held on Thursday, October 25, 2007 at 9 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) 800 - 8651. 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 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.
Media Contact: Investor Relations Contact:
Jon Kasle Greg Smith
781-522-5110 781-522-5141
Attachment A
Raytheon Company
Preliminary Statement of Operations Information
Third Quarter 2007
(In millions except
per share amounts) Three Months Ended Nine Months Ended
23-Sep-07 24-Sep-06 23-Sep-07 24-Sep-06
Net sales $5,355 $4,936 $15,702 $14,569
Cost of sales 4,276 4,047 12,583 11,886
Administrative and selling
expenses 460 327 1,167 991
Research and development expenses 142 106 377 342
Total operating expenses 4,878 4,480 14,127 13,219
Operating income 477 456 1,575 1,350
Interest expense 41 65 155 202
Interest income (42) (15) (127) (49)
Other expense (income), net 9 (2) 68 (41)
Non-operating expense, net 8 48 96 112
Income from continuing operations
before taxes 469 408 1,479 1,238
Federal and foreign income taxes 165 141 505 423
Income from continuing operations 304 267 974 815
(Loss) income from discontinued
operations, net of tax (5) 54 20 103
Gain on sale, net of tax - - 986 -
(Loss) income from discontinued
operations (5) 54 1,006 103
Net income $299 $321 $1,980 $918
Earnings per share from continuing
operations
Basic $0.70 $0.60 $2.23 $1.84
Diluted $0.69 $0.59 $2.17 $1.81
(Loss) earnings per share from
discontinued operations
Basic $(0.01) $0.12 $2.31 $0.23
Diluted $(0.01) $0.12 $2.24 $0.23
Earnings per share
Basic $0.69 $0.73 $4.54 $2.08
Diluted $0.68 $0.71 $4.42 $2.04
Average shares outstanding
Basic 431.2 441.9 436.3 442.3
Diluted 443.0 451.6 448.2 450.5
Attachment B
Raytheon Company
Preliminary Segment Information
Third Quarter 2007
(In millions)
Operating Income
Net Sales Operating Income As a Percent of Sales
Three Months Ended Three Months Ended Three Months Ended
23-Sep-07 24-Sep-06 23-Sep-07 24-Sep-06 23-Sep-07 24-Sep-06
Integrated
Defense Systems $1,147 $1,030 $206 $167 18.0% 16.2%
Intelligence and
Information
Systems 680 626 64 58 9.4% 9.3%
Missile Systems 1,247 1,081 139 109 11.1% 10.1%
Network Centric
Systems 1,036 879 123 87 11.9% 9.9%
Space and
Airborne Systems 1,016 1,069 121 148 11.9% 13.8%
Technical Services 513 500 34 35 6.6% 7.0%
Other 191 190 (96) (10) -50.3% -5.3%
FAS/CAS Pension
Adjustment - - (67) (90)
Corporate and
Eliminations (475) (439) (47) (48)
Total $5,355 $4,936 $477 $456 8.9% 9.2%
Operating Income
Net Sales Operating Income As a Percent of Sales
Nine Months Ended Nine Months Ended Nine Months Ended
23-Sep-07 24-Sep-06 23-Sep-07 24-Sep-06 23-Sep-07 24-Sep-06
Integrated
Defense Systems $3,405 $3,031 $617 $502 18.1% 16.6%
Intelligence and
Information
Systems 1,934 1,870 182 171 9.4% 9.1%
Missile Systems 3,631 3,187 393 341 10.8% 10.7%
Network Centric
Systems 3,017 2,550 379 262 12.6% 10.3%
Space and
Airborne Systems 3,045 3,144 383 445 12.6% 14.2%
Technical
Services 1,412 1,416 84 96 5.9% 6.8%
Other 589 582 (103) (33) -17.5% -5.7%
FAS/CAS Pension
Adjustment - - (192) (271)
Corporate and
Eliminations (1,331) (1,211) (168) (163)
Total $15,702 $14,569 $1,575 $1,350 10.0% 9.3%
Attachment C
Raytheon Company
Other Preliminary Information
Third Quarter 2007
Funded
Backlog Backlog
(In millions) (In millions)
23-Sep-07 31-Dec-06 23-Sep-07 31-Dec-06
Integrated Defense Systems $8,458 $7,934 $3,399 $4,088
Intelligence and Information
Systems 4,142 3,935 925 893
Missile Systems 9,078 9,504 4,866 5,135
Network Centric Systems 5,407 5,059 4,094 4,037
Space and Airborne Systems 4,900 5,591 2,907 2,770
Technical Services 1,686 1,572 1,044 1,020
Other 218 243 218 243
Total $33,889 $33,838 $17,453 $18,186
Bookings
(In millions)
Three Months Ended
23-Sep-07 24-Sep-06
Total Bookings $6,463 $5,403
Attachment D
Raytheon Company
Preliminary Balance Sheet Information
Third Quarter 2007
(In millions)
23-Sep-07 31-Dec-06
Assets
Cash and cash equivalents $2,609 $2,460
Accounts receivable, less allowance for
doubtful accounts 155 178
Contracts in process 3,894 3,600
Inventories 543 487
Deferred taxes 215 257
Prepaid expenses and other current assets 391 239
Assets held for sale - 2,296
Total current assets 7,807 9,517
Property, plant and equipment, net 2,062 2,131
Deferred taxes 74 189
Goodwill 11,464 11,539
Other assets, net 2,084 2,115
Total assets $23,491 $25,491
Liabilities and Stockholders' Equity
Notes payable and current portion of long-term
debt $119 $687
Advance payments and billings in excess of costs
incurred 1,786 1,962
Accounts payable 982 920
Accrued employee compensation 950 944
Other accrued expenses 1,138 1,193
Liabilities held for sale - 1,009
Total current liabilities 4,975 6,715
Accrued retiree benefits and other long-term
liabilities 4,083 4,232
Deferred taxes - -
Long-term debt 2,249 3,278
Minority interest 211 165
Stockholders' equity 11,973 11,101
Total liabilities and stockholders' equity $23,491 $25,491
Attachment E
Raytheon Company
Preliminary Cash Flow Information
Third Quarter 2007
(In millions)
Three Months Ended Nine Months Ended
23-Sep-07 24-Sep-06 23-Sep-07 24-Sep-06
Income from continuing operations $304 $267 $974 $815
Depreciation 76 72 219 215
Amortization 22 19 65 60
Working capital 219 80 (499) (484)
Discontinued operations (4) 19 (45) 33
Net activity in financing receivables 15 22 71 96
Other 99 273 (520) 457
Net operating cash flow 731 752 265 1,192
Capital spending (65) (58) (161) (146)
Internal use software spending (18) (25) (52) (50)
Acquisitions - (40) - (87)
Investment activity and divestitures - - 3,117 50
Dividends (111) (108) (331) (313)
Repurchase of common stock (500) (250) (1,301) (352)
Debt repayments (568) (74) (1,606) (445)
Discontinued operations - (9) (27) (27)
Other 95 49 245 138
Total cash flow $(436) $237 $149 $(40)
Attachment F
Raytheon Company
Non-GAAP Financial Measures
Third Quarter 2007
We define 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 cumulative
minimum pension liability/impact of FAS 158. 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
2007 Current 2007 Prior
(In millions) Guidance Guidance
Low end High end Low end High end
of range of range of range of range
Income from continuing operations
Net interest expense, after-tax* Combined Combined Combined Combined
Lease expense, after-tax*
Return $1,450 $1,515 $1,470 $1,535
Net debt **
Equity less investment in
discontinued operations
Lease expense x 8 plus financial
guarantees Combined Combined Combined Combined
Minimum pension liability (cumulative)
Invested capital from continuing
operations*** $16,885 $16,685 $17,050 $16,850
ROIC 8.6% 9.1% 8.6% 9.1%
* Effective tax rate: 33.9% (2007 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
Attachment G
Raytheon Company
Preliminary Financial Information Excluding Flight Options Non-GAAP
Reconciliation
Third Quarter 2007
(In millions except
per share amounts)
Three Months Ended Nine Months Ended
23-Sep-07 24-Sep-06 23-Sep-07 24-Sep-06
Net sales as reported
under GAAP $5,355 $4,936 $15,702 $14,569
Less: Flight Options (136) (137) (401) (423)
Net sales excluding Flight
Options* $5,219 $4,799 $15,301 $14,146
Three Months Ended Nine Months Ended
23-Sep-07 24-Sep-06 23-Sep-07 24-Sep-06
Operating income as reported
under GAAP $477 $456 $1,575 $1,350
Add Back: Flight Options,
including a Q3 2007 pretax
impairment charge of $84 million 95 12 107 41
Operating income excluding Flight
Options* $572 $468 $1,682 $1,391
Three Months Ended Nine Months Ended
23-Sep-07 24-Sep-06 23-Sep-07 24-Sep-06
Operating margin as reported
under GAAP 8.9% 9.2% 10.0% 9.3%
Operating margin excluding Flight
Options* 11.0% 9.8% 11.0% 9.8%
Three Months Ended Nine Months Ended
23-Sep-07 24-Sep-06 23-Sep-07 24-Sep-06
Income from continuing operations
as reported under GAAP $304 $267 $974 $815
Add Back: Flight Options,
including a Q3 2007 after-tax
impairment charge of $69 million 76 7 85 28
Income from continuing operations
excluding Flight
Options* $380 $274 $1,059 $843
Three Months Ended Nine Months Ended
23-Sep-07 24-Sep-06 23-Sep-07 24-Sep-06
Diluted EPS from continuing
operations as reported
under GAAP $0.69 $0.59 $2.17 $1.81
Add Back: Loss per share of Flight
Options, including
a Q3 2007 after-tax impairment
charge of $0.16 0.17 0.02 0.19 0.06
Diluted EPS from continuing
operations excluding
Flight Options* $0.86 $0.61 $2.36 $1.87
* These amounts are not measures of financial performance under generally
accepted accounting principles (GAAP). They should be considered
supplemental to and not a substitute for financial performance in
accordance with GAAP. We are providing these non-GAAP measures to
provide insight on how we expect continuing operations to appear when
Flight Options is reported as a discontinued operation in the fourth
quarter 2007.
SOURCE: Raytheon Company
CONTACT: Media, Jon Kasle, +1-781-522-5110, or Investor Relations, Greg
Smith, +1-781-522-5141, both of Raytheon Company
Web site: http://www.raytheon.com/