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Raytheon Reports Strong First Quarter Results; Increases Full-Year Guidance
Highlights
- Net sales of $5.9 billion, up 10 percent
- Operating income of $712 million, up 17 percent
- Earnings per share (EPS) from continuing operations of $1.11, up 21 percent
- Solid bookings of $5.2 billion; backlog of $37.9 billion
- Increased annual dividend by 11 percent to $1.24 per share, as previously announced
WALTHAM, Mass., April 23, 2009 /PRNewswire-FirstCall/ -- Raytheon Company reported first quarter 2009 income from continuing operations of $457 million or $1.11 per diluted share compared to $401 million or $0.92 per diluted share in the first quarter 2008.
"We delivered strong results across all of our businesses during the quarter," said William H. Swanson, Raytheon's Chairman and CEO. "Raytheon's strong domestic and international business and diverse portfolio of more than 8,000 programs position us well today and for the future."
Net sales for the first quarter 2009 were $5.9 billion, up 10 percent from $5.4 billion in the first quarter 2008, with growth across all of the Company's businesses.
Operating cash flow from continuing operations for the first quarter 2009 was $411 million compared to $67 million for the first quarter 2008. The increase in operating cash flow was primarily due to a $337 million tax refund received in the first quarter 2009.
In the first quarter 2009 the Company repurchased 6.8 million shares of common stock for $300 million, as part of the Company's previously announced share repurchase program. In addition, as announced in March 2009, the Company's Board of Directors voted to increase the Company's annual dividend payout rate by 11 percent from $1.12 to $1.24 per share.
The Company ended the first quarter 2009 with $87 million of net debt. Net debt is defined as total debt less cash and cash equivalents.
Summary Financial Results 1st Quarter %
($in millions, except per share data) 2009 2008 Change
Net sales $5,884 $5,354 10%
Total operating expenses 5,172 4,745
Operating income 712 609 17%
Non-operating expenses,
net 33 16
Income from cont. ops. before taxes $679 $593 15%
Income from continuing operations $457 $401 14%
Income/(loss) from disc. ops., net NM
of tax 3 (2)
Net income(1) $460 $399 15%
Less: noncontrolling
interests(1) 8 1
Net income attributable to
Raytheon Company(1) $452 $398 14%
Diluted EPS from continuing
operations(2) $1.11 $0.92 21%
Diluted EPS(2) $1.12 $0.92 22%
Operating cash flow from cont. ops. $411 $67
FAS/CAS pension adjustment
Inc./(Exp.) $11 $(33)
Workdays in fiscal reporting
calendar 61 63
(1) Raytheon Company adopted FAS No.160, Noncontrolling Interests in
Consolidated Financial Statements, effective January 1, 2009.
(2) Raytheon Company adopted FASB Staff Position EITF 03-6-1 for
Participating Securities, effective January 1, 2009, which decreased
Q1 2008 diluted EPS from continuing operations by $0.01. The impact
on Q1 2008 diluted EPS was less than $0.01.
The Company adopted FAS No.160, Noncontrolling Interests in Consolidated Financial Statements, effective January 1, 2009. The Company's noncontrolling interests relate primarily to Thales-Raytheon Systems Co. LLC, which is included in the Network Centric Systems (NCS) segment. The impact to NCS in the first quarter 2009 is an increase of $8 million in operating income compared to an increase of $1 million in the first quarter 2008.
During the quarter, the Company changed the reporting of a U.K. manufacturing facility from Space and Airborne Systems to Missile Systems. Prior period segment results have been revised to reflect this reorganization.
Bookings and Backlog
Bookings 1st Quarter
($in millions) 2009 2008
Total Bookings $5,209 $6,516
Backlog
Period Ended
($in millions) 03/29/09 12/31/08
Backlog $37,939 $38,884
Funded Backlog $23,022 $21,986
The Company reported total bookings for the first quarter 2009 of $5.2 billion compared to $6.5 billion in the first quarter 2008. The Company ended the first quarter 2009 with a backlog of $37.9 billion compared to $38.9 billion at the end of 2008 and $37.7 billion at the end of the first quarter 2008.
Outlook
2009 Financial Outlook Current Prior (1/29/09)
Net Sales ($B) 24.4 - 24.9* 24.3 - 24.8
FAS/CAS Pension Income ($M) 47 47
Interest Inc./(Exp.), net ($M) (105) - (115) (105) - (115)
Diluted Shares (M) 398 - 401* 402 - 405
EPS from Continuing Operations $4.55 - $4.70* $4.45 - $4.60
Operating Cash Flow from
Cont. Ops. ($B) 2.2 - 2.4 2.2 - 2.4
ROIC (%) 11.1 - 11.6* 11.0 - 11.5**
* Denotes change from prior guidance.
** Prior ROIC guidance now reflects a 10 bp increase due to the
impact of FAS 160, Noncontrolling Interests in Consolidated
Financial Statements, which the Company adopted January 1,
2009. The Company's noncontrolling interests relate primarily
to Thales-Raytheon Systems Co. LLC at NCS.
The Company has increased full-year 2009 guidance for net sales, earnings per share from continuing operations and Return on Invested Capital (ROIC), and updated the outlook for diluted share count. Charts containing additional information on the Company's 2009 guidance are available on the Company's website at www.raytheon.com. See attachment F for the Company's calculation and use of ROIC, a non-GAAP financial measure.
Segment Results
Integrated Defense Systems
1st Quarter %
Change
($in millions) 2009 2008
Net Sales $1,262 $1,192 6%
Operating Income $188 $211 -11%
Operating Margin 14.9% 17.7%
Integrated Defense Systems (IDS) had first quarter 2009 net sales of $1,262 million, up 6 percent compared to $1,192 million in the first quarter 2008, primarily due to growth on domestic and international Patriot programs. IDS recorded $188 million of operating income compared to $211 million in the first quarter 2008. The change in operating income was primarily due to contract mix, driven primarily by the completion of certain programs in 2008. IDS also benefited from the sale of certain software licenses in the first quarter 2008.
During the quarter, IDS booked $741 million in new international and domestic Patriot awards, including $185 million for the United Arab Emirates (UAE), $139 million for Taiwan, $159 million to provide engineering services and $115 million for the Patriot Pure Fleet program for the U.S. Army.
Intelligence and Information Systems
1st Quarter %
Change
($in millions) 2009 2008
Net Sales $784 $692 13%
Operating Income $61 $52 17%
Operating Margin 7.8% 7.5%
Intelligence and Information Systems (IIS) had first quarter 2009 net sales of $784 million, up 13 percent compared to $692 million in the first quarter 2008, primarily due to higher volume on classified contracts. IIS recorded $61 million of operating income compared to $52 million in the first quarter 2008. The increase in operating income was primarily due to higher volume.
During the quarter, IIS booked $236 million on a number of classified contracts.
Missile Systems
1st Quarter %
Change
($in millions) 2009 2008
Net Sales $1,368 $1,319 4%
Operating Income $158 $139 14%
Operating Margin 11.5% 10.5%
Missile Systems (MS) had first quarter 2009 net sales of $1,368 million, up 4 percent compared to $1,319 million in the first quarter 2008, primarily due to higher volume on the Standard Missile, Advanced Medium-Range Air-to-Air Missile (AMRAAM), and Evolved Sea Sparrow Missile (ESSM) programs. MS recorded $158 million of operating income compared to $139 million in the first quarter 2008. The increase in operating income was due to improved program performance and higher volume.
During the quarter, MS booked $119 million for continued development and production work on the Exoatmospheric Kill Vehicle (EKV). MS also booked $85 million for the production of the Joint Standoff Weapon (JSOW) for the U.S. Navy.
Network Centric Systems
1st Quarter %
Change
($in millions) 2009 2008
Net Sales $1,154 $1,067 8%
Operating Income $163 $124 31%
Operating Margin 14.1% 11.6%
Network Centric Systems (NCS) had first quarter 2009 net sales of $1,154 million, up 8 percent compared to $1,067 million in the first quarter 2008, primarily due to increased volume on certain U.S. Army programs. NCS recorded $163 million of operating income compared to $124 million in the first quarter 2008. The increase in operating income was primarily due to improved program performance and higher volume.
During the quarter, NCS booked $98 million for the Secure Mobile Anti-Jam Reliable Tactical Terminal (SMART-T) program and $95 million for the Thermal Weapon Sight II program for the U.S. Army.
Space and Airborne Systems
1st Quarter %
Change
($in millions) 2009 2008
Net Sales $1,046 $977 7%
Operating Income $139 $117 19%
Operating Margin 13.3% 12.0%
Space and Airborne Systems (SAS) had first quarter 2009 net sales of $1,046 million, up 7 percent compared to $977 million in the first quarter 2008, primarily due to growth on an international tactical radar program and classified business. SAS recorded $139 million of operating income compared to $117 million in the first quarter 2008. The increase in operating income was primarily due to higher volume, improved program performance and favorable contractual settlements.
During the quarter, SAS booked $422 million to supply APG-63 fire control radars and support equipment for the Japan Air Self-Defense Force. SAS also booked $130 million for the B-2 Radar Modernization Program (RMP).
Technical Services
1st Quarter %
Change
($in millions) 2009 2008
Net Sales $696 $521 34%
Operating Income $44 $35 26%
Operating Margin 6.3% 6.7%
Technical Services (TS) had first quarter 2009 net sales of $696 million, up 34 percent compared to $521 million in the first quarter 2008, primarily due to strong growth in training programs. TS recorded operating income of $44 million in the first quarter 2009 compared to $35 million in the first quarter 2008. The increase in operating income was primarily due to higher volume.
During the quarter, TS booked $178 million for work on the Warfighter Field Operations Customer Support (FOCUS) contract for the U.S. Army.
Raytheon Company , 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 First Quarter 2009 Financial Results
Raytheon's financial results conference call will be held on Thursday, April 23, 2009 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 (800) 798-2864 in the U.S. or (617) 614-6206 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 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 and procurement and other regulations; the impact of competition; the ability to develop products and technologies; the impact of the current downturn in the financial markets; the risk that actual pension returns 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.
Media Contact: Investor Relations Contact:
Jon Kasle Marc Kaplan
781-522-5110 781-522-5141
Attachment A
Raytheon Company
Preliminary Statement of Operations Information*
First Quarter 2009
(In millions, except per share amounts) Three Months Ended
------------------
29-Mar-09 30-Mar-08
--------- ---------
Net sales $5,884 $5,354
------ ------
Operating expenses
Cost of sales 4,697 4,258
Administrative and selling expenses 364 380
Research and development expenses 111 107
--- ---
Total operating expenses 5,172 4,745
----- -----
Operating income 712 609
--- ---
Interest expense 32 34
Interest income (4) (23)
Other expense, net 5 5
- -
Non-operating expense, net 33 16
-- --
Income from continuing operations before taxes 679 593
Federal and foreign income taxes 222 192
--- ---
Income from continuing operations 457 401
Income (loss) from discontinued operations,
net of tax 3 (2)
- --
Net income 460 399
--- ---
Less: Net income attributable to
noncontrolling interests 8 1
- -
Net income attributable to Raytheon Company $452 $398
==== ====
Basic earnings (loss) per share attributable
to Raytheon Company common stockholders:
Income from continuing operations $1.12 $0.94
Discontinued operations 0.01 (0.01)
Net income 1.13 0.94
Diluted earnings (loss) per share attributable
to Raytheon Company common stockholders:
Income from continuing operations $1.11 $0.92
Discontinued operations 0.01 (0.01)
Net income 1.12 0.92
Amounts attributable to Raytheon Company
common stockholders:
Income from continuing operations $449 $400
Income (loss) from discontinued operations 3 (2)
- --
Net income $452 $398
==== ====
Average shares outstanding
Basic 399.0 423.8
Diluted 404.0 434.7
* This Preliminary Statement of Operations Information was prepared on
the same basis as our annual consolidated financial statements, except
for the adoption of Statement of Financial Accounting Standards No.
160, Noncontrolling Interests, and Financial Accounting Standards
Board Staff Position Emerging Issues Task Force No. 03-6-1, Determining
Whether Instruments Granted in Share-Based Payment Transactions are
Participating Securities effective January 1, 2009. Accordingly, this
Preliminary Statement of Operations Information has been prepared to
reflect the adoption of these standards.
Attachment A
Raytheon Company
Pro Forma Statement of Operations Information *
Quarters 2008
(In millions, except
per share amounts) Three Months Ended
------------------
30-Mar-08 29-Jun-08 28-Sep-08 31-Dec-08
--------- --------- --------- ---------
Net sales $5,354 $5,870 $5,864 $6,086
------ ------ ------ ------
Operating expenses
Cost of sales 4,258 4,664 4,664 4,903
Administrative and
selling expenses 380 396 380 392
Research and development
expenses 107 142 130 138
--- --- --- ---
Total operating expenses 4,745 5,202 5,174 5,433
----- ----- ----- -----
Operating income 609 668 690 653
--- --- --- ---
Interest expense 34 34 29 32
Interest income (23) (17) (16) (8)
Other expense (income),
net 5 (2) 18 12
- -- -- --
Non-operating expense, net 16 15 31 36
-- -- -- --
Income from continuing
operations before taxes 593 653 659 617
Federal and foreign income
taxes 192 221 222 189
--- --- --- ---
Income from continuing
operations 401 432 437 428
Loss from discontinued
operations, net of tax (2) - - -
-- - - -
Net income 399 432 437 428
--- --- --- ---
Less: Net income
attributable to
noncontrolling
interests 1 6 10 7
- - -- -
Net income attributable to
Raytheon Company $398 $426 $427 $421
==== ==== ==== ====
Basic earnings (loss) per
share attributable to
Raytheon Company
common stockholders:
Income from continuing
operations $0.94 $1.02 $1.03 $1.03
Discontinued operations (0.01) - - -
Net income 0.94 1.02 1.03 1.03
Diluted earnings (loss) per
share attributable to
Raytheon Company
common stockholders:
Income from continuing
operations $0.92 $0.99 $1.01 $1.01
Discontinued operations (0.01) - - -
Net income 0.92 0.99 1.00 1.01
Amounts attributable to
Raytheon Company common
stockholders:
Income from continuing
operations $400 $426 $427 $421
Loss from discontinued
operations (2) - - -
-- - - -
Net income $398 $426 $427 $421
==== ==== ==== ====
Average shares outstanding
Basic 423.8 419.7 415.6 409.8
Diluted 434.7 430.0 424.9 416.4
* On January 1, 2009, we adopted Statement of Financial Accounting
Standards No. 160, Noncontrolling Interests, and Financial Accounting
Standards Board Staff Position Emerging Issues Task Force No. 03-6-1,
Determining Whether Instruments Granted in Share-Based Payment
Transactions are Participating Securities. This Pro Forma Statement of
Operations Information has been prepared to reflect the adoption of
these standards.
Attachment A
Raytheon Company
Pro Forma Statement of Operations Information *
Full Year 2005 through 2008
(In millions, except
per share amounts) Twelve Months Ended
-------------------
31-Dec-08 31-Dec-07 31-Dec-06 31-Dec-05
--------- --------- --------- ---------
Net sales $23,174 $21,301 $19,707 $18,491
------- ------- ------- -------
Operating expenses
Cost of sales 18,489 17,011 15,955 15,205
Administrative and
selling expenses 1,548 1,434 1,322 1,228
Research and development
expenses 517 502 464 430
--- --- --- ---
Total operating expenses 20,554 18,947 17,741 16,863
------ ------ ------ ------
Operating income 2,620 2,354 1,966 1,628
----- ----- ----- -----
Interest expense 129 196 272 305
Interest income (64) (163) (75) (39)
Other expense (income),
net 33 70 (44) (13)
-- -- --- ---
Non-operating expense, net 98 103 153 253
-- --- --- ---
Income from continuing
operations before taxes 2,522 2,251 1,813 1,375
Federal and foreign income
taxes 824 532 604 468
--- --- --- ---
Income from continuing
operations 1,698 1,719 1,209 907
Operating (loss) income from
discontinued operations,
net of tax (2) (57) 96 (27)
Net gain on sales of
discontinued operations,
net of tax - 942 - -
-- --- -- --
(Loss) income from discontinued
operations, net of tax (2) 885 96 (27)
-- --- -- ---
Net income 1,696 2,604 1,305 880
----- ----- ----- ---
Less: Net income
attributable to
noncontrolling
interests 24 26 22 9
-- -- -- -
Net income attributable to
Raytheon Company $1,672 $2,578 $1,283 $871
====== ====== ====== ====
Basic earnings (loss) per
share attributable to
Raytheon Company
common stockholders:
Income from continuing
operations $4.01 $3.86 $2.66 $1.99
Discontinued operations (0.01) 2.02 0.21 (0.06)
Net income 4.01 5.88 2.87 1.93
Diluted earnings (loss)
per share attributable to
Raytheon Company
common stockholders:
Income from continuing
operations $3.93 $3.78 $2.62 $1.97
Discontinued operations (0.01) 1.97 0.21 (0.06)
Net income 3.92 5.75 2.83 1.91
Amounts attributable to
Raytheon Company common
stockholders:
Income from continuing
operations $1,674 $1,693 $1,187 $898
(Loss) income from
discontinued operations (2) 885 96 (27)
-- --- -- ---
Net income $1,672 $2,578 $1,283 $871
====== ====== ====== ====
Average shares outstanding
Basic 417.2 438.6 447.2 451.0
Diluted 426.5 448.4 453.9 455.9
* On January 1, 2009, we adopted Statement of Financial Accounting
Standards No. 160, Noncontrolling Interests, and Financial Accounting
Standards Board Staff Position Emerging Issues Task Force No. 03-6-1,
Determining Whether Instruments Granted in Share-Based Payment
Transactions are Participating Securities. This Pro Forma Statement
of Operations Information has been prepared to reflect the adoption of
these standards.
Attachment B
Raytheon Company
Preliminary Segment Information*
First Quarter 2009
Operating
Income
As a Percent
(In millions, Net Sales Operating Income of Sales
except percentages) Three Months Three Months Three Months
Ended Ended Ended
------------- ------------- -------------
29-Mar- 30-Mar 29-Mar 30-Mar 29-Mar 30-Mar
09 -08 -09 -08 -09 -08
------- ------- ------- ------ ------- -------
Integrated Defense
Systems $1,262 $1,192 $188 $211 14.9% 17.7%
Intelligence and
Information
Systems 784 692 61 52 7.8% 7.5%
Missile Systems 1,368 1,319 158 139 11.5% 10.5%
Network Centric
Systems 1,154 1,067 163 124 14.1% 11.6%
Space and Airborne
Systems 1,046 977 139 117 13.3% 12.0%
Technical Services 696 521 44 35 6.3% 6.7%
FAS/CAS Pension
Adjustment - - 11 (33)
Corporate and
Eliminations (426) (414) (52) (36)
---- ---- --- ---
Total $5,884 $5,354 $712 $609 12.1% 11.4%
====== ====== ==== ====
* This Preliminary Segment Information was prepared on the same basis as
our annual consolidated financial statements, except for the adoption
of Statement of Financial Accounting Standards No. 160, Noncontrolling
Interest, and the reorganization of a U.K. manufacturing facility from
Space and Airborne Systems to Missile Systems. These changes became
effective on January 1, 2009.
Attachment B
Raytheon Company
Pro Forma Segment Information *
Quarters 2008 and Full Year 2006 through 2008
Net Sales
(In millions, except percentages) Three Months Ended
------------------
30-Mar-08 29-Jun-08 28-Sep-08 31-Dec-08
--------- --------- --------- ---------
Integrated Defense Systems $1,192 $1,257 $1,276 $1,423
Intelligence and Information
Systems 692 829 801 810
Missile Systems 1,319 1,363 1,360 1,366
Network Centric Systems 1,067 1,173 1,145 1,125
Space and Airborne Systems 977 1,072 1,065 1,166
Technical Services 521 647 689 744
Corporate and Eliminations (414) (471) (472) (548)
---- ---- ---- ----
Total $5,354 $5,870 $5,864 $6,086
====== ====== ====== ======
Net Sales
(In millions, except percentages) Twelve Months Ended
-------------------
31-Dec-08 31-Dec-07 31-Dec-06
--------- --------- ---------
Integrated Defense Systems $5,148 $4,695 $4,220
Intelligence and Information
Systems 3,132 2,742 2,560
Missile Systems 5,408 5,026 4,535
Network Centric Systems 4,510 4,164 3,561
Space and Airborne Systems 4,280 4,202 4,224
Technical Services 2,601 2,174 2,153
Corporate and Eliminations (1,905) (1,702) (1,546)
------ ------ ------
Total $23,174 $21,301 $19,707
======= ======= =======
Operating Income
Three Months Ended
------------------
30-Mar-08 29-Jun-08 28-Sep-08 31-Dec-08
--------- --------- --------- ---------
Integrated Defense Systems $211 $209 $206 $244
Intelligence and Information
Systems 52 67 67 67
Missile Systems 139 158 145 142
Network Centric Systems 124 151 152 148
Space and Airborne Systems 117 141 144 167
Technical Services 35 45 45 49
FAS/CAS Pension Adjustment (33) (34) (26) (30)
Corporate and Eliminations (36) (69) (43) (134)
--- --- --- ----
Total $609 $668 $690 $653
==== ==== ==== ====
Operating Income
Twelve Months Ended
-------------------
31-Dec-08 31-Dec-07 31-Dec-06
--------- --------- ---------
Integrated Defense Systems $870 $828 $691
Intelligence and Information
Systems 253 248 234
Missile Systems 584 543 483
Network Centric Systems 575 532 401
Space and Airborne Systems 569 556 599
Technical Services 174 139 153
FAS/CAS Pension Adjustment (123) (259) (362)
Corporate and Eliminations (282) (233) (233)
---- ---- ----
Total $2,620 $2,354 $1,966
====== ====== ======
Operating Income as a Percentage of Sales
Three Months Ended
------------------
30-Mar-08 29-Jun-08 28-Sep-08 31-Dec-08
--------- --------- --------- ---------
Integrated Defense Systems 17.7% 16.6% 16.1% 17.1%
Intelligence and Information
Systems 7.5% 8.1% 8.4% 8.3%
Missile Systems 10.5% 11.6% 10.7% 10.4%
Network Centric Systems 11.6% 12.9% 13.3% 13.2%
Space and Airborne Systems 12.0% 13.2% 13.5% 14.3%
Technical Services 6.7% 7.0% 6.5% 6.6%
FAS/CAS Pension Adjustment
Corporate and Eliminations
Total 11.4% 11.4% 11.8% 10.7%
Operating Income
As a Percent of Sales
Twelve Months Ended
-------------------
31-Dec-08 31-Dec-07 31-Dec-06
--------- --------- ---------
Integrated Defense Systems 16.9% 17.6% 16.4%
Intelligence and Information
Systems 8.1% 9.0% 9.1%
Missile Systems 10.8% 10.8% 10.7%
Network Centric Systems 12.7% 12.8% 11.3%
Space and Airborne Systems 13.3% 13.2% 14.2%
Technical Services 6.7% 6.4% 7.1%
FAS/CAS Pension Adjustment
Corporate and Eliminations
Total 11.3% 11.1% 10.0%
* On January 1, 2009, we adopted Statement of Financial Accounting
Standards No. 160, Noncontrolling Interests. Additionally, the
composition of Space and Airborne Systems was changed to exclude a U.K.
manufacturing facility, which now reports directly to Missile Systems.
This Pro Forma Segment Information has been prepared to reflect these
changes.
Attachment C
Raytheon Company
Other Preliminary Information*
First Quarter 2009
(In millions) Funded Backlog Total Backlog
-------------- -------------
29-Mar-09 31-Dec-08 29-Mar-09 31-Dec-08
--------- --------- --------- ---------
Integrated Defense Systems $5,735 $4,802 $9,684 $9,883
Intelligence and Information
Systems 1,761 1,890 4,818 5,137
Missile Systems 5,605 6,082 9,355 9,937
Network Centric Systems 4,816 4,593 5,850 5,733
Space and Airborne Systems 3,284 2,731 5,613 5,442
Technical Services 1,821 1,888 2,619 2,752
----- ----- ----- -----
Total $23,022 $21,986 $37,939 $38,884
======= ======= ======= =======
Bookings
Three Months Ended
-----------------------
29-Mar-09 30-Mar-08
--------- ---------
Total Bookings $5,209 $6,516
====== ======
* This Other Preliminary Information was prepared on the same basis as
our annual consolidated financial statements, except for the
reorganization of a U.K. manufacturing facility from Space and
Airborne Systems to Missile Systems.
Attachment C
Raytheon Company
Other Pro Forma Information *
Quarters 2008 and Full Year 2006 through 2008
(In millions) Funded Backlog Total Backlog
Twelve Months Ended Twelve Months Ended
------------------- -------------------
31-Dec 31-Dec 31-Dec 31-Dec 31-Dec 31-Dec
-08 -07 -06 -08 -07 -06
------ ------ ------ ------ ------ -----
Integrated Defense
Systems $4,802 $4,781 $4,088 $9,883 $9,296 $7,934
Intelligence and
Information
Systems 1,890 2,325 893 5,137 5,636 3,935
Missile Systems 6,082 5,295 5,216 9,937 9,456 9,585
Network Centric
Systems 4,593 3,957 4,037 5,733 5,102 5,059
Space and
Airborne
Systems 2,731 2,960 2,689 5,442 5,199 5,510
Technical
Services 1,888 1,200 1,263 2,752 1,925 1,815
----- ----- ----- ----- ----- -----
Total $21,986 $20,518 $18,186 $38,884 $36,614 $33,838
======= ======= ======= ======= ======= =======
(In millions) Total Bookings
Twelve Months Ended
-------------------
31-Dec-08 31-Dec-07 31-Dec-06
--------- --------- ---------
Integrated Defense Systems $5,933 $6,066 $4,118
Intelligence and Information Systems 3,204 4,900 2,701
Missile Systems 6,043 4,954 6,050
Network Centric Systems 4,938 3,904 4,037
Space and Airborne Systems 3,927 3,968 3,992
Technical Services 2,753 1,610 1,418
Corporate 22 96 101
-- -- ---
Total $26,820 $25,498 $22,417
======= ======= =======
(In millions) Total Bookings
Three Months Ended
------------------
30-Mar-08 29-Jun-08 28-Sep-08 31-Dec-08
--------- --------- --------- ---------
Integrated Defense Systems $1,106 $981 $516 $3,330
Intelligence and Information
Systems 1,019 776 698 711
Missile Systems 1,642 1,941 1,102 1,358
Network Centric Systems 1,592 895 1,090 1,361
Space and Airborne Systems 728 809 1,087 1,303
Technical Services 418 595 1,273 467
Corporate 11 11 - -
-- -- -- --
Total $6,516 $6,008 $5,766 $8,530
====== ====== ====== ======
* On January 1, 2009, the composition of Space and Airborne Systems was
changed to exclude a U.K. manufacturing facility, which now reports
directly to Missile Systems. This Other Pro Forma Information has been
prepared to reflect this change.
Attachment D
Raytheon Company
Preliminary Balance Sheet Information*
First Quarter 2009
(In millions)
29-Mar-09 31-Dec-08
--------- ---------
Assets
Cash and cash equivalents $2,210 $2,259
Accounts receivable, net 106 105
Contracts in process 4,257 3,793
Inventories 275 325
Current tax asset 13 441
Deferred taxes 390 395
Prepaid expenses and other current assets 88 99
-- --
Total current assets 7,339 7,417
Property, plant and equipment, net 1,981 2,024
Deferred taxes 704 735
Prepaid retiree benefits 64 56
Goodwill 11,661 11,662
Other assets, net 1,130 1,240
----- -----
Total assets $22,879 $23,134
======= =======
Liabilities and Equity
Current liabilities
Advance payments and billings in excess of costs
incurred $1,794 $1,970
Accounts payable 1,209 1,201
Accrued employee compensation 567 913
Other accrued expenses 1,098 1,065
----- -----
Total current liabilities 4,668 5,149
Accrued retiree benefits and other long-term
liabilities 6,614 6,488
Long-term debt 2,297 2,309
Equity
Raytheon Company stockholders' equity
Common stock 4 4
Additional paid-in capital 10,866 10,873
Accumulated other comprehensive loss (5,132) (5,182)
Treasury stock, at cost (4,523) (4,254)
Retained earnings 7,976 7,646
----- -----
Total Raytheon Company stockholders'
equity 9,191 9,087
Noncontrolling interest in subsidiaries 109 101
--- ---
Total equity 9,300 9,188
----- -----
Total liabilities and equity $22,879 $23,134
======= =======
* This Preliminary Balance Sheet Information has been prepared on the
same basis as our annual consolidated financial statements, except
for the adoption of the Statements of Accounting Standards No. 160,
Noncontrolling Interests effective January 1, 2009.
Attachment D
Raytheon Company
Pro Forma Balance Sheet Information *
(In millions) Twelve Months Ended
-------------------
31-Dec-08 31-Dec-07 31-Dec-06 31-Dec-05
--------- --------- --------- ---------
Assets
Cash and cash equivalents $2,259 $2,655 $2,460 $1,202
Accounts receivable, net 105 126 141 142
Contracts in process 3,793 3,821 3,600 3,441
Inventories 325 386 376 420
Current tax asset 441 98 - -
Deferred taxes 395 432 257 355
Prepaid expenses and other
current assets 99 98 108 131
Assets held for sale - - 2,575 3,079
-- -- ----- -----
Total current assets 7,417 7,616 9,517 8,770
Property, plant and equipment,
net 2,024 2,058 2,025 1,997
Deferred taxes 735 - 170 (27)
Prepaid retiree benefits 56 617 527 710
Goodwill 11,662 11,627 11,461 11,421
Assets held for sale - - 374 -
Other assets, net 1,240 1,234 1,322 1,455
----- ----- ----- -----
Total assets $23,134 $23,152 $25,396 $24,326
======= ======= ======= =======
Liabilities and Equity
Current liabilities
Notes payable and current
portion of long-term debt $- $- $687 $54
Subordinated notes payable - - - 408
Advance payments and billings
in excess of costs incurred 1,970 1,845 1,885 1,560
Accounts payable 1,201 1,141 910 789
Accrued employee compensation 913 902 937 931
Other accrued expenses 1,065 900 1,043 1,054
Liabilities held for sale - - 1,253 1,539
-- -- ----- -----
Total current liabilities 5,149 4,788 6,715 6,335
Accrued retiree benefits and
other long-term liabilities 6,488 3,016 4,053 3,190
Deferred taxes - 451 - 59
Long-term debt 2,309 2,268 3,278 3,969
Liabilities held for sale - - 179 -
Equity
Raytheon Company
stockholders' equity
Common stock 4 4 5 5
Additional paid-in
capital 10,873 10,544 10,097 9,722
Accumulated other
comprehensive loss (5,182) (1,956) (2,514) (2,039)
Treasury stock, at cost (4,254) (2,502) (816) (454)
Retained earnings 7,646 6,452 4,329 3,475
----- ----- ----- -----
Total Raytheon Company
stockholders' equity 9,087 12,542 11,101 10,709
Noncontrolling interest in
subsidiaries 101 87 70 64
--- -- -- --
Total equity 9,188 12,629 11,171 10,773
----- ------ ------ ------
Total liabilities
and equity $23,134 $23,152 $25,396 $24,326
======= ======= ======= =======
* On January 1, 2009, we adopted Statement of Accounting Standards No.
160, Noncontrolling Interests. This Pro Forma Balance Sheet
Information has been prepared to reflect the adoption of this standard.
Attachment E
Raytheon Company
Preliminary Cash Flow Information*
First Quarter 2009
(In millions) Three Months Ended
--------------------
29-Mar-09 30-Mar-08
--------- ---------
Net income $460 $399
(Income) loss from discontinued operations,
net of tax (3) 2
-- -
Income from continuing operations 457 401
Depreciation 71 69
Amortization 26 23
Net income attributable to noncontrolling interest (8) (1)
Working capital (excluding pension and taxes)** (938) (703)
Discontinued operations (6) (10)
Net activity in financing receivables 9 20
Other 794 258
--- ---
Net operating cash flow 405 57
Capital spending (33) (43)
Internal use software spending (13) (17)
Dividends (112) (109)
Repurchases of common stock (300) (340)
Other 4 84
-- --
Total cash flow $(49) $(368)
==== =====
* This Preliminary Cash Flow Information has been prepared on the same
basis as our annual consolidated financial statements, except for the
adoption of Statement of Accounting Standards No. 160, Noncontrolling
Interests.
** 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 E
Raytheon Company
Pro Forma Cash Flow Information *
Quarters 2008 and Full Year 2006 through 2008
Twelve Months Ended
-------------------
(In millions) 31-Dec-08 31-Dec-07 31-Dec-06
--------- --------- ---------
Net income $1,696 $2,604 $1,305
Loss (income) from discontinued
operations, net of tax 2 (885) (96)
-- ---- ---
Income from continuing operations 1,698 1,719 1,209
Depreciation 292 288 285
Amortization 98 84 76
Net income attributable to noncontrolling
interests (24) (26) (22)
Working capital (excluding pension
and taxes)** 247 (85) 377
Discontinued operations (21) (51) 266
Net activity in financing receivables 68 88 168
Other (343) (819) 384
---- ---- ---
Net operating cash flow 2,015 1,198 2,743
Capital spending (304) (313) (294)
Internal use software spending (74) (85) (77)
Acquisitions (54) (211) (87)
Investment activity and divestitures 9 3,143 53
Dividends (460) (440) (420)
Repurchase of common stock (1,700) (1,642) (352)
Debt repayments - (1,724) (437)
Discontinued operations - (29) (73)
Other 172 298 202
--- --- ---
Total cash flow $(396) $195 $1,258
===== ==== ======
Three Months Ended
------------------
(In millions) 30-Mar-08 29-Jun-08 28-Sep-08 31-Dec-08
--------- --------- --------- ---------
Net income $399 $432 $437 $428
Loss (income) from
Discontinued operations,
net of tax 2 - - -
-- -- -- --
Income from continuing
operations 401 432 437 428
Depreciation 69 73 75 75
Amortization 23 24 24 27
Net income attributable to
noncontrolling interests (1) (6) (10) (7)
Working capital (excluding
pension and taxes)** (703) 318 3 629
Discontinued operations (10) (6) (5) -
Net activity in financing
receivables 20 5 21 22
Other 258 (79) 208 (730)
--- --- --- ----
Net operating cash flow 57 761 753 444
Capital spending (43) (56) (68) (137)
Internal use software spending (17) (13) (28) (16)
Acquisitions - (33) (20) -
Investment activity and
divestitures - 9 - -
Dividends (109) (118) (117) (116)
Repurchase of common stock (340) (340) (340) (680)
Other 84 57 27 3
-- -- -- -
Total cash flow $(368) $267 $207 $(502)
===== ==== ==== =====
* On January 1, 2009, we adopted Statement of Financial Accounting
Standards No. 160, Noncontrolling Interests. This Pro Forma Cash
Flow Information has been prepared to reflect the adoption of this
standard.
** 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
Preliminary Return on Invested Capital Non-GAAP Financial Measure
First 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 Statement of
Financial Accounting Standards No. 158, Employers' Accounting for
Defined Benefit Pension and Other Postretirement Plans (SFAS No. 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
(In millions, except percentages) 2009 Current Guidance
---------------------
Low end High end
of range of range
-------- --------
Income from continuing operations
Net interest expense, after-tax* Combined Combined
Lease expense, after-tax*
------ ------
Return $1,970 $2,030
------ ------
Net debt **
Equity less investment in
discontinued operations
Lease expense x 8, plus
financial guarantees Combined Combined
SFAS No. 158 impact
------- -------
Invested capital from
continuing operations*** $17,700 $17,500
------- -------
---- ----
ROIC 11.1% 11.6%
===== =====
* Effective 2009 tax rate: 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
SOURCE: Raytheon Company
Web site: http://www.raytheon.com/
Company News On-Call: http://www.prnewswire.com/comp/149999.html