Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K
 
  
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (date of earliest event reported): July 25, 2019
________________________________________________________________________________
RAYTHEON COMPANY
(Exact name of registrant as specified in its charter)
________________________________________________________________________________ 
Delaware
(State of Incorporation)
1-13699
(Commission File Number)
95-1778500
(IRS Employer
Identification Number)

870 Winter Street, Waltham, Massachusetts 02451
(Address of Principal Executive Offices) (Zip Code)
 
(781) 522-3000
(Registrant's telephone number, including area code)
________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol
Name of Each Exchange on Which Registered
Common Stock,
$0.01
par value
RTN
New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

_____________________________________________________________________________________






Item 2.02. Results of Operations and Financial Condition

On July 25, 2019, Raytheon Company issued a press release announcing financial results for the fiscal quarter ended June 30, 2019. A copy of the press release is furnished with this report as Exhibit 99.1. The information in this report, including Exhibit 99.1, is furnished in accordance with SEC Release No. 33-8216 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing.

 
Item 9.01. Financial Statements and Exhibits

(d) Exhibits

99.1 Press Release issued by Raytheon Company dated July 25, 2019.


2




SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
 
RAYTHEON COMPANY
 
 
 
 
 
 
Date:
July 25, 2019
By:
/s/ Michael J. Wood
 
 
 
 
Michael J. Wood
 
 
 
 
Vice President, Controller and Chief Accounting Officer
 
 
 
 
 
 

3




EXHIBIT INDEX


Exhibit No.
 
 
Description
 
 

4
Exhibit
Exhibit 99.1

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13021575&doc=4
 
 
Raytheon Company
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13021575&doc=3
 
 
Global Headquarters
 
 
Waltham, Mass.
 
 
 
 
 
Investor Relations Contact
 
 
Kelsey DeBriyn
 
 
 
781.522.5141
 
 
 
 
 
 
 
Media Contact
 
 
 
Corinne Kovalsky
 
 
 
781.522.5899
For Immediate Release

Raytheon Reports Strong Second Quarter 2019 Results

Record bookings of $9.5 billion; book-to-bill ratio of 1.32
Strong net sales of $7.2 billion, up 8.1 percent
EPS from continuing operations of $2.92, up 5.0 percent
Operating cash flow from continuing operations of $823 million
Increased full-year 2019 guidance for sales, EPS and operating cash flow
Merger activities progressing well for previously announced merger of Raytheon and United Technologies; expected close remains on track for first half of 2020
__________________________________________________________________________________________________

WALTHAM, Mass., (July 25, 2019) - Raytheon Company (NYSE: RTN) today announced net sales for the second quarter 2019 of $7.2 billion, up 8.1 percent compared to $6.6 billion in the second quarter 2018. Second quarter 2019 EPS from continuing operations was $2.92 compared to $2.78 in the second quarter 2018. The increase in the second quarter 2019 EPS from continuing operations was primarily driven by operational improvements and pension-related items, partially offset by a favorable tax-related EPS impact of $0.33 in the second quarter 2018 related to a discretionary pension plan contribution.
“The company had very strong second quarter operating results, with our bookings, sales, operating margin, EPS, and cash flow all exceeding our expectations,” said Thomas A. Kennedy, Raytheon Chairman and CEO. “We begin the second half with continued confidence in our growth outlook given our innovative technologies, breadth of franchises, and record backlog.
“Integration planning for the merger with United Technologies is progressing well, with the integration team developing detailed execution plans to capture revenue and cost synergies rapidly and ensure seamless operations post close. We continue to expect the transaction to close in the first half of 2020.”
Operating cash flow from continuing operations for the second quarter 2019 was $823 million compared to $1,156 million for the second quarter 2018. The decrease in operating cash flow from continuing operations in the second quarter 2019 was primarily due to the timing of collections. Operating cash flow from continuing operations for the second quarter 2019 was better than the company’s prior guidance.
In the second quarter 2019, the company repurchased 1.7 million shares of common stock for $300 million. Year-to-date 2019, the company repurchased 4.4 million shares of common stock for $800 million.


1


The company had record bookings of $9.5 billion in the second quarter 2019, resulting in a book-to-bill ratio of 1.32. Second quarter 2018 bookings were $8.7 billion.
Summary Financial Results
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2nd Quarter
 
%
 
Six Months
 
%
($ in millions, except per share data)
2019
 
2018
 
Change
 
2019
 
2018
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
Bookings
$
9,475

 
$
8,694

 
9.0%
 
$
14,843

 
$
15,005

 
(1.1)%
Net Sales
$
7,159

 
$
6,625

 
8.1%
 
$
13,888

 
$
12,892

 
7.7%
Income from Continuing Operations attributable to Raytheon Company
$
817

 
$
799

 
2.3%
 
$
1,598

 
$
1,433

 
11.5%
EPS from Continuing Operations
$
2.92

 
$
2.78

 
5.0%
 
$
5.69

 
$
4.98

 
14.3%
Operating Cash Flow from Continuing Operations
$
823

 
$
1,156

 
 
 
$
412

 
$
1,439

 
 
Workdays in Fiscal Reporting Calendar
64

 
64

 
 
 
127

 
128

 
 
Backlog at the end of the second quarter 2019 was a record $43.1 billion, an increase of $3.3 billion or 8 percent compared to the end of the second quarter 2018.
Backlog
 
 
 
 
 
 
 Period Ending
($ in millions)
Q2 2019
 
Q2 2018
 
2018
Backlog
$
43,131

 
$
39,881

 
$
42,420

Outlook
The company has increased its financial outlook for 2019. Charts containing additional information on the company’s 2019 outlook are available on the company’s website.
2019 Financial Outlook
 
 
 
 
Current
 
Prior (4/25/19)
Net Sales ($B)
28.8 - 29.3*
 
28.6 - 29.1
Deferred Revenue Adjustment ($M)
(2)
 
(2)
Amortization of Acquired Intangibles ($M)
(110)
 
(110)
FAS/CAS Operating Adjustment ($M)
1,463
 
1,463
Retirement Benefits Non-service Expense, non-operating ($M)
(726)
 
(726)
Interest Expense, net ($M)
~(145)*
 
(153) - (158)
Diluted Shares (M)
~281*
 
279 - 281
Effective Tax Rate
17.0% - 17.5%
 
17.0% - 17.5%
EPS from Continuing Operations
$11.50 - $11.70*
 
$11.40 - $11.60
Operating Cash Flow from Continuing Operations ($B)
4.0 - 4.2*
 
3.9 - 4.1
*Denotes change from prior guidance
 
 
 
Segment Results
The company’s reportable segments are: Integrated Defense Systems (IDS); Intelligence, Information and Services (IIS); Missile Systems (MS); Space and Airborne Systems (SAS); and Forcepoint™.



2


Integrated Defense Systems
 
 
 
 
 
 
 
 
 
 
 
2nd Quarter
 
 
 
Six Months
 
 
($ in millions)
2019
 
2018
 
% Change
 
2019
 
2018
 
% Change
Net Sales
$
1,641

 
$
1,514

 
8%
 
$
3,191

 
$
3,003

 
6%
Operating Income
$
264

 
$
262

 
1%
 
$
522

 
$
535

 
(2)%
Operating Margin
16.1
%
 
17.3
%
 
 
 
16.4
%
 
17.8
%
 
 
Integrated Defense Systems (IDS) had second quarter 2019 net sales of $1,641 million, up 8 percent compared to $1,514 million in the second quarter 2018. The increase in net sales for the quarter was primarily driven by higher net sales on various international Patriot® programs.
IDS recorded $264 million of operating income in the second quarter 2019 compared to $262 million in the second quarter 2018.
During the quarter, IDS booked $485 million and $375 million to provide advanced Patriot air and missile defense capability for Romania and the State of Qatar, respectively. IDS also booked $506 million for National Advanced Surface-to-Air Missile System (NASAMS™) for Australia; $344 million on the Army Navy/Transportable Radar Surveillance-Model 2 (AN/TPY-2) radar program for the Kingdom of Saudi Arabia; $206 million on the Multi-Function Radio Frequency System (MFRFS) program for the U.S. Army; and $93 million to provide engineering support services for an international customer.
Shortly after the quarter close, as previously announced, IDS received a direct commercial contract worth approximately $1.8 billion to provide NASAMS to the State of Qatar.
Intelligence, Information and Services
 
 
 
 
 
 
 
 
 
2nd Quarter
 
 
 
Six Months
 
 
($ in millions)
2019
 
2018
 
% Change
 
2019
 
2018
 
% Change
Net Sales
$
1,777

 
$
1,687

 
5%
 
$
3,554

 
$
3,269

 
9%
Operating Income
$
161

 
$
128

 
26%
 
$
348

 
$
245

 
42%
Operating Margin
9.1
%
 
7.6
%
 
 
 
9.8
%
 
7.5
%
 
 
Intelligence, Information and Services (IIS) had second quarter 2019 net sales of $1,777 million, up 5 percent compared to $1,687 million in the second quarter 2018. The increase in net sales for the quarter was primarily driven by higher net sales on classified programs in both cyber and space.
IIS recorded $161 million of operating income in the second quarter 2019 compared to $128 million in the second quarter 2018. The increase in operating income for the quarter was primarily driven by higher net program efficiencies.
During the quarter, IIS booked $821 million on a number of classified programs. IIS also booked $146 million on domestic and foreign training programs in support of Warfighter FOCUS activities, and $105 million to provide cybersecurity support for an international customer.


3


Missile Systems
 
 
 
 
 
 
 
 
 
2nd Quarter
 
 
 
Six Months
 
 
($ in millions)
2019
 
2018
 
% Change
 
2019
 
2018
 
% Change
Net Sales
$
2,210

 
$
2,051

 
8%
 
$
4,216

 
$
3,899

 
8%
Operating Income
$
253

 
$
231

 
10%
 
$
443

 
$
443

 
-
Operating Margin
11.4
%
 
11.3
%
 
 
 
10.5
%
 
11.4
%
 
 
Missile Systems (MS) had second quarter 2019 net sales of $2,210 million, up 8 percent compared to $2,051 million in the second quarter 2018. The increase in net sales for the quarter was primarily due to higher net sales on classified programs, the High-speed Anti-radiation Missile (HARM®) program, and the Phalanx® program.
MS recorded $253 million of operating income in the second quarter 2019 compared to $231 million in the second quarter 2018. The increase in operating income for the quarter was primarily due to a favorable change in program mix and higher volume.
During the quarter, MS booked $477 million for AIM-9X Sidewinder short-range air-to-air missiles for the U.S. Navy, U.S. Air Force and international customers; $232 million for Tube-launched, Optically-tracked, Wireless-guided (TOW®) missiles for the U.S. Army, U.S. Marine Corps and international customers; $200 million for Excalibur® for the U.S. Army; $190 million for the Coyote® Rapid Development Program (CRDP) for a U.S. customer; $120 million for StormBreaker™ for the U.S. Air Force; and $101 million for HARM for the U.S. Air Force and international customers. MS also booked $448 million on a number of classified contracts.
Space and Airborne Systems
 
 
 
 
 
 
 
 
 
2nd Quarter
 
 
 
Six Months
 
 
($ in millions)
2019
 
2018
 
% Change
 
2019
 
2018
 
% Change
Net Sales
$
1,817

 
$
1,605

 
13%
 
$
3,470

 
$
3,173

 
9%
Operating Income
$
229

 
$
206

 
11%
 
$
441

 
$
399

 
11%
Operating Margin
12.6
%
 
12.8
%
 
 
 
12.7
%
 
12.6
%
 
 
Space and Airborne Systems (SAS) had second quarter 2019 net sales of $1,817 million, up 13 percent compared to $1,605 million in the second quarter 2018. The increase in net sales for the quarter included higher net sales on classified programs, the Next Generation Overhead Persistent Infrared (Next Gen OPIR) program, and an international tactical radar systems program.
SAS recorded $229 million of operating income in the second quarter 2019 compared to $206 million in the second quarter 2018. The increase in operating income for the quarter was primarily due to higher volume.
During the quarter, SAS booked $218 million for radar components for the U.S. Navy; $93 million for the Multi-Spectral Targeting System (MTS) for the U.S. Air Force; $88 million for radar warning receivers for the U.S. Air Force; and $77 million for missile seekers for the U.S. Navy and an international customer. SAS also booked $876 million on a number of classified contracts.


4


Forcepoint
 
 
 
 
 
 
 
 
 
2nd Quarter
 
 
 
Six Months
 
 
($ in millions)
2019
 
2018
 
% Change
 
2019
 
2018
 
% Change
Net Sales
$
156

 
$
148

 
5%
 
$
314

 
$
289

 
9%
Operating Income (Loss)
$
(3
)
 
$
(8
)
 
NM
 
$
(12
)
 
$
(15
)
 
NM
Operating Margin
(1.9
)%
 
(5.4
)%
 
 
 
(3.8
)%
 
(5.2
)%
 
 
 
NM = Not Meaningful
 
 
 
 
 
 
 
 
 
 
 
Forcepoint had second quarter 2019 net sales of $156 million, up 5 percent compared to $148 million in the second quarter 2018.
Forcepoint recorded a loss of $3 million in the second quarter 2019 compared to a loss of $8 million in the second quarter 2018.

About Raytheon
Raytheon Company, with 2018 sales of $27 billion and 67,000 employees, is a technology and innovation leader specializing in defense, civil government and cybersecurity solutions. With a history of innovation spanning 97 years, Raytheon provides state-of-the-art electronics, mission systems integration, C5I® products and services, sensing, effects, and mission support for customers in more than 80 countries. Raytheon is headquartered in Waltham, Massachusetts. Follow us on Twitter.
Conference Call on the Second Quarter 2019 Financial Results
Raytheon’s financial results conference call will be held on Thursday, July 25, 2019 at 9 a.m. ET. Participants will include Thomas A. Kennedy, Chairman and CEO; Anthony F. O’Brien, vice president and CFO; and other company executives.
The dial-in number for the conference call will be (866) 219-7829 in the U.S. or (478) 205-0667 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 (sometimes referred to as Raytheon) 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 announcement of the proposed merger with United Technologies Corporation (UTC), including its effect on our customer, supplier and other business


5


relationships, employee retention and hiring, resources and management’s attention, our ability to pursue new business and investment opportunities, our operating results and business generally, and the market price of our common stock; risks associated with the successful and timely completion of the proposed merger with UTC and the related integration, as described in more detail below; 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, a government shutdown, or otherwise, uncertain funding of programs, potential termination of contracts and performance under undefinitized contract awards; difficulties in contract performance; the resolution of program terminations; the ability to procure new contracts; the risks of conducting business in foreign countries; the unpredictability of timing of international bookings; the ability to comply with extensive governmental regulation, including export and import requirements such as the International Traffic in Arms Regulations and the Export Administration Regulations, anti-bribery and anti-corruption requirements including the Foreign Corrupt Practices Act, industrial cooperation agreement obligations, and procurement and other regulations; dependence on U.S. government approvals for international contracts; changes in government procurement practices; the impact of competition; the ability to develop products and technologies, and the impact of associated investments and costs; the ability to recruit and retain qualified personnel; the impact of potential security and cyber threats, and other disruptions; the risk that actual pension returns, discount rates or other actuarial assumptions, including the long-term return on asset assumption, are significantly different than the company’s current assumptions; the risk of cost overruns, particularly for the company’s fixed-price contracts; dependence on material and component availability, subcontractor and partner performance and key suppliers; risks of a negative government audit; risks associated with acquisitions, investments, dispositions, joint ventures and other business arrangements; the ability to grow in the government and commercial cybersecurity markets; risks of an impairment of goodwill or other intangible assets; the impact of financial markets and global economic conditions; the use of accounting estimates in the company’s financial statements; the outcome of contingencies and litigation matters, including government investigations; the risk of environmental liabilities; changes in tax laws and regulations, or their interpretation; and other factors as may be detailed from time to time in the company’s public announcements and Securities and Exchange Commission filings.
Risks associated with the successful and timely completion of the proposed merger with UTC and the related integration include (1) the effect of economic conditions in the industries and markets in which UTC and Raytheon operate in the U.S. and globally and any changes therein, including financial market conditions, fluctuations in commodity prices, interest rates and foreign currency exchange rates, levels of end-market demand in construction and in both the commercial and defense segments of the aerospace industry, levels of air travel, financial condition of commercial airlines, the impact of weather conditions and natural disasters, the financial condition of our customers and suppliers, 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, a government shutdown, or otherwise, and uncertain funding of programs); (2) challenges in the development, production, delivery, support, performance and realization of the anticipated benefits (including our expected returns under customer contracts) of advanced technologies and new products and services; (3) the scope, nature, impact or timing of the proposed merger and the spin-offs by UTC of its Otis and Carrier businesses into separate companies (the separation transactions) and other merger, acquisition and divestiture


6


activity, including among other things the integration of or with other businesses and realization of synergies and opportunities for growth and innovation and incurrence of related costs and expenses; (4) future levels of indebtedness, including indebtedness that may be incurred in connection with the proposed merger and the separation transactions, and capital spending and research and development spending; (5) future availability of credit and factors that may affect such availability, including credit market conditions and our capital structure; (6) the timing and scope of future repurchases by the combined company of its common stock, which may be suspended at any time due to various factors, including market conditions and the level of other investing activities and uses of cash; (7) delays and disruption in delivery of materials and services from suppliers; (8) company and customer-directed cost reduction efforts and restructuring costs and savings and other consequences thereof (including the potential termination of U.S. government contracts and performance under undefinitized contract awards and the potential inability to recover termination costs); (9) new business and investment opportunities; (10) the ability to realize the intended benefits of organizational changes; (11) the anticipated benefits of diversification and balance of operations across product lines, regions and industries; (12) the outcome of legal proceedings, investigations and other contingencies; (13) pension plan assumptions and future contributions; (14) the impact of the negotiation of collective bargaining agreements and labor disputes; (15) the effect of changes in political conditions in the U.S. and other countries in which UTC, Raytheon and the businesses of each operate, including the effect of changes in U.S. trade policies or the U.K.’s pending withdrawal from the European Union, on general market conditions, global trade policies and currency exchange rates in the near term and beyond; (16) the effect of changes in tax (including U.S. tax reform enacted on December 22, 2017, which is commonly referred to as the Tax Cuts and Jobs Act of 2017), environmental, regulatory and other laws and regulations (including, among other things, export and import requirements such as the International Traffic in Arms Regulations and the Export Administration Regulations, anti-bribery and anti-corruption requirements, including the Foreign Corrupt Practices Act, industrial cooperation agreement obligations, and procurement and other regulations) in the U.S. and other countries in which UTC, Raytheon and the businesses of each operate; (17) negative effects of the announcement or pendency of the proposed merger or the separation transactions on the market price of UTC’s and/or Raytheon’s respective common stock and/or on their respective financial performance; (18) the ability of the parties to receive the required regulatory approvals for the proposed merger (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction) and approvals of UTC’s stockholders and Raytheon’s stockholders and to satisfy the other conditions to the closing of the merger on a timely basis or at all; (19) the occurrence of events that may give rise to a right of one or both of the parties to terminate the merger agreement; (20) risks relating to the value of the UTC shares to be issued in the proposed merger, significant transaction costs and/or unknown liabilities; (21) the possibility that the anticipated benefits from the proposed merger cannot be realized in full or at all or may take longer to realize than expected, including risks associated with third-party contracts containing consent and/or other provisions that may be triggered by the proposed transaction; (22) risks associated with transaction-related litigation; (23) the possibility that costs or difficulties related to the integration of UTC’s and Raytheon’s operations will be greater than expected; (24) risks relating to completed merger, acquisition and divestiture activity, including UTC’s integration of Rockwell Collins, including the risk that the integration may be more difficult, time-consuming or costly than expected or may not result in the achievement of estimated synergies within the contemplated time frame or at all; (25) the ability of each of Raytheon, UTC, the companies resulting from the separation transactions and the


7


combined company to retain and hire key personnel; (26) the expected benefits and timing of the separation transactions, and the risk that conditions to the separation transactions will not be satisfied and/or that the separation transactions will not be completed within the expected time frame, on the expected terms or at all; (27) the intended qualification of (i) the merger as a tax-free reorganization and (ii) the separation transactions as tax-free to UTC and UTC’s stockholders, in each case, for U.S. federal income tax purposes; (28) the possibility that any opinions, consents, approvals or rulings required in connection with the separation transactions will not be received or obtained within the expected time frame, on the expected terms or at all; (29) expected financing transactions undertaken in connection with the proposed merger and the separation transactions and risks associated with additional indebtedness; (30) the risk that dissynergy costs, costs of restructuring transactions and other costs incurred in connection with the separation transactions will exceed UTC’s estimates; and (31) the impact of the proposed merger and the separation transactions on the respective businesses of Raytheon and UTC and the risk that the separation transactions may be more difficult, time-consuming or costly than expected, including the impact on UTC’s resources, systems, procedures and controls, diversion of its management’s attention and the impact on relationships with customers, suppliers, employees and other business counterparties.
There can be no assurance that the proposed merger, the separation transactions or any other transaction described above will in fact be consummated in the manner described or at all. For additional information on identifying factors that may cause actual results to vary materially from those stated in forward-looking statements, see the preliminary joint proxy statement/prospectus (defined below) and the reports of UTC and Raytheon on Forms 10-K, 10-Q and 8-K filed with or furnished to the Securities and Exchange Commission (the “SEC”) from time to time.
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.
Additional Information and Where to Find It
In connection with the proposed merger, on July 17, 2019, UTC filed with the SEC a registration statement on Form S-4, which includes a preliminary joint proxy statement of UTC and Raytheon that also constitutes a preliminary prospectus of UTC (the “preliminary joint proxy statement/prospectus”), which will be mailed to stockholders of UTC and stockholders of Raytheon once the registration statement becomes effective and the preliminary joint proxy statement/prospectus is in definitive form (the “definitive joint proxy statement/prospectus”), and each party will file other documents regarding the proposed merger with the SEC. In addition, in connection with the separation transactions, subsidiaries of UTC will file registration statements on Form 10 or Form S-1. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PRELIMINARY JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED OR THAT WILL BE FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders will be able to obtain copies of the registration statements and the definitive joint proxy statement/prospectus free of charge from the SEC’s website or from UTC or Raytheon. The


8


documents filed by UTC with the SEC may be obtained free of charge at UTC’s website at www.utc.com or at the SEC’s website at www.sec.gov. These documents may also be obtained free of charge from UTC by requesting them by mail at UTC Corporate Secretary, 10 Farm Springs Road, Farmington, CT, 06032, by telephone at 1-860-728-7870 or by email at corpsec@corphq.utc.com. The documents filed by Raytheon with the SEC may be obtained free of charge at Raytheon’s website at www.raytheon.com or at the SEC’s website at www.sec.gov. These documents may also be obtained free of charge from Raytheon by requesting them by mail at Raytheon Company, Investor Relations, 870 Winter Street, Waltham, MA, 02541, by telephone at 1-781-522-5123 or by email at invest@raytheon.com.
Participants in the Solicitation
Raytheon and UTC and their respective directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed merger. Information about Raytheon’s directors and executive officers is available in Raytheon’s proxy statement dated April 16, 2019, for its 2019 Annual Meeting of Shareholders. Information about UTC’s directors and executive officers is available in UTC’s proxy statement dated March 18, 2019, for its 2019 Annual Meeting of Shareowners. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, are contained in the preliminary joint proxy statement/prospectus and will be contained in the definitive joint proxy statement/prospectus and other relevant materials to be filed with the SEC regarding the transaction when they become available. Investors should carefully read the preliminary joint proxy statement/prospectus and the definitive joint proxy statement/prospectus when it becomes available before making any voting or investment decisions. You may obtain free copies of these documents from Raytheon or UTC as indicated above.
No Offer or Solicitation
This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.

# # #


9


Attachment A
 
 
 
 
 
 
 
 
Raytheon Company
 

 
 
 
 
Preliminary Statement of Operations Information
 
 
 
 
 
 
 
 
Second Quarter 2019
 
 
 
 
 
 
 
 
(In millions, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
 
30-Jun-19
 
1-Jul-18
 
30-Jun-19
 
1-Jul-18
 
 
 
 
 
 
 
 
 
Net sales
 
$
7,159

 
$
6,625

 
$
13,888

 
$
12,892

Operating expenses
 
 
 
 
 
 
 
 
Cost of sales
 
5,205

 
4,777

 
10,082

 
9,309

General and administrative expenses
 
778

 
748

 
1,517

 
1,442

Total operating expenses
 
5,983

 
5,525

 
11,599

 
10,751

Operating income
 
1,176

 
1,100

 
2,289

 
2,141

Non-operating (income) expense, net
 
 
 
 
 
 
 
 
Retirement benefits non-service expense
 
181

 
238

 
362

 
477

Interest expense
 
45

 
46

 
89

 
93

Interest income
 
(7
)
 
(8
)
 
(20
)
 
(15
)
Other (income) expense, net
 
(8
)
 
(3
)
 
(28
)
 
2

Total non-operating (income) expense, net
 
211

 
273

 
403

 
557

Income from continuing operations before taxes
 
965

 
827

 
1,886

 
1,584

Federal and foreign income taxes
 
152

 
37

 
298

 
170

Income from continuing operations
 
813

 
790

 
1,588

 
1,414

Income (loss) from discontinued operations, net of tax
 

 
1

 

 

Net income
 
813

 
791

 
1,588

 
1,414

Less: Net income (loss) attributable to noncontrolling interests in subsidiaries
 
(4
)
 
(9
)
 
(10
)
 
(19
)
Net income attributable to Raytheon Company
 
$
817

 
$
800

 
$
1,598

 
$
1,433

 
 
 
 
 
 
 
 
 
Basic earnings per share attributable to Raytheon Company common stockholders:
 
 
 
 
 
 
 
 
Income from continuing operations
 
$
2.92

 
$
2.78

 
$
5.69

 
$
4.98

Income (loss) from discontinued operations, net of tax
 

 

 

 

Net income
 
2.92

 
2.78

 
5.69

 
4.98

 
 
 
 
 
 
 
 
 
Diluted earnings per share attributable to Raytheon Company common stockholders:
 
 
 
 
 
 
 
 
Income from continuing operations
 
$
2.92

 
$
2.78

 
$
5.69

 
$
4.98

Income (loss) from discontinued operations, net of tax
 

 

 

 

Net income
 
2.92

 
2.78

 
5.69

 
4.97

 
 
 
 
 
 
 
 
 
Amounts attributable to Raytheon Company common stockholders:
 
 
 
 
 
 
 
 
Income from continuing operations
 
$
817

 
$
799

 
$
1,598

 
$
1,433

Income (loss) from discontinued operations, net of tax
 

 
1

 

 

Net income
 
$
817

 
$
800

 
$
1,598

 
$
1,433

 
 
 
 
 
 
 
 
 
Average shares outstanding
 
 
 
 
 
 
 
 
Basic
 
279.7

 
287.3

 
280.8

 
287.9

Diluted
 
279.9

 
287.6

 
281.0

 
288.2






Attachment B
 
 
 
 
 
 
 
 
 
 
 
 
Raytheon Company
 

 
 
Preliminary Segment Information
 
 
 
 
 
 
 
 
 
 
 
 
Second Quarter 2019
 
 
 
 
 
 
 
 
 
 
 
 
(In millions, except percentages)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income
 
 
Net Sales
 
Operating Income
 
As a Percent of Net Sales
 
 
Three Months Ended
 
Three Months Ended
 
Three Months Ended
 
 
30-Jun-19
 
1-Jul-18
 
30-Jun-19
 
1-Jul-18
 
30-Jun-19
 
1-Jul-18
 
 
 
 
 
 
 
 
 
 
 
 
 
Integrated Defense Systems
 
$
1,641

 
$
1,514

 
$
264

 
$
262

 
16.1
 %
 
17.3
 %
Intelligence, Information and Services
 
1,777

 
1,687

 
161

 
128

 
9.1
 %
 
7.6
 %
Missile Systems
 
2,210

 
2,051

 
253

 
231

 
11.4
 %
 
11.3
 %
Space and Airborne Systems
 
1,817

 
1,605

 
229

 
206

 
12.6
 %
 
12.8
 %
Forcepoint
 
156

 
148

 
(3
)
 
(8
)
 
(1.9
)%
 
(5.4
)%
Eliminations
 
(442
)
 
(376
)
 
(46
)
 
(41
)
 


 


Total business segment
 
7,159

 
6,629

 
858

 
778

 
12.0
 %
 
11.7
 %
Acquisition Accounting Adjustments
 

 
(4
)
 
(27
)
 
(34
)
 
 
 
 
FAS/CAS Operating Adjustment
 

 

 
363

 
353

 
 
 
 
Corporate
 

 

 
(18
)
 
3

 
 
 
 
Total
 
$
7,159

 
$
6,625

 
$
1,176

 
$
1,100

 
16.4
 %
 
16.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income
 
 
Net Sales
 
Operating Income
 
As a Percent of Net Sales
 
 
Six Months Ended
 
Six Months Ended
 
Six Months Ended
 
 
30-Jun-19
 
1-Jul-18
 
30-Jun-19
 
1-Jul-18
 
30-Jun-19
 
1-Jul-18
 
 
 
 
 
 
 
 
 
 
 
 
 
Integrated Defense Systems
 
$
3,191

 
$
3,003

 
$
522

 
$
535

 
16.4
 %
 
17.8
 %
Intelligence, Information and Services
 
3,554

 
3,269

 
348

 
245

 
9.8
 %
 
7.5
 %
Missile Systems
 
4,216

 
3,899

 
443

 
443

 
10.5
 %
 
11.4
 %
Space and Airborne Systems
 
3,470

 
3,173

 
441

 
399

 
12.7
 %
 
12.6
 %
Forcepoint
 
314

 
289

 
(12
)
 
(15
)
 
(3.8
)%
 
(5.2
)%
Eliminations
 
(856
)
 
(733
)
 
(93
)
 
(81
)
 
 
 
 
Total business segment
 
13,889

 
12,900

 
1,649

 
1,526

 
11.9
 %
 
11.8
 %
Acquisition Accounting Adjustments
 
(1
)
 
(8
)
 
(55
)
 
(67
)
 
 
 
 
FAS/CAS Operating Adjustment
 

 

 
729

 
707

 
 
 
 
Corporate
 

 

 
(34
)
 
(25
)
 
 
 
 
Total
 
$
13,888

 
$
12,892

 
$
2,289

 
$
2,141

 
16.5
 %
 
16.6
 %

 



Attachment C
 
 
 
 
 
 
 
 
 
Raytheon Company

Other Preliminary Information
 
 
 
 
 
 
 
 
 
Second Quarter 2019
 
 
 
 
 
 
 
 
 
(In millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Backlog
 
 
 
 
 
 
30-Jun-19
 
31-Dec-18
 
 
 
 
 
 
 
 
 
 
Integrated Defense Systems
 
 
 
 
 
 
$
12,260

 
$
11,557

Intelligence, Information and Services
 
 
 
 
 
6,652

 
6,233

Missile Systems
 
 
 
 
 
 
12,778

 
13,976

Space and Airborne Systems
 
 
 
 
 
 
10,947

 
10,126

Forcepoint
 
 
 
 
 
 
494

 
528

Total backlog
 
 
 
 
 
 
$
43,131

 
$
42,420

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
Bookings
 
 
30-Jun-19
 
1-Jul-18
 
30-Jun-19
 
1-Jul-18
 
 
 
 
 
 
 
 
 
 
Total bookings
 
 
$
9,475

 
$
8,694

 
$
14,843

 
$
15,005

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
General and Administrative Expenses
 
 
30-Jun-19
 
1-Jul-18
 
30-Jun-19
 
1-Jul-18
 
 
 
 
 
 
 
 
 
 
Administrative and selling expenses
 
$
578

 
$
540

 
$
1,122

 
$
1,068

Research and development expenses
 
200

 
208

 
395

 
374

Total general and administrative expenses
 
$
778

 
$
748

 
$
1,517

 
$
1,442

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash, Cash Equivalents and Restricted Cash
 
 
 
 
 
 
30-Jun-19
 
31-Dec-18
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
 
 
 
 
$
2,173

 
$
3,608

Restricted cash
 
 
 
13

 
16

Cash, cash equivalents and restricted cash shown in Attachment E
 
 
 
$
2,186

 
$
3,624






Attachment D
 
 
 
Raytheon Company

Preliminary Balance Sheet Information
 
Second Quarter 2019
(In millions)
 
 
 
 
 
 
 
 
30-Jun-19
 
31-Dec-18
 
 
 
 
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
2,173

 
$
3,608

Receivables, net
1,607

 
1,648

Contract assets
6,130

 
5,594

Inventories
932

 
758

Prepaid expenses and other current assets(1)
684

 
529

Total current assets
11,526

 
12,137

 
 
 
 
Property, plant and equipment, net
2,982

 
2,840

Operating lease right-of-use assets(1)
888

 
805

Goodwill
14,882

 
14,864

Other assets, net
1,908

 
2,024

Total assets
$
32,186

 
$
32,670

 
 
 
 
Liabilities, Redeemable Noncontrolling Interests and Equity
 
 
 
Current liabilities
 
 
 
Commercial paper and current portion of long-term debt
$
800

 
$
300

Contract liabilities
2,944

 
3,309

Accounts payable
1,368

 
1,964

Accrued employee compensation
1,361

 
1,509

Other current liabilities(1)
1,398

 
1,381

Total current liabilities
7,871

 
8,463

 
 
 
 
Accrued retiree benefits and other long-term liabilities(1)
6,699

 
6,922

Long-term debt
4,257

 
4,755

Operating lease liabilities(1)
720

 
647

 
 
 
 
Redeemable noncontrolling interests
435

 
411

 
 
 
 
Equity
 
 
 
Raytheon Company stockholders’ equity
 
 
 
Common stock
3

 
3

Additional paid-in capital

 

Accumulated other comprehensive loss
(8,182
)
 
(8,618
)
Retained earnings
20,383

 
20,087

Total Raytheon Company stockholders’ equity
12,204

 
11,472

Noncontrolling interests in subsidiaries

 

Total equity
12,204

 
11,472

Total liabilities, redeemable noncontrolling interests and equity
$
32,186

 
$
32,670

(1)
In the first quarter 2019 we adopted Accounting Standards Update (ASU) 2016-02, Leases (Topic 842). As a result we recast certain amounts on our balance sheet to reflect the recognition of operating lease right-of-use assets and operating lease liabilities and other reclassifications. Included in other current liabilities is $207 million and $194 million at June 30, 2019 and December 31, 2018, respectively, related to the current portion of operating lease liabilities.




Attachment E
 
 
 
Raytheon Company

Preliminary Cash Flow Information
 
 
 
Second Quarter 2019
 
 
 
(In millions)
 
 
 
 
Six Months Ended
 
30-Jun-19
 
1-Jul-18
 
 
 
 
Cash flows from operating activities
 
 
 
Net income
$
1,588

 
$
1,414

(Income) loss from discontinued operations, net of tax

 

Income from continuing operations
1,588

 
1,414

Adjustments to reconcile to net cash provided by (used in) operating activities from continuing operations, net of the effect of acquisitions and divestitures
 
 
 
Depreciation and amortization
291

 
274

Stock-based compensation
91

 
101

Deferred income taxes
3

 
8

Changes in assets and liabilities
 
 
 
Receivables, net
53

 
7

Contract assets and contract liabilities
(865
)
 
(442
)
Inventories
(174
)
 
(133
)
Prepaid expenses and other current assets
(17
)
 
62

Income taxes receivable/payable
(203
)
 
168

Accounts payable
(502
)
 
(73
)
Accrued employee compensation
(157
)
 
(98
)
Other current liabilities
17

 
(70
)
Accrued retiree benefits
365

 
239

Other, net
(78
)
 
(18
)
Net cash provided by (used in) operating activities from continuing operations
412

 
1,439

Net cash provided by (used in) operating activities from discontinued operations

 
1

Net cash provided by (used in) operating activities
412

 
1,440

Cash flows from investing activities
 
 
 
Additions to property, plant and equipment
(438
)
 
(366
)
Additions to capitalized internal-use software
(25
)
 
(28
)
Maturities of short-term investments

 
309

Payments for purchases of acquired companies, net of cash received
(8
)
 

Proceeds from sale of business, net of transaction costs

 
11

Other
2

 
(3
)
Net cash provided by (used in) investing activities
(469
)
 
(77
)
Cash flows from financing activities
 
 
 
Dividends paid
(510
)
 
(480
)
Net borrowings (payments) on commercial paper

 

Repurchases of common stock under share repurchase programs
(800
)
 
(800
)
Repurchases of common stock to satisfy tax withholding obligations
(66
)
 
(91
)
Other
(5
)
 
(5
)
Net cash provided by (used in) financing activities
(1,381
)
 
(1,376
)
Net increase (decrease) in cash, cash equivalents and restricted cash
(1,438
)
 
(13
)
Cash, cash equivalents and restricted cash at beginning of the year
3,624

 
3,115

Cash, cash equivalents and restricted cash at end of period
$
2,186

 
$
3,102




Attachment F

 
 
 
 
Raytheon Company
 
 
 
 
 
 
 
Supplemental EPS Information
 
 
 
 
 
 
 
 
Second Quarter 2019
 
 
 
 
 
 
 
(In millions, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
 
 
 
 
30-Jun-19

1-Jul-18
 
30-Jun-19
 
1-Jul-18
 
 
 
 
 
 
 
 
 
 
 
 
Per share impact of tax benefit from third quarter 2018 discretionary pension contribution (A)
$

 
$
0.33

 
$

 
$
0.33

 
 
 
 
 
 
 
 
 
 
 
 
(A)
Tax benefit from third quarter 2018 discretionary pension contribution
$

 
$
95

 
$

 
$
95

 
Diluted shares

 
287.6

 

 
288.2

 
Per share impact
$

 
$
0.33

 
$

 
$
0.33