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Raytheon Reports Solid Fourth Quarter and Full-Year 2008 Results; Reaffirms Outlook for Continued Growth in 2009
Highlights

  • Year-end backlog increased to a record $38.9 billion
  • Delivered strong full-year sales growth of 9%
  • Fourth quarter adjusted EPS from continuing operations of $1.13 grew by 18%; reported EPS from continuing operations was $1.02 (1)
  • Full-year 2008 adjusted EPS from continuing operations of $4.06 grew by 23%; reported EPS from continuing operations was $3.95 (1)
  • Excellent operating cash flow of $2.0 billion in 2008. The Company made $660 million in discretionary cash contributions to its pension plans.
  • Reaffirms guidance for 2009; expects to deliver continued growth in sales, earnings and return on invested capital

WALTHAM, Mass., Jan. 29, 2009 /PRNewswire-FirstCall/ -- Raytheon Company (NYSE: RTN - News) announced fourth quarter 2008 adjusted income from continuing operations of $466 million or $1.13 per diluted share, compared to $420 million or $0.96 per diluted share in the fourth quarter 2007(1). Reported fourth quarter 2008 income from continuing operations was $421 million or $1.02 per diluted share compared to $634 million or $1.45 per diluted share in the fourth quarter 2007. Fourth quarter 2008 income from continuing operations included a $45 million or $0.11 per diluted share unfavorable adjustment due to the impact of pension investment returns on existing contracts (the "CAS Pension Adjustment"). Fourth quarter 2007 income from continuing operations included a $214 million or $0.49 per diluted share favorable adjustment due to tax-related benefits.

"Raytheon had a successful 2008 with strong bookings, a record backlog and solid growth in sales and operating income," said William H. Swanson, Raytheon Chairman and CEO. "Our advanced technologies, program performance and diverse portfolio of products and services are uniquely suited to meet customer requirements and position us well for the future."

Net sales in the fourth quarter 2008 were $6.1 billion compared to $6.0 billion in the fourth quarter 2007. The Company's solid sales performance in the fourth quarter 2008 was achieved with 3 fewer work days than the fourth quarter 2007.

The Company continued to generate solid operating cash flow in the fourth quarter 2008. Operating cash flow from continuing operations in the fourth quarter 2008 was $444 million compared to $941 million in the fourth quarter 2007. The change was primarily due to $381 million in tax refunds in the fourth quarter 2007. The Company also made $160 million more in discretionary cash contributions to its pension plans in the fourth quarter 2008 ($660 million in 2008 compared to $500 million in 2007).

The Company ended the year with $50 million of net debt. Net debt is defined as total debt less cash and cash equivalents.

Full-Year Financial Results

Full-year 2008 adjusted income from continuing operations was $1.7 billion or $4.06 per diluted share, compared to $1.5 billion or $3.31 per diluted share in 2007(2). Reported full-year 2008 income from continuing operations was $1.7 billion or $3.95 per diluted share compared to $1.7 billion or $3.80 per diluted share in 2007. Full-year 2008 income from continuing operations included the $45 million or $0.11 per diluted share unfavorable CAS Pension Adjustment. Full-year 2007 income from continuing operations included a $219 million or $0.49 per diluted share favorable adjustment due to tax-related benefits.

2008 net sales were $23.2 billion compared to $21.3 billion in 2007, an increase of 9 percent. All of Raytheon's businesses contributed to the Company's sales growth.

The Company generated excellent operating cash flow for the year. Operating cash flow from continuing operations was $2.0 billion in 2008 compared to $1.2 billion in 2007. The increase in operating cash flow in 2008 was primarily due to a reduction in working capital items, lower net cash tax payments and lower discretionary cash contributions made to the Company's pension plans. The Company paid $448 million in net cash taxes in 2008, compared to $734 million in 2007 (which included $631 million in tax payments attributable to the gain on the sale of Raytheon Aircraft Company (RAC) and $381 million in tax refunds). The Company also made $660 million in discretionary cash contributions to its pension plans in 2008 compared to $900 million in 2007.

As part of its previously announced share repurchase program, the Company repurchased 14.1 million shares of common stock for $680 million in the fourth quarter 2008 and 30.7 million shares for $1.7 billion for the year.

(1) Adjusted EPS and income from continuing operations are non-GAAP financial measures. Fourth quarter and full-year 2008 adjusted EPS and income from continuing operations exclude the $45 million ($69 million pretax) or $0.11 per diluted share unfavorable adjustment due to the impact of pension investment returns on existing contracts (the "CAS Pension Adjustment"). Fourth quarter and full-year 2007 adjusted EPS and income from continuing operations exclude a $0.49 per diluted share ($214 million) and $0.49 per diluted share ($219 million) favorable adjustment, respectively, due to certain tax-related benefits. Please see attachment G for a reconciliation of these measures to EPS and income from continuing operations under GAAP and a discussion of why the Company is presenting this information.

(2) Adjusted EPS and income from continuing operations are non-GAAP financial measures. Full-year 2008 adjusted EPS and income from continuing operations exclude the $45 million ($69 million pretax) or $0.11 per diluted share unfavorable CAS Pension Adjustment. Full-year 2007 adjusted EPS and income from continuing operations exclude a $0.49 per diluted share ($219 million) favorable adjustment due to certain tax-related benefits. Please see attachment G for a reconciliation of these measures to EPS and income from continuing operations under GAAP and a discussion of why the Company is presenting this information.

    Adjusted Summary Financial
      Results (1)                    4th Quarter    %       Full-Year       %
    ($in millions, except
    per share data)               2008     2007  Change   2008    2007  Change

    Adjusted Net Sales           $6,155   $6,000    3%  $23,243  $21,301    9%
    Adjusted Operating Income       715      646   11%    2,665    2,328   14%
    Adj. Income from Cont. Ops.
      before Taxes                  679      639    6%    2,567    2,225   15%
    Adj. Income from Continuing
     Operations                     466      420   11%    1,719    1,474   17%
    Adjusted EPS from Continuing
     Ops.                         $1.13    $0.96   18%    $4.06    $3.31   23%


    Summary Financial Results        4th Quarter    %       Full-Year      %
    ($in millions, except per
       share data)                2008     2007  Change   2008    2007 Change

    Net Sales                    $6,086   $6,000    1%  $23,174  $21,301   9%
    Total Operating Expenses      5,440    5,354         20,578   18,973
    Operating Income                646      646    0%    2,596    2,328  12%
    Non-operating Expenses           36        7             98      103
    Income from Cont. Ops. before
     Taxes                         $610     $639   -5%   $2,498   $2,225  12%
    Income from Continuing
     Operations                    $421     $634  -34%   $1,674   $1,693  -1%
    Diluted EPS from Continuing
     Ops.                         $1.02    $1.45  -30%    $3.95    $3.80   4%
    Operating Cash Flow from Cont.
     Ops.                          $444     $941         $2,036   $1,249
    Workdays in Fiscal Reporting
     Calendar                        60       63            250      249

(1) Adjusted Summary Financial Results include non-GAAP financial measures which exclude the impact of certain items noted below. The fourth quarter and full-year 2008 adjusted measures exclude the $45 million ($69 million pretax) or $0.11 per diluted share unfavorable adjustment due to the impact of pension investment returns on existing contracts (the "CAS Pension Adjustment"). Fourth quarter and full-year 2007 adjusted EPS and income from continuing operations exclude a $0.49 per diluted share ($214 million) and $0.49 per diluted share ($219 million) favorable adjustment, respectively, due to certain tax-related benefits. See attachment G for a reconciliation of these measures to the comparable GAAP measures and a discussion of why the Company is presenting this information.

Bookings and Backlog

    Bookings                           4th Quarter            Full-Year
    (in millions)                   2008        2007        2008      2007

    Total Bookings                 $8,530       $9,181     $26,820    $25,498

    Backlog
    (in millions)                12/31/08      12/31/07

    Backlog                       $38,884      $36,614
    Funded Backlog                $21,986      $20,518

The Company ended 2008 with a record backlog of $38.9 billion, up 6 percent compared to $36.6 billion at the end of 2007.

Outlook

    2009 Financial Outlook                   Current             Prior
                                                               (10/23/08)

    Net Sales ($B)                           24.3 - 24.8       24.3 - 24.8
    FAS/CAS Pension Income ($M)                   47*              77
    Interest Inc./(Exp.), net ($M)          (105) - (115)      Not provided
    Diluted Shares (M)                        402 - 405        Not provided
    EPS from Continuing Ops.               $4.45 - $4.60      $4.45 - $4.60
    Operating Cash Flow from Cont.
      Ops. ($B)                               2.2 - 2.4         2.2 - 2.4
    ROIC (%)                                 10.9 - 11.4      Not provided

    * Denotes change from prior guidance

The Company is reaffirming its prior guidance for 2009 and providing more detailed information. 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 Return on Invested Capital (ROIC), a non-GAAP financial measure.

Segment Results

    Integrated Defense Systems

                            4th Quarter        %          Full-Year       %
    ($in millions)        2008*      2007   Change     2008      2007  Change

    Net Sales            $1,423    $1,290      10%    $5,148    $4,695    10%
    Operating Income       $244      $211      16%      $870      $828     5%
    Operating Margin       17.1%     16.4%              16.9%     17.6%

    * Fourth quarter 2008 included 3 fewer work days than the fourth quarter
      2007.
     

Fourth Quarter

Integrated Defense Systems (IDS) had fourth quarter 2008 net sales of $1,423 million compared to $1,290 million in the fourth quarter 2007, primarily due to growth on U.S. Army programs. IDS recorded $244 million of operating income compared to $211 million in the fourth quarter 2007. The increase in operating income was primarily due to higher volume, improved performance on several international and domestic programs, and the sale of licensed software.

During the quarter, IDS booked $2,483 million to provide advanced Patriot air and missile defense capability for the United Arab Emirates (UAE). IDS also booked $154 million for the production of torpedo kits for the U.S. Navy.

Full-year

IDS had full-year 2008 net sales of $5,148 million compared to $4,695 million in 2007. The increase in sales was primarily due to higher volume on U.S. Army programs. IDS recorded $870 million of operating income in 2008 compared to $828 million in 2007. The increase in operating income was primarily due to higher volume, partially offset by a change in contract mix.

During the year, IDS booked $2,483 million to provide advanced Patriot air and missile defense capability for the UAE and $533 million on international contracts for the design, development and support of the Patriot system. IDS also booked $237 million to provide engineering services support for Patriot air and missile defense programs and $229 million for the Rapid Aerostat Initial Deployment (RAID) program for the U.S. Army.

Intelligence and Information Systems


                              4th Quarter       %       Full-Year        %
    ($in millions)         2008*     2007    Change   2008     2007    Change

    Net Sales              $810      $808      0%    $3,132    $2,742    14%
    Operating Income        $67       $66      2%      $253      $248     2%
    Operating Margin        8.3%      8.2%              8.1%      9.0%

    * Fourth quarter 2008 included 3 fewer work days than the fourth
      quarter 2007.

Fourth Quarter

Intelligence and Information Systems (IIS) had fourth quarter 2008 net sales of $810 million compared to $808 million in the fourth quarter 2007. IIS recorded $67 million of operating income compared to $66 million in the fourth quarter 2007.

During the quarter, IIS booked $443 million on a number of classified contracts.

Full-year

IIS had full-year 2008 net sales of $3,132 million compared to $2,742 million in 2007. The increase in sales was primarily due to higher volume on the international e-Borders program and a competitive design program for the U.S. Air Force's next generation global positioning ground system. IIS recorded $253 million of operating income in 2008 compared to $248 million in 2007. The increase in operating income was partially offset by certain acquisition costs and other investments in cyber operations and information security capabilities.

During the year, IIS booked $1,789 million on a number of classified contracts, including $379 million on a major classified program.

Missile Systems

                            4th Quarter      %            Full-Year       %
    ($in millions)       2008*     2007     Change     2008     2007   Change

    Net Sales           $1,360     $1,362     0%    $5,377    $4,993      8%
    Operating Income      $143       $148    -3%      $581      $541      7%
    Operating Margin      10.5%      10.9%            10.8%     10.8%

    * Fourth quarter 2008 included 3 fewer work days than the fourth
      quarter 2007.

Fourth Quarter

Missile Systems (MS) had fourth quarter 2008 net sales of $1,360 million compared to $1,362 million in the fourth quarter 2007. MS recorded $143 million of operating income compared to $148 million in the fourth quarter 2007.

During the quarter, MS booked $423 million for the production of Standard Missile-2 (SM-2) for international customers and the U.S. Navy, and $161 million for Standard Missile-3 (SM-3) for the U.S. Navy and the Missile Defense Agency. MS also booked $132 million for the production of Tube-launched Optically guided Wire controlled (TOW) missiles for international customers and the U.S. Army.

Full-year

MS had full-year 2008 net sales of $5,377 million compared to $4,993 million in 2007. The increase in sales in 2008 was primarily due to higher volume on the Advanced Medium-Range Air-to-Air Missile (AMRAAM), Rolling Airframe Missile (RAM), Phalanx, Paveway(TM) and TOW programs. MS recorded $581 million of operating income in 2008 compared to $541 million in 2007. The increase in operating profit in 2008 was primarily due to higher volume.

During the year, MS booked $1,165 million for the production of SM-3 for the U.S. Navy and the Missile Defense Agency, $624 million for the production of the AMRAAM program for international customers and the U.S. Air Force, $577 million on Standard Missile development and production and $478 million for the production of Tactical Tomahawk cruise missiles for the U.S. Navy.

Network Centric Systems


                             4th Quarter        %         Full-Year       %
    ($in millions)       2008*      2007    Change     2008      2007   Change

    Net Sales           $1,125      $1,147     -2%   $4,510    $4,164     8%
    Operating Income      $141        $127     11%     $552      $506     9%
    Operating Margin      12.5%       11.1%            12.2%     12.2%

    * Fourth quarter 2008 included 3 fewer work days than the fourth quarter
      2007.


Fourth Quarter

Network Centric Systems (NCS) had fourth quarter 2008 net sales of $1,125 million compared to $1,147 million in the fourth quarter 2007. NCS recorded $141 million of operating income compared to $127 million in the fourth quarter 2007. The increase in operating income was primarily due to productivity improvements.

During the quarter, NCS booked $218 million to provide support for the Firefinder weapon locating radar program, $173 million to provide Horizontal Technology Integration (HTI) forward-looking infrared kits and $122 million for Long Range Advanced Scout Surveillance Systems (LRAS3) for the U.S. Army.

Full-year

NCS had full-year 2008 net sales of $4,510 million compared to $4,164 million in 2007. The increase in sales was primarily due to higher volume on U.S. Army programs. NCS recorded $552 million of operating income compared to $506 million in 2007. The increase in operating income was primarily due to the higher volume.

During the year, NCS booked $570 million to provide HTI forward-looking infrared kits and $279 million for LRAS3 systems for the U.S. Army. NCS also booked $233 million for the design and development phase of the Joint Precision Approach and Landing System (JPALS) for the U.S. Navy, $231 million for the production of Improved Target Acquisition Systems (ITAS) for the U.S. Army and the U.S. Marine Corps, and $115 million for the Airborne, Maritime and Fixed Site (AMF) Joint Tactical Radio System (JTRS) program.

Space and Airborne Systems

                             4th Quarter       %          Full-Year        %
    ($in millions)        2008*      2007   Change     2008     2007   Change

    Net Sales            $1,189      $1,243    -4%   $4,372    $4,288     2%
    Operating Income       $168        $177    -5%     $580      $560     4%
    Operating Margin       14.1%       14.2%           13.3%     13.1%

    * Fourth quarter 2008 included 3 fewer work days than the fourth
      quarter 2007.

Fourth Quarter

Space and Airborne Systems (SAS) had fourth quarter 2008 net sales of $1,189 million compared to $1,243 million in the fourth quarter 2007. SAS recorded $168 million of operating income compared to $177 million in the fourth quarter 2007. The decrease in operating income was primarily due to lower volume.

During the quarter, SAS booked $127 million for the production of Advanced Countermeasures Electronic System (ACES) for the Royal Moroccan Air Force and $106 million for the development of the F-15E Radar Modernization Program (RMP). SAS also booked $528 million on a number of classified contracts.

Full-year

SAS had full-year 2008 net sales of $4,372 million compared to $4,288 million in 2007. SAS recorded $580 million of operating income in 2008 compared to $560 million in 2007. The increase in sales and operating income in 2008 were primarily due to higher volume.

During the year, SAS booked $1,475 million on a number of classified contracts.

Technical Services


                           4th Quarter        %            Full-Year        %
    ($in millions)       2008*      2007    Change      2008      2007  Change

    Net Sales             $744      $643      16%     $2,601    $2,174     20%
    Operating Income       $49       $47       4%       $174      $139     25%
    Operating Margin       6.6%      7.3%                6.7%      6.4%

    * Fourth quarter 2008 included 3 fewer work days than the fourth
      quarter 2007.

Fourth Quarter

Technical Services (TS) had fourth quarter 2008 net sales of $744 million compared to $643 million in the fourth quarter 2007, primarily due to strong growth in training programs. TS recorded operating income of $49 million in the fourth quarter 2008 compared to $47 million in the fourth quarter 2007.

During the quarter, TS booked $130 million for work on the Warfighter Field Operations Customer Support (FOCUS) contract for the U.S. Army.

Full-year

TS had full-year 2008 net sales of $2,601 million compared to $2,174 million in 2007. TS recorded operating income of $174 million in 2008 compared to $139 million in 2007. The increase in sales and operating income were primarily due to strong growth in training programs, principally the Warfighter FOCUS contract.

During the year, TS booked $957 million for work on the Warfighter FOCUS contract and $436 million for the FAA's Air Traffic Control Optimum Training Solution (ATCOTS) contract.

Raytheon Company (NYSE: RTN - News), with 2008 sales of $23.2 billion, is a technology 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 Fourth Quarter and Full-Year 2008 Financial Results

Raytheon's conference call to discuss its financial results will be held on Thursday, January 29, 2009 at 9 a.m. ET. Participants will include William H. Swanson, Chairman and CEO; David C. Wajsgras, senior vice president and CFO; and other Company executives.

The dial-in number for the conference call will be (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.

    Attachment A

    Raytheon Company
    Preliminary Adjusted Summary Financial Results and
     Preliminary Statement of Operations Information
    Fourth Quarter 2008

    Preliminary Adjusted Summary Financial Results *
    (In millions, except per share amounts)

                                    Three Months Ended    Twelve Months Ended
                                    ------------------    -------------------
                                    31-Dec-08 31-Dec-07   31-Dec-08 31-Dec-07
                                    --------- ---------   --------- ---------

    Adjusted net sales                $6,155    $6,000      $23,243   $21,301
    Adjusted operating income            715       646        2,665     2,328
    Adjusted income from continuing
     operations before taxes             679       639        2,567     2,225
    Adjusted income from continuing
     operations                          466       420        1,719     1,474

    Adjusted earnings per
     share from continuing
     operations
       Diluted                         $1.13     $0.96        $4.06     $3.31




    Preliminary Statement of Operations
     Information
    (In millions, except per share amounts)

                                    Three Months Ended   Twelve Months Ended
                                    ------------------   -------------------
                                   31-Dec-08  31-Dec-07  31-Dec-08  31-Dec-07
                                   ---------  ---------  ---------  ---------

    Net sales                       $6,086     $6,000    $23,174    $21,301
                                    ------     ------    -------    -------
    Operating expenses
      Cost of sales                  4,910      4,837     18,513     17,037
      Administrative and selling
       expenses                        392        392      1,548      1,434
      Research and development
       expenses                        138        125        517        502
                                       ---        ---        ---        ---

    Total operating expenses         5,440      5,354     20,578     18,973
                                     -----      -----     ------     ------

    Operating income                   646        646      2,596      2,328
                                       ---        ---      -----      -----

      Interest expense                  32         41        129        196
      Interest income                   (8)       (36)       (64)      (163)
      Other expense, net                12          2         33         70
                                        --         --         --         --

    Non-operating expense, net          36          7         98        103
                                       ---        ---      -----      -----

    Income from continuing operations
     before taxes                      610        639      2,498      2,225

    Federal and foreign income taxes   189          5        824        532
                                       ---        ---      -----      -----

    Income from continuing operations  421        634      1,674      1,693

    Operating income from discontinued
     operations, net of tax              -          8         (2)       (57)
    Gain (loss) on sales of
     discontinued operations,
     net of tax                          -        (44)         -        942
                                       ---        ---      -----      -----

    Income (loss) from discontinued
     operations, net of tax              -        (36)        (2)       885
                                       ---        ---      -----      -----
    Net income**                      $421       $598     $1,672     $2,578
                                      ====       ====     ======     ======

    Earnings per share from
     continuing operations
       Basic                         $1.04      $1.50      $4.07      $3.91
       Diluted                       $1.02      $1.45      $3.95      $3.80

    Earnings (loss) per share
     from discontinued operations
       Basic                            $-     $(0.09)    $(0.01)     $2.04
       Diluted                          $-     $(0.08)    $(0.01)     $1.99

    Earnings per share
       Basic                         $1.04      $1.41      $4.06      $5.95
       Diluted                       $1.02      $1.37      $3.95      $5.79

    Average shares outstanding
       Basic                         404.0      423.2      411.4      433.0
       Diluted                       413.4      436.8      423.7      445.7


    * Preliminary Adjusted Summary Financial Results include non-GAAP
    financial measures which exclude the impact of certain items noted below.
    The 2008 adjusted measures exclude the $69 million pre-tax, $45 million
    after-tax, or $0.11 per diluted share unfavorable adjustment due to the
    impact of pension investment returns on existing contracts. Fourth
    quarter and full-year 2007 adjusted income and EPS from continuing operations
 exclude a favorable adjustment of $214 million or $0.49 per
    diluted share and $219 million or $0.49 per diluted share, respectively,
    due to certain tax-related benefits.  See attachment G for a
    reconciliation of these measures to the comparable GAAP measures and a
    discussion of why the Company is presenting this information.

    ** Net income in 2007 included $885 million or $1.99 per diluted share in
    discontinued operations primarily from Raytheon Aircraft Company (RAC)
    and Flight Options (FO) which were sold in 2007.



    Attachment B
    Raytheon Company
    Preliminary Segment Information
    Fourth Quarter 2008

    (In millions, except percentages
                                                          Operating Income
                   Net Sales          Operating Income  As a Percent of Sales
                  Three Months          Three Months         Three Months
                     Ended                  Ended               Ended
                 -------------        -------------         -----------------
             31-Dec-08  31-Dec-07  31-Dec-08  31-Dec-07  31-Dec-08  31-Dec-07
             ---------  ---------  ---------  ---------  ---------  ---------
    Integrated
     Defense
     Systems       $1,423    $1,290     $244     $211      17.1%      16.4%
    Intelligence
     and Inform-
     ation Systems    810       808       67       66       8.3%       8.2%
    Missile
     Systems        1,360     1,362      143      148      10.5%      10.9%
    Network
     Centric
     Systems        1,125     1,147      141      127      12.5%      11.1%
    Space and
     Airborne
     Systems        1,189     1,243      168      177      14.1%      14.2%
    Technical
     Services         744       643       49       47       6.6%       7.3%
    FAS/CAS Pension
     Adjustment         -         -      (30)     (67)
    Corporate and
     Eliminations    (565)     (493)    (136)*    (63)
                      ----     ----      ----      ---

    Total          $6,086    $6,000     $646     $646      10.6%      10.8%
                    ======   ======     ====     ====

                                                          Operating Income
                   Net Sales         Operating Income   As a Percent of Sales
                 Twelve Months        Twelve Months         Twelve Months
                     Ended                Ended                 Ended
             -------------------   -------------------   -------------------
             31-Dec-08  31-Dec-07  31-Dec-08  31-Dec-07  31-Dec-08  31-Dec-07
             ---------  ---------  ---------  ---------  ---------  ---------

    Integrated
     Defense
     Systems     $5,148     $4,695      $870      $828       16.9%      17.6%
    Intelligence
     and
     Information
     Systems      3,132      2,742       253       248        8.1%       9.0%
    Missile
     Systems      5,377      4,993       581       541       10.8%      10.8%
    Network
     Centric
     Systems      4,510      4,164       552       506       12.2%      12.2%
    Space and
     Airborne
     Systems      4,372      4,288       580       560       13.3%      13.1%
    Technical
     Services     2,601      2,174       174       139        6.7%       6.4%
    FAS/CAS
     Pension
     Adjustment       -          -      (123)     (259)
    Corporate
     and
     Elimin-
     ations      (1,966)    (1,755)     (291)*    (235)
                  ------     ------      ----     ----

    Total       $23,174    $21,301    $2,596    $2,328       11.2%      10.9%
                =======    =======     ======   ======


    * Includes $69 million CAS Pension Adjustment (see Attachment G for a
      discussion of the CAS Pension Adjustment).



    Attachment C

    Raytheon Company
    Other Preliminary Information
    Fourth Quarter 2008


    (In millions)                   Funded Backlog           Total Backlog
                                   --------- ---------    --------- ---------
                                 31-Dec-08  31-Dec-07     31-Dec-08 31-Dec-07
                                 ---------  ---------     --------- ---------

    Integrated Defense Systems      $4,802     $4,781      $9,883     $9,296
    Intelligence and Information
     Systems                         1,890      2,325       5,137      5,636
    Missile Systems                  6,003      5,218       9,858      9,379
    Network Centric  Systems         4,593      3,957       5,733      5,102
    Space and Airborne Systems       2,810      3,037       5,521      5,276
    Technical Services               1,888      1,200       2,752      1,925
                                     -----      -----       -----      -----

    Total                          $21,986    $20,518     $38,884    $36,614
                                   =======    =======     =======    =======

                                         Bookings             Bookings
                                   Three Months Ended    Twelve Months Ended
                                   -------------------   -------------------
                                   31-Dec-08 31-Dec-07   31-Dec-08 31-Dec-07
                                   --------- ---------   --------- ---------

    Total Bookings                  $8,530     $9,181     $26,820   $25,498
                                    ======     ======     =======   =======



    Attachment D

    Raytheon Company
    Preliminary Balance Sheet Information
    Fourth Quarter 2008

    (In millions)
                                                   ---------  ---------
                                                   31-Dec-08  31-Dec-07
                                                   ---------  ---------
    Assets
         Cash and cash equivalents                    $2,259     $2,655
         Accounts receivable, net                        105        126
         Contracts in process                          3,793      3,821
         Inventories                                     325        386
         Current tax asset                               441         98
         Deferred taxes                                  395        432
         Prepaid expenses and other current
          assets                                          99         98
                                                          --         --
                Total current assets                   7,417      7,616

    Property, plant and equipment, net                 2,024      2,058
    Deferred taxes                                       735          -
    Prepaid retiree benefits                              56        617
    Goodwill                                          11,662     11,627
    Other assets, net                                  1,402      1,363
                                                       -----      -----
                       Total assets                  $23,296    $23,281
                                                     =======    =======

    Liabilities and Stockholders' Equity
         Advance payments and billings in
          excess
          of costs incurred                           $1,970     $1,845
         Accounts payable                              1,201      1,141
         Accrued employee compensation                   913        902
         Other accrued expenses                        1,065        900
                                                       -----        ---
                Total current liabilities              5,149      4,788

    Accrued retiree benefits and other
     long-term liabilities                             6,488      3,016
    Deferred taxes                                         -        451
    Long-term debt                                     2,309      2,268
    Minority interest                                    263        216
    Stockholders' equity
       Common stock                                        4          4
       Additional paid-in capital                     10,873     10,544
       Accumulated other comprehensive loss           (5,182)    (1,956)
       Treasury stock, at cost                        (4,254)    (2,502)
       Retained earnings                               7,646      6,452
                                                       -----      -----
                Total stockholders' equity             9,087     12,542
                                                       -----     ------
                       Total liabilities and
         stockholders' equity                        $23,296    $23,281
                                                     =======    =======



    Attachment E

    Raytheon Company
    Preliminary Cash Flow Information
    Fourth Quarter 2008

                               Three Months Ended       Twelve Months Ended
    (In millions)              ------------------       -------------------
                              31-Dec-08  31-Dec-07     31-Dec-08   31-Dec-07
                              ---------  ---------     ---------   ---------

    Net income                   $421      $598        $1,672      $2,578
    (Income) loss from
     discontinued
     operations, net of tax         -        36             2        (885)
                                 ----      ----          ----        ---- 
Income from continuing
     operations                   421       634         1,674       1,693

    Depreciation                   75        74           292         288
    Amortization                   27        23            98          84
    Working capital
     (excluding pension
     and taxes)*                  629       444           247         (85)
    Discontinued operations         -        (8)          (21)        (51)
    Net activity in
     financing receivables         22        17            68          88
    Other                        (730)     (251)         (343)       (819)
                                 ----      ----          ----        ----
       Net operating
        cash flow                 444       933         2,015       1,198

    Capital spending             (137)     (153)         (304)       (313)
    Internal use software
     spending                     (16)      (34)          (74)        (85)
    Acquisitions                    -      (211)          (54)       (211)
    Investment activity and
     divestitures                   -        26             9       3,143
    Dividends                    (116)     (109)         (460)       (440)
    Repurchases of common
     stock                       (680)     (341)       (1,700)     (1,642)
    Debt repayments                 -      (118)            -      (1,724)
    Discontinued operations         -         -             -         (29)
    Other                           3        53           172         298
                                   --        --           ---         ---
       Total cash flow          $(502)      $46         $(396)       $195
                                =====       ===         =====        ====


    * 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
    Fourth Quarter 2008



    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                                            $1,930      $1,990
                                                      ------      ------

    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***                         $17,650     $17,450
                                                      -------     -------

                                                         ----        ----
    ROIC                                                 10.9%       11.4%
                                                         ====        ====

    * Effective 2009 tax rate: Approximately 33.0% (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





    Attachment G

    Raytheon Company
    Reconciliation of Non-GAAP Measures in Preliminary Statement of Operations
     Information
    Fourth Quarter 2008

    (In millions, except per share
     amounts)                             Three Months Ended
            -----------------------------------------------------------------
               GAAP     CAS Pension  Adjusted*   GAAP        Tax   Adjusted *
            31-Dec-08  Adjustment*  31-Dec-08  31-Dec-07  Benefit*  31-Dec-07
            -----------------------------------------------------------------

    Net sales    $6,086      $69     $6,155       $6,000       $-      $6,000
    Operating
     income         646       69        715          646        -         646
    Income from
     continuing
     operations
     before
     taxes          610       69        679          639        -         639
    Income from
     continuing
     operations     421       45        466          634     (214)        420

    Earnings per
      share from
      continuing
      operations
       Diluted    $1.02    $0.11      $1.13        $1.45   $(0.49)      $0.96


                                    Twelve Months Ended
             ----------------------------------------------------------------
               GAAP     CAS Pension   Adjusted*   GAAP      Tax     Adjusted*
             31-Dec-08  Adjustment*  31-Dec-08 31-Dec-07  Benefit*  31-Dec-07
             ----------------------------------------------------------------

    Net sales   $23,174      $69    $23,243      $21,301      $-     $21,301
    Operating
     income       2,596       69      2,665        2,328       -       2,328
    Income from
     continuing
     operations
     before
     taxes        2,498       69      2,567        2,225       -       2,225
    Income from
     continuing
     operations   1,674       45      1,719        1,693    (219)      1,474

    Earnings per
     share from
     continuing
     operations
       Diluted    $3.95    $0.11      $4.06        $3.80  $(0.49)      $3.31



    This Reconciliation of Non-GAAP Measures in Preliminary Statement of
    Operations Information includes certain non-GAAP financial measures
    under the "Adjusted" columns and sets forth a reconciliation of such
    measures to the comparable GAAP measure under the "GAAP" column.  The
    non-GAAP financial measures should be considered supplemental to and
    not a substitute for financial performance in accordance with GAAP.
    We use the adjusted measures to facilitate management's internal
    comparisons to the Company's historical operating results, to
    competitors' operating results, and to provide greater transparency to
    investors of supplemental information used by management in its
    financial and operational decision-making, including management's
    evaluation of the Company's operating performance.  The 2008 adjusted
    measures exclude an unfavorable adjustment to reflect the impact of the
    increase in estimated future pension costs on existing contracts
    recorded in the fourth quarter of 2008 (the "CAS Pension Adjustment").
    Pension costs as calculated under the U.S. Government Cost Accounting
    Standards (CAS) are a component of our estimated costs to complete each
    of our contracts.  On an annual basis, we update our estimate of
    future CAS pension costs based upon actual asset returns and other
    actuarial factors.  When these estimated future costs increase, which
    occurred at December 31, 2008 driven mainly by the significant decline
    in the value of our pension assets, the estimated costs to complete each
    existing contract increases.  The amounts of revenue and profit which are
    recognizable based upon our estimated percent complete and expected
     margins on our contracts, principally on our fixed price contracts, were
    reduced.  In the fourth quarter, we recorded a cumulative catch-up
    adjustment for this reduction in revenue and profit of $69 million pretax,
    $45 million after-tax or $0.11 per diluted share as part of Corporate and
    Eliminations consistent with our internal management reporting and
    performance evaluation.  The components of the CAS Pension Adjustment by
    business are as follows:  IDS - $20 million, IIS - $7 million, MS - $14
    million, NCS - $12 million, SAS - $12 million and TS - $4 million. Fourth
    quarter and full-year 2007 adjusted income and EPS from continuing
    operations exclude a favorable adjustment of $214 million or $0.49 per
    diluted share and $219 million or $0.49 per diluted share, respectively,
    due to certain tax-related benefits.


Media Contact:
Jon Kasle
781-522-5110

Investor Relations Contact:
Marc Kaplan
781-522-5141

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