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Raytheon Reports Second Quarter Results

- Net sales of $6.0 billion(1)
- Adjusted EPS of $1.36, up 11 percent; reported EPS from continuing operations was $0.56(1)
- Adjusted operating margin of 12.6 percent, up 30 basis points; reported operating margin was 5.8 percent(1)
- Solid operating cash flow from continuing operations of $400 million

WALTHAM, Mass., July 29, 2010 /PRNewswire via COMTEX/ -- Raytheon Company (NYSE: RTN) announced second quarter 2010 Adjusted EPS of $1.36 per diluted share, compared to $1.22 per diluted share in the second quarter 2009(1). Second quarter 2010 income from continuing operations attributable to Raytheon was $0.56 per diluted share compared to $1.24 per diluted share in the second quarter 2009.

Second quarter 2010 income from continuing operations attributable to Raytheon included a ($395) million before-tax unfavorable adjustment, ($274) million after-tax or ($0.71) per diluted share, due to the previously announced program termination notice received by Raytheon Systems Limited on July 22, 2010 from the UK Border Agency. The Company believes that it performed well and delivered substantial capabilities to the customer under this program, and intends to pursue vigorously the collection of the unbilled receivables and damages and defend itself against the claims for losses and previous payments. Under U.S. Generally Accepted Accounting Principles (GAAP) the Company is required to recognize, in the second quarter 2010, the potential financial impact of the termination notice.

Second quarter 2010 income from continuing operations attributable to Raytheon also included ($0.09) per diluted share of FAS/CAS pension expense, compared to $0.02 per diluted share of FAS/CAS pension income in the second quarter 2009.

"Raytheon's underlying results during the quarter and execution of our strategy show continued growth for the year," said William H. Swanson, Raytheon's Chairman and CEO. "We continue to be well aligned with our customers' needs and we are well positioned for the future."

Net sales of $6.0 billion in the second quarter 2010 reflect the $316 million reduction for the UK Border Agency program termination. Net sales in the second quarter 2009 were $6.1 billion.

The Company generated operating cash flow from continuing operations of $400 million in the second quarter 2010 compared to $512 million in the second quarter 2009. Operating cash flow from continuing operations in the second quarter 2010 included $73 million in higher cash tax payments.

The Company ended the second quarter 2010 with $2.4 billion in cash and cash equivalents and $2.3 billion in total debt.

In the second quarter 2010, the Company repurchased 8.6 million shares of common stock for $475 million, as part of its previously announced share repurchase program. Year-to-date 2010, the Company repurchased 14.2 million shares of common stock for $775 million.

(1) A termination notice on a UK Border Agency program reduced second quarter 2010 net sales by $316 million, income from continuing operations before taxes by $395 million and EPS by $0.71 per share. Adjusted EPS is defined as EPS from continuing operations attributable to Raytheon Company common stockholders excluding the EPS impact of the FAS/CAS pension adjustment and the UK Border Agency program termination adjustment. Adjusted Operating Margin is defined as total operating margin excluding the margin impact of the FAS/CAS pension adjustment and the adjustment for the UK Border Agency program termination. Adjusted EPS and Adjusted Operating Margin are non-GAAP financial measures. See attachment F for a reconciliation of these measures and a discussion of why the Company is presenting this information.

    Summary Financial Results                      2nd Quarter          %
                                                   -----------
    ($ in millions, except per share data)           2010     2009 Change
                                                     ----     ---- ------

    Net sales(1)                                   $5,973   $6,125      -2%
    Income from continuing operations attributable
     to Raytheon Company(1)                          $212     $492     -57%
    Adjusted Income(2)                               $522     $485       8%
    EPS from continuing operations(1)               $0.56    $1.24     -55%
    Adjusted EPS(2)                                 $1.36    $1.22      11%
    Operating cash flow from cont. ops.              $400     $512

    Workdays in fiscal reporting calendar              64       64


    Summary Financial Results                       Six Months          %
                                                    ----------
    ($ in millions, except per share data)            2010    2009 Change
                                                      ----    ---- ------

    Net sales(1)                                   $12,026 $12,009       0%
    Income from continuing operations attributable
     to Raytheon Company(1)                           $665    $941     -29%
    Adjusted Income(2)                              $1,009    $927       9%
    EPS from continuing operations(1)                $1.73   $2.35     -26%
    Adjusted EPS(2)                                  $2.63   $2.31      14%
    Operating cash flow from cont. ops.               $657    $923

    Workdays in fiscal reporting calendar              124     125


    (1) The unfavorable adjustment for the UK Border Agency program
    termination reduced net sales in the second quarter and YTD 2010 by
    $316 million; reduced income from
    continuing operations attributable to Raytheon Company in the second
    quarter and YTD 2010 by $395 million (before tax), $274 million
    (after-tax); and reduced EPS from
    continuing operations in the second quarter and YTD 2010 by $0.71 and
    $0.72 per diluted share, respectively.
    (2) Adjusted Income is defined as income from continuing operations
    attributable to Raytheon Company common stockholders excluding the
    after-tax impact of the FAS/CAS
    pension adjustment and the UK Border Agency program termination
    adjustment.  Adjusted EPS is defined as EPS from continuing
    operations attributable to Raytheon
    Company common stockholders excluding the EPS impact of the FAS/CAS
    pension adjustment and the UK Border Agency program termination
    adjustment.  Adjusted EPS
    and Adjusted Income are non-GAAP financial measures.  See attachment
    F for a reconciliation of these measures and a discussion of why the
    Company is presenting this
    information.

Bookings and Backlog

    Bookings                 2nd Quarter                     Six Months
                             -----------                     ----------
    ($ in millions)       2010           2009           2010           2009
                          ----           ----           ----           ----

    Bookings            $5,901         $7,647        $12,427        $12,856
                        ======         ======        =======        =======

    Backlog                 Period Ending
                            -------------
    ($ in millions)   06/27/10       12/31/09
                      --------       --------

    Backlog(1)         $35,980        $36,877
    Funded
     Backlog(1)        $22,461        $23,479



    (1)  Backlog and funded backlog for the period ending 06/27/10 was
    reduced by $556 million for the UK
     Border Agency program termination.

Year-to-date 2010 bookings were $12.4 billion, resulting in a book-to-bill ratio slightly greater than 1.

Outlook

    2010 Financial Outlook

                                                       2010 Outlook
                                                       ------------
                                  2009
                                 Actual       Current         Prior (4/22/10)
                                -------       -------         ---------------

    Net Sales ($B)                  24.9   25.6 - 26.1*         25.9 - 26.4
    FAS/CAS Pension Inc./(Exp.)
     ($M)                             27            (220)                (220)
    Interest Expense, Net ($M)      (109)  (95) - (110)         (95) - (110)
    Diluted Shares (M)             395.7     377 - 382           377 - 382
    Effective Tax Rate              32.5%         ~31.5%              ~31.5%
    EPS from Continuing
     Operations                    $4.89  $4.00 - $4.15*        $4.75 - $4.90
    Adjusted EPS(1)                $4.85   $5.13 - $5.28        $5.13 - $5.28
    Operating Cash Flow from
     Cont. Ops. ($B)                 2.7     2.0 - 2.2           2.0 - 2.2
    ROIC (%)(1)                     12.2    12.2 - 12.6         12.2 - 12.6


    * Denotes change from prior guidance.
    (1) Adjusted EPS is defined as EPS from continuing operations
    attributable to Raytheon Company common stockholders
    excluding the EPS impact of the FAS/CAS pension adjustment and the
    UK Border Agency program termination
    adjustment.  ROIC excludes the  impact of the UK Border Agency
    program termination adjustment.  Adjusted EPS and
    ROIC are non-GAAP financial measures.  See attachment F for a
    reconciliation of Adjusted EPS to EPS from continuing
    operations and attachment G for a calculation of ROIC  and
    discussions of why the Company is presenting this
    information.

The Company updated its full-year 2010 guidance to reflect the unfavorable impact of the UK Border Agency program termination. Charts containing additional information on the Company's 2010 financial outlook are available on the Company's website at www.raytheon.com/ir.

Segment Results

Integrated Defense Systems

                          2nd Quarter              %
                          -----------
    ($ in
     millions)         2010         2009      Change
                       ----         ----      ------

    Net Sales        $1,352       $1,335           1%
    Operating
     Income            $221         $205           8%
    Operating
     Margin            16.3%        15.4%


                          Six Months               %
                          ----------
    ($ in
     millions)         2010         2009      Change
                       ----         ----      ------

    Net Sales        $2,688       $2,597           4%
    Operating
     Income            $431         $393          10%
    Operating
     Margin            16.0%        15.1%


Integrated Defense Systems (IDS) had second quarter 2010 net sales of $1,352 million compared to $1,335 million in the second quarter 2009. IDS recorded $221 million of operating income compared to $205 million in the second quarter 2009. The increase in operating income was primarily due to international Patriot programs.

During the quarter, IDS booked $317 million to provide advanced Patriot air and missile defense capability for an international customer.

Intelligence and Information Systems


                    2nd Quarter         %          Six Months           %
                    -----------                    ----------
     ($ in
      millions)   2010       2009  Change     2010         2009  Change
                  ----       ----  ------     ----         ----  ------

     Net Sales    $472       $812      -42% $1,202       $1,596      -25%
     Operating
      Income
      (Loss)     $(329)       $66     NM     $(279)        $127     NM
     Operating
      Margin        NM        8.1%              NM          8.0%

     NM = Not
      Meaningful
     -----------


Intelligence and Information Systems (IIS) had second quarter 2010 net sales of $472 million compared to $812 million in the second quarter 2009. IIS recorded $329 million of operating loss in the second quarter 2010 and $66 million of operating income in the second quarter 2009. The impact of the UK Border Agency program termination reduced IIS' second quarter 2010 net sales and operating income by $316 million and $395 million, respectively.

During the quarter, IIS booked $80 million on the Earth Observing System Data and Information System (EOSDIS) contract for NASA. IIS also booked $371 million on a number of classified contracts.

Missile Systems


                    2nd Quarter           %          Six Months           %
                    -----------                      ----------
     ($ in
      millions)   2010         2009  Change     2010         2009  Change
                  ----         ----  ------     ----         ----  ------

     Net Sales  $1,415       $1,384        2% $2,776       $2,752        1%
     Operating
      Income      $164         $147       12%   $322         $305        6%
     Operating
      Margin      11.6%        10.6%            11.6%        11.1%




Missile Systems (MS) had second quarter 2010 net sales of $1,415 million compared to $1,384 million in the second quarter 2009. MS recorded $164 million of operating income compared to $147 million in the second quarter 2009. The increase in operating income was primarily due to improved program performance.

During the quarter, MS booked $234 million for Standard Missile-3 (SM-3) for the Missile Defense Agency, $223 million for Phalanx Weapon Systems for the U.S. Navy, U.S. Army and international customers, $150 million for Miniature Air Launched Decoys (MALD) for the U.S. Air Force, $123 million for Evolved Sea Sparrow Missiles (ESSM) for the U.S. Navy and international customers, $84 million for Standard Missile-2 (SM-2) for the U.S. Navy and an international customer and $81 million for AIM-9X short range air-to-air missiles for the U.S. Navy and international customers.

Network Centric Systems



                    2nd Quarter           %          Six Months           %
                    -----------                      ----------
     ($ in
      millions)   2010         2009  Change     2010         2009  Change
                  ----         ----  ------     ----         ----  ------

     Net Sales  $1,205       $1,197        1% $2,381       $2,351        1%
     Operating
      Income      $166         $170       -2%   $331         $333       -1%
     Operating
      Margin      13.8%        14.2%            13.9%        14.2%




Network Centric Systems (NCS) had second quarter 2010 net sales of $1,205 million compared to $1,197 million in the second quarter 2009. NCS recorded $166 million of operating income compared to $170 million in the second quarter 2009.

During the quarter, NCS booked $100 million on a command and control program for an international customer.

Space and Airborne Systems


                    2nd Quarter          %          Six Months           %
                    -----------                     ----------
     ($ in
      millions)   2010        2009  Change     2010         2009  Change
                  ----        ----  ------     ----         ----  ------

     Net Sales  $1,197      $1,136        5% $2,292       $2,182        5%
     Operating
      Income      $171        $175       -2%   $330         $314        5%
     Operating
      Margin      14.3%       15.4%            14.4%        14.4%




Space and Airborne Systems (SAS) had second quarter 2010 net sales of $1,197 million, up 5 percent compared to $1,136 million in the second quarter 2009, primarily due to growth on classified business. SAS recorded $171 million of operating income compared to $175 million in the second quarter 2009. The change in operating income was primarily due to a favorable contractual settlement in the second quarter 2009.

During the quarter, SAS booked $160 million on two international AESA tactical radar programs. SAS also booked $563 million on a number of classified contracts, including $355 million on a major classified program.

Technical Services


                   2nd Quarter         %          Six Months           %
                   -----------                    ----------
     ($ in
      millions) 2010        2009  Change     2010         2009  Change
                ----        ----  ------     ----         ----  ------

     Net Sales  $834        $780        7% $1,635       $1,476       11%
     Operating
      Income     $73         $53       38%   $140          $97       44%
     Operating
      Margin     8.8%        6.8%             8.6%         6.6%




Technical Services (TS) had second quarter 2010 net sales of $834 million, up 7 percent compared to $780 million in the second quarter 2009, primarily due to continued growth in domestic and foreign training programs supporting the U.S. Army's Warfighter Field Operations Customer Support (FOCUS) activities. TS recorded operating income of $73 million compared to $53 million in the second quarter 2009. The increase in operating income was primarily due to improved program performance and higher volume.

During the quarter, TS booked $399 million on domestic training programs and $136 million on foreign training programs in support of the Warfighter FOCUS activities. TS also booked $95 million to provide operational and logistics support to the National Science Foundation (NSF) Office of Polar Programs.

Raytheon Company (NYSE: RTN), with 2009 sales of $25 billion, is a technology and innovation leader specializing in defense, homeland security and other government markets throughout the world. With a history of innovation spanning 88 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 75,000 people worldwide.

Conference Call on the Second Quarter 2010 Financial Results

Raytheon's financial results conference call will be held on Thursday, July 29, 2010 at 9 a.m. ET. Participants will include William H. Swanson, Chairman and CEO; David C. Wajsgras, senior vice president and CFO; and other Company executives.

The dial-in number for the conference call will be (866) 543-6405 in the U.S. or (617) 213-8897 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 2010 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 resolution of program terminations; the ability to procure new contracts; the risks of conducting business in foreign countries; the ability to comply with extensive governmental regulation, including import and export policies, the Foreign Corrupt Practices Act, the International Traffic in Arms Regulations, and procurement and other regulations; the impact of competition; the ability to develop products and technologies; the impact of changes in the financial markets and global economic conditions; the risk that actual pension returns, discount rates or other actuarial assumptions are significantly different than the Company's assumptions; the risk of cost overruns, particularly for the Company's fixed-price contracts; dependence on component availability, subcontractor performance and key suppliers; risks of a negative government audit; the use of accounting estimates in the Company's financial statements; risks associated with acquisitions, dispositions, joint ventures and other business arrangements; risks of an impairment of goodwill or other intangible assets; the outcome of contingencies and litigation matters, including government investigations; the ability to recruit and retain qualified personnel; the impact of potential security threats and other disruptions; and other factors as may be detailed from time to time in the Company's public announcements and Securities and Exchange Commission filings. The Company undertakes no obligation to make any revisions to the forward-looking statements contained in this release and the attachments or to update them to reflect events or circumstances occurring after the date of this release, including any acquisitions, dispositions or other business arrangements that may be announced or closed after such date. This release and the attachments also contain non-GAAP financial measures. A GAAP reconciliation and a discussion of the Company's use of these measures are included in this release or the attachments.

    Media Contact:                            Investor Relations Contact:
    Jon Kasle                                 Marc Kaplan
    781-522-5110                              781-522-5141


    Attachment A
    Raytheon Company
    Preliminary Statement of Operations Information
    Second Quarter 2010

    (In millions, except per share
     amounts)                                         Three Months Ended
                                                      ------------------
                                                 27-Jun-10       28-Jun-09
                                                 ---------       ---------

    Net sales                                        $5,973          $6,125
                                                     ------          ------
    Operating expenses
         Cost of sales                                5,038           4,839
         Administrative and selling
          expenses                                      414             370
         Research and development expenses              176             151
                                                        ---             ---

    Total operating expenses                          5,628           5,360
                                                      -----           -----

    Operating income                                    345             765
                                                        ---             ---

         Interest expense                                33              31
         Interest income                                 (4)             (3)
         Other (income) expense                           6             (13)
                                                        ---             ---

    Non-operating (income) expense                       35              15
                                                        ---             ---

    Income from continuing operations
     before taxes                                       310             750

    Federal and foreign income taxes                     91             246
                                                        ---             ---

    Income from continuing operations                   219             504

    Income (loss) from discontinued
     operations, net of tax                              (4)             (3)
                                                        ---             ---

    Net income                                          215             501

      Less: Net income (loss)
       attributable to noncontrolling
       interests in subsidiaries                          7              12
                                                        ---             ---

    Net income attributable to
     Raytheon Company                                  $208            $489
                                                       ====            ====

    Basic earnings (loss) per share
     attributable to Raytheon Company
     common stockholders:
           Income from continuing operations          $0.56           $1.25
           Income (loss) from discontinued
            operations, net of tax                    (0.01)          (0.01)
           Net income                                  0.55            1.24

    Diluted earnings (loss) per share
     attributable to Raytheon Company
     common stockholders:
           Income from continuing operations          $0.56           $1.24
           Income (loss) from discontinued
            operations, net of tax                    (0.01)          (0.01)
           Net income                                  0.55            1.23

    Amounts attributable to Raytheon
     Company common stockholders:
           Income from continuing operations           $212            $492
           Income (loss) from discontinued
            operations, net of tax                       (4)             (3)
                                                        ---             ---
           Net income                                  $208            $489
                                                       ====            ====

    Average shares outstanding
             Basic                                    378.5           392.5
             Diluted                                  383.1           397.3


    (In millions, except per share
     amounts)                                          Six Months Ended
                                                       ----------------
                                                 27-Jun-10       28-Jun-09
                                                 ---------       ---------

    Net sales                                       $12,026         $12,009
                                                    -------         -------
    Operating expenses
         Cost of sales                                9,822           9,536
         Administrative and selling
          expenses                                      822             734
         Research and development expenses              328             262
                                                        ---             ---

    Total operating expenses                         10,972          10,532
                                                     ------          ------

    Operating income                                  1,054           1,477
                                                      -----           -----

         Interest expense                                65              63
         Interest income                                 (7)             (7)
         Other (income) expense                           5              (8)
                                                        ---             ---

    Non-operating (income) expense                       63              48
                                                        ---             ---

    Income from continuing operations
     before taxes                                       991           1,429

    Federal and foreign income taxes                    311             468
                                                        ---             ---

    Income from continuing operations                   680             961

    Income (loss) from discontinued
     operations, net of tax                             (12)              -
                                                        ---             ---

    Net income                                          668             961

      Less: Net income (loss)
       attributable to noncontrolling
       interests in subsidiaries                         15              20
                                                        ---             ---

    Net income attributable to
     Raytheon Company                                  $653            $941
                                                       ====            ====

    Basic earnings (loss) per share
     attributable to Raytheon Company
     common stockholders:
           Income from continuing operations          $1.76           $2.38
           Income (loss) from discontinued
            operations, net of tax                    (0.03)              -
           Net income                                  1.73            2.38

    Diluted earnings (loss) per share
     attributable to Raytheon Company
     common stockholders:
           Income from continuing operations          $1.73           $2.35
           Income (loss) from discontinued
            operations, net of tax                    (0.03)              -
           Net income                                  1.70            2.35

    Amounts attributable to Raytheon
     Company common stockholders:
           Income from continuing operations           $665            $941
           Income (loss) from discontinued
            operations, net of tax                      (12)              -
                                                        ---             ---
           Net income                                  $653            $941
                                                       ====            ====

    Average shares outstanding
             Basic                                    378.1           395.7
             Diluted                                  383.7           400.6


    Attachment B
    Raytheon Company
    Preliminary Segment Information
    Second Quarter 2010

                                         Net Sales
    (In millions, except
     percentages)                   Three Months Ended
                                    ------------------
                              27-Jun-10         28-Jun-09
                              ---------         ---------

    Integrated Defense
     Systems                      $1,352             $1,335
    Intelligence and
     Information Systems             472                812
    Missile Systems                1,415              1,384
    Network Centric Systems        1,205              1,197
    Space and Airborne
     Systems                       1,197              1,136
    Technical Services               834                780
    FAS/CAS Pension
     Adjustment                        -                  -
    Corporate and
     Eliminations                   (502)              (519)
                                    ----               ----

    Total                         $5,973             $6,125
                                  ======             ======



                                      Operating Income
    (In millions, except
     percentages)                    Three Months Ended
                                     ------------------
                               27-Jun-10          28-Jun-09
                               ---------          ---------

    Integrated Defense
     Systems                          $221               $205
    Intelligence and
     Information Systems              (329)                66
    Missile Systems                    164                147
    Network Centric Systems            166                170
    Space and Airborne
     Systems                           171                175
    Technical Services                  73                 53
    FAS/CAS Pension
     Adjustment                        (55)                11
    Corporate and
     Eliminations                      (66)               (62)
                                       ---                ---

    Total                             $345               $765
                                      ====               ====


                                   Operating Income
                                  As a Percent of Net
                                         Sales
    (In millions, except
     percentages)                 Three Months Ended
                                  ------------------
                             27-Jun-10       28-Jun-09
                             ---------       ---------

    Integrated Defense
     Systems                       16.3%           15.4%
    Intelligence and
     Information Systems          -69.7%            8.1%
    Missile Systems                11.6%           10.6%
    Network Centric Systems        13.8%           14.2%
    Space and Airborne
     Systems                       14.3%           15.4%
    Technical Services              8.8%            6.8%
    FAS/CAS Pension
     Adjustment
    Corporate and
     Eliminations

    Total                           5.8%           12.5%


                                              Net Sales
    (In millions, except
     percentages)                         Six Months Ended
                                          ----------------
                                   27-Jun-10         28-Jun-09
                                   ---------         ---------

    Integrated Defense Systems         $2,688             $2,597
    Intelligence and Information
     Systems                            1,202              1,596
    Missile Systems                     2,776              2,752
    Network Centric Systems             2,381              2,351
    Space and Airborne Systems          2,292              2,182
    Technical Services                  1,635              1,476
    FAS/CAS Pension Adjustment              -                  -
    Corporate and Eliminations           (948)              (945)
                                                            ----

    Total                             $12,026            $12,009
                                      =======            =======


                                           Operating Income
    (In millions, except
     percentages)                          Six Months Ended
                                           ----------------
                                    27-Jun-10          28-Jun-09
                                    ---------          ---------

    Integrated Defense Systems             $431               $393
    Intelligence and Information
     Systems                               (279)               127
    Missile Systems                         322                305
    Network Centric Systems                 331                333
    Space and Airborne Systems              330                314
    Technical Services                      140                 97
    FAS/CAS Pension Adjustment             (108)                22
    Corporate and Eliminations             (113)              (114)
                                                              ----

    Total                                $1,054             $1,477
                                         ======             ======


                                        Operating Income
                                       As a Percent of Net
                                              Sales
    (In millions, except
     percentages)                       Six Months Ended
                                        ----------------
                                  27-Jun-10       28-Jun-09
                                  ---------       ---------

    Integrated Defense Systems          16.0%           15.1%
    Intelligence and Information
     Systems                           -23.2%            8.0%
    Missile Systems                     11.6%           11.1%
    Network Centric Systems             13.9%           14.2%
    Space and Airborne Systems          14.4%           14.4%
    Technical Services                   8.6%            6.6%
    FAS/CAS Pension Adjustment
    Corporate and Eliminations

    Total                                8.8%           12.3%


    Attachment C
    Raytheon Company
    Other Preliminary Information
    Second Quarter 2010

    (In millions)           Funded Backlog                 Total Backlog
                            --------------                 -------------
                     27-Jun-10        31-Dec-09  27-Jun-10        31-Dec-09
                     ---------        ---------  ---------        ---------

    Integrated
     Defense Systems     $5,637           $5,595     $9,463          $10,665
    Intelligence and
     Information
     Systems *            1,013            1,588      4,619            4,360
    Missile Systems       6,296            6,454      7,838            7,657
    Network Centric
     Systems              4,221            4,389      5,143            5,501
    Space and
     Airborne
     Systems              3,215            3,402      5,930            5,921
    Technical
     Services             2,079            2,051      2,987            2,773
                          -----            -----      -----            -----

    Total               $22,461          $23,479    $35,980          $36,877
                        =======          =======    =======          =======



    * Backlog and funded backlog for the period ending June 27, 2010 was
    reduced by a net $556 million for the UK Border Agency program
    termination.

                               Bookings
                          Three Months Ended
                          ------------------
                     27-Jun-10        28-Jun-09
                     ---------        ---------

    Total Bookings       $5,901           $7,647
                         ======           ======


    Attachment D
    Raytheon Company
    Preliminary Balance Sheet Information
    Second Quarter 2010

    (In millions)

                                                     27-Jun-10    31-Dec-09
                                                     ---------    ---------
    Assets
         Cash and cash equivalents                        $2,385       $2,642
         Accounts receivable, net                            131          120
         Contracts in process                              4,461        4,373
         Inventories                                         330          344
         Deferred taxes                                      301          273
         Prepaid expenses and other current
          assets                                             112          116
                Total current assets                       7,720        7,868

    Property, plant and equipment, net                     1,953        2,001
    Deferred taxes                                           326          436
    Prepaid retiree benefits                                 130          111
    Goodwill                                              11,921       11,922
    Other assets, net                                      1,231        1,269
                       Total assets                      $23,281      $23,607
                                                         =======      =======

    Liabilities and Equity
    Current liabilities
         Advance payments and billings in excess
          of costs incurred                               $2,159       $2,224
         Accounts payable                                  1,330        1,397
         Accrued employee compensation                       972          868
         Other accrued expenses                            1,214        1,034
                                                           -----
                Total current liabilities                  5,675        5,523

    Accrued retiree benefits and other
     long-term liabilities                                 5,261        5,793
    Deferred taxes                                            23           23
    Long-term debt                                         2,327        2,329

    Equity
      Raytheon Company stockholders' equity
         Common stock                                          4            4
         Additional paid-in capital                       11,332       10,991
         Accumulated other comprehensive loss             (4,712)      (4,824)
         Treasury stock, at cost                          (6,222)      (5,446)
         Retained earnings                                 9,473        9,102
                                                                        -----
                Total Raytheon Company stockholders'
                 equity                                    9,875        9,827
         Noncontrolling interests in
          subsidiaries                                       120          112
                                                             ---          ---
             Total equity                                  9,995        9,939
                       Total liabilities and equity      $23,281      $23,607
                                                         =======      =======



    Attachment E
    Raytheon Company
    Preliminary Cash Flow Information
    Second Quarter 2010

    (In millions)                                     Three Months Ended
                                                     ------------------
                                                27-Jun-10         28-Jun-09
                                                ---------         ---------

    Net income (loss)                                 $215              $501
    (Income) loss from discontinued
     operations, net of tax                              4                 3
                                                       ---               ---
    Income (loss) from continuing operations           219               504

    Depreciation                                        75                73
    Amortization                                        28                24
    Working capital (excluding pension and
     taxes)*                                           651               313
    Discontinued operations                              -                (3)
    Net activity in financing receivables                6                 6
    Other                                             (579)             (408)
                                                      ----              ----
         Net operating cash flow                       400               509

    Capital spending                                   (64)              (48)
    Internal use software spending                     (17)              (21)
    Acquisitions                                         -                 -
    Dividends                                         (143)             (122)
    Repurchases of common stock                       (475)             (300)
    Warrants exercised                                  87                 -
    Other                                              (16)              (29)
                                                       ---               ---
         Total cash flow                             $(228)             $(11)
                                                     =====              ====



    (In millions)                                      Six Months Ended
                                                       ----------------
                                                27-Jun-10         28-Jun-09
                                                ---------         ---------

    Net income (loss)                                 $668               $961
    (Income) loss from discontinued
     operations, net of tax                             12                  -
                                                       ---                ---
    Income (loss) from continuing operations           680                961

    Depreciation                                       149                144
    Amortization                                        57                 50
    Working capital (excluding pension and
     taxes)*                                           (26)              (625)
    Discontinued operations                              2                 (9)
    Net activity in financing receivables               22                 15
    Other                                             (225)               378
                                                      ----                ---
         Net operating cash flow                       659                914

    Capital spending                                  (109)               (81)
    Internal use software spending                     (31)               (34)
    Acquisitions                                       (12)                 -
    Dividends                                         (260)              (234)
    Repurchases of common stock                       (775)              (600)
    Warrants exercised                                 250                  -
    Other                                               21                (25)
                                                       ---                ---
         Total cash flow                             $(257)              $(60)
                                                     =====               ====



    * 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
    Non-GAAP Financial Measures - Adjusted Measures
    Second Quarter 2010

    Adjusted EPS Non-GAAP
     Reconciliation
    ---------------------

    (In millions, except per share
     amounts)
                                                 Three Months Ended
                                                 ------------------
                                                    2010             2009
                                                    ----             ----

    Diluted earnings per share from
     continuing operations                         $0.56            $1.24
                attributable to Raytheon Company
                 common stockholders
    Less: Per share impact of the FAS/
     CAS Pension Adjustment (A)                    (0.09)            0.02
    Less: Per share impact of United
     Kingdom (UK) Border Agency                    (0.71)               -
                program termination (B)            -----              ---
    Adjusted EPS (1)                               $1.36            $1.22
                                                   =====            =====


    (A) FAS/CAS Pension Adjustment                  $(55)             $11
        Tax effect (at 35% federal
         statutory rate)                              19               (4)
                                                     ---              ---
      After-tax impact                               (36)               7
      Diluted Shares                               383.1            397.3
                                                   -----            -----
      Per share impact (2)                        $(0.09)           $0.02
                                                  ======            =====


    (B) UK Border Agency program
     termination                                   $(395)              $-
        Tax effect (actual at 30.6%
         blended global tax rate and
         guidance at 28% UK statutory
         rate)                                       121                -
                                                     ---              ---
      After-tax adjustment                          (274)               -
      Diluted Shares                               383.1            397.3
                                                   -----            -----
      Per share impact (2)                        $(0.71)              $-
                                                  ======              ===


    Adjusted EPS Non-GAAP
     Reconciliation
    ---------------------

    (In millions, except per share
     amounts)
                                                   Six Months Ended
                                                   ----------------
                                                   2010              2009
                                                   ----              ----

    Diluted earnings per share from
     continuing operations                        $1.73             $2.35
                attributable to Raytheon Company
                 common stockholders
    Less: Per share impact of the FAS/
     CAS Pension Adjustment (A)                   (0.18)             0.04
    Less: Per share impact of United
     Kingdom (UK) Border Agency                   (0.72)                -
                program termination (B)           -----               ---
    Adjusted EPS (1)                              $2.63             $2.31
                                                  =====             =====


    (A) FAS/CAS Pension Adjustment                $(108)              $22
        Tax effect (at 35% federal
         statutory rate)                             38                (8)
                                                    ---               ---
      After-tax impact                              (70)               14
      Diluted Shares                              383.7             400.6
                                                  -----             -----
      Per share impact (2)                       $(0.18)            $0.04
                                                 ======             =====


    (B) UK Border Agency program
     termination                                  $(395)               $-
        Tax effect (actual at 30.6%
         blended global tax rate and
         guidance at 28% UK statutory
         rate)                                      121                 -
                                                    ---               ---
      After-tax adjustment                         (274)                -
      Diluted Shares                              383.7             400.6
                                                  -----             -----
      Per share impact (2)                       $(0.72)               $-
                                                 ======               ===


    Adjusted EPS Non-GAAP
     Reconciliation
    ---------------------

    (In millions, except per
     share amounts)                              2010 Current Guidance
                                                 ---------------------
                                             Low end            High end
                                             of range           of range
                                             --------           --------

    Diluted earnings per share
     from continuing operations                   $4.00              $4.15
                attributable to Raytheon
                 Company common stockholders
    Less: Per share impact of
     the FAS/CAS Pension
     Adjustment (A)                               (0.38)             (0.38)
    Less: Per share impact of
     United Kingdom (UK) Border
     Agency                                       (0.75)             (0.75)
                program termination (B)           -----              -----
    Adjusted EPS (1)                              $5.13              $5.28
                                                  =====              =====


    (A) FAS/CAS Pension
     Adjustment                                   $(220)             $(220)
        Tax effect (at 35% federal
         statutory rate)                             77                 77
                                                    ---                ---
      After-tax impact                             (143)              (143)
      Diluted Shares                              382.0              377.0
                                                  -----              -----
      Per share impact (2)                       $(0.38)            $(0.38)
                                                 ======             ======


    (B) UK Border Agency program
     termination                                  $(395)             $(395)
        Tax effect (actual at 30.6%
         blended global tax rate and
         guidance at 28% UK
         statutory rate)                            111                111
                                                    ---                ---
      After-tax adjustment                         (284)              (284)
      Diluted Shares                              382.0              377.0
                                                  -----              -----
      Per share impact (2)                       $(0.75)            $(0.75)
                                                 ======             ======


    Adjusted EPS Non-GAAP
     Reconciliation
    ---------------------

    (In millions, except per
     share amounts)                               2010 Prior Guidance
                                                  -------------------
                                             Low end            High end
                                             of range           of range
                                             --------           --------

    Diluted earnings per share
     from continuing operations                   $4.75              $4.90
                attributable to Raytheon
                 Company common stockholders
    Less: Per share impact of the
     FAS/CAS Pension Adjustment
     (A)                                          (0.38)             (0.38)
    Less: Per share impact of
     United Kingdom (UK) Border
     Agency                                           -                  -
                program termination (B)             ---                ---
    Adjusted EPS (1)                              $5.13              $5.28
                                                  =====              =====


    (A) FAS/CAS Pension
     Adjustment                                   $(220)             $(220)
        Tax effect (at 35% federal
         statutory rate)                             77                 77
                                                    ---                ---
      After-tax impact                             (143)              (143)
      Diluted Shares                              382.0              377.0
                                                  -----              -----
      Per share impact (2)                       $(0.38)            $(0.38)
                                                 ======             ======


    (B) UK Border Agency program
     termination                                     $-                 $-
        Tax effect (actual at 30.6%
         blended global tax rate and
         guidance at 28% UK statutory
         rate)                                        -                  -
                                                    ---                ---
      After-tax adjustment                            -                  -
      Diluted Shares                              382.0              377.0
                                                  -----              -----
      Per share impact (2)                           $-                 $-
                                                    ===                ===


    Adjusted Income from Continuing Operations attributable to Raytheon
    Company common stockholders Non-GAAP Reconciliation

                                    Three Months
                                        Ended           Six Months Ended
                                    ------------    ----------------
                                  2010        2009    2010          2009
                                  ----        ----    ----          ----

    Income from Continuing
     Operations attributable to
     Raytheon Company  common
     stockholders                 $212        $492    $665          $941
    FAS/CAS Pension Adjustment
     (Tax effected at 35% federal
     statutory rate)                36          (7)     70           (14)

    UK Border Agency program
     termination (Tax effected at
     30.6% blended global tax
     rate)                         274           -     274             -
                                   ---         ---     ---           ---

    Adjusted Income (1)           $522        $485  $1,009          $927
                                  ====        ====  ======          ====



    Adjusted operating margin Non-GAAP
     Reconciliation
    ----------------------------------

    (In millions, except per share
     amounts)
                                            Three Months        Six Months
                                               Ended               Ended
                                          2010       2009    2010       2009
                                          ----       ----    ----       ----

    Operating margin                      5.8 %     12.5 %   8.8 %     12.3 %
    Less: Impact of the FAS/CAS Pension
     Adjustment                         (0.9) %      0.2 % (0.9) %      0.2 %
    Less: Impact of UK Border Agency
     program termination                (5.9) %      0.0 % (2.9) %      0.0 %
    Adjusted operating margin (1)        12.6 %     12.3 %  12.6 %     12.1 %
                                         =====      =====   =====      =====




    Adjusted operating margin Non-GAAP
     Reconciliation
    ----------------------------------

    (In millions, except per share               2010 Current
     amounts)                                      Guidance
                                               Low           High
                                               end            end
                                                of             of
                                              range          range
                                             ------         ------

    Operating margin                            9.4 %          9.6 %
    Less: Impact of the FAS/CAS Pension
     Adjustment                               (0.9) %        (0.9) %
    Less: Impact of UK Border Agency
     program termination                      (1.5) %        (1.5) %
    Adjusted operating margin (1)              11.8 %         12.0 %
                                               =====          =====




    (1)  These amounts are not measures of financial performance under
    U.S. generally accepted accounting principles (GAAP).  They should
    be
    considered supplemental to and not a substitute for financial
    performance in accordance with GAAP and may not be defined and
    calculated by
    other companies in the same manner.  We are providing these measures
    because management uses them for the purposes of evaluating and
    forecasting the Company's financial performance and we believe it
    allows investors to benefit from being able to assess our operating
    performance in the context of how our principal customer, the U.S.
    Government, allows us to recover pension costs and to better compare
    our
    operating performance to others in the industry on that same basis
    and excluding significant unusual items.

    Adjusted EPS is defined as diluted EPS from continuing operations
    attributable to Raytheon Company common stockholders excluding the
    EPS
    impact of the FAS/CAS pension adjustment and the UK Border Agency
    program termination.  Adjusted operating margin is defined as total
    operating
    margin excluding the margin impact of the FAS/CAS pension adjustment
    and the UK Border Agency program termination. Adjusted Income from
    continuing operations attributable to Raytheon Company common
    stockholders is defined as income from continuing operations
    attributable to
    Raytheon Company common stockholders excluding the after-tax impact
    of the FAS/CAS pension adjustment and the after-tax impact of the
    UK
    Border Agency program termination.


    (2)  Amounts may not recalculate directly due to rounding.

    Attachment G
    Raytheon Company
    Preliminary Return on Invested Capital Non-GAAP Financial Measure
    Second Quarter 2010

    The Company defines Return on Invested Capital (ROIC) as income from
     continuing operations excluding the after-tax effect of
    the FAS/CAS pension adjustment and the after-tax effect of the UK
     Border Agency program termination adjustment 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 the accounting standard for
    employers' accounting for defined benefit pension and other
     postretirement plans.   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. The Company uses ROIC as a measure of efficiency
     and effectiveness of its use of capital and as an
    element of management compensation.


    Return on Invested Capital

    (In millions, except percentages)                2010 Current Guidance
                                                     ---------------------
                                                    Low end       High end
                                             2009  of range       of range
                                             ----  --------       --------
    Income from continuing operations      $1,977
    FAS/CAS Pension Adjustment, after-
     tax *                                    (18)
    UK Border Agency program termination,
     after-tax **                               -
    Net interest expense, after-tax *          71  Combined        Combined
    Lease expense, after-tax *                 66
                                              ---
    Return                                 $2,096     $2,155         $2,220
                                           ------     ------         ------

    Net debt ***                            $(132)
    Equity less investment in
     discontinued operations                9,560
    Lease expense x 8, plus financial
     guarantees                             2,815  Combined        Combined
    Minimum pension liability               5,007
    Invested capital from continuing
     operations ****                      $17,250    $17,700        $17,500
                                          -------    -------        -------


    ROIC                                     12.2%      12.2%          12.6%
                                             ----       ----           ----



    *       Federal statutory tax rate of 35%
    **      U.K. statutory tax rate of 28%
    ***     Net debt is defined as total debt less cash and cash
    equivalents and is calculated using a 2 point average
    ****   Calculated using a 2 point average

SOURCE Raytheon Company