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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 |
