| ||||
FOR IMMEDIATE RELEASE | ||||
Media Contact: | Investor Relations Contact: | |||
Jon Kasle | Marc Kaplan | |||
781-522-5110 | 781-522-5141 |
Raytheon Reports Strong Third Quarter 2008 Results; Increases Full-Year Guidance and Announces New $2.0 Billion Share Repurchase Plan
Highlights
• | Sales of $5.9 billion, up 12 percent |
• | Operating income of $680 million, up 19 percent |
• | Earnings per share (EPS) from continuing operations of $1.01, up 17 percent |
• | Strong bookings of $5.8 billion; backlog of $37.0 billion |
• | Credit rating upgraded to A- by Standard & Poor’s and Fitch |
WALTHAM,Mass., (October 23, 2008) – Raytheon Company (NYSE: RTN) reported third quarter 2008 income from continuing operations of $427 million or $1.01 per diluted share compared to $380 million or $0.86 per diluted share in the third quarter 2007. Third quarter 2008 income from continuing operations was higher primarily due to operational improvements and lower pension expense.
“We delivered strong results during the quarter,” said William H. Swanson, Raytheon’s Chairman and CEO. “With our innovative technologies, breadth of programs, global customers and strong balance sheet, we continue to be well positioned for growth.”
Third quarter 2008 net income was $427 million or $1.01 per diluted share compared to $299 million or $0.68 per diluted share in the third quarter 2007. Net income for the third quarter 2007 included an $81 million loss in discontinued operations or $0.18 per diluted share primarily related to Flight Options, which was sold in the fourth quarter 2007.
Net sales for the third quarter 2008 were $5.9 billion, up 12 percent from $5.2 billion in the third quarter 2007, with growth across all of the Company’s businesses.
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Operating cash flow from continuing operations for the third quarter 2008 was $758 million compared to $691 million for the third quarter 2007.
In the third quarter 2008 the Company repurchased 6.0 million shares of common stock for $340 million, as part of the Company’s previously announced share repurchase program. The Company has repurchased 16.7 million shares of common stock year-to-date for $1.0 billion. Also during the quarter, both Standard & Poor’s and Fitch rating services upgraded the Company’s senior unsecured credit rating from BBB+ to A-.
The Board of Directors, on October 22, 2008, authorized the repurchase of an additional $2.0 billion of the Company’s outstanding common stock. Share repurchases will take place from time to time at management’s discretion depending on market conditions.
Summary Financial Results | ||||||||||||||||||||
3rd Quarter | % Change | Nine Months | % Change | |||||||||||||||||
($ in millions, except per share data) | 2008 | 2007 | 2008 | 2007 | ||||||||||||||||
Net Sales | $ | 5,864 | $ | 5,219 | 12 | % | $ | 17,088 | $ | 15,301 | 12 | % | ||||||||
Total Operating Expenses | 5,184 | 4,647 | 15,138 | 13,619 | ||||||||||||||||
Operating Income | 680 | 572 | 19 | % | 1,950 | 1,682 | 16 | % | ||||||||||||
Non-operating Expenses | 31 | 8 | 62 | 96 | ||||||||||||||||
Income from Cont. Ops. before Taxes | $ | 649 | $ | 564 | 15 | % | $ | 1,888 | $ | 1,586 | 19 | % | ||||||||
Income from Continuing Operations | $ | 427 | $ | 380 | 12 | % | $ | 1,253 | $ | 1,059 | 18 | % | ||||||||
Inc. (Loss) from Disc. Ops., Net of Tax* | — | (81 | ) | NM | (2 | ) | 921 | NM | ||||||||||||
Net Income | $ | 427 | $ | 299 | NM | $ | 1,251 | $ | 1,980 | NM | ||||||||||
Diluted EPS from Continuing Ops. | $ | 1.01 | $ | 0.86 | 17 | % | $ | 2.93 | $ | 2.36 | 24 | % | ||||||||
Diluted EPS | $ | 1.01 | $ | 0.68 | NM | $ | 2.93 | $ | 4.42 | NM | ||||||||||
Operating Cash Flow from Cont. Ops.** | $ | 758 | $ | 691 | $ | 1,592 | $ | 308 | ||||||||||||
Workdays in Fiscal Reporting Calendar | 63 | 63 | 190 | 186 | ||||||||||||||||
* | Includes after-tax impairment charges of $69 million in the Flight Options (FO) business in Q3 ’07 and an after-tax net gain of $986 million on the sale of Raytheon Aircraft Company (RAC) in Q2 ’07. |
** | Includes cash tax payments of $157 million in Q3 ’07 and $473 million in Q3 YTD ’07 related to the gain on the RAC sale. |
NM – Not meaningful for comparison purposes due to impairment charges in FO in Q3 ’07 and the gain on sale of RAC in Q2 ’07.
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Bookings and Backlog
Bookings | ||||||||||||
3rd Quarter | Nine Months | |||||||||||
(in millions) | 2008 | 2007 | 2008 | 2007 | ||||||||
Total Bookings | $ | 5,766 | $ | 6,327 | $ | 18,290 | $ | 16,317 | ||||
Backlog | ||||||||||||
Period Ending | ||||||||||||
(in millions) | 09/28/08 | 12/31/07 | ||||||||||
Backlog | $ | 36,985 | $ | 36,614 | ||||||||
Funded Backlog | $ | 21,145 | $ | 20,518 |
The Company reported total bookings for the third quarter 2008 of $5.8 billion compared to $6.3 billion in the third quarter 2007. The Company ended the third quarter 2008 with a backlog of $37.0 billion compared to $36.6 billion at the end of 2007 and $33.9 billion at the end of the third quarter 2007.
Outlook
2008 Financial Outlook | ||||
Current | Prior* | |||
Net Sales ($B) | 22.9 - 23.2 | 22.6 - 23.1 | ||
FAS/CAS Pension Inc./(Exp.) ($M) | (125) | (150) | ||
Interest Inc./(Exp.), net ($M) | (50) - (55) | (40) - (55) | ||
Diluted Shares (M) | 426 - 428 | 426 - 428 | ||
EPS from Cont. Ops. | $3.95 - $4.00 | $3.80 - $3.95 | ||
Operating Cash Flow from Cont. Ops. ($B) | 2.2 - 2.4 | 2.2 - 2.4 | ||
ROIC (%) | 10.3 - 10.5 | 9.9 - 10.4 |
* | As of July 24, 2008 |
The Company has increased full-year 2008 guidance for net sales, earnings per share from continuing operations and Return on Invested Capital (ROIC), and updated FAS/CAS pension expense and net interest expense. See attachment F for the Company’s calculation and use of ROIC, a non-GAAP financial measure.
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Outlook (Continued)
The Company has also provided its initial financial outlook for 2009.
2009 Financial Outlook | ||||
2008 | 2009 | |||
Net Sales ($B) | 22.9 - 23.2 | 24.3 - 24.8 | ||
FAS/CAS Pension Inc./(Exp.) ($M) | (125) | 77 | ||
EPS from Cont. Ops. | $3.95 - $4.00 | $4.45 - $4.60 | ||
Operating Cash Flow from Cont. Ops. ($B) | 2.2 - 2.4 | 2.2 - 2.4 |
Charts containing additional information on the Company’s 2008 and 2009 guidance are available on the Company’s website atwww.raytheon.com. Additional information regarding the Company’s 2009 guidance will be provided on the fourth quarter earnings conference call scheduled for January 29, 2009.
Segment Results
Integrated Defense Systems
3rd Quarter | % Change | Nine Months | % Change | |||||||||||||||||||
($ in millions) | 2008 | 2007 | 2008 | 2007 | ||||||||||||||||||
Net Sales | $ | 1,276 | $ | 1,147 | 11 | % | $ | 3,725 | $ | 3,405 | 9 | % | ||||||||||
Operating Income | $ | 206 | $ | 206 | — | % | $ | 626 | $ | 617 | 1 | % | ||||||||||
Operating Margin | 16.1 | % | 18.0 | % | 16.8 | % | 18.1 | % |
Integrated Defense Systems (IDS) had third quarter 2008 net sales of $1,276 million, up 11 percent compared to $1,147 million in the third quarter 2007, primarily due to growth on U.S. Army programs and a U.S. Navy program. IDS recorded $206 million of operating income in both the third quarter 2008 and the third quarter 2007.
IDS’ bookings during the quarter included $127 million on several contracts for the U.S. Army.
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Intelligence and Information Systems
3rd Quarter | % Change | Nine Months | % Change | |||||||||||||||||||
($ in millions) | 2008 | 2007 | 2008 | 2007 | ||||||||||||||||||
Net Sales | $ | 801 | $ | 680 | 18 | % | $ | 2,322 | $ | 1,934 | 20 | % | ||||||||||
Operating Income | $ | 67 | $ | 64 | 5 | % | $ | 186 | $ | 182 | 2 | % | ||||||||||
Operating Margin | 8.4 | % | 9.4 | % | 8.0 | % | 9.4 | % |
Intelligence and Information Systems (IIS) had third quarter 2008 net sales of $801 million, up 18 percent compared to $680 million in the third quarter 2007, primarily due to the U.K. e-Borders program. IIS recorded $67 million of operating income compared to $64 million in the third quarter 2007. The increase in operating income was primarily due to higher volume, partially offset by certain acquisition costs and other investments in cyber operations and information security capabilities.
During the quarter, IIS booked $119 million on the Consolidated Field Services (CFS) contract to provide support to the U.S. Air Force. IIS also booked $294 million on a number of classified contracts.
Missile Systems
3rd Quarter | % Change | Nine Months | % Change | |||||||||||||||||||
($ in millions) | 2008 | 2007 | 2008 | 2007 | ||||||||||||||||||
Net Sales | $ | 1,351 | $ | 1,247 | 8 | % | $ | 4,017 | $ | 3,631 | 11 | % | ||||||||||
Operating Income | $ | 145 | $ | 139 | 4 | % | $ | 438 | $ | 393 | 11 | % | ||||||||||
Operating Margin | 10.7 | % | 11.1 | % | 10.9 | % | 10.8 | % |
Missile Systems (MS) had third quarter 2008 net sales of $1,351 million, up 8 percent compared to $1,247 million in the third quarter 2007, primarily due to higher volume on the Advanced Medium-Range Air-to-Air Missile (AMRAAM) and Phalanx programs. MS recorded $145 million of operating income compared to $139 million in the third quarter 2007. The increase in operating income was primarily due to higher volume.
During the quarter, MS booked $200 million for the production of Phalanx for the U.S. Navy, $125 million for the competitive development of the U.S. Army-led Joint Air to Ground Missile (JAGM) program and $114 million for the production of the Rolling Airframe Missile (RAM) for an international customer.
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Network Centric Systems
3rd Quarter | % Change | Nine Months | % Change | |||||||||||||||||||
($ in millions) | 2008 | 2007 | 2008 | 2007 | ||||||||||||||||||
Net Sales | $ | 1,145 | $ | 1,036 | 11 | % | $ | 3,385 | $ | 3,017 | 12 | % | ||||||||||
Operating Income | $ | 143 | $ | 123 | 16 | % | $ | 411 | $ | 379 | 8 | % | ||||||||||
Operating Margin | 12.5 | % | 11.9 | % | 12.1 | % | 12.6 | % |
Network Centric Systems (NCS) had third quarter 2008 net sales of $1,145 million, up 11 percent compared to $1,036 million in the third quarter 2007, primarily due to increased volume on certain U.S. Army programs. NCS recorded $143 million of operating income compared to $123 million in the third quarter 2007. The increase in operating income was primarily due to higher volume.
During the quarter, NCS booked $233 million for the design and development phase of the Joint Precision Approach and Landing System (JPALS) for the U.S. Navy.
Space and Airborne Systems
3rd Quarter | % Change | Nine Months | % Change | |||||||||||||||||||
($ in millions) | 2008 | 2007 | 2008 | 2007 | ||||||||||||||||||
Net Sales | $ | 1,092 | $ | 1,016 | 7 | % | $ | 3,183 | $ | 3,045 | 5 | % | ||||||||||
Operating Income | $ | 147 | $ | 121 | 21 | % | $ | 412 | $ | 383 | 8 | % | ||||||||||
Operating Margin | 13.5 | % | 11.9 | % | 12.9 | % | 12.6 | % |
Space and Airborne Systems (SAS) had third quarter 2008 net sales of $1,092 million, up 7 percent compared to $1,016 million in the third quarter 2007, primarily due to increased volume on certain domestic sensor programs. SAS recorded $147 million of operating income compared to $121 million in the third quarter 2007. The increase in operating income was primarily due to higher volume and improved program performance.
SAS booked $434 million on a number of classified contracts.
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Technical Services
3rd Quarter | % Change | Nine Months | % Change | |||||||||||||||||||
($ in millions) | 2008 | 2007 | 2008 | 2007 | ||||||||||||||||||
Net Sales | $ | 689 | $ | 554 | 24 | % | $ | 1,857 | $ | 1,531 | 21 | % | ||||||||||
Operating Income | $ | 45 | $ | 37 | 22 | % | $ | 125 | $ | 92 | 36 | % | ||||||||||
Operating Margin | 6.5 | % | 6.7 | % | 6.7 | % | 6.0 | % |
Technical Services (TS) had third quarter 2008 net sales of $689 million, up 24 percent compared to $554 million in the third quarter 2007, primarily due to growth in training programs. TS recorded operating income of $45 million in the third quarter 2008 compared to $37 million in the third quarter 2007. The increase in operating income was primarily due to higher volume.
During the quarter, TS booked $437 million for the Air Traffic Control Optimum Training Solution (ATCOTS) contract for the Federal Aviation Administration (FAA). TS also booked an additional $409 million for work on the Warfighter Field Operations Customer Support (FOCUS) contract for the U.S. Army, bringing the year-to-date bookings on the program to $827 million.
Raytheon Company (NYSE: RTN), with 2007 sales of $21.3 billion, is a technology leader specializing in defense, homeland security and other government markets throughout the world. With a history of innovation spanning 86 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 72,000 people worldwide.
Conference Call on the Third Quarter 2008 Financial Results
Raytheon’s financial results conference call will be held on Thursday, October 23, 2008 at 9 a.m. EDT. Participants will include William H. Swanson, Chairman and CEO, David C. Wajsgras, senior vice president and CFO, and other Company executives.
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The dial-in number for the conference call will be (866) 770 – 7051. The conference call will also be audiocast on the Internet atwww.raytheon.com. Individuals may listen to the call and download charts that will be used during the call. These charts will be available for printing prior to the call.
Interested parties are encouraged to check the website ahead of time to ensure their computers are configured for the audio stream. Instructions for obtaining the free required downloadable software are posted on the site.
Disclosure Regarding Forward-looking Statements
This release and the attachments contain forward-looking statements, including information regarding the Company’s 2008 and 2009 financial outlook, future plans, objectives, business prospects and anticipated financial performance. These forward-looking statements are not statements of historical facts and represent only the Company’s current expectations regarding such matters. These statements inherently involve a wide range of known and unknown risks and uncertainties. The Company’s actual actions and results could differ materially from what is expressed or implied by these statements. Specific factors that could cause such a difference include, but are not limited to: the Company’s dependence on the U.S. Government for a significant portion of its business and the risks associated with U.S. Government sales, including changes or shifts in defense spending, uncertain funding of programs, potential termination of contracts, and difficulties in contract performance; the ability to procure new contracts; the risks of conducting business in foreign countries; the ability to comply with extensive governmental regulation, including import and export policies and procurement and other regulations; the impact of competition; the ability to develop products and technologies; the impact of the current downturn in the financial markets; the risk 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.
# # #
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Attachment A
Raytheon Company
Preliminary Statement of Operations Information
Third Quarter 2008
Three Months Ended | Nine Months Ended | |||||||||||||||
(In millions, except per share amounts) | 28-Sep-08 | 23-Sep-07 | 28-Sep-08 | 23-Sep-07 | ||||||||||||
Net sales | $ | 5,864 | $ | 5,219 | $ | 17,088 | $ | 15,301 | ||||||||
Operating expenses | ||||||||||||||||
Cost of sales | 4,674 | 4,150 | 13,603 | 12,200 | ||||||||||||
Administrative and selling expenses | 380 | 355 | 1,156 | 1,042 | ||||||||||||
Research and development expenses | 130 | 142 | 379 | 377 | ||||||||||||
Total operating expenses | 5,184 | 4,647 | 15,138 | 13,619 | ||||||||||||
Operating income | 680 | 572 | 1,950 | 1,682 | ||||||||||||
Interest expense | 29 | 41 | 97 | 155 | ||||||||||||
Interest income | (16 | ) | (42 | ) | (56 | ) | (127 | ) | ||||||||
Other expense, net | 18 | 9 | 21 | 68 | ||||||||||||
Non-operating expense, net | 31 | 8 | 62 | 96 | ||||||||||||
Income from continuing operations before taxes | 649 | 564 | 1,888 | 1,586 | ||||||||||||
Federal and foreign income taxes | 222 | 184 | 635 | 527 | ||||||||||||
Income from continuing operations | 427 | 380 | 1,253 | 1,059 | ||||||||||||
Operating income (loss) from discontinued operations, net of tax | — | (81 | ) | (2 | ) | (65 | ) | |||||||||
Gain on sale of discontinued operation, net of tax | — | — | — | 986 | ||||||||||||
Income (loss) from discontinued operations, net of tax | — | (81 | ) | (2 | ) | 921 | ||||||||||
Net income | $ | 427 | $ | 299 | $ | 1,251 | $ | 1,980 | ||||||||
Earnings per share from continuing operations | ||||||||||||||||
Basic | $ | 1.04 | $ | 0.88 | $ | 3.03 | $ | 2.43 | ||||||||
Diluted | $ | 1.01 | $ | 0.86 | $ | 2.93 | $ | 2.36 | ||||||||
Earnings (loss) per share from discontinued operations | ||||||||||||||||
Basic | $ | — | $ | (0.19 | ) | $ | (0.01 | ) | $ | 2.11 | ||||||
Diluted | $ | — | $ | (0.18 | ) | $ | (0.01 | ) | $ | 2.06 | ||||||
Earnings per share | ||||||||||||||||
Basic | $ | 1.04 | $ | 0.69 | $ | 3.02 | $ | 4.54 | ||||||||
Diluted | $ | 1.01 | $ | 0.68 | $ | 2.93 | $ | 4.42 | ||||||||
Average shares outstanding | ||||||||||||||||
Basic | 409.9 | 431.2 | 413.9 | 436.3 | ||||||||||||
Diluted | 421.6 | 443.0 | 427.2 | 448.2 |
Attachment B
Raytheon Company
Preliminary Segment Information
Third Quarter 2008
Net Sales Three Months Ended | Operating Income Three Months Ended | Operating Income As a Percent of Sales Three Months Ended | ||||||||||||||||||||
(In millions, except percentages) | 28-Sep-08 | 23-Sep-07 | 28-Sep-08 | 23-Sep-07 | 28-Sep-08 | 23-Sep-07 | ||||||||||||||||
Integrated Defense Systems | $ | 1,276 | $ | 1,147 | $ | 206 | $ | 206 | 16.1 | % | 18.0 | % | ||||||||||
Intelligence and Information Systems | 801 | 680 | 67 | 64 | 8.4 | % | 9.4 | % | ||||||||||||||
Missile Systems | 1,351 | 1,247 | 145 | 139 | 10.7 | % | 11.1 | % | ||||||||||||||
Network Centric Systems | 1,145 | 1,036 | 143 | 123 | 12.5 | % | 11.9 | % | ||||||||||||||
Space and Airborne Systems | 1,092 | 1,016 | 147 | 121 | 13.5 | % | 11.9 | % | ||||||||||||||
Technical Services | 689 | 554 | 45 | 37 | 6.5 | % | 6.7 | % | ||||||||||||||
FAS/CAS Pension Adjustment | — | — | (26 | ) | (67 | ) | ||||||||||||||||
Corporate and Eliminations | (490 | ) | (461 | ) | (47 | ) | (51 | ) | ||||||||||||||
Total | $ | 5,864 | $ | 5,219 | $ | 680 | $ | 572 | 11.6 | % | 11.0 | % | ||||||||||
Net Sales Nine Months Ended | Operating Income Nine Months Ended | Operating Income As a Percent of Sales Nine Months Ended | ||||||||||||||||||||
28-Sep-08 | 23-Sep-07 | 28-Sep-08 | 23-Sep-07 | 28-Sep-08 | 23-Sep-07 | |||||||||||||||||
Integrated Defense Systems | $ | 3,725 | $ | 3,405 | $ | 626 | $ | 617 | 16.8 | % | 18.1 | % | ||||||||||
Intelligence and Information Systems | 2,322 | 1,934 | 186 | 182 | 8.0 | % | 9.4 | % | ||||||||||||||
Missile Systems | 4,017 | 3,631 | 438 | 393 | 10.9 | % | 10.8 | % | ||||||||||||||
Network Centric Systems | 3,385 | 3,017 | 411 | 379 | 12.1 | % | 12.6 | % | ||||||||||||||
Space and Airborne Systems | 3,183 | 3,045 | 412 | 383 | 12.9 | % | 12.6 | % | ||||||||||||||
Technical Services | 1,857 | 1,531 | 125 | 92 | 6.7 | % | 6.0 | % | ||||||||||||||
FAS/CAS Pension Adjustment | — | — | (93 | ) | (192 | ) | ||||||||||||||||
Corporate and Eliminations | (1,401 | ) | (1,262 | ) | (155 | ) | (172 | ) | ||||||||||||||
Total | $ | 17,088 | $ | 15,301 | $ | 1,950 | $ | 1,682 | 11.4 | % | 11.0 | % | ||||||||||
Attachment C
Raytheon Company
Other Preliminary Information
Third Quarter 2008
Funded Backlog | Total Backlog | |||||||||||
(In millions) | 28-Sep-08 | 31-Dec-07 | 28-Sep-08 | 31-Dec-07 | ||||||||
Integrated Defense Systems | $ | 4,334 | $ | 4,781 | $ | 7,943 | $ | 9,296 | ||||
Intelligence and Information Systems | 2,199 | 2,325 | 5,518 | 5,636 | ||||||||
Missile Systems | 5,514 | 5,218 | 9,949 | 9,379 | ||||||||
Network Centric Systems | 4,045 | 3,957 | 5,498 | 5,102 | ||||||||
Space and Airborne Systems | 3,164 | 3,037 | 5,246 | 5,276 | ||||||||
Technical Services | 1,889 | 1,200 | 2,831 | 1,925 | ||||||||
Total | $ | 21,145 | $ | 20,518 | $ | 36,985 | $ | 36,614 | ||||
Bookings Three Months Ended | ||||||
28-Sep-08 | 23-Sep-07 | |||||
Total Bookings | $ | 5,766 | $ | 6,327 | ||
Attachment D
Raytheon Company
Preliminary Balance Sheet Information
Third Quarter 2008
(In millions) | 28-Sep-08 | 31-Dec-07 | ||||||
Assets | ||||||||
Cash and cash equivalents | $ | 2,761 | $ | 2,655 | ||||
Accounts receivable, net | 120 | 126 | ||||||
Contracts in process | 4,366 | 3,821 | ||||||
Inventories | 356 | 386 | ||||||
Deferred taxes | 452 | 432 | ||||||
Prepaid expenses and other current assets | 113 | 196 | ||||||
Total current assets | 8,168 | 7,616 | ||||||
Property, plant and equipment, net | 1,990 | 2,058 | ||||||
Prepaid retiree benefits | 668 | 617 | ||||||
Goodwill | 11,667 | 11,627 | ||||||
Other assets, net | 1,273 | 1,363 | ||||||
Total assets | $ | 23,766 | $ | 23,281 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Advance payments and billings in excess of costs incurred | $ | 1,850 | $ | 1,845 | ||||
Accounts payable | 1,196 | 1,141 | ||||||
Accrued employee compensation | 838 | 902 | ||||||
Other accrued expenses | 1,175 | 900 | ||||||
Total current liabilities | 5,059 | 4,788 | ||||||
Accrued retiree benefits and other long-term liabilities | 2,959 | 3,016 | ||||||
Deferred taxes | 515 | 451 | ||||||
Long-term debt | 2,273 | 2,268 | ||||||
Minority interest | 253 | 216 | ||||||
Stockholders’ equity | ||||||||
Common stock | 4 | 4 | ||||||
Additional paid-in capital | 10,838 | 10,544 | ||||||
Accumulated other comprehensive loss | (1,900 | ) | (1,956 | ) | ||||
Treasury stock, at cost | (3,571 | ) | (2,502 | ) | ||||
Retained earnings | 7,336 | 6,452 | ||||||
Total stockholders’ equity | 12,707 | 12,542 | ||||||
Total liabilities and stockholders’ equity | $ | 23,766 | $ | 23,281 | ||||
Attachment E
Raytheon Company
Preliminary Cash Flow Information
Third Quarter 2008
Three Months Ended | Nine Months Ended | |||||||||||||||
(In millions) | 28-Sep-08 | 23-Sep-07 | 28-Sep-08 | 23-Sep-07 | ||||||||||||
Net income | $ | 427 | $ | 299 | $ | 1,251 | $ | 1,980 | ||||||||
(Income) loss from discontinued operations, net of tax | — | 81 | 2 | (921 | ) | |||||||||||
Income from continuing operations | 427 | 380 | 1,253 | 1,059 | ||||||||||||
Depreciation | 75 | 74 | 217 | 214 | ||||||||||||
Amortization | 24 | 21 | 71 | 61 | ||||||||||||
Working capital (excluding pension and taxes)* | 3 | 163 | (382 | ) | (529 | ) | ||||||||||
Discontinued operations | (5 | ) | 40 | (21 | ) | (43 | ) | |||||||||
Net activity in financing receivables | 21 | 15 | 46 | 71 | ||||||||||||
Other | 208 | 38 | 387 | (568 | ) | |||||||||||
Net operating cash flow | 753 | 731 | 1,571 | 265 | ||||||||||||
Capital spending | (68 | ) | (65 | ) | (167 | ) | (160 | ) | ||||||||
Internal use software spending | (28 | ) | (17 | ) | (58 | ) | (51 | ) | ||||||||
Acquisitions | (20 | ) | — | (54 | ) | — | ||||||||||
Investment activity and divestitures | — | — | 9 | 3,117 | ||||||||||||
Dividends | (117 | ) | (111 | ) | (344 | ) | (331 | ) | ||||||||
Repurchases of common stock | (340 | ) | (500 | ) | (1,020 | ) | (1,301 | ) | ||||||||
Debt repayments | — | (568 | ) | — | (1,606 | ) | ||||||||||
Discontinued operations | — | (1 | ) | — | (29 | ) | ||||||||||
Other | 27 | 95 | 169 | 245 | ||||||||||||
Total cash flow | $ | 207 | $ | (436 | ) | $ | 106 | $ | 149 | |||||||
* | Working capital (excluding pension and taxes) is a summation of changes in: accounts receivable, net, contracts in process and advance payments and billings in excess of costs incurred, inventories, prepaid expenses and other current assets, accounts payable, accrued employee compensation, and other accrued expenses from the Statements of Cash Flows. |
Attachment F
Raytheon Company
Preliminary Return on Invested Capital Non-GAAP Financial Measure
Third Quarter 2008
We define Return on Invested Capital (ROIC) as income from continuing operations plus after-tax net interest expense plus one-third of operating lease expense after-tax (estimate of interest portion of operating lease expense) divided by average invested capital after capitalizing operating leases (operating lease expense times a multiplier of 8), adding financial guarantees less net investment in Discontinued Operations, and adding back the impact of Statement of Financial Accounting Standards No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans (SFAS No. 158). ROIC is not a measure of financial performance under generally accepted accounting principles (GAAP) and may not be defined and calculated by other companies in the same manner. ROIC should be considered supplemental to and not a substitute for financial information prepared in accordance with GAAP. We use ROIC as a measure of efficiency and effectiveness of our use of capital and as an element of management compensation.
Return on Invested Capital
2008 Current Guidance | 2008 Prior Guidance | |||||||||||||||
(In millions, except percentages) | Low end of range | High end of range | Low end of range | High end of range | ||||||||||||
Income from continuing operations | ||||||||||||||||
Net interest expense, after-tax* | Combined | Combined | Combined | Combined | ||||||||||||
Lease expense, after-tax* | ||||||||||||||||
Return | $ | 1,780 | $ | 1,800 | $ | 1,715 | $ | 1,780 | ||||||||
Net debt ** | ||||||||||||||||
Equity less investment in discontinued operations | ||||||||||||||||
Lease expense x 8, plus financial guarantees | Combined | Combined | Combined | Combined | ||||||||||||
SFAS No. 158 impact | ||||||||||||||||
Invested capital from continuing operations*** | $ | 17,300 | $ | 17,100 | $ | 17,300 | $ | 17,100 | ||||||||
ROIC | 10.3 | % | 10.5 | % | 9.9 | % | 10.4 | % | ||||||||
* | Effective 2008 tax rate: 33.5% (2008 guidance) |
** | Net debt is defined as total debt less cash and cash equivalents and is calculated using a 2 point average |
*** | Calculated using a 2 point average |