Raytheon Increases Full-year Guidance; Reports Strong Second Quarter 2008

WALTHAM, Mass., July 24, 2008 /PRNewswire-FirstCall/ -- Highlights -- Sales of $5.9 billion, up 11 percent -- Operating income of $662 million, up 12 percent -- Earnings per share (EPS) from continuing operations of $1.00...


WALTHAM, Mass., July 24, 2008 /PRNewswire-FirstCall/ -- Highlights -- Sales of $5.9 billion, up 11 percent -- Operating income of $662 million, up 12 percent

-- Earnings per share (EPS) from continuing operations of $1.00, up 27 percent

-- Solid bookings of $6.0 billion; backlog of $37.5 billion

-- Strong operating cash flow from continuing operations of $767 million

-- Full-year guidance increased for sales, EPS, operating cash flow and ROIC

Raytheon Company (NYSE: RTN) reported second quarter 2008 income from continuing operations of $426 million or $1.00 per diluted share compared to $355 million or $0.79 per diluted share in the second quarter 2007. Second quarter 2008 income from continuing operations was higher primarily due to operational improvements and lower pension expense, as well as a prior-year $39 million charge ($59 million pretax) or $0.09 per diluted share for the early retirement of debt.

"All of our businesses performed well and the Company had a strong second quarter," said William H. Swanson , Raytheon's Chairman and CEO. "We are increasing our financial outlook for the year as a result of our solid performance."

Second quarter 2008 net income was $426 million or $1.00 per diluted share compared to $1,335 million or $2.97 per diluted share in the second quarter 2007. Net income for the second quarter 2007 included $980 million in discontinued operations or $2.18 per diluted share primarily due to the sale of Raytheon Aircraft Company (RAC), which was completed in the second quarter 2007.

Net sales for the second quarter 2008 were $5.9 billion, up 11 percent from $5.3 billion in the second quarter 2007, with growth across all of the Company's businesses.

Operating cash flow from continuing operations for the second quarter 2008 was a positive $767 million compared to an outflow of $30 million for the second quarter 2007. The improvement in the second quarter 2008 was primarily due to cash tax payments of $316 million made in the second quarter 2007 attributable to the gain on the sale of RAC and a reduction in working capital items in the second quarter 2008.

In the second quarter 2008 the Company repurchased 5.2 million shares of common stock for $340 million, as part of the Company's previously announced share repurchase program. The Company has repurchased 10.7 million shares of common stock year-to-date for $680 million.

The Company reported total bookings for the second quarter 2008 of $6.0 billion compared to $4.8 billion in the second quarter 2007. The Company ended the second quarter 2008 with a backlog of $37.5 billion compared to $36.6 billion at the end of 2007 and $33.3 billion at the end of the second quarter 2007.

The Company has increased full-year 2008 guidance for net sales, earnings per share from continuing operations, operating cash flow from continuing operations and Return on Invested Capital (ROIC), and updated net interest expense and diluted shares. Charts containing additional information on the Company's 2008 guidance are available on the Company's website at www.raytheon.com. See attachment F for the Company's calculation and use of ROIC, a non-GAAP financial measure.

Integrated Defense Systems (IDS) had second quarter 2008 net sales of $1,257 million, up 8 percent compared to $1,166 million in the second quarter 2007, primarily due to growth on U.S. Army programs. IDS recorded $209 million of operating income compared to $212 million in the second quarter 2007. The change in operating income was primarily due to program mix and favorable performance adjustments taken on certain programs in the second quarter 2007.

During the quarter, IDS booked $179 million for the upgrade and support of the Patriot system for Kuwait and South Korea . IDS also booked $143 million for the Rapid Aerostat Initial Deployment (RAID) program for the U.S. Army.

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