-- Earnings per share (EPS) from continuing operations of
-- Solid bookings of
-- Strong operating cash flow from continuing operations of
-- 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
"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
Net sales for the second quarter 2008 were
Operating cash flow from continuing operations for the second quarter 2008
was a positive
In the second quarter 2008 the Company repurchased 5.2 million shares of
common stock for
The Company reported total bookings for the second quarter 2008 of
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.
Segment Results Integrated Defense Systems 2nd Quarter % Six Months % ($ in millions) 2008 2007 Change 2008 2007 Change Net Sales $1,257 $1,166 8% $2,449 $2,258 8% Operating Income $209 $212 -1% $420 $411 2% Operating Margin 16.6% 18.2% 17.1% 18.2% Integrated Defense Systems (IDS) had second quarter 2008 net sales of
During the quarter, IDS booked
Intelligence and Information Systems (IIS) had second quarter 2008 net
sales of
During the quarter, IIS booked
Missile Systems (MS) had second quarter 2008 net sales of
During the quarter, MS booked
Network Centric Systems (NCS) had second quarter 2008 net sales of
During the quarter, NCS booked
Space and Airborne Systems (SAS) had second quarter 2008 net sales of
Technical Services (TS) had second quarter 2008 net sales of
During the quarter, TS booked
Raytheon Company (NYSE: RTN), with 2007 sales of
Disclosure Regarding Forward-looking Statements
This release and the attachments contain forward-looking statements, including information regarding the Company's 2008 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 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.
Conference Call on the Second Quarter 2008 Financial Results
Raytheon's financial results conference call will be held on Thursday, July 24, 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.
The dial-in number for the conference call will be (800) 901 - 5217. The conference call will also be audiocast on the Internet at www.raytheon.com. Individuals may listen to the call and download charts that will be used during the call. These charts will be available for printing prior to the call.
Interested parties are encouraged to check the website ahead of time to ensure their computers are configured for the audio stream. Instructions for obtaining the free required downloadable software are posted on the site.
Media Contact: Investor Relations Contact: Jon Kasle Jim Singer 781-522-5110 781-522-5136 Attachment A Raytheon Company Preliminary Statement of Operations Information Second Quarter 2008 (In millions, except per share amounts) Three Months Ended Six Months Ended 29-Jun-08 24-Jun-07 29-Jun-08 24-Jun-07 Net sales $5,870 $5,278 $11,224 $10,082 Cost of sales 4,670 4,194 8,929 8,050 Administrative and selling expenses 396 357 776 687 Research and development expenses 142 138 249 235 Total operating expenses 5,208 4,689 9,954 8,972 Operating income 662 589 1,270 1,110 Interest expense 34 54 68 114 Interest income (17) (57) (40) (85) Other (income) expense, net (2) 56 3 59 Non-operating expense, net 15 53 31 88 Income from continuing operations before taxes 647 536 1,239 1,022 Federal and foreign income taxes 221 181 413 343 Income from continuing operations 426 355 826 679 Income (loss) from discontinued operations, net of tax - (6) (2) 16 Gain on sale of discontinued operation, net of tax - 986 - 986 Income (loss) from discontinued operations, net of tax - 980 (2) 1,002 Net income $426 $1,335 $824 $1,681 Earnings per share from continuing operations Basic $1.03 $0.81 $1.99 $1.55 Diluted $1.00 $0.79 $1.92 $1.51 Earnings per share from discontinued operations Basic $- $2.24 $- $2.28 Diluted $- $2.18 $- $2.22 Earnings per share Basic $1.03 $3.06 $1.98 $3.83 Diluted $1.00 $2.97 $1.92 $3.73 Average shares outstanding Basic 414.0 436.7 416.1 438.9 Diluted 427.7 448.8 430.0 451.0 Attachment B Raytheon Company Preliminary Segment Information Second Quarter 2008 Operating Income Operating As a Percent Net Sales Income of Sales Three Months Three Months Three Months Ended Ended Ended 29-Jun- 24-Jun- 29-Jun- 24-Jun- 29-Jun- 24-Jun- 08 07 08 07 08 07 (In millions) Integrated Defense Systems $1,257 $1,166 $209 $212 16.6% 18.2% Intelligence and Information Systems 829 666 67 63 8.1% 9.5% Missile Systems 1,355 1,244 156 134 11.5% 10.8% Network Centric Systems 1,173 1,052 145 139 12.4% 13.2% Space and Airborne Systems 1,096 1,065 144 133 13.1% 12.5% Technical Services 647 514 45 32 7.0% 6.2% FAS/CAS Pension Adjustment - - (34) (63) Corporate and Eliminations (487) (429) (70) (61) Total $5,870 $5,278 $662 $589 11.3% 11.2% Operating Income As a Percent Operating of Sales Net Sales Income Six Months Six Months Ended Six Months Ended Ended 29-Jun- 24-Jun- 29-Jun- 24-Jun- 29-Jun- 24-Jun- 08 07 08 07 08 07 Integrated Defense Systems $2,449 $2,258 $420 $411 17.1% 18.2% Intelligence and Information Systems 1,521 1,254 119 118 7.8% 9.4% Missile Systems 2,666 2,384 293 254 11.0% 10.7% Network Centric Systems 2,240 1,981 268 256 12.0% 12.9% Space and Airborne Systems 2,091 2,029 265 262 12.7% 12.9% Technical Services 1,168 977 80 55 6.8% 5.6% FAS/CAS Pension Adjustment - - (67) (125) Corporate and Eliminations (911) (801) (108) (121) Total $11,224 $10,082 $1,270 $1,110 11.3% 11.0% Attachment C Raytheon Company Other Preliminary Information Second Quarter 2008 Funded (In millions) Backlog Backlog 29-Jun-08 31-Dec-07 29-Jun-08 31-Dec-07 Integrated Defense Systems $8,882 $9,296 $5,044 $4,781 Intelligence and Information Systems 5,756 5,636 2,554 2,325 Missile Systems 10,250 9,379 5,873 5,218 Network Centric Systems 5,479 5,102 4,244 3,957 Space and Airborne Systems 5,102 5,276 3,301 3,037 Technical Services 2,058 1,925 1,210 1,200 Total $37,527 $36,614 $22,226 $20,518 Bookings Three Months Ended 29-Jun-08 24-Jun-07 Total Bookings $6,008 $4,832 Attachment D Raytheon Company Preliminary Balance Sheet Information Second Quarter 2008 (In millions) 29-Jun-08 31-Dec-07 Assets Cash and cash equivalents $2,554 $2,655 Accounts receivable, net 113 126 Contracts in process 4,366 3,821 Inventories 379 386 Deferred taxes 440 432 Prepaid expenses and other current assets 129 196 Total current assets 7,981 7,616 Property, plant and equipment, net 2,021 2,058 Prepaid retiree benefits 645 617 Goodwill 11,657 11,627 Other assets, net 1,293 1,363 Total assets $23,597 $23,281 Liabilities and Stockholders' Equity Advance payments and billings in excess of costs incurred $1,933 $1,845 Accounts payable 1,128 1,141 Accrued employee compensation 846 902 Other accrued expenses 903 900 Total current liabilities 4,810 4,788 Accrued retiree benefits and other long-term liabilities 3,006 3,016 Deferred taxes 543 451 Long-term debt 2,269 2,268 Minority interest 233 216 Stockholders' equity Common stock 4 4 Additional paid-in capital 10,788 10,544 Accumulated other comprehensive loss (1,856) (1,956) Treasury stock, at cost (3,225) (2,502) Retained earnings 7,025 6,452 Total stockholders' equity 12,736 12,542 Total liabilities and stockholders' equity $23,597 $23,281 Attachment E Raytheon Company Preliminary Cash Flow Information Second Quarter 2008 (In millions) Three Months Ended Six Months Ended 29-Jun-08 24-Jun-07 29-Jun-08 24-Jun-07 Net income $426 $1,335 $824 $1,681 (Income) loss from discontinued operations, net of tax - (980) 2 (1,002) Income from continuing operations 426 355 826 679 Depreciation 73 73 142 140 Amortization 24 21 47 40 Working capital (excluding pension and taxes)* 318 (39) (385) (692) Discontinued operations (6) (20) (16) (83) Net activity in financing receivables 5 35 25 56 Other (79) (475) 179 (606) Net operating cash flow 761 (50) 818 (466) Capital spending (56) (57) (99) (95) Internal use software spending (13) (19) (30) (34) Acquisitions (33) - (34) - Investment activity and divestitures 9 3,117 9 3,117 Dividends (118) (113) (227) (220) Repurchases of common stock (340) (526) (680) (801) Debt repayments - (1,041) - (1,038) Discontinued operations - - - (28) Other 57 74 142 150 Total cash flow $267 $1,385 $(101) $585* 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 Second Quarter 2008We 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 2008 Prior (In millions) Guidance Guidance Low end High end Low end High end of range of range of range of range Income from continuing operations Net interest expense, after-tax* Combined Combined Combined Combined Lease expense, after-tax* Return $1,715 $1,780 $1,655 $1,720 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 9.9% 10.4% 9.6% 10.1% * 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
SOURCE Raytheon Company
