Highlights  Â
- Solid bookings of $7.1 billion in the quarter and $25.1 billion for the year
- Delivered strong sales growth of 10 percent in the quarter and 7 percent for the year
- Fourth quarter diluted earnings per share (EPS) from continuing operations of $1.30, up 29 percent; full-year 2009 EPS from continuing operations of $4.89, up 24 percent
- Strong operating cash flow of $1.1 billion in the quarter and $2.7 billion for the year
Raytheon Company (NYSE: RTN) reported fourth quarter 2009 income from continuing operations of $517 million, up 21 percent compared to $428 million in the fourth quarter 2008. EPS from continuing operations for the fourth quarter 2009 was $1.30, up 29 percent compared to $1.01 in the fourth quarter 2008. Fourth quarter 2008 income from continuing operations included a $45 million ($69 million pretax) unfavorable adjustment due to the impact of pension investment returns on existing contracts in 2008. Â
“Our 2009 results reflect the increasing global demand for our capabilities, as well as the Company’s strong operational performance,” said William H. Swanson, Raytheon’s Chairman and CEO. “Looking ahead, we expect continued growth by providing our customers with innovative solutions that address their evolving needs.” Net sales in the fourth quarter 2009 were $6.7 billion, up 10 percent from $6.1 billion in the fourth quarter 2008.Operating cash flow from continuing operations in the fourth quarter 2009 was $1,073 million compared to $444 million in the fourth quarter 2008. In the fourth quarter 2008 the Company made $660 million in discretionary cash contributions to its pension plans. The Company made $1,115 million in total cash contributions to its pension plans in full-year 2009 compared to $1,174 million in full-year 2008.In the fourth quarter 2009 the Company repurchased 6.0 million shares of common stock for $300 million, as part of its previously announced share repurchase program. For the full-year 2009 the Company repurchased 25.8 million shares of common stock for $1.2 billion.
Full-Year Financial Results
Full-year 2009 income from continuing operations was $2.0 billion, up 16 percent compared to $1.7 billion for the full-year 2008. EPS from continuing operations for the full-year 2009 was $4.89, up 24 percent compared to $3.93 for the full-year 2008.Net sales in 2009 were $24.9 billion, up 7 percent from $23.2 billion in 2008, with all of Raytheon’s businesses contributing to the sales growth.The Company generated strong operating cash flow for the year. Operating cash flow from continuing operations was $2.7 billion in 2009 compared to $2.0 billion in 2008. The increase in operating cash flow in 2009 was primarily due to improved performance and lower net cash tax payments. The Company paid $627 million in cash taxes in 2009 and received $419 million in tax refunds and credits, primarily related to the discretionary cash contributions that it made to its pension plans in December 2008. The Company paid $545 million in cash taxes in 2008 and received $97 million in tax refunds and credits.The Company ended 2009 in a net cash position of $313 million ($2.6 billion in cash and cash equivalents less total debt of $2.3 billion). Â
Summary Financial Results
4th Quarter %
-- ---------
($ in millions, except per
share data) 2009 2008(1) Change
---- ------ ------
Net sales $6,667 $6,086 10%
Income from continuing
operations $517 $428 21%
Income from continuing
operations attributable to
Raytheon Company $504 $421 20%
FAS/CAS Adjusted Income(2) $500 $441 13%
EPS from continuing operations $1.30 $1.01 29%
FAS/CAS Adjusted EPS(2) $1.29 $1.06 22%
Operating cash flow from cont.
ops. $1,073 $444
Workdays in fiscal reporting
calendar 61 60
Full-Year %
---------
($ in millions, except per
share data) 2009 2008(1) Change
---- ------ ------
Net sales $24,881 $23,174 7%
Income from continuing
operations $1,977 $1,698 16%
Income from continuing
operations attributable to
Raytheon Company $1,936 $1,674 16%
FAS/CAS Adjusted Income(2) $1,918 $1,754 9%
EPS from continuing operations $4.89 $3.93 24%
FAS/CAS Adjusted EPS(2) $4.85 $4.12 18%
Operating cash flow from cont.
ops. $2,745 $2,036
Workdays in fiscal reporting
calendar 249 250
(1) Fourth quarter and full-year 2008 includes a $45 million ($69
million pretax) unfavorable adjustment due to the impact of pension
investment returns on existing contracts in 2008.
(2) FAS/CAS Adjusted Income is defined as income from continuing
operations attributable to Raytheon Company common stockholders
excluding the after-tax impact of the FAS/CAS pension adjustment.
FAS/CAS Adjusted EPS is defined as EPS from continuing operations
attributable to Raytheon Company common stockholders excluding the
earnings per share impact of the FAS/CAS pension adjustment. FAS/
CAS Adjusted EPS and FAS/CAS Adjusted Income are non-GAAP
financial measures. See attachment F for a reconciliation of these
measures and a discussion of why the Company is presenting this
information.
Bookings and Backlog  Â
Bookings 4th Quarter Full-Year
----------- ---------
($ in millions) 2009 2008 2009 2008
---- ---- ---- ----
Bookings $7,065 $8,530 $25,058 $26,820
======= =======
Backlog Period Ending
-------------
($ in millions) 12/31/09 12/31/08
-------- --------
Backlog* $36,877 $38,884
Funded Backlog $23,479 $21,986
* Due to a change in Missile Defense Agency priorities, on June 10,
2009 the Kinetic Energy Interceptor (KEI) program was terminated for
convenience, resulting in a $2.4 billion reduction of the Company's
backlog at the end of the second quarter 2009.
Bookings exceeded net sales in both the fourth quarter and full-year 2009. Â
The Company ended 2009 with a backlog of $36.9 billion and its highest year-end funded backlog of $23.5 billion. Â
Outlook Â
2010 Financial Outlook 2010 Outlook
------------
Prior
2009A Current (10/22/09)
----- ------- -----------
Net Sales ($B) 24.9 25.9 - 26.4 25.9 - 26.4
FAS/CAS Pension Inc./(Exp.) ($M) 27 (220)* (228)
(95) -
Interest Expense, Net ($M) (109) (110)* (90) - (105)
Diluted Shares (M) 395.7 377 - 382 377 - 382
Effective Tax Rate 32.5% ~31.5% ~31.5%
EPS from Continuing Operations $4.89 $4.75 - $4.90 $4.75 - $4.90
FAS/CAS Adjusted EPS(1) $4.85 $5.13 - $5.28* $5.16 - $5.31
Operating Cash Flow from Cont.
Ops. ($B) 2.7 2.0 - 2.2 2.0 - 2.2
ROIC (%)(1) 12.2 12.2 - 12.6 Not provided
* Denotes change from prior
guidance.
(1) FAS/CAS Adjusted EPS is defined as EPS from continuing
operations attributable to Raytheon Company common stockholders
excluding the earnings per share impact of the FAS/CAS pension
adjustment. The statutory tax rate of 35.0% was used to calculate
the after-tax impact of the current FAS/CAS pension adjustment.
The effective tax rate of 31.5% was used to calculate the after-tax
impact of the prior FAS/CAS pension adjustment. FAS/CAS Adjusted
EPS and ROIC are non-GAAP financial measures. See attachment F for
a reconciliation of FAS/CAS 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 is reaffirming its prior guidance for 2010 and providing more detailed information. Charts containing additional information on the Company’s 2010 guidance are available on the Company’s website at www.raytheon.com. Â
Segment Results Â
Integrated Defense Systems Â
4th Quarter % Full-Year %
----------- ---------
($ in
millions) 2009 2008 Change 2009 2008 Change
---- ---- ------ ---- ---- ------
Net Sales $1,541 $1,423 8% $5,525 $5,148 7%
Operating
Income $249 $244 2% $859 $870 -1%
Operating
Margin 16.2% 17.1% 15.5% 16.9%
Fourth Quarter Â
Integrated Defense Systems (IDS) had fourth quarter 2009 net sales of $1,541 million, up 8 percent compared to $1,423 million in the fourth quarter 2008, primarily due to growth on international Patriot programs. IDS recorded $249 million of operating income compared to $244 million in the fourth quarter 2008. Â
During the quarter, IDS booked $990 million for a letter contract on ground-system hardware and initial spares for the Patriot Air and Missile Defense System for Taiwan, after receiving contract awards totaling $1.1 billion. IDS also booked $160 million related to the renewal of an international Patriot technical support contract and $315 million for systems design work for the Zumwalt-class destroyer for the U.S. Navy. Â
Full-year Â
IDS had full-year 2009 net sales of $5,525 million, up 7 percent compared to $5,148 million in 2008. The increase in sales was primarily due to growth on international Patriot programs. IDS recorded $859 million of operating income in 2009 compared to $870 million in 2008. Â
During the year, IDS booked $1,982 million to fund new production and upgrades of the Patriot Air and Missile Defense System for Taiwan and United Arab Emirates (UAE). IDS also booked $650 million on the Zumwalt-class destroyer program, $157 million to provide Finland with Surface Launched Medium Range Air-to-Air Missile (SL-AMRAAM) systems, and $150 million for Joint Land Attack Cruise Missile Defense Elevated Netted Sensor Systems (JLENS) for the U.S. Army. Â
Intelligence and Information Systems Â
4th Quarter % Full-Year %
----------- ---------
($ in
millions) 2009 2008 Change 2009 2008 Change
---- ---- ------ ---- ---- ------
Net Sales $803 $810 -1% $3,204 $3,132 2%
Operating
Income $64 $67 -4% $259 $253 2%
Operating
Margin 8.0% 8.3% 8.1% 8.1%
Fourth Quarter Â
Intelligence and Information Systems (IIS) had fourth quarter 2009 net sales of $803 million compared to $810 million in the fourth quarter 2008. IIS recorded $64 million of operating income compared to $67 million in the fourth quarter 2008. Â
During the quarter, IIS booked $153 million on a contract to provide intelligence, surveillance and reconnaissance (ISR) support to the U.S. Air Force. IIS also booked $519 million on a number of classified contracts. Â
Full-year Â
IIS had full-year 2009 net sales of $3,204 million compared to $3,132 million in 2008. IIS recorded $259 million of operating income in 2009 compared to $253 million in 2008. Â
During the year, IIS booked $1,364 million on a number of classified contracts. Â
Missile Systems Â
4th Quarter % Full-Year %
----------- ---------
($ in
millions) 2009 2008 Change 2009 2008 Change
---- ---- ------ ---- ---- ------
Net Sales $1,413 $1,366 3% $5,561 $5,408 3%
Operating
Income $154 $142 8% $604 $584 3%
Operating
Margin 10.9% 10.4% 10.9% 10.8%
Fourth Quarter Â
Missile Systems (MS) had fourth quarter 2009 net sales of $1,413 million compared to $1,366 million in the fourth quarter 2008, primarily due to higher volume on the Evolved Sea Sparrow Missile (ESSM), Maverick, and Phalanx programs. MS recorded $154 million of operating income compared to $142 million in the fourth quarter 2008. Â
During the quarter, MS booked $222 million for the production of Standard Missile-2 (SM-2) for international customers and the U.S. Navy, and $101 million for the development of Standard Missile-3 (SM-3) for the Missile Defense Agency. MS also booked $201 million for the production of ESSM for international customers and the U.S. Navy, $170 million for the production of Maverick missiles for an international customer and $111 million for the production of Tube Launched, Optically Tracked, Wireless (TOW) missiles for international customers and the U.S. Army. Â
Full-year Â
MS had full-year 2009 net sales of $5,561 million compared to $5,408 million in 2008. The increase in sales in 2009 was primarily due to higher volume on the SM-3 and Maverick programs. MS recorded $604 million of operating income in 2009 compared to $584 million in 2008. The increase in operating income in 2009 was primarily due to higher volume. Â
During the year, MS booked $645 million for the Advanced Medium-Range Air-to-Air Missile (AMRAAM) program for international customers and the U.S. Air Force, $514 million for TOW missiles for international customers and the U.S. Army, and $508 million for ESSM and $402 million for Phalanx Weapon Systems for international customers and the U.S. Navy. MS also booked $384 million on SM-2 for international customers and the U.S. Navy, $318 million for SM-3 for the Missile Defense Agency and $294 million for Tactical Tomahawk cruise missiles for the U.S. Navy. Â
Network Centric Systems Â
4th Quarter % Full-Year %
----------- ---------
($ in
millions) 2009 2008 Change 2009 2008 Change
---- ---- ------ ---- ---- ------
Net Sales $1,259 $1,125 12% $4,822 $4,510 7%
Operating
Income $169 $148 14% $674 $575 17%
Operating
Margin 13.4% 13.2% 14.0% 12.7%
Fourth Quarter Â
Network Centric Systems (NCS) had fourth quarter 2009 net sales of $1,259 million, up 12 percent compared to $1,125 million in the fourth quarter 2008, due to higher volume on various programs, primarily for the U.S. Army. NCS recorded $169 million of operating income compared to $148 million in the fourth quarter 2008. The increase in operating income was primarily due to the increased volume. Â
During the quarter, NCS booked $446 million on an international classified program and an additional $127 million for a toll system replacement program. Â
Full-year Â
NCS had full-year 2009 net sales of $4,822 million, up 7 percent compared to $4,510 million in 2008. The increase in sales was due to higher volume on various production programs, primarily for the U.S. Army. NCS recorded $674 million of operating income compared to $575 million in 2008. The increase in operating income was primarily due to improved program performance and higher volume. Â
During the year, NCS booked $163 million for Improved Target Acquisition Systems (ITAS), $146 million for Horizontal Technology Insertion (HTI) forward-looking infrared kits, $117 million for Commander’s Independent Viewers (CIV), $107 million for the Secure Mobile Anti-Jam Reliable Tactical Terminal (SMART-T) program and $97 million for Thermal Weapon Sights II for the U.S. Army, and $82 million for the Global Positioning Satellite-Aided Geosynchronous Augmented Navigation (GAGAN) system for the India Space Research Organization (ISRO). Â
Space and Airborne Systems Â
4th Quarter % Full-Year %
-----------
($ in
millions) 2009 2008 Change 2009 2008 Change
---- ---- ------ ---- ---- ------
Net Sales $1,266 $1,166 9% $4,582 $4,280 7%
Operating
Income $174 $167 4% $647 $569 14%
Operating
Margin 13.7% 14.3% 14.1% 13.3%
Fourth Quarter Â
Space and Airborne Systems (SAS) had fourth quarter 2009 net sales of $1,266 million, up 9 percent compared to $1,166 million in the fourth quarter 2008, primarily due to growth on classified business. SAS recorded $174 million of operating income compared to $167 million in the fourth quarter 2008. The increase in operating income was primarily due to higher volume. Â
During the quarter, SAS booked $122 million for the B-2 Radar Modernization Program (RMP). SAS also booked $131 million on a number of classified contracts. Â
Full-year Â
SAS had full-year 2009 net sales of $4,582 million, up 7 percent compared to $4,280 million in 2008, primarily due to growth on classified business. SAS recorded $647 million of operating income in 2009 compared to $569 million in 2008. The increase in operating income was primarily due to higher volume, favorable mix and contractual settlements. Â
During the year, SAS booked $422 million to supply APG-63 fire control radars and support equipment for the Japan Air Self-Defense Force, $295 million for the B-2 RMP and $147 million on the Integrated Sensor Is Structure (ISIS) radar program for the Defense Advanced Research Projects Agency (DARPA). SAS also booked $1,330 million on a number of classified contracts. Â
Technical Services Â
4th Quarter % Full-Year %
----------- ---------
($ in
millions) 2009 2008 Change 2009 2008 Change
---- ---- ------ ---- ---- ------
Net Sales $888 $744 19% $3,161 $2,601 22%
Operating
Income $58 $49 18% $215 $174 24%
Operating
Margin 6.5% 6.6% 6.8% 6.7%
Fourth Quarter Â
Technical Services (TS) had fourth quarter 2009 net sales of $888 million, up 19 percent compared to $744 million in the fourth quarter 2008, primarily due to continued growth in domestic and foreign operational training programs for the U.S. Army’s Warfighter Field Operations Customer Support activities. TS recorded operating income of $58 million in the fourth quarter 2009 compared to $49 million in the fourth quarter 2008, primarily due to higher volume. Â
During the quarter, TS booked $67 million for work on domestic operational training programs for the U.S. Army. Â
Full-year Â
TS had full-year 2009 net sales of $3,161 million, up 22 percent compared to $2,601 million in 2008. TS recorded operating income of $215 million in 2009 compared to $174 million in 2008. The increase in net sales and operating income were primarily due to continued strong growth in domestic and foreign operational training programs and the Federal Aviation Administration’s (FAA) Air Traffic Control Optimum Training Solutions (ATCOTS). Â
During the year, TS booked $1,011 million on domestic operational training programs and $300 million on foreign operational training programs for the U.S. Army. TS also booked $160 million to upgrade Phalanx Weapon Systems for the Royal Canadian Navy and $100 million for a Defense Threat Reduction Agency (DTRA) program. Â
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. Â
Conference Call on the Fourth Quarter and Full-Year 2009 Financial Results Â
Raytheon’s financial results conference call will be held on Thursday, January 28, 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. Â
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. Â
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. Â
Disclosure Regarding Forward-looking Statements Â
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 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. Â
Media Contact: Investor Relations Contact:
Jon Kasle Marc Kaplan
781-522-5110 781-522-5141
Attachment A
Raytheon Company
Preliminary Statement of Operations Information
Fourth Quarter 2009
(In millions, except per
share amounts)
Three Months Ended Twelve Months Ended
31-Dec-09 31-Dec-08 31-Dec-09 31-Dec-08
--------- --------- --------- ---------
Total net sales $6,667 $6,086 $24,881 $23,174
------ ------ ------- -------
Operating expenses
Cost of sales 5,317 4,903 19,747 18,489
Administrative
and selling
expenses 392 392 1,527 1,548
Research and
development
expenses 158 138 565 517
--- --- --- ---
Total operating
expenses 5,867 5,433 21,839 20,554
----- ----- ------ ------
Operating income 800 653 3,042 2,620
--- --- ----- -----
Interest expense 28 32 123 129
Interest income (3) (8) (14) (64)
Other expense, net 21 12 3 33
--- --- --- ---
Non-operating expense,
net 46 36 112 98
--- --- --- ---
Income from continuing
operations before taxes 754 617 2,930 2,522
Federal and foreign
income taxes 237 189 953 824
--- --- --- ---
Income from continuing
operations 517 428 1,977 1,698
Income (loss) from
discontinued operations,
net of tax - - (1) (2)
--- --- --- ---
Net income 517 428 1,976 1,696
Less: Net income
attributable
to noncontrolling
interests 13 7 41 24
--- --- --- ---
Net income attributable
to Raytheon Company $504 $421 $1,935 $1,672
==== ==== ====== ======
Basic earnings (loss)
per share attributable
to Raytheon Company
common stockholders:
Income from
continuing
operations $1.32 $1.03 $4.96 $4.01
Income (loss)
from
discontinued
operations - - - (0.01)
Net income 1.32 1.03 4.96 4.01
Diluted earnings
(loss) per share
attributable
to Raytheon
Company common
stockholders:
Income from
continuing
operations $1.30 $1.01 $4.89 $3.93
Income (loss)
from
discontinued
operations - - - (0.01)
Net income 1.30 1.01 4.89 3.92
Amounts attributable
to Raytheon Company
common stockholders:
Income from
continuing
operations $504 $421 $1,936 $1,674
Income (loss)
from
discontinued
operations - - (1) (2)
--- --- --- ---
Net income $504 $421 $1,935 $1,672
==== ==== ====== ======
Average shares
outstanding
Basic 382.2 409.8 390.4 417.2
Diluted 388.4 416.4 395.7 426.5
Attachment B
Raytheon Company
Preliminary Segment Information
Fourth Quarter 2009
Total Net Sales Operating Income
(In millions,
except
percentages) Three Months Ended Three Months Ended
------------------ ------------------
31-Dec-09 31-Dec-08 31-Dec-09 31-Dec-08
--------- --------- --------- ---------
Integrated
Defense
Systems $1,541 $1,423 $249 $244
Intelligence
and
Information
Systems 803 810 64 67
Missile
Systems 1,413 1,366 154 142
Network
Centric
Systems 1,259 1,125 169 148
Space and
Airborne
Systems 1,266 1,166 174 167
Technical
Services 888 744 58 49
FAS/CAS
Pension
Adjustment - - 6 (30)
Corporate and
Eliminations (503) (548) (74) (134)
---- ---- --- ----
Total $6,667 $6,086 $800 $653
====== ====== ==== ====
Operating Income
As a Percent of Sales
(In millions, except
percentages) Three Months Ended
------------------
31-Dec-09 31-Dec-08
--------- ---------
Integrated Defense
Systems 16.2% 17.1%
Intelligence and
Information Systems 8.0% 8.3%
Missile Systems 10.9% 10.4%
Network Centric Systems 13.4% 13.2%
Space and Airborne
Systems 13.7% 14.3%
Technical Services 6.5% 6.6%
FAS/CAS Pension
Adjustment
Corporate and
Eliminations
Total 12.0% 10.7%
Total Net Sales Operating Income
(In millions,
except
percentages) Twelve Months Ended Twelve Months Ended
------------------- -------------------
31-Dec-09 31-Dec-08 31-Dec-09 31-Dec-08
--------- --------- --------- ---------
Integrated
Defense
Systems $5,525 $5,148 $859 $870
Intelligence
and
Information
Systems 3,204 3,132 259 253
Missile
Systems 5,561 5,408 604 584
Network
Centric
Systems 4,822 4,510 674 575
Space and
Airborne
Systems 4,582 4,280 647 569
Technical
Services 3,161 2,601 215 174
FAS/CAS
Pension
Adjustment - - 27 (123)
Corporate and
Eliminations (1,974) (1,905) (243) (282)
------ ------ ---- ----
Total $24,881 $23,174 $3,042 $2,620
======= ======= ====== ======
Operating Income
As a Percent of Sales
(In millions, except
percentages) Twelve Months Ended
-------------------
31-Dec-09 31-Dec-08
--------- ---------
Integrated Defense
Systems 15.5% 16.9%
Intelligence and
Information Systems 8.1% 8.1%
Missile Systems 10.9% 10.8%
Network Centric Systems 14.0% 12.7%
Space and Airborne
Systems 14.1% 13.3%
Technical Services 6.8% 6.7%
FAS/CAS Pension
Adjustment
Corporate and
Eliminations
Total 12.2% 11.3%
Attachment C
Raytheon Company
Other Preliminary Information
Fourth Quarter 2009
(In millions) Funded Backlog Total Backlog
-------------- -------------
31-Dec-09 31-Dec-08 31-Dec-09 31-Dec-08
--------- --------- --------- ---------
Integrated Defense
Systems $5,595 $4,802 $10,665 $9,883
Intelligence and
Information
Systems 1,588 1,890 4,360 5,137
Missile Systems* 6,454 6,082 7,657 9,937
Network Centric
Systems 4,389 4,593 5,501 5,733
Space and Airborne
Systems 3,402 2,731 5,921 5,442
Technical Services 2,051 1,888 2,773 2,752
Total $23,479 $21,986 $36,877 $38,884
======= ======= ======= =======
Bookings Bookings
Three Months Ended Twelve Months Ended
------------------ -------------------
31-Dec-09 31-Dec-08 31-Dec-09 31-Dec-08
--------- --------- --------- ---------
Bookings $7,065 $8,530 $25,058 $26,820
====== ====== ======= =======
* Due to a change in Missile Defense Agency priorities, on June 10, 2009
the Kinetic Energy Interceptor (KEI) program was terminated for
convenience, resulting in a $2.4 billion reduction of the Company's
backlog at the end of the second quarter of 2009.
Attachment D
Raytheon Company
Preliminary Balance Sheet Information
Fourth Quarter 2009
(In millions)
31-Dec-09 31-Dec-08
--------- ---------
Assets
Cash and cash equivalents $2,642 $2,259
Accounts receivable, net 120 105
Contracts in process 4,373 3,793
Inventories 344 325
Current tax asset - 441
Deferred taxes 273 395
Prepaid expenses and other current assets 116 99
--- ---
Total current assets 7,868 7,417
Property, plant and equipment, net 2,001 2,024
Deferred taxes 436 735
Prepaid retiree benefits 111 56
Goodwill 11,922 11,662
Other assets, net 1,269 1,240
----- -----
Total assets $23,607 $23,134
======= =======
Liabilities and Equity
Current liabilities
Advance payments and billings in excess of
costs incurred $2,224 $1,970
Accounts payable 1,397 1,201
Accrued employee compensation 868 913
Other accrued expenses 1,034 1,065
----- -----
Total current liabilities 5,523 5,149
Accrued retiree benefits and other long-
term liabilities 5,793 6,488
Deferred taxes 23 -
Long-term debt 2,329 2,309
Equity
Raytheon Company stockholders' equity
Common stock 4 4
Additional paid-in capital 10,991 10,873
Accumulated other comprehensive loss (4,824) (5,182)
Treasury stock, at cost (5,446) (4,254)
Retained earnings 9,102 7,646
----- -----
Total Raytheon Company stockholders' equity 9,827 9,087
Noncontrolling interest in subsidiaries 112 101
--- ---
Total equity 9,939 9,188
----- -----
Total liabilities and equity $23,607 $23,134
======= =======
Attachment E
Raytheon Company
Preliminary Cash Flow Information
Fourth Quarter 2009
(In millions) Three Months Ended Twelve Months Ended
------------------ -------------------
31-Dec-09 31-Dec-08 31-Dec-09 31-Dec-08
--------- --------- --------- ---------
Net income $517 $428 $1,976 $1,696
Loss (income) from
discontinued
operations, net of
tax - - 1 2
--- --- --- ---
Income from
continuing
operations 517 428 1,977 1,698
Depreciation 79 75 299 292
Amortization 28 27 103 98
Working capital
(excluding pension
and taxes)* 178 629 (47) 247
Discontinued
operations (4) - (20) (21)
Net activity in
financing
receivables 18 22 46 68
Other 253 (737) 367 (367)
---- ---- ---- ----
Net operating
cash flow 1,069 444 2,725 2,015
Capital spending (142) (137) (280) (304)
Internal use
software spending (18) (16) (67) (74)
Acquisitions (334) - (334) (54)
Investment activity
and divestiture - - - 9
Dividends (118) (116) (473) (460)
Repurchases of
common stock (300) (680) (1,200) (1,700)
Debt issuance 496 - 496 -
Debt repayment (474) - (474) -
Other 21 3 (10) 172
--- --- --- ---
Total cash flow $200 $(502) $383 $(396)
==== ===== ==== =====
* 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 - FAS/CAS Adjusted Measures
Fourth Quarter 2009
FAS/CAS Adjusted EPS Non-GAAP Reconciliation
Fourth Quarter Full Year 2010 Guidance
-------------- --------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Diluted
earnings per
share from
continuing
operations
attributable
to Raytheon
Company
common
stockholders $1.30 $1.01* $4.89 $3.93*
Less: Per
share impact
of the FAS/
CAS Pension
Adjustment** 0.01 (0.05) 0.04 (0.19)
---- ----- ---- -----
FAS/CAS
Adjusted EPS
*** $1.29 $1.06 $4.85 $4.12
===== ===== ===== =====
** FAS/CAS
Pension
Adjustment $6 $(30) $27 $(123)
Tax affect (at
35.0% federal
statutory
rate) (2) 10 (9) 43
--- --- --- ---
After-tax
FAS/CAS
Pension
Adjustment 4 (20) 18 (80)
Diluted Shares 388.4 416.4 395.7 426.5
----- ----- ----- -----
Per share
impact of the
FAS/CAS
Pension
Adjustment $0.01 $(0.05) $0.04 $(0.19)
===== ====== ===== ======
2010 Guidance
-------------
Low end High end
of range of range
-------- --------
Diluted earnings per share from
continuing operations
attributable to Raytheon
Company common stockholders $4.75 $4.90
Less: Per share impact of the
FAS/CAS Pension Adjustment** (0.38) (0.38)
----- -----
FAS/CAS Adjusted EPS *** $5.13 $5.28
===== =====
** FAS/CAS Pension Adjustment $(220) $(220)
Tax affect (at 35.0% federal
statutory rate) 77 77
--- ---
After-tax FAS/CAS Pension
Adjustment (143) (143)
Diluted Shares 382.0 377.0
----- -----
Per share impact of the FAS/CAS
Pension Adjustment $(0.38) $(0.38)
====== ======
* Fourth quarter and full-year 2008 EPS from continuing operations
includes the $45 million ($69 million pretax) unfavorable adjustment
due to the impact of pension investment returns on existing
contracts in 2008.
FAS/CAS Adjusted Income from Continuing Operations attributable to
Raytheon Company common stockholders Non-GAAP Reconciliation
Fourth Quarter Full Year
-------------- ---------
2009 2008 2009 2008
---- ---- ---- ----
Income from Continuing
Operations attributable to
Raytheon Company common
stockholders $504 $421 $1,936 $1,674
FAS/CAS Pension Adjustment
(Tax affected at 35.0%
federal statutory rate) (4) 20 (18) 80
--- --- --- ---
FAS/CAS Adjusted Income
from Continuing Operations
attributable to Raytheon
common stockholders***
$500 $441 $1,918 $1,754
==== ==== ====== ======
*** 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. FAS/CAS Adjusted
EPS is defined as EPS from continuing operations attributable to
Raytheon Company common stockholders excluding the earnings per
share impact of the FAS/CAS pension adjustment. FAS/CAS 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
impact of the FAS/CAS pension adjustment. We are providing these
measures, which exclude the impact of the FAS/CAS pension
adjustment, 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.
Attachment G
Raytheon Company
Preliminary Return on Invested Capital Non-GAAP Financial Measure
Fourth Quarter 2009
We define Return on Invested Capital (ROIC) as income from continuing
operations excluding the after-tax affect of the FAS/CAS Pension
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. 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
(In millions, except
percentages) 2009 2010 Initial Guidance
---- ---------------------
Low end High end
of range of range
-------- --------
Income from continuing
operations $1,977
FAS/CAS Pension
Adjustment, after-tax * (18)
Net interest expense,
after-tax * 71 Combined Combined
Lease expense, after-tax * 66
---
Return $2,096 $2,155 $2,200
------ ------ ------
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 35.0%
** 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
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