Raytheon Reports Solid Second Quarter 2013 Results

-- Adjusted EPS(1) of $1.64, up 4 percent; EPS from continuing operations was $1.50, up 6 percent

-- Adjusted Operating Margin(1) of 13.7 percent and reported operating margin of 12.5 percent, both up 10 basis points

-- Net sales of $6.1 billion, up 2 percent

-- Increased full-year 2013 guidance for EPS

Jul 25, 2013, 07:00 ET from Raytheon Company

WALTHAM, Mass., July 25, 2013 /PRNewswire/ -- Raytheon Company (NYSE: RTN) announced second quarter 2013 Adjusted EPS1 of $1.64 per diluted share compared to $1.57 per diluted share in the second quarter 2012, up 4 percent. Second quarter 2013 EPS from continuing operations was $1.50 compared to $1.41 in the second quarter 2012, up 6 percent. The second quarter 2012 Adjusted EPS1 has been revised to include the favorable $0.02 impact for the 2012 research and development (R&D) tax credit approved by Congress in January 2013. In addition, an unfavorable FAS/CAS Adjustment of $0.14 has been excluded in both second quarters 2013 and 2012 Adjusted EPS1. The increase in both Adjusted EPS1 and EPS from continuing operations was primarily driven by operational improvements and capital deployment actions.

"Our world class technology and innovation have positioned us well to meet the global security needs of our customers, and strong program execution drove solid operating performance in the second quarter," said William H. Swanson, Raytheon's Chairman and CEO.

Net sales for the second quarter 2013 were $6,115 million, up 2 percent from $5,992 million in the second quarter 2012. 

Operating cash flow from continuing operations for the second quarter 2013 was an outflow of $41 million compared to an outflow of $259 million for the second quarter 2012. The increase in operating cash flow from continuing operations in the second quarter 2013 compared to the second quarter 2012 was primarily due to the timing of required pension contributions.

In the second quarter 2013, the Company repurchased 3.4 million shares of common stock for $225 million as part of its previously announced share repurchase program.  Year-to-date 2013, the Company repurchased 7.6 million shares of common stock for $450 million.

The Company ended the second quarter 2013 with $1.3 billion of net debt. Net debt is defined as total debt less cash and cash equivalents and short-term investments.

_________________________________

1 Adjusted EPS is diluted EPS from continuing operations attributable to Raytheon Company common stockholders and Adjusted Operating Margin is total operating margin, in each case, excluding the impact of the FAS/CAS Adjustment, and from time to time, certain other items. In addition, the Q2 2012 Adjusted EPS amount has been revised to include the favorable $0.02 impact for the research and development (R&D) tax credit, approved by Congress in January 2013, that relates to 2012. 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

%

Six Months

%

($ in millions, except per share data)

2013

2012

Change

2013

2012

Change

Net Sales

$

6,115

$

5,992

2.1%

$

11,994

$

11,930

0.5%

Income from Continuing Operations attributable to

   Raytheon Company

$

488

$

472

3.4%

$

978

$

922

6.1%

Adjusted Income*

$

535

$

524

2.1%

$

1,046

$

1,026

1.9%

EPS from Continuing Operations

$

1.50

$

1.41

6.4%

$

2.99

$

2.74

9.1%

Adjusted EPS*

$

1.64

$

1.57

4.5%

$

3.20

$

3.05

4.9%

Operating Cash Flow from Continuing Operations

$

(41)

$

(259)

$

381

$

(148)

Workdays in Fiscal Reporting Calendar

64

64

127

128

* Adjusted Income is income from continuing operations attributable to Raytheon Company common stockholders and Adjusted EPS is diluted EPS from continuing operations attributable to Raytheon Company common stockholders, in each case, excluding the after-tax impact of the FAS/CAS Adjustment and, from time to time, certain other items. In addition to the FAS/CAS Adjustment, Six Months 2013 Adjusted EPS excludes the $0.08 impact of the 2012 R&D tax credit. In addition, the Q2 2012 and Six Months 2012 Adjusted EPS amounts have been revised to include the favorable $0.02 and $0.04 impact, respectively, for the 2012 R&D tax credit. Adjusted Income and Adjusted EPS 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

($ in millions)

2nd Quarter

Six Months

2013

2012

2013

2012

Bookings                            

$

5,324

$

6,157

$

8,930

$

11,319

 

Backlog

($ in millions)

Period Ending

Q2 2013

Q2 2012

2012

Backlog

$

32,435

$

33,923

$

36,181

Funded Backlog                  

$

22,169

$

23,085

$

24,047

 

The Company had bookings of $5.3 billion in the second quarter 2013 and ended the second quarter 2013 with a backlog of $32.4 billion, compared to $33.9 billion at the end of the second quarter 2012.

Outlook

The Company has updated its financial outlook for 2013 and increased guidance for EPS. The 2013 outlook reflects the Company's current expectations of the effects of sequestration under the Budget Control Act (BCA) of 2011. Charts containing additional information on the Company's 2013 outlook are available on the Company's website at www.raytheon.com/ir

 

2013 Financial Outlook

Current

Prior (4/25/13)

Net Sales ($B)

 23.5 - 23.7*

 23.2 - 23.7

FAS/CAS Adjustment ($M)

(286)

(286)

Interest Expense, net ($M)

(200) - (210)

 (200) - (210)

Diluted Shares (M)

323 - 324*

324 - 327

Effective Tax Rate

 ~29%*

 ~29.5%

EPS from Continuing Operations

$5.51 - $5.61*

$5.26 - $5.41

Adjusted EPS**

$6.00 - $6.10*

$5.75 - $5.90

Operating Cash Flow from Continuing Operations ($B)

 2.1 - 2.3

 2.1 - 2.3

* Denotes change from prior guidance.

** Adjusted EPS is diluted EPS from continuing operations attributable to Raytheon Company common stockholders, excluding the after-tax impact of the FAS/CAS Adjustment and, from time to time, certain other items. In addition to the FAS/CAS Adjustment, 2013 Adjusted EPS guidance also excludes the impact of the 2012 R&D tax credit. See attachment F for a reconciliation of this measure and a discussion of why the Company is presenting this information.

 

Segment Results

As previously announced, effective April 1, 2013, the Company consolidated its structure. The new structure consists of the following four businesses: Integrated Defense Systems (IDS); Intelligence, Information and Services (IIS); Missile Systems (MS); and Space and Airborne Systems (SAS). The Company's reportable segments for the second quarter ending June 30, 2013 are consistent with the new structure.  All segment data has been recast to reflect this consolidation.

 

Integrated Defense Systems

2nd Quarter

Six Months

($ in millions)

2013

2012

% Change

2013

2012

% Change

Net Sales

$

1,721

$

1,574

9%

$

3,317

$

3,152

5%

Operating Income

$

326

$

269

21%

$

588

$

507

16%

Operating Margin

18.9%

17.1%

17.7%

16.1%

 

Integrated Defense Systems (IDS) had second quarter 2013 net sales of $1,721 million, up 9 percent compared to $1,574 million in the second quarter 2012. The increase in net sales was primarily due to higher sales on various international air and missile defense programs. IDS recorded $326 million of operating income compared to $269 million in the second quarter 2012. The increase in operating income was primarily driven by international programs.

During the quarter, IDS booked $93 million for in-service support for the Collins class submarine for the Royal Australian Navy and $85 million on the Standard Terminal Automation Replacement System (STARS) program for the Federal Aviation Administration (FAA).

 

Intelligence, Information and Services

2nd Quarter

Six Months

($ in millions)

2013

2012

% Change

2013

2012

% Change

Net Sales

$

1,570

$

1,597

-2%

$

3,091

$

3,185

-3%

Operating Income

$

131

$

138

-5%

$

255

$

274

-7%

Operating Margin

8.3%

8.6%

8.2%

8.6%

 

Intelligence, Information and Services (IIS) had second quarter 2013 net sales of $1,570 million compared to $1,597 million in the second quarter 2012. IIS recorded $131 million of operating income compared to $138 million in the second quarter 2012.

During the quarter, IIS booked $582 million on domestic training programs and $117 million on foreign training programs in support of Warfighter FOCUS activities.  IIS also booked $252 million on a number of classified contracts.

 

Missile Systems

2nd Quarter

Six Months

($ in millions)

2013

2012

% Change

2013

2012

% Change

Net Sales

$

1,690

$

1,580

7%

$

3,326

$

3,181

5%

Operating Income

$

213

$

209

2%

$

427

$

430

-1%

Operating Margin

12.6%

13.2%

12.8%

13.5%

 

Missile Systems (MS) had second quarter 2013 net sales of $1,690 million, up 7 percent compared to $1,580 million in the second quarter 2012. The increase in net sales was primarily driven by higher sales on Standard Missile-3 (SM-3) and an international Paveway program. MS recorded $213 million of operating income compared to $209 million in the second quarter 2012.

During the quarter, MS booked $543 million for Advanced Medium-Range Air-to-Air Missiles (AMRAAM) for the U.S. Air Force, the U.S. Navy and international customers, $228 million for SM-3 for the Missile Defense Agency (MDA), $224 million for the Exoatmospheric Kill Vehicle (EKV) for the MDA, $132 million for Paveway for international customers, and $98 million for the Joint Stand-off Weapon (JSOW) for the U.S. Navy and international customers. 

 

Space and Airborne Systems

2nd Quarter

Six Months

($ in millions)

2013

2012

% Change

2013

2012

% Change

Net Sales

$

1,620

$

1,709

-5%

$

3,202

$

3,325

-4%

Operating Income

$

216

$

246

-12%

$

443

$

469

-6%

Operating Margin

13.3%

14.4%

13.8%

14.1%

 

Space and Airborne Systems (SAS) had second quarter 2013 net sales of $1,620 million compared to $1,709 million in the second quarter 2012. The change in net sales was primarily due to lower volume on classified programs. SAS recorded $216 million of operating income compared to $246 million in the second quarter 2012. The change in operating income was primarily due to prior year favorable program efficiencies, a change in contract mix and lower volume.

During the quarter, SAS booked $78 million for the production of Electronic Warfare Systems for an international customer. SAS also booked $351 million on a number of classified contracts.

As previously announced on July 8, 2013, SAS was awarded $279 million to develop the Next Generation Jammer (NGJ) for the U.S. Navy.

About Raytheon Raytheon Company, with 2012 sales of $24 billion and 68,000 employees worldwide, is a technology and innovation leader specializing in defense, security and civil markets throughout the world. With a history of innovation spanning 91 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. Raytheon is headquartered in Waltham, Mass. For more about Raytheon, visit us at www.raytheon.com and follow us on Twitter @raytheon.

Conference Call on the Second Quarter 2013 Financial Results Raytheon's financial results conference call will be held on Thursday, July 25, 2013 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) 510-0712 in the U.S. or (617) 597-5380 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 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 due to budgetary constraints, spending cuts resulting from sequestration under the Budget Control Act of 2011, or otherwise, 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 and cyber 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.

 

Attachment A

Raytheon Company

Preliminary Statement of Operations Information

Second Quarter 2013

(In millions, except per share amounts)

Three Months Ended

Six Months Ended

30-Jun-13

01-Jul-12

30-Jun-13

01-Jul-12

Net sales

$

6,115

$

5,992

$

11,994

$

11,930

Operating expenses

   Cost of sales

4,753

4,652

9,358

9,311

   Administrative and selling expenses

420

404

828

809

   Research and development expenses

176

194

336

362

Total operating expenses

5,349

5,250

10,522

10,482

Operating income

766

742

1,472

1,448

Non-operating (income) expense, net

   Interest expense

53

50

106

100

   Interest income

(3)

(1)

(6)

(3)

   Other (income) expense, net

3

3

(4)

(5)

Total non-operating (income) expense, net

53

52

96

92

Income from continuing operations before taxes

713

690

1,376

1,356

Federal and foreign income taxes

220

219

387

431

Income from continuing operations

493

471

989

925

Income (loss) from discontinued operations, net of tax

(1)

(2)

(3)

Net income

493

470

987

922

Less: Net income (loss) attributable to noncontrolling

   interests in subsidiaries

5

(1)

11

3

Net income attributable to Raytheon Company

$

488

$

471

$

976

$

919

Basic earnings (loss) per share attributable to Raytheon

 Company common stockholders:

   Income from continuing operations

$

1.50

$

1.41

$

3.00

$

2.75

   Income (loss) from discontinued operations, net of tax

(0.01)

(0.01)

   Net income

1.50

1.41

2.99

2.74

Diluted earnings (loss) per share attributable to Raytheon

 Company common stockholders:

   Income from continuing operations

$

1.50

$

1.41

$

2.99

$

2.74

   Income (loss) from discontinued operations, net of tax

(0.01)

(0.01)

   Net income

1.50

1.41

2.99

2.73

Amounts attributable to Raytheon Company common

 stockholders:

   Income from continuing operations

$

488

$

472

$

978

$

922

   Income (loss) from discontinued operations, net of tax

(1)

(2)

(3)

   Net income

$

488

$

471

$

976

$

919

Average shares outstanding

   Basic

324.9

333.4

326.1

335.4

   Diluted

325.6

334.4

326.9

336.5

 

Attachment B

Raytheon Company

Preliminary Segment Information

Second Quarter 2013

Operating Income

Net Sales (1)

Operating Income (1)

As a Percent of Net Sales (1)

(In millions, except percentages)

Three Months Ended

Three Months Ended

Three Months Ended

30-Jun-13

01-Jul-12

30-Jun-13

01-Jul-12

30-Jun-13

01-Jul-12

Integrated Defense Systems

 

$

1,721

$

1,574

$

326

 

$

269

18.9%

17.1%

Intelligence, Information and Services

1,570

1,597

131

138

8.3%

8.6%

Missile Systems

1,690

 

1,580

213

209

12.6%

13.2%

Space and Airborne Systems

1,620

 

1,709

216

246

13.3%

14.4%

FAS/CAS Adjustment

 

(72)

(71)

Corporate and Eliminations

(486)

(468)

(48)

(49)

Total

$

6,115

$

5,992

$

766

$

742

12.5%

12.4%

(1) These amounts are revised to reflect our segment consolidation.

Operating Income

Net Sales (1)

Operating Income (1)

As a Percent of Net Sales (1)

(In millions, except percentages)

Six Months Ended

Six Months Ended

Six Months Ended

30-Jun-13

01-Jul-12

30-Jun-13

01-Jul-12

30-Jun-13

01-Jul-12

Integrated Defense Systems

$

3,317

$

3,152

$

588

$

507

17.7%

16.1%

Intelligence, Information and Services

3,091

3,185

255

274

8.2%

8.6%

Missile Systems

3,326

3,181

427

430

12.8%

13.5%

Space and Airborne Systems

3,202

3,325

443

469

13.8%

14.1%

FAS/CAS Adjustment

(143)

(141)

Corporate and Eliminations

(942)

(913)

(98)

(91)

Total

$

11,994

$

11,930

$

1,472

$

1,448

12.3%

12.1%

(1) These amounts are revised to reflect our segment consolidation.

 

Attachment B - Pro Forma

Raytheon Company

Pro-Forma Segment Information

Full Year 2011, Quarters within and Full Year 2012, and First Quarter 2013

As previously announced, effective April 1, 2013, we consolidated our structure. Our new structure consists of the following four businesses: Integrated Defense Systems (IDS); Intelligence, Information and Services (IIS); Missile Systems (MS); and Space and Airborne Systems (SAS). The amounts, discussion and presentation of our business segments, including eliminations for intersegment activity as set forth in our Form 10-Q, reflect our new structure.

Net Sales

Net Sales

(In millions)

Three Months Ended

Twelve Months Ended

31-Mar-13

31-Dec-12

30-Sep-12

01-Jul-12

01-Apr-12

31-Dec-12

31-Dec-11

Integrated Defense Systems

$

1,596

$

1,730

$

1,610

$

1,574

$

1,578

$

6,492

$

6,441

Intelligence, Information and

   Services

1,521

1,603

1,547

1,597

1,588

6,335

6,470

Missile Systems

1,636

1,781

1,677

1,580

1,601

6,639

6,801

Space and Airborne Systems

1,582

1,820

1,678

1,709

1,616

6,823

6,818

Corporate and Eliminations

(456)

(495)

(467)

(468)

(445)

(1,875)

(1,739)

Total

$

5,879

$

6,439

$

6,045

$

5,992

$

5,938

$

24,414

$

24,791

Operating Income

Operating Income

(In millions)

Three Months Ended

Twelve Months Ended

31-Mar-13

31-Dec-12

30-Sep-12

01-Jul-12

01-Apr-12

31-Dec-12

31-Dec-11

Integrated Defense Systems

$

262

$

262

$

278

$

269

$

238

$

1,047

$

998

Intelligence, Information and

   Services

124

136

126

138

136

536

480

Missile Systems

214

198

233

209

221

861

939

Space and Airborne Systems

227

283

236

246

223

988

951

FAS/CAS Adjustment

(71)

(67)

(47)

(71)

(70)

(255)

(337)

Corporate and Eliminations

(50)

(57)

(40)

(49)

(42)

(188)

(201)

Total

$

706

$

755

$

786

$

742

$

706

$

2,989

$

2,830

Operating Income 

Operating Income

As a Percent of Net Sales 

As a Percent of Net Sales

Three Months Ended 

Twelve Months Ended

31-Mar-13 

31-Dec-12 

30-Sep-12 

01-Jul-12 

01-Apr-12 

31-Dec-12 

31-Dec-11

Integrated Defense Systems 

16.4%

15.1%

17.3%

17.1%

15.1%

16.1%

15.5%

Intelligence, Information and

   Services 

8.2%

8.5%

8.1%

8.6%

8.6%

8.5%

7.4%

Missile Systems 

13.1%

11.1%

13.9%

13.2%

13.8%

13.0%

13.8%

Space and Airborne Systems 

14.3%

15.5%

14.1%

14.4%

13.8%

14.5%

13.9%

FAS/CAS Adjustment

Corporate and Eliminations

Total 

12.0%

11.7%

13.0%

12.4%

11.9%

12.2%

11.4%

 

Attachment C

Raytheon Company

Other Preliminary Information

Second Quarter 2013

(In millions)

Funded Backlog (1) 

Total Backlog (1)

30-Jun-13 

31-Dec-12 

30-Jun-13 

31-Dec-12

Integrated Defense Systems 

$

8,295

$

9,188

$

9,913

$

11,656

Intelligence, Information and Services                   

2,531

2,848

5,754

6,409

Missile Systems 

6,789

7,535

9,695

10,676

Space and Airborne Systems 

4,554

4,476

7,073

7,440

Total 

$

22,169

$

24,047

$

32,435

$

36,181

(1) These amounts are revised to reflect segment consolidation.

Bookings 

Bookings

Three Months Ended 

Six Months Ended

30-Jun-13 

01-Jul-12 

30-Jun-13 

01-Jul-12

Total Bookings 

$

5,324

$

6,157

$

8,930

$

11,319

 

Attachment C - Pro Forma Raytheon Company Pro Forma Other Information Full Year 2011, Quarters within and Full Year 2012, and First Quarter 2013

As previously announced, effective April 1, 2013, we consolidated our structure. Our new structure consists of the following four businesses: Integrated Defense Systems (IDS); Intelligence, Information and Services (IIS); Missile Systems (MS); and Space and Airborne Systems (SAS). The amounts, discussion and presentation of our business segments, including eliminations for intersegment activity as set forth in our Form 10-Q, reflect our new structure.

(In millions)

Funded Backlog

31-Mar-13

31-Dec-12

30-Sep-12

01-Jul-12

01-Apr-12

31-Dec-11

Integrated Defense Systems

$

8,841

$

9,188

$

8,171

$

8,530

$

8,714

$

8,512

Intelligence, Information and Services

2,459

2,848

3,029

2,991

2,878

2,821

Missile Systems

6,656

7,535

7,069

7,037

7,171

6,957

Space and Airborne Systems

4,567

4,476

4,617

4,527

4,207

4,172

Total

$

22,523

$

24,047

$

22,886

$

23,085

$

22,970

$

22,462

(In millions)

Total Backlog

31-Mar-13

31-Dec-12

30-Sep-12

01-Jul-12

01-Apr-12

31-Dec-11

Integrated Defense Systems

$

10,924

$

11,656

$

10,150

$

10,358

$

10,863

$

11,547

Intelligence, Information and Services

5,831

6,409

6,853

6,413

6,441

7,027

Missile Systems

9,648

10,676

10,476

9,655

9,300

9,446

Space and Airborne Systems

7,143

7,440

7,536

7,497

7,699

7,292

Total

$

33,546

$

36,181

$

35,015

$

33,923

$

34,303

$

35,312

Bookings

Bookings

(In millions)

Three Months Ended

Twelve Months Ended

31-Mar-13

31-Dec-12

30-Sep-12

01-Jul-12

01-Apr-12

31-Dec-12

31-Dec-11

Integrated Defense Systems

$

926

$

3,229

$

1,361

$

1,148

$

895

$

6,633

$

7,605

Intelligence, Information and Services

830

1,189

1,870

1,520

891

5,470

6,158

Missile Systems

811

1,947

2,418

1,977

1,452

7,794

6,747

Space and Airborne Systems

1,039

1,527

1,644

1,512

1,924

6,607

6,045

Total

$

3,606

$

7,892

$

7,293

$

6,157

$

5,162

$

26,504

$

26,555

 

Attachment D

Raytheon Company

Preliminary Balance Sheet Information

Second Quarter 2013

(In millions)

30-Jun-13

31-Dec-12

Assets

Current assets

   Cash and cash equivalents

$

2,467

$

3,188

   Short-term investments

995

856

   Contracts in process, net

5,156

4,543

   Inventories

454

381

   Deferred taxes

90

96

   Prepaid expenses and other current assets

114

182

      Total current assets

9,276

9,246

Property, plant and equipment, net

1,924

1,986

Deferred taxes

1,140

1,367

Goodwill

12,764

12,756

Other assets, net

1,272

1,331

         Total assets

$

26,376

$

26,686

Liabilities and Equity

Current liabilities

   Advance payments and billings in excess of costs incurred

$

2,140

$

2,398

   Accounts payable

1,164

1,348

   Accrued employee compensation

927

1,014

   Other accrued expenses

1,223

1,142

      Total current liabilities

5,454

5,902

Accrued retiree benefits and other long-term liabilities

7,443

7,854

Deferred taxes

10

9

Long-term debt

4,732

4,731

Equity

 Raytheon Company stockholders' equity

   Common stock

3

3

   Additional paid-in capital

2,526

2,928

   Accumulated other comprehensive loss

(7,464)

(7,788)

   Retained earnings

13,503

12,883

      Total Raytheon Company stockholders' equity

8,568

8,026

   Noncontrolling interests in subsidiaries

169

164

      Total equity

8,737

8,190

         Total liabilities and equity

$

26,376

$

26,686

 

Attachment E

Raytheon Company

Preliminary Cash Flow Information

Second Quarter 2013

(In millions)

Three Months Ended

Six Months Ended

30-Jun-13

01-Jul-12

30-Jun-13

01-Jul-12

Net income

$

493

$

470

$

987

$

922

Loss (income) from discontinued operations, net of tax

1

2

3

Income from continuing operations

493

471

989

925

Depreciation

77

81

151

158

Amortization

36

35

70

70

Working capital (excluding pension and income taxes)*

(489)

(442)

(1,282)

(1,343)

Other long-term liabilities

4

(28)

(11)

(26)

Pension and other postretirement benefit plans

(45)

(313)

246

(59)

Other, net

(117)

(63)

218

127

      Net operating cash flow from continuing operations

$

(41)

$

(259)

381

(148)

Supplemental Cash Flow Information

Capital spending

$

(56)

$

(67)

(105)

(137)

Internal use software spending

(12)

(26)

(21)

(46)

Acquisitions

(14)

(14)

Dividends

(179)

(167)

(343)

(313)

Repurchases of common stock

(225)

(200)

(450)

(600)

* Working capital (excluding pension and income taxes) is a summation of changes in: contracts in process, net 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 Consolidated Statements of Cash Flows.

 

Attachment F

Raytheon Company

Non-GAAP Financial Measures - Adjusted EPS, Adjusted Income and Adjusted Operating Margin

Second Quarter 2013

Adjusted EPS Non-GAAP Reconciliation

2013

2013

(In millions, except per share amounts)

Current Guidance

Prior Guidance

Three Months Ended

Six Months Ended

Low end

High end

Low end

High end

30-Jun-13

01-Jul-12

30-Jun-13

01-Jul-12

of range

of range

of range

of range

Diluted EPS from continuing operations attributable to

Raytheon Company common stockholders

$

1.50

$

1.41

$

2.99

$

2.74

$

5.51

$

5.61

$

5.26

$

5.41

Per share impact of the FAS/CAS Adjustment (A)

0.14

0.14

0.28

0.27

0.57

0.58

0.57

0.57

Per share impact of the 2012 research and development

(R&D) tax credit (B)

0.02

(0.08)

0.04

(0.08)

(0.08)

(0.08)

(0.08)

Adjusted EPS (2), (3)

$

1.64

$

1.57

$

3.20

$

3.05

$

6.00

$

6.10

$

5.75

$

5.90

(A)

FAS/CAS Adjustment

$

72

$

71

$

143

$

141

$

286

$

286

$

286

$

286

      Tax effect (1)

(25)

(25)

(50)

(49)

(100)

(100)

(100)

(100)

After-tax impact

47

46

93

92

186

186

186

186

Diluted shares

325.6

334.4

326.9

336.5

324.0

323.0

327.0

324.0

Per share impact

$

0.14

$

0.14

$

0.28

$

0.27

$

0.57

$

0.58

$

0.57

$

0.57

(B)

2012 R&D tax credit

$

$

6

$

(25)

$

12

$

(25)

$

(25)

$

(25)

$

(25)

Diluted shares

334.4

326.9

336.5

324.0

323.0

327.0

324.0

Per share impact

$

$

0.02

$

(0.08)

$

0.04

$

(0.08)

$

(0.08)

$

(0.08)

$

(0.08)

Adjusted Income Non-GAAP Reconciliation

(In millions)

Three Months Ended

Six Months Ended

30-Jun-13

01-Jul-12

30-Jun-13

01-Jul-12

Income from continuing operations attributable to Raytheon

   Company common stockholders

$

488

$

472

$

978

$

922

FAS/CAS Adjustment (1)

47

46

93

92

2012 R&D tax credit

6

(25)

12

Adjusted Income (2), (4)

$

535

$

524

$

1,046

$

1,026

Adjusted Operating Margin Non-GAAP Reconciliation

2013

2013

Current Guidance

Prior Guidance

Three Months Ended

Six Months Ended

Low end

High end

Low end

High end

30-Jun-13

01-Jul-12

30-Jun-13

01-Jul-12

of range

of range

of range

of range

Operating Margin

12.5%

12.4%

12.3%

12.1%

11.7

%

11.8

%

11.4

%

11.6

%

Impact of the FAS/CAS Adjustment

1.2%

1.2%

1.2%

1.2%

1.2

%

1.2

%

1.2

%

1.2

%

Adjusted Operating Margin (2), (5)

13.7%

13.6%

13.5%

13.3%

12.9

%

13.0

%

12.6

%

12.8

%

(1)

Tax effected at 35% federal statutory tax rate.

(2)

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. These amounts exclude the FAS/CAS Adjustment and, from time to time, certain other items. We are providing these measures because management uses them for the purposes of evaluating and forecasting the Company's financial performance and believes that they provide additional insights into the Company's underlying business performance. We also believe that they allow 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 and postretirement benefit (PRB) costs and to better compare our operating performance to others in the industry on that same basis. Amounts may not recalculate directly due to rounding.

(3)

Adjusted EPS is diluted EPS from continuing operations attributable to Raytheon Company common stockholders excluding the EPS impact of the FAS/CAS Adjustment and, from time to time, certain other items. Six Months Ended 2013 Adjusted EPS also excludes the earnings per share impact of an R&D tax credit that relates to 2012. In addition, the Q2 2012 and Six Months Ended 2012 Adjusted EPS amount has been revised to include the favorable impact for the 2012 R&D tax credit. In January 2013, Congress approved legislation that included the extension of the R&D tax credit. The legislation retroactively reinstated the R&D tax credit for 2012 and extended it through December 31, 2013. As a result, we recorded the 2012 benefit in the first quarter of 2013.

(4)

Adjusted Income is income from continuing operations attributable to Raytheon Company common stockholders excluding the after-tax impact of the FAS/CAS Adjustment and, from time to time, certain other items. Six Months Ended 2013 Adjusted Income also excludes the R&D tax credit that relates to 2012, as discussed above.  Q2 2012 and Six Months Ended 2012 Adjusted Income also includes the 2012 R&D tax credit as discussed above.

(5)

Adjusted Operating Margin is defined as total operating margin excluding the margin impact of the FAS/CAS Adjustment and, from time to time, certain other items.

 

Raytheon Company Global Headquarters Waltham, Mass.

Investor Relations Contact Todd Ernst 781.522.5141

Media Contact Jon Kasle 781.522.5110

 

SOURCE Raytheon Company



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