Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - RAYTHEON CO/ | d337953d8k.htm |
Exhibit 99.1
|
Raytheon Company |
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| Global Headquarters | ||||
| Waltham, Mass. | ||||
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Investor Relations Contact |
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| Todd Ernst | ||||
| 781.522.5141 | ||||
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Media Contact |
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| Jon Kasle | ||||
| 781.522.5110 |
For Immediate Release
Raytheon Reports Solid First Quarter 2012 Results
| • | Adjusted EPS of $1.46, up 7 percent; EPS from continuing operations was $1.331 |
| • | Adjusted operating margin of 13.1 percent, up 60 basis points; reported operating margin of 11.9 percent1 |
| • | As previously announced, increased annual dividend by 16 percent to $2.00 per share |
| • | Increased full-year 2012 guidance for EPS |
WALTHAM, Mass., (April 26, 2012) – Raytheon Company (NYSE: RTN) announced first quarter 2012 Adjusted EPS of $1.46 per diluted share compared to $1.37 per diluted share in the first quarter 20111, up 7 percent. The increase was driven by capital deployment actions and operational improvements. First quarter 2012 EPS from continuing operations was $1.33 compared to $1.06 in the first quarter 2011. First quarter 2012 included an unfavorable FAS/CAS Adjustment of $0.14, compared with an unfavorable FAS/CAS Adjustment of $0.16 in the first quarter 2011. First quarter 2011 EPS from continuing operations also included a $0.16 unfavorable impact associated with the UKBA Letters of Credit (LOC) Adjustment2.
“Our focus on performance drove solid operating results in the first quarter,” said William H. Swanson, Raytheon’s Chairman and CEO. “These results reflect our ongoing commitment to providing best value in meeting our customers’ evolving requirements for affordable, innovative solutions.”
| 1 | Adjusted EPS is 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. 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. |
| 2 | See attachment F for a discussion of the previously disclosed UKBA LOC Adjustment. |
1
| Q1 2011 vs. Q1 2012 EPS Variance |
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| EPS | Adjusted EPS* |
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| Q1 2011 |
$ | 1.06 | $ | 1.37 | ||||
| Operational Improvements |
0.04 | 0.04 | ||||||
| Reduced Share Count |
0.09 | 0.09 | ||||||
| Other Items, net (primarily tax-related) |
(0.04 | ) | (0.04 | ) | ||||
| FAS/CAS Adjustment** |
0.02 | — | ||||||
| UKBA LOC Adjustment |
0.16 | — | ||||||
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| Q1 2012 |
$ | 1.33 | $ | 1.46 | ||||
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| * | Adjusted EPS is a non-GAAP financial measure. See attachment F for a reconciliation of this measure and a discussion of why the Company is presenting this information. Amounts may not add due to rounding. |
| ** | Represents the difference between the 2012 and 2011 FAS/CAS Adjustments of $(0.14) and $(0.16), respectively. |
Net sales for the first quarter 2012 were $5,938 million, compared to $6,052 million in the first quarter 2011.
Operating cash flow from continuing operations for the first quarter 2012 was $111 million compared to $60 million for the first quarter 2011.
In the first quarter 2012, the Company repurchased 7.9 million shares of common stock for $400 million as part of its previously announced share repurchase program. In addition, as announced in March 2012, the Company’s Board of Directors voted to increase the Company’s annual dividend rate by 16 percent from $1.72 to $2.00 per share, the eighth consecutive annual dividend increase.
The Company ended the first quarter 2012 with $1.1 billion of net debt. Net debt is defined as total debt less cash and cash equivalents.
2
| Summary Financial Results* |
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| 1st Quarter | ||||||||||||
| ($ in millions, except per share data) | 2012 | 2011 | % Change | |||||||||
| Net sales |
$ | 5,938 | $ | 6,052 | -2 | % | ||||||
| Income from continuing operations attributable to Raytheon Company |
$ | 450 | $ | 381 | 18 | % | ||||||
| Adjusted Income** |
$ | 496 | $ | 495 | — | |||||||
| EPS from continuing operations |
$ | 1.33 | $ | 1.06 | 25 | % | ||||||
| Adjusted EPS** |
$ | 1.46 | $ | 1.37 | 7 | % | ||||||
| Operating cash flow from cont. ops. |
$ | 111 | $ | 60 | ||||||||
| Workdays in fiscal reporting calendar |
64 | 64 | ||||||||||
| * | Excludes the results of Raytheon Airline Aviation Services (RAAS), the Company’s former turbo-prop commuter aircraft portfolio, which was reclassified to discontinued operations beginning in the first quarter of 2012. |
| ** | 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. 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 |
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| ($ in millions) | 1st Quarter | |||||||
| 2012 | 2011 | |||||||
| Bookings |
$ | 5,162 | $ | 5,103 | ||||
| Backlog |
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| ($ in millions) | Period Ending | |||||||||||
| Q1 2012 | 2011 | Q1 2011 | ||||||||||
| Backlog |
$ | 34,303 | $ | 35,312 | $ | 33,705 | ||||||
| Funded Backlog |
$ | 22,970 | $ | 22,462 | $ | 21,743 | ||||||
The Company ended the first quarter 2012 with a backlog of $34.3 billion, compared to $33.7 billion at the end of the first quarter 2011.
3
Outlook
The Company has updated its full-year 2012 outlook. Charts containing additional information on the Company’s 2012 outlook are available on the Company’s website at www.raytheon.com/ir.
| 2012 Financial Outlook | ||||
| Current | Prior (1/26/12) | |||
| Net Sales ($B) |
24.5 - 25.0 | 24.5 - 25.0 | ||
| FAS/CAS Adjustment ($M) |
(284) | (284) | ||
| Interest Expense, Net ($M) |
(190) - (200) | (190) - (200) | ||
| Diluted Shares (M) |
334 - 336* | 334 - 340 | ||
| Effective Tax Rate |
~32% | ~32% | ||
| EPS from Continuing Operations |
$5.00 - $5.15* | $4.90 - $5.05 | ||
| Adjusted EPS** |
$5.55 - $5.70* | $5.45 - $5.60 | ||
| Operating Cash Flow from Cont. Ops. ($B) |
1.6 - 1.8 | 1.6 - 1.8 | ||
| * | Denotes change from prior guidance |
| ** | Adjusted EPS is a non-GAAP financial measure. See attachment F for a reconciliation of this measure and a discussion of why the Company is presenting this information. |
Segment Results
The Company’s reportable segments are: Integrated Defense Systems, Intelligence and Information Systems, Missile Systems, Network Centric Systems, Space and Airborne Systems, and Technical Services.
| Integrated Defense Systems |
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| 1st Quarter | ||||||||||||
| ($ in millions) | 2012 | 2011 | % Change | |||||||||
| Net Sales |
$ | 1,220 | $ | 1,219 | — | |||||||
| Operating Income |
$ | 216 | $ | 193 | 12 | % | ||||||
| Operating Margin |
17.7 | % | 15.8 | % | ||||||||
Integrated Defense Systems (IDS) had first quarter 2012 net sales of $1,220 million compared to $1,219 million in the first quarter 2011. IDS recorded $216 million of operating income compared to $193 million in the first quarter 2011. The change in operating income was primarily due to favorable contract mix and improved program performance.
During the quarter, IDS booked $182 million to provide Patriot engineering services support for U.S. and international customers. IDS also booked $90 million to provide engineering services, production and support for the Aegis weapon system for the U.S. Navy.
4
| Intelligence and Information Systems |
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| 1st Quarter | ||||||||||||
| ($ in millions) | 2012 | 2011* | % Change | |||||||||
| Net Sales |
$ | 764 | $ | 750 | 2 | % | ||||||
| Operating Income |
$ | 62 | $ | (28 | ) | NM | ||||||
| Operating Margin |
8.1 | % | -3.7 | % | ||||||||
| * | First quarter 2011 includes a $80 million reduction to operating income due to the UKBA LOC Adjustment. |
NM = Not Meaningful
Intelligence and Information Systems (IIS) had first quarter 2012 net sales of $764 million compared to $750 million in the first quarter 2011. The change in net sales was primarily due to recent acquisitions in cybersecurity. IIS recorded $62 million of operating income compared to a $28 million loss in the first quarter 2011. The change in operating income was primarily due to the $80 million UKBA LOC Adjustment in the first quarter 2011. First quarter 2012 operating income included an insurance recovery for legal expenses.
During the quarter, IIS booked $284 million on a number of classified contracts.
| Missile Systems |
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| 1st Quarter | ||||||||||||
| ($ in millions) | 2012 | 2011 | % Change | |||||||||
| Net Sales |
$ | 1,351 | $ | 1,329 | 2 | % | ||||||
| Operating Income |
$ | 180 | $ | 155 | 16 | % | ||||||
| Operating Margin |
13.3 | % | 11.7 | % | ||||||||
Missile Systems (MS) had first quarter 2012 net sales of $1,351 million compared to $1,329 million in the first quarter 2011. The increase in net sales was primarily due to higher sales on Excalibur. MS recorded $180 million of operating income compared to $155 million in the first quarter 2011. The increase in operating income was primarily due to favorable contract mix and improved program performance.
During the quarter, MS booked $497 million for a Advanced Medium-Range Air-to-Air Missiles (AMRAAM) contract for the U.S. Air Force and international customers and $172 million for AIM-9X Sidewinder short range air-to-air missiles for the U.S. Navy and international customers. MS also booked $171 million for the development of Standard Missile-3 (SM-3) for the Missile Defense Agency (MDA) and $79 million for development on the Accelerated Improved Intercept Initiative (AI3) program for the U.S. Army.
5
| Network Centric Systems |
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| 1st Quarter | ||||||||||||
| ($ in millions) | 2012 | 2011 | % Change | |||||||||
| Net Sales |
$ | 1,000 | $ | 1,121 | -11 | % | ||||||
| Operating Income |
$ | 116 | $ | 160 | -28 | % | ||||||
| Operating Margin |
11.6 | % | 14.3 | % | ||||||||
Network Centric Systems (NCS) had first quarter 2012 net sales of $1,000 million compared to $1,121 million in the first quarter 2011. The change in net sales, as anticipated, was primarily due to lower sales on U.S. Army programs. NCS recorded $116 million of operating income compared to $160 million in the first quarter 2011. The change in operating income was primarily due to lower volume in the first quarter 2012 as well as production program efficiencies in the first quarter 2011.
During the quarter, NCS booked $81 million on the Navy Multiband Terminal (NMT) program for the U.S. Navy.
| Space and Airborne Systems |
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| 1st Quarter | ||||||||||||
| ($ in millions) | 2012 | 2011 | % Change | |||||||||
| Net Sales |
$ | 1,257 | $ | 1,265 | -1 | % | ||||||
| Operating Income |
$ | 173 | $ | 156 | 11 | % | ||||||
| Operating Margin |
13.8 | % | 12.3 | % | ||||||||
Space and Airborne Systems (SAS) had first quarter 2012 net sales of $1,257 million compared to $1,265 million in the first quarter 2011. SAS recorded $173 million of operating income compared to $156 million in the first quarter 2011. The increase in operating income was primarily due to improved program performance.
During the quarter, SAS booked $159 million to supply radar spare parts on APG-63 for an international customer, $99 million on a radar performance-based logistics (PBL) contract for international customers and $77 million for the production of radar warning receivers for the U.S. Navy. SAS also booked $925 million on a number of classified contracts.
6
| Technical Services |
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| 1st Quarter | ||||||||||||
| ($ in millions) | 2012 | 2011 | % Change | |||||||||
| Net Sales |
$ | 802 | $ | 799 | — | |||||||
| Operating Income |
$ | 71 | $ | 81 | -12 | % | ||||||
| Operating Margin |
8.9 | % | 10.1 | % | ||||||||
Technical Services (TS) had first quarter 2012 net sales of $802 million compared to $799 million in the first quarter 2011. TS recorded operating income of $71 million compared to $81 million in the first quarter 2011. First quarter 2011 operating income included a favorable contract modification, contract extension, and a legal settlement.
During the quarter, TS booked $119 million on foreign training programs and $68 million on domestic training programs in support of Warfighter FOCUS activities.
About Raytheon
Raytheon Company, with 2011 sales of $25 billion and 71,000 employees worldwide, is a technology and innovation leader specializing in defense, homeland security and other government markets throughout the world. With a history of innovation spanning 90 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 at @raytheon.
Conference Call on the First Quarter 2012 Financial Results
Raytheon’s financial results conference call will be held on Thursday, April 26, 2012 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.
7
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, 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.
# # #
8
Attachment A
Raytheon Company
Preliminary Statement of Operations Information*
First Quarter 2012
| (In millions, except per share amounts) | Three Months Ended | |||||||
| 01-Apr-12 | 03-Apr-11 | |||||||
| Net sales |
$ | 5,938 | $ | 6,052 | ||||
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| Operating expenses |
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| Cost of sales |
4,659 | 4,898 | ||||||
| Administrative and selling expenses |
405 | 426 | ||||||
| Research and development expenses |
168 | 139 | ||||||
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| Total operating expenses |
5,232 | 5,463 | ||||||
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| Operating income |
706 | 589 | ||||||
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| Non-operating (income) expense, net |
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| Interest expense |
50 | 43 | ||||||
| Interest income |
(2 | ) | (4 | ) | ||||
| Other (income) expense |
(8 | ) | — | |||||
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| Total non-operating (income) expense, net |
40 | 39 | ||||||
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| Income from continuing operations before taxes |
666 | 550 | ||||||
| Federal and foreign income taxes |
212 | 164 | ||||||
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| Income from continuing operations |
454 | 386 | ||||||
| Income (loss) from discontinued operations, net of tax |
(2 | ) | 3 | |||||
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| Net income |
452 | 389 | ||||||
| Less: Net income (loss) attributable to noncontrolling interests in subsidiaries |
4 | 5 | ||||||
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| Net income attributable to Raytheon Company |
$ | 448 | $ | 384 | ||||
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| Basic earnings (loss) per share attributable to Raytheon Company common stockholders: |
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| Income from continuing operations |
$ | 1.33 | $ | 1.07 | ||||
| Income (loss) from discontinued operations, net of tax |
— | 0.01 | ||||||
| Net income |
1.33 | 1.07 | ||||||
| Diluted earnings (loss) per share attributable to Raytheon Company common stockholders: |
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| Income from continuing operations |
$ | 1.33 | $ | 1.06 | ||||
| Income (loss) from discontinued operations, net of tax |
— | 0.01 | ||||||
| Net income |
1.32 | 1.06 | ||||||
| Amounts attributable to Raytheon Company common stockholders: |
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| Income from continuing operations |
$ | 450 | $ | 381 | ||||
| Income (loss) from discontinued operations, net of tax |
(2 | ) | 3 | |||||
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| Net income |
$ | 448 | $ | 384 | ||||
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| Average shares outstanding |
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| Basic |
337.5 | 357.4 | ||||||
| Diluted |
338.7 | 360.8 | ||||||
| * | This Preliminary Statement of Operations Information was prepared on the same basis as our annual consolidated financial statements, except for the reclassification of Raytheon Airline Aviation Services LLC (RAAS) as a discontinued operation. |
Attachment A - Pro Forma
Raytheon Company
Pro Forma Statement of Operations Information*
Quarters 2011
| (In millions, except per share amounts) | Three Months Ended | |||||||||||||||
| 03-Apr-11 | 03-Jul-11 | 02-Oct-11 | 31-Dec-11 | |||||||||||||
| Net sales |
$ | 6,052 | $ | 6,201 | $ | 6,116 | $ | 6,422 | ||||||||
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| Operating expenses |
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| Cost of sales |
4,898 | 4,933 | 4,815 | 5,018 | ||||||||||||
| Administrative and selling expenses |
426 | 436 | 426 | 384 | ||||||||||||
| Research and development expenses |
139 | 162 | 153 | 171 | ||||||||||||
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| Total operating expenses |
5,463 | 5,531 | 5,394 | 5,573 | ||||||||||||
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| Operating income |
589 | 670 | 722 | 849 | ||||||||||||
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| Non-operating (income) expense, net |
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| Interest expense |
43 | 43 | 41 | 45 | ||||||||||||
| Interest income |
(4 | ) | (3 | ) | (5 | ) | (2 | ) | ||||||||
| Other (income) expense |
— | 1 | 14 | (3 | ) | |||||||||||
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| Total non-operating (income) expense, net |
39 | 41 | 50 | 40 | ||||||||||||
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| Income from continuing operations before taxes |
550 | 629 | 672 | 809 | ||||||||||||
| Federal and foreign income taxes |
164 | 192 | 165 | 261 | ||||||||||||
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| Income from continuing operations |
386 | 437 | 507 | 548 | ||||||||||||
| Income (loss) from discontinued operations, net of tax |
3 | 8 | 3 | 4 | ||||||||||||
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| Net income |
389 | 445 | 510 | 552 | ||||||||||||
| Less: Net income (loss) attributable to noncontrolling interests in subsidiaries |
5 | 7 | 9 | 9 | ||||||||||||
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| Net income attributable to Raytheon Company |
$ | 384 | $ | 438 | $ | 501 | $ | 543 | ||||||||
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| Basic earnings (loss) per share attributable to Raytheon Company common stockholders: |
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| Income from continuing operations |
$ | 1.07 | $ | 1.21 | $ | 1.42 | $ | 1.56 | ||||||||
| Income (loss) from discontinued operations, net of tax |
0.01 | 0.02 | 0.01 | 0.02 | ||||||||||||
| Net income |
1.07 | 1.23 | 1.43 | 1.58 | ||||||||||||
| Diluted earnings (loss) per share attributable to Raytheon Company common stockholders: |
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| Income from continuing operations |
$ | 1.06 | $ | 1.20 | $ | 1.42 | $ | 1.56 | ||||||||
| Inome (loss) from discontinued operations, net of tax |
0.01 | 0.02 | 0.01 | 0.02 | ||||||||||||
| Net income |
1.06 | 1.23 | 1.43 | 1.57 | ||||||||||||
| Amounts attributable to Raytheon Company common stockholders: |
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| Income from continuing operations |
$ | 381 | $ | 430 | $ | 498 | $ | 539 | ||||||||
| Income (loss) from discontinued operations, net of tax |
3 | 8 | 3 | 4 | ||||||||||||
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| Net income |
$ | 384 | $ | 438 | $ | 501 | $ | 543 | ||||||||
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| Average shares outstanding |
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| Basic |
357.4 | 355.0 | 350.5 | 344.1 | ||||||||||||
| Diluted |
360.8 | 357.1 | 351.4 | 345.1 | ||||||||||||
| * | As previously disclosed in the Company’s 2011 Annual Report on Form 10-K, during the first quarter of 2012 we completed the disposal or abandonment of the remaining individual assets of our former turbo-prop commuter aircraft portfolio, Raytheon Airline Aviation Services LLC (RAAS), and all operations have ceased. As a result of the sale of the remaining operating assets, we have reported RAAS as a discontinued operation. This Pro Forma Statement of Operations Information has been prepared to reflect the reclassification of RAAS as a discontinued operation. |
Attachment A - Pro Forma
Raytheon Company
Pro Forma Statement of Operations Information*
Full Years 2011, 2010 and 2009
| (In millions, except per share amounts) | Twelve Months Ended | |||||||||||
| 31-Dec-11 | 31-Dec-10 | 31-Dec-09 | ||||||||||
| Net sales |
$ | 24,791 | $ | 25,150 | $ | 24,843 | ||||||
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| Operating expenses |
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| Cost of sales |
19,664 | 20,273 | 19,703 | |||||||||
| Administrative and selling expenses |
1,672 | 1,639 | 1,520 | |||||||||
| Research and development expenses |
625 | 625 | 565 | |||||||||
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| Total operating expenses |
21,961 | 22,537 | 21,788 | |||||||||
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| Operating income |
2,830 | 2,613 | 3,055 | |||||||||
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| Non-operating (income) expense, net |
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| Interest expense |
172 | 126 | 123 | |||||||||
| Interest income |
(14 | ) | (12 | ) | (8 | ) | ||||||
| Other (income) expense |
12 | 65 | 3 | |||||||||
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| Total non-operating (income) expense, net |
170 | 179 | 118 | |||||||||
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| Income from continuing operations before taxes |
2,660 | 2,434 | 2,937 | |||||||||
| Federal and foreign income taxes |
782 | 590 | 956 | |||||||||
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| Income from continuing operations |
1,878 | 1,844 | 1,981 | |||||||||
| Income (loss) from discontinued operations, net of tax |
18 | 35 | (5 | ) | ||||||||
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| Net income |
1,896 | 1,879 | 1,976 | |||||||||
| Less: Net income (loss) attributable to noncontrolling interests in subsidiaries |
30 | 39 | 41 | |||||||||
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| Net income attributable to Raytheon Company |
$ | 1,866 | $ | 1,840 | $ | 1,935 | ||||||
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| Basic earnings (loss) per share attributable to Raytheon Company common stockholders: |
||||||||||||
| Income from continuing operations |
$ | 5.25 | $ | 4.84 | 4.97 | |||||||
| Income (loss) from discontinued operations, net of tax |
0.05 | 0.09 | (0.02 | ) | ||||||||
| Net income |
5.30 | 4.94 | 4.96 | |||||||||
| Diluted earnings (loss) per share attributable to Raytheon Company common stockholders: |
||||||||||||
| Income from continuing operations |
$ | 5.22 | $ | 4.79 | 4.91 | |||||||
| Income (loss) from discontinued operations, net of tax |
0.05 | 0.09 | (0.02 | ) | ||||||||
| Net income |
5.28 | 4.88 | 4.89 | |||||||||
| Amounts attributable to Raytheon Company common stockholders: |
||||||||||||
| Income from continuing operations |
$ | 1,848 | $ | 1,805 | $ | 1,940 | ||||||
| Income (loss) from discontinued operations, net of tax |
18 | 35 | (5 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Net income |
$ | 1,866 | $ | 1,840 | $ | 1,935 | ||||||
|
|
|
|
|
|
|
|||||||
| Average shares outstanding |
||||||||||||
| Basic |
351.7 | 372.7 | 390.4 | |||||||||
| Diluted |
353.6 | 377.0 | 395.7 | |||||||||
| * | As previously disclosed in the Company’s 2011 Annual Report on Form 10-K, during the first quarter of 2012 we completed the disposal or abandonment of the remaining individual assets of our former turbo-prop commuter aircraft portfolio, Raytheon Airline Aviation Services LLC (RAAS), and all operations have ceased. As a result of the sale of the remaining operating assets, we have reported RAAS as a discontinued operation. This Pro Forma Statement of Operations Information has been prepared to reflect the reclassification of RAAS as a discontinued operation. |
Attachment B
Raytheon Company
Preliminary Segment Information*
First Quarter 2012
| (In millions, except percentages) | Net Sales Three Months Ended |
Operating Income Three Months Ended |
Operating
Income As a Percent of Net Sales Three Months Ended |
|||||||||||||||||||||
| 01-Apr-12 | 03-Apr-11 | 01-Apr-12 | 03-Apr-11 | 01-Apr-12 | 03-Apr-11 | |||||||||||||||||||
| Integrated Defense Systems |
$ | 1,220 | $ | 1,219 | $ | 216 | $ | 193 | 17.7 | % | 15.8 | % | ||||||||||||
| Intelligence and Information Systems |
764 | 750 | 62 | (28 | ) | 8.1 | % | -3.7 | % | |||||||||||||||
| Missile Systems |
1,351 | 1,329 | 180 | 155 | 13.3 | % | 11.7 | % | ||||||||||||||||
| Network Centric Systems |
1,000 | 1,121 | 116 | 160 | 11.6 | % | 14.3 | % | ||||||||||||||||
| Space and Airborne Systems |
1,257 | 1,265 | 173 | 156 | 13.8 | % | 12.3 | % | ||||||||||||||||
| Technical Services |
802 | 799 | 71 | 81 | 8.9 | % | 10.1 | % | ||||||||||||||||
| FAS/CAS Adjustment |
— | — | (70 | ) | (89 | ) | ||||||||||||||||||
| Corporate and Eliminations |
(456 | ) | (431 | ) | (42 | ) | (39 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total |
$ | 5,938 | $ | 6,052 | $ | 706 | $ | 589 | 11.9 | % | 9.7 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| * | This Preliminary Segment Information was prepared on the same basis as our annual consolidated financial statements, except for the reclassification of Raytheon Airline Aviation Services LLC (RAAS) as a discontinued operation. |
Attachment B - Pro Forma
Raytheon Company
Pro Forma Segment Information*
Quarters 2011 and Full Years 2011, 2010 and 2009
| (In millions, except percentages) | Net Sales Three Months Ended |
Net Sales Twelve Months Ended |
||||||||||||||||||||||||||
| 03-Apr-11 | 03-Jul-11 | 02-Oct-11 | 31-Dec-11 | 31-Dec-11 | 31-Dec-10 | 31-Dec-09 | ||||||||||||||||||||||
| Integrated Defense Systems |
$ | 1,219 | $ | 1,272 | $ | 1,176 | $ | 1,291 | $ | 4,958 | $ | 5,470 | $ | 5,525 | ||||||||||||||
| Intelligence and Information Systems |
750 | 752 | 760 | 753 | 3,015 | 2,757 | 3,204 | |||||||||||||||||||||
| Missile Systems |
1,329 | 1,366 | 1,413 | 1,482 | 5,590 | 5,732 | 5,561 | |||||||||||||||||||||
| Network Centric Systems |
1,121 | 1,135 | 1,104 | 1,137 | 4,497 | 4,918 | 4,822 | |||||||||||||||||||||
| Space and Airborne Systems |
1,265 | 1,344 | 1,305 | 1,341 | 5,255 | 4,830 | 4,582 | |||||||||||||||||||||
| Technical Services |
799 | 851 | 817 | 886 | 3,353 | 3,472 | 3,161 | |||||||||||||||||||||
| Corporate and Eliminations |
(431 | ) | (519 | ) | (459 | ) | (468 | ) | (1,877 | ) | (2,029 | ) | (2,012 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
$ | 6,052 | $ | 6,201 | $ | 6,116 | $ | 6,422 | $ | 24,791 | $ | 25,150 | $ | 24,843 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Operating Income Three Months Ended |
Operating Income Twelve Months Ended |
|||||||||||||||||||||||||||
| 03-Apr-11 | 03-Jul-11 | 02-Oct-11 | 31-Dec-11 | 31-Dec-11 | 31-Dec-10 | 31-Dec-09 | ||||||||||||||||||||||
| Integrated Defense Systems |
$ | 193 | $ | 203 | $ | 204 | $ | 236 | $ | 836 | $ | 870 | $ | 847 | ||||||||||||||
| Intelligence and Information Systems |
(28 | ) | 55 | 58 | 74 | 159 | (157 | ) | 252 | |||||||||||||||||||
| Missile Systems |
155 | 151 | 178 | 209 | 693 | 650 | 599 | |||||||||||||||||||||
| Network Centric Systems |
160 | 170 | 162 | 175 | 667 | 692 | 663 | |||||||||||||||||||||
| Space and Airborne Systems |
156 | 176 | 171 | 214 | 717 | 676 | 635 | |||||||||||||||||||||
| Technical Services |
81 | 72 | 75 | 84 | 312 | 297 | 212 | |||||||||||||||||||||
| FAS/CAS Adjustment |
(89 | ) | (90 | ) | (75 | ) | (83 | ) | (337 | ) | (187 | ) | 80 | |||||||||||||||
| Corporate and Eliminations |
(39 | ) | (67 | ) | (51 | ) | (60 | ) | (217 | ) | (228 | ) | (233 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
$ | 589 | $ | 670 | $ | 722 | $ | 849 | $ | 2,830 | $ | 2,613 | $ | 3,055 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Operating Income as a Percent of Net Sales Three Months Ended |
Operating Income as a Percent of Net Sales Twelve Months Ended |
|||||||||||||||||||||||||||
| 03-Apr-11 | 03-Jul-11 | 02-Oct-11 | 31-Dec-11 | 31-Dec-11 | 31-Dec-10 | 31-Dec-09 | ||||||||||||||||||||||
| Integrated Defense Systems |
15.8 | % | 16.0 | % | 17.3 | % | 18.3 | % | 16.9 | % | 15.9 | % | 15.3 | % | ||||||||||||||
| Intelligence and Information Systems |
-3.7 | % | 7.3 | % | 7.6 | % | 9.8 | % | 5.3 | % | -5.7 | % | 7.9 | % | ||||||||||||||
| Missile Systems |
11.7 | % | 11.1 | % | 12.6 | % | 14.1 | % | 12.4 | % | 11.3 | % | 10.8 | % | ||||||||||||||
| Network Centric Systems |
14.3 | % | 15.0 | % | 14.7 | % | 15.4 | % | 14.8 | % | 14.1 | % | 13.7 | % | ||||||||||||||
| Space and Airborne Systems |
12.3 | % | 13.1 | % | 13.1 | % | 16.0 | % | 13.6 | % | 14.0 | % | 13.9 | % | ||||||||||||||
| Technical Services |
10.1 | % | 8.5 | % | 9.2 | % | 9.5 | % | 9.3 | % | 8.6 | % | 6.7 | % | ||||||||||||||
| FAS/CAS Adjustment |
||||||||||||||||||||||||||||
| Corporate and Eliminations |
||||||||||||||||||||||||||||
| Total |
9.7 | % | 10.8 | % | 11.8 | % | 13.2 | % | 11.4 | % | 10.4 | % | 12.3 | % | ||||||||||||||
| * | As previously disclosed in the Company’s 2011 Annual Report on Form 10-K, during the first quarter of 2012 we completed the disposal or abandonment of the remaining individual assets of our former turbo-prop commuter aircraft portfolio, Raytheon Airline Aviation Services LLC (RAAS), and all operations have ceased. As a result of the sale of the remaining operating assets, we have reported RAAS as a discontinued operation. This Pro Forma Segment Information has been prepared to reflect the reclassification of RAAS as a discontinued operation. |
Attachment C
Raytheon Company
Other Preliminary Information
First Quarter 2012
| (In millions) | Funded Backlog | Total Backlog | ||||||||||||||
| 01-Apr-12 | 31-Dec-11 | 01-Apr-12 | 31-Dec-11 | |||||||||||||
| Integrated Defense Systems |
$ | 7,479 | $ | 7,100 | $ | 9,335 | $ | 9,766 | ||||||||
| Intelligence and Information Systems |
1,165 | 829 | 4,055 | 4,366 | ||||||||||||
| Missile Systems |
6,508 | 6,205 | 8,529 | 8,570 | ||||||||||||
| Network Centric Systems |
2,957 | 3,267 | 3,772 | 4,160 | ||||||||||||
| Space and Airborne Systems |
3,186 | 3,104 | 6,305 | 5,864 | ||||||||||||
| Technical Services |
1,675 | 1,957 | 2,307 | 2,586 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 22,970 | $ | 22,462 | $ | 34,303 | $ | 35,312 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Bookings Three Months Ended |
||||||||
| 01-Apr-12 | 03-Apr-11 | |||||||
| Total Bookings |
$ | 5,162 | $ | 5,103 | ||||
|
|
|
|
|
|||||
Attachment D
Raytheon Company
Preliminary Balance Sheet Information
First Quarter 2012
| (In millions) | ||||||||
| 01-Apr-12 | 31-Dec-11 | |||||||
| Assets |
||||||||
| Cash and cash equivalents |
$ | 3,541 | $ | 4,000 | ||||
| Contracts in process, net |
4,838 | 4,526 | ||||||
| Inventories |
395 | 336 | ||||||
| Deferred taxes |
229 | 221 | ||||||
| Prepaid expenses and other current assets |
182 | 226 | ||||||
|
|
|
|
|
|||||
| Total current assets |
9,185 | 9,309 | ||||||
| Property, plant and equipment, net |
1,979 | 2,006 | ||||||
| Deferred taxes |
575 | 657 | ||||||
| Goodwill |
12,544 | 12,544 | ||||||
| Other assets, net |
1,344 | 1,338 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 25,627 | $ | 25,854 | ||||
|
|
|
|
|
|||||
| Liabilities and Equity |
||||||||
| Current liabilities |
||||||||
| Advance payments and billings in excess of costs incurred |
$ | 2,360 | $ | 2,542 | ||||
| Accounts payable |
1,199 | 1,507 | ||||||
| Accrued employee compensation |
859 | 941 | ||||||
| Other accrued expenses |
1,313 | 1,140 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
5,731 | 6,130 | ||||||
| Accrued retiree benefits and other long-term liabilities |
6,787 | 6,774 | ||||||
| Deferred taxes |
4 | 5 | ||||||
| Long-term debt |
4,606 | 4,605 | ||||||
| Equity |
||||||||
| Raytheon Company stockholders’ equity |
||||||||
| Common stock |
3 | 3 | ||||||
| Additional paid-in capital |
11,774 | 11,676 | ||||||
| Accumulated other comprehensive loss |
(6,817 | ) | (7,001 | ) | ||||
| Treasury stock, at cost |
(8,562 | ) | (8,153 | ) | ||||
| Retained earnings |
11,938 | 11,656 | ||||||
|
|
|
|
|
|||||
| Total Raytheon Company stockholders’ equity |
8,336 | 8,181 | ||||||
| Noncontrolling interests in subsidiaries |
163 | 159 | ||||||
|
|
|
|
|
|||||
| Total equity |
8,499 | 8,340 | ||||||
|
|
|
|
|
|||||
| Total liabilities and equity |
$ | 25,627 | $ | 25,854 | ||||
|
|
|
|
|
|||||
Attachment E
Raytheon Company
Preliminary Cash Flow Information*
First Quarter 2012
| (In millions) | Three Months Ended | |||||||
| 01-Apr-12 | 03-Apr-11 | |||||||
| Net income (loss) |
$ | 452 | $ | 389 | ||||
| (Income) loss from discontinued operations, net of tax |
2 | (3 | ) | |||||
|
|
|
|
|
|||||
| Income (loss) from continuing operations |
454 | 386 | ||||||
| Depreciation |
77 | 75 | ||||||
| Amortization |
35 | 29 | ||||||
| Working capital (excluding pension and income taxes)** |
(901 | ) | (914 | ) | ||||
| Other long-term liabilities |
2 | 14 | ||||||
| Pension and other postretirement benefits |
254 | 257 | ||||||
| Other |
190 | 213 | ||||||
|
|
|
|
|
|||||
| Net operating cash flow |
111 | 60 | ||||||
| Discontinued operations |
4 | (45 | ) | |||||
| Capital spending |
(70 | ) | (50 | ) | ||||
| Internal use software spending |
(20 | ) | (26 | ) | ||||
| Acquisitions |
— | (500 | ) | |||||
| Dividends |
(146 | ) | (135 | ) | ||||
| Repurchases of common stock |
(400 | ) | (312 | ) | ||||
| Warrants exercised |
— | 13 | ||||||
| Other |
62 | 17 | ||||||
|
|
|
|
|
|||||
| Total cash flow |
$ | (459 | ) | $ | (978 | ) | ||
|
|
|
|
|
|||||
| * | This Preliminary Cash Flow Information was prepared on the same basis as our annual consolidated financial statements, except for the reclassification of Raytheon Airline Aviation Services LLC (RAAS) as a discontinued operation. |
| ** | Working capital (excluding pension and income taxes) is a summation of changes in: 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 E - Pro Forma
Raytheon Company
Pro Forma Cash Flow Information*
Quarters 2011
| (In millions) | Three Months Ended | |||||||||||||||
| 03-Apr-11 | 03-Jul-11 | 02-Oct-11 | 31-Dec-11 | |||||||||||||
| Net income |
$ | 389 | $ | 445 | $ | 510 | $ | 552 | ||||||||
| Loss (Income) from discontinued operations, net of tax |
(3 | ) | (8 | ) | (3 | ) | (4 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from continuing operations |
386 | 437 | 507 | 548 | ||||||||||||
| Depreciation |
75 | 76 | 79 | 81 | ||||||||||||
| Amortization |
29 | 35 | 34 | 35 | ||||||||||||
| Working capital (excluding pension and income taxes)** |
(914 | ) | (216 | ) | 257 | 1,060 | ||||||||||
| Other long-term liabilities |
14 | 5 | (74 | ) | 30 | |||||||||||
| Pension and other postretirement benefits |
257 | (249 | ) | (268 | ) | (500 | ) | |||||||||
| Other |
213 | (177 | ) | 310 | 32 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net operating cash flow |
60 | (89 | ) | 845 | 1,286 | |||||||||||
| Discontinued operations |
(45 | ) | 19 | 25 | 38 | |||||||||||
| Capital spending |
(50 | ) | (57 | ) | (90 | ) | (143 | ) | ||||||||
| Internal use software spending |
(26 | ) | (24 | ) | (24 | ) | (23 | ) | ||||||||
| Acquisitions |
(500 | ) | (50 | ) | (1 | ) | (94 | ) | ||||||||
| Dividends |
(135 | ) | (153 | ) | (152 | ) | (148 | ) | ||||||||
| Repurchases of common stock |
(312 | ) | (313 | ) | (312 | ) | (313 | ) | ||||||||
| Debt issuance |
— | — | — | 992 | ||||||||||||
| Warrants exercised |
13 | 110 | — | — | ||||||||||||
| Other |
17 | 13 | (2 | ) | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total cash flow |
$ | (978 | ) | $ | (544 | ) | $ | 289 | $ | 1,595 | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| * | As previously disclosed in the Company’s 2011 Annual Report on Form 10-K, during the first quarter of 2012 we completed the disposal or abandonment of the remaining individual assets of our former turbo-prop commuter aircraft portfolio, Raytheon Airline Aviation Services LLC (RAAS), and all operations have ceased. As a result of the sale of the remaining operating assets, we have reported RAAS as a discontinued operation. This Pro Forma Cash Flow Information has been prepared to reflect the reclassification of RAAS as a discontinued operation. |
| ** | Working capital (excluding pension and income taxes) is a summation of changes in: 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 E - Pro Forma
Raytheon Company
Pro Forma Cash Flow Information*
Full Years 2011, 2010 and 2009
| (In millions) | Twelve Months Ended | |||||||||||
| 31-Dec-11 | 31-Dec-10 | 31-Dec-09 | ||||||||||
| Net income |
1,896 | 1,879 | 1,976 | |||||||||
| Loss (Income) from discontinued operations, net of tax |
(18 | ) | (35 | ) | 5 | |||||||
|
|
|
|
|
|
|
|||||||
| Income from continuing operations |
1,878 | 1,844 | 1,981 | |||||||||
| Depreciation |
311 | 298 | 293 | |||||||||
| Amortization |
133 | 116 | 103 | |||||||||
| Working capital (excluding pension and income taxes)** |
187 | 329 | (49 | ) | ||||||||
| Other long-term liabilities |
(25 | ) | (344 | ) | 55 | |||||||
| Pension and other postretirement benefits |
(760 | ) | (1,048 | ) | (525 | ) | ||||||
| Other |
378 | 697 | 841 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net operating cash flow |
2,102 | 1,892 | 2,699 | |||||||||
| Discontinued operations |
37 | 50 | 27 | |||||||||
| Capital spending |
(340 | ) | (319 | ) | (281 | ) | ||||||
| Internal use software spending |
(97 | ) | (67 | ) | (67 | ) | ||||||
| Acquisitions |
(645 | ) | (152 | ) | (334 | ) | ||||||
| Dividends |
(588 | ) | (536 | ) | (473 | ) | ||||||
| Repurchases of common stock |
(1,250 | ) | (1,450 | ) | (1,200 | ) | ||||||
| Debt issuance |
992 | 1,975 | 496 | |||||||||
| Debt repayment |
— | (678 | ) | (474 | ) | |||||||
| Warrants exercised |
123 | 250 | — | |||||||||
| Other |
28 | 31 | (10 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Total cash flow |
$ | 362 | $ | 996 | $ | 383 | ||||||
|
|
|
|
|
|
|
|||||||
| * | As previously disclosed in the Company’s 2011 Annual Report on Form 10-K, during the first quarter of 2012 we completed the disposal or abandonment of the remaining individual assets of our former turbo-prop commuter aircraft portfolio, Raytheon Airline Aviation Services LLC (RAAS), and all operations have ceased. As a result of the sale of the remaining operating assets, we have reported RAAS as a discontinued operation. This Pro Forma Cash Flow Information has been prepared to reflect the reclassification of RAAS as a discontinued operation. |
| ** | Working capital (excluding pension and income taxes) is a summation of changes in: 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 - Adjusted EPS, Adjusted Income and Adjusted Operating Margin*
First Quarter 2012
Adjusted EPS Non-GAAP Reconciliation
| (In millions, except per share amounts) |
2012 Guidance | |||||||||||||||||
| First Quarter | Low end of range |
High end of range |
||||||||||||||||
| 2012 | 2011 | |||||||||||||||||
| Diluted earnings per share from continuing operations attributable to Raytheon Company common stockholders |
$ | 1.33 | $ | 1.06 | $ | 5.00 | $ | 5.15 | ||||||||||
| Per share impact of the FAS/CAS Adjustment (A) |
0.14 | 0.16 | 0.55 | 0.55 | ||||||||||||||
| Per share impact of the UK Border Agency (UKBA) LOC Adjustment (B) |
— | 0.16 | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Adjusted EPS (3), (4) |
$ | 1.46 | $ | 1.37 | $ | 5.55 | $ | 5.70 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| (A) |
FAS/CAS Adjustment |
$ | 70 | $ | 89 | $ | 284 | $ | 284 | |||||||||
| Tax effect (1) |
(24 | ) | (31 | ) | (99 | ) | (99 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| After-tax impact |
46 | 58 | 185 | 185 | ||||||||||||||
| Diluted Shares |
338.7 | 360.8 | 336.0 | 334.0 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Per share impact |
$ | 0.14 | $ | 0.16 | $ | 0.55 | $ | 0.55 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| (B) |
UKBA LOC Adjustment |
$ | — | $ | 80 | $ | — | $ | — | |||||||||
| Tax effect (2) |
— | (24 | ) | — | — | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| After-tax impact |
— | 56 | — | — | ||||||||||||||
| Diluted Shares |
— | 360.8 | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Per share impact |
$ | — | $ | 0.16 | $ | — | $ | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
Adjusted Income Non-GAAP Reconciliation
| (In millions) | ||||||||
| First Quarter | ||||||||
| 2012 | 2011 | |||||||
| Income from continuing operations attributable to Raytheon Company common stockholders |
$ | 450 | $ | 381 | ||||
| FAS/CAS Adjustment (1) |
46 | 58 | ||||||
| UKBA LOC Adjustment (2) |
— | 56 | ||||||
|
|
|
|
|
|||||
| Adjusted Income (3), (5) |
$ | 496 | $ | 495 | ||||
|
|
|
|
|
|||||
Adjusted Operating Margin Non-GAAP Reconciliation
| 2012 Guidance | ||||||||||||||||
| First Quarter | Low end of range |
High end of range |
||||||||||||||
| 2012 | 2011 | |||||||||||||||
| Operating Margin |
11.9 | % | 9.7 | % | 11.1 | % | 11.3 | % | ||||||||
| Impact of the FAS/CAS Adjustment |
1.2 | % | 1.5 | % | 1.2 | % | 1.2 | % | ||||||||
| Impact of the UKBA LOC Adjustment |
— | % | 1.3 | % | — | % | — | % | ||||||||
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| Adjusted Operating Margin (3), (6) |
13.1 | % | 12.5 | % | 12.3 | % | 12.5 | % | ||||||||
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| * | As previously disclosed in the Company’s 2011 Annual Report on Form 10-K, during the first quarter of 2012 we completed the disposal or abandonment of the remaining individual assets of our former turbo-prop commuter aircraft portfolio, Raytheon Airline Aviation Services LLC (RAAS), and all operations have ceased. As a result of the sale of the remaining operating assets, we have reported RAAS as a discontinued operation. This Non-GAAP Financial Measures information has been prepared to reflect the reclassification of RAAS as a discontinued operation. |
| (1) | Tax effected at 35% federal statutory tax rate. |
| (2) | Tax effected at approximately 30% blended global tax rate. |
| (3) | 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 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. |
| (4) | 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. In addition to the FAS/CAS Adjustment, first quarter 2011 Adjusted EPS also excludes the impact of the UKBA LOC Adjustment, as previously disclosed. This adjustment was based on the UKBA’s decision to draw down on the previously disclosed letters of credit provided by Raytheon Systems Limited (RSL). The determination of the validity of the draw down is now a subject of the ongoing arbitration proceedings related to the UKBA program. |
| (5) | 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. In addition to the FAS/CAS Adjustment, first quarter 2011 Adjusted Income also excludes the after-tax impact of the UKBA LOC Adjustment, as described above. |
| (6) | 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. In addition to the FAS/CAS Adjustment, first quarter 2011 Adjusted Operating Margin also excludes the impact of the UKBA LOC Adjustment, as described above. |
Attachment F - Pro Forma (Page 1 of 2)
Raytheon Company
Pro Forma Non-GAAP Financial Measures - Adjusted EPS, Adjusted Income and Adjusted Operating Margin*
Quarters 2011 and Full Years 2011, 2010 and 2009
Adjusted EPS Non-GAAP Reconciliation
| (In millions, except per share amounts) | ||||||||||||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||||
| 03-Apr-11 | 03-Jul-11 | 02-Oct-11 | 31-Dec-11 | 31-Dec-11 | 31-Dec-10 | 31-Dec-09 | ||||||||||||||||||||||||
| Diluted earnings per share from continuing operations attributable to Raytheon Company common stockholders |
$ | 1.06 | $ | 1.20 | $ | 1.42 | $ | 1.56 | $ | 5.22 | $ | 4.79 | $ | 4.91 | ||||||||||||||||
| Per share impact of the FAS/CAS Adjustment (A) |
0.16 | 0.16 | 0.14 | 0.16 | 0.62 | 0.32 | (0.13 | ) | ||||||||||||||||||||||
| Per share impact of the UK Border Agency (UKBA) Program Adjustment (B) |
— | — | — | — | — | 0.75 | — | |||||||||||||||||||||||
| Per share impact of the UKBA LOC Adjustment (C) |
0.16 | — | — | — | 0.17 | — | — | |||||||||||||||||||||||
| Per share impact of the favorable tax settlements (D) |
— | — | (0.17 | ) | — | (0.17 | ) | (0.45 | ) | — | ||||||||||||||||||||
| Per share impact of the early debt retirement make-whole provision (E) |
— | — | — | — | — | 0.13 | 0.04 | |||||||||||||||||||||||
| Per share impact of the acceleration of deferred gains related to terminated interest rate swaps on retired debt (F) |
— | — | — | — | — | (0.03 | ) | (0.01 | ) | |||||||||||||||||||||
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| Adjusted EPS (4), (5) |
$ | 1.37 | $ | 1.37 | $ | 1.39 | $ | 1.72 | $ | 5.85 | $ | 5.51 | $ | 4.80 | ||||||||||||||||
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| (A) |
FAS/CAS Adjustment |
$ | 89 | $ | 90 | $ | 75 | $ | 83 | $ | 337 | $ | 187 | $ | (80 | ) | ||||||||||||||
| Tax effect (1) |
(31 | ) | (32 | ) | (26 | ) | (29 | ) | (118 | ) | (65 | ) | 28 | |||||||||||||||||
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| After-tax impact |
58 | 58 | 49 | 54 | 219 | 122 | (52 | ) | ||||||||||||||||||||||
| Diluted shares |
360.8 | 357.1 | 351.4 | 345.1 | 353.6 | 377.0 | 395.7 | |||||||||||||||||||||||
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| Per share impact |
$ | 0.16 | $ | 0.16 | $ | 0.14 | $ | 0.16 | $ | 0.62 | $ | 0.32 | $ | (0.13 | ) | |||||||||||||||
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| (B) |
UKBA Program Adjustment |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | 395 | $ | — | |||||||||||||||
| Tax effect (2) |
— | — | — | — | — | (111 | ) | — | ||||||||||||||||||||||
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| After-tax impact |
— | — | — | — | — | 284 | — | |||||||||||||||||||||||
| Diluted shares |
— | — | — | — | — | 377.0 | — | |||||||||||||||||||||||
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| Per share impact |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | 0.75 | $ | — | ||||||||||||||||
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| (C) |
UKBA LOC Adjustment |
$ | 80 | $ | — | $ | — | $ | — | $ | 80 | $ | — | $ | — | |||||||||||||||
| Tax effect (3) |
(24 | ) | — | — | — | (20 | ) | — | — | |||||||||||||||||||||
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| After-tax impact |
56 | — | — | — | 60 | — | — | |||||||||||||||||||||||
| Diluted shares |
360.8 | — | — | — | 353.6 | — | — | |||||||||||||||||||||||
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| Per share impact |
$ | 0.16 | $ | — | $ | — | $ | — | $ | 0.17 | $ | — | $ | — | ||||||||||||||||
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| (D) |
Favorable tax settlements |
$ | — | $ | — | $ | (60 | ) | $ | — | $ | (60 | ) | $ | (170 | ) | $ | — | ||||||||||||
| Diluted shares |
— | — | 351.4 | — | 353.6 | 377.0 | — | |||||||||||||||||||||||
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| Per share impact |
$ | — | $ | — | $ | (0.17 | ) | $ | — | $ | (0.17 | ) | $ | (0.45 | ) | $ | — | |||||||||||||
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| (E) |
Early debt retirement make-whole provision |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | 73 | $ | 22 | |||||||||||||||
| Tax effect (1) |
— | — | — | — | — | (26 | ) | (8 | ) | |||||||||||||||||||||
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| After-tax impact |
— | — | — | — | — | 47 | 14 | |||||||||||||||||||||||
| Diluted shares |
— | — | — | — | — | 377.0 | 395.7 | |||||||||||||||||||||||
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| Per share impact |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | 0.13 | $ | 0.04 | ||||||||||||||||
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| (F) |
Acceleration of deferred gains related to terminated interest rate swaps on retired debt |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | (15 | ) | $ | (6 | ) | |||||||||||||
| Tax effect (1) |
— | — | — | — | — | 5 | 2 | |||||||||||||||||||||||
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| After-tax impact |
— | — | — | — | — | (10 | ) | (4 | ) | |||||||||||||||||||||
| Diluted Shares |
— | — | — | — | — | 377.0 | 395.7 | |||||||||||||||||||||||
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| Per share impact |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | (0.03 | ) | $ | (0.01 | ) | ||||||||||||||
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| * | As previously disclosed in the Company’s 2011 Annual Report on Form 10-K, during the first quarter of 2012 we completed the disposal or abandonment of the remaining individual assets of our former turbo-prop commuter aircraft portfolio, Raytheon Airline Aviation Services LLC (RAAS), and all operations have ceased. As a result of the sale of the remaining operating assets, we have reported RAAS as a discontinued operation. This Pro Forma Non-GAAP Financial Measures information has been prepared to reflect the reclassification of RAAS as a discontinued operation. |
| (1) | Tax effected at 35% federal statutory tax rate. |
| (2) | Tax effected at approximately 28% blended global tax rate. |
| (3) | Three Months Ended April 3, 2011 Tax effected at approximately 30% blended global tax rate. Twelve Months ended Dec 31, 2011 Tax effected at approximately 25% blended global tax rate. |
| (4) | 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 benefits (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. |
| (5) | 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 previously disclosed items as set forth above in the reconciliation. |
Attachment F - Pro Forma (Page 2 of 2)
Raytheon Company
Pro Forma Non-GAAP Financial Measures - Adjusted EPS, Adjusted Income and Adjusted Operating Margin*
Quarters 2011 and Full Years 2011, 2010 and 2009
Adjusted Income Non-GAAP Reconciliation
| (In millions) | ||||||||||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||
| 03-Apr-11 | 03-Jul-11 | 02-Oct-11 | 31-Dec-11 | 31-Dec-11 | 31-Dec-10 | 31-Dec-09 | ||||||||||||||||||||||
| Income from continuing operations attributable to Raytheon Company common stockholders |
$ | 381 | $ | 430 | $ | 498 | $ | 539 | $ | 1,848 | $ | 1,805 | $ | 1,940 | ||||||||||||||
| FAS/CAS Adjustment (1) |
58 | 58 | 49 | 54 | 219 | 122 | (52 | ) | ||||||||||||||||||||
| UKBA Program Adjustment (2) |
— | — | — | — | — | 284 | — | |||||||||||||||||||||
| UKBA LOC Adjustment (3) |
56 | — | — | — | 60 | — | — | |||||||||||||||||||||
| Favorable tax settlement |
— | — | (60 | ) | — | (60 | ) | (170 | ) | — | ||||||||||||||||||
| Early debt retirement make-whole provision (1) |
— | — | — | — | — | 47 | 14 | |||||||||||||||||||||
| Acceleration of deferred gains related to terminated interest rate swaps on retired debt (1) |
— | — | — | — | — | (10 | ) | (4 | ) | |||||||||||||||||||
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| Adjusted Income (4), (5) |
$ | 495 | $ | 488 | $ | 487 | $ | 593 | $ | 2,067 | $ | 2,078 | $ | 1,898 | ||||||||||||||
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Adjusted Operating Margin Non-GAAP Reconciliation
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||
| 03-Apr-11 | 03-Jul-11 | 02-Oct-11 | 31-Dec-11 | 31-Dec-11 | 31-Dec-10 | 31-Dec-09 | ||||||||||||||||||||||
| Operating Margin |
9.7 | % | 10.8 | % | 11.8 | % | 13.2 | % | 11.4 | % | 10.4 | % | 12.3 | % | ||||||||||||||
| Impact of the FAS/CAS Adjustment |
1.5 | % | 1.5 | % | 1.2 | % | 1.3 | % | 1.4 | % | 0.7 | % | (0.3 | )% | ||||||||||||||
| Impact of UKBA Program Adjustment |
— | % | — | % | — | % | — | % | — | % | 1.4 | % | — | % | ||||||||||||||
| Impact of the UKBA LOC Adjustment |
1.3 | % | — | % | — | % | — | % | 0.3 | % | — | % | — | % | ||||||||||||||
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| Adjusted Operating Margin (4), (6) |
12.5 | % | 12.3 | % | 13.0 | % | 14.5 | % | 13.1 | % | 12.5 | % | 12.0 | % | ||||||||||||||
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| * | As previously disclosed in the Company’s 2011 Annual Report on Form 10-K, during the first quarter of 2012 we completed the disposal or abandonment of the remaining individual assets of our former turbo-prop commuter aircraft portfolio (Raytheon Airline Aviation Services LLC (RAAS)) and all operations have ceased. As a result of the sale of the remaining operating assets, we have reported RAAS as a discontinued operation. This Pro Forma Non-GAAP Financial Measures information has been prepared to reflect the reclassification of RAAS as a discontinued operation. |
| (1) | Tax effected at 35% federal statutory tax rate. |
| (2) | Tax effected at approximately 28% blended global tax rate. |
| (3) | Three Months Ended April 3, 2011 Tax effected at approximately 30% blended global tax rate. Twelve Months ended Dec 31, 2011 Tax effected at approximately 25% blended global tax rate. |
| (4) | 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 benefits (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. |
| (5) | 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 previously disclosed items as set forth above in the reconciliation. |
| (6) | 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 previously disclosed items as set forth above in the reconciliation. |
Attachment G
Raytheon Company
Preliminary Return on Invested Capital Non-GAAP Financial Measure
First Quarter 2012
As previously disclosed in the Company’s 2011 Annual Report on Form 10-K, during the first quarter of 2012 we completed the disposal or abandonment of the remaining individual assets of our former turbo-prop commuter aircraft portfolio, Raytheon Airline Aviation Services LLC (RAAS), and all operations have ceased. As a result of the sale of the remaining operating assets, we have reported RAAS as a discontinued operation. This Preliminary Return on Invested Capital Non-GAAP Financial Measure has been prepared to reflect the reclassification of RAAS as a discontinued operation.
We define ROIC as income from continuing operations excluding the after-tax effect of the FAS/CAS Adjustment and, from time to time, certain other items, 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 liability for defined benefit pension plans and postretirement benefit plans, net of tax. 2011 ROIC also excludes from income from continuing operations the $60 million after-tax effect of the UKBA LOC Adjustment and the $60 million impact of the favorable tax settlement, both as previously disclosed. 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. The Company uses ROIC as a measure of the efficiency and effectiveness of its use of capital and as an element of management compensation.
Return on Invested Capital
| (In millions, except percentages) | ||||
| 2011 | ||||
| Income from continuing operations |
$ | 1,878 | ||
| FAS/CAS Adjustment (1) |
219 | |||
| Q1 2011 UK Border Agency (UKBA) LOC adjustment (2) |
(60 | ) | ||
| Q3 2011 favorable tax settlement |
60 | |||
| Net interest expense (1) |
102 | |||
| Lease expense (1) |
59 | |||
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| Return |
$ | 2,258 | ||
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| Net debt (3) |
$ | 289 | ||
| Equity less investment in discontinued operations |
9,132 | |||
| Lease expense x 8, plus financial guarantees |
2,762 | |||
| Pension and PRB liability, net of related tax benefit |
3,774 | |||
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| Invested capital from continuing operations (4) |
$ | 15,957 | ||
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| ROIC |
14.2 | % | ||
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| (1) | Net of tax, calculated utilizing the federal statutory tax rate of 35% |
| (2) | Net of tax, calculated utilizing the UK statutory tax rate in effect in 2011 of 25% |
| (3) | Net debt is defined as total debt less cash and cash equivalents and is calculated using a 2-point average |
| (4) | Calculated using a 2-point average |