Watch Live

Tweet TWEET

Raytheon Reports Solid Third Quarter 2012 Results

              Raytheon Reports Solid Third Quarter 2012 Results

-- Strong bookings of $7.3 billion; book-to-bill of 1.21

-- Adjusted EPS(1) of $1.60, up 15 percent; EPS from continuing operations was
$1.51, up 6 percent

-- Adjusted Operating Margin(1), of 13.8 percent, up 80 basis points; reported
operating margin of 13.0 percent up 120 basis points

-- Net sales of $6.0 billion, down 1 percent

-- Strong operating cash flow from continuing operations of $1.1 billion

-- Increased full-year 2012 guidance for EPS

PR Newswire

WALTHAM, Mass., Oct. 25, 2012

WALTHAM, Mass., Oct.25, 2012 /PRNewswire/ --Raytheon Company (NYSE: RTN)
announced third quarter 2012 Adjusted EPS^(1) of $1.60 per diluted share
compared to $1.39 per diluted share in the third quarter 2011, up 15 percent.
The increase was primarily driven by operational improvements and capital
deployment actions. Third quarter 2012 EPS from continuing operations was
$1.51 compared to $1.42 in the third quarter 2011. Third quarter 2012 included
an unfavorable FAS/CAS Adjustment of $0.09, compared with an unfavorable
FAS/CAS Adjustment of $0.14 in the third quarter 2011. Third quarter 2011 also
included a $0.17 per diluted share favorable tax settlement.

"Raytheon's strong operating performance in the third quarter reflects our
continued focus on reducing cost, and increasing productivity," said William
H. Swanson, Raytheon's Chairman and CEO. "Our bookings in the quarter were
strong, and we have significant opportunities in both domestic and
international markets for our innovative technologies and affordable
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. Q3 2011 Adjusted EPS also excludes the
impact of the favorable tax settlement as discussed above. 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.

Q3 2011 vs. Q3 2012   3rd Quarter                         Nine Months
EPS Variance
                      EPS              Adjusted EPS*      EPS         Adjusted
                                                                      EPS*
Q3 2011               $   1.42         $    1.39          $  3.68     $  4.13
Operational           0.07             0.07               0.24        0.24
Improvements
Reduced Share Count   0.08             0.08               0.27        0.27
Other Items, net      0.06             0.06               (0.05)      (0.05)
FAS/CAS Adjustment**  0.05             —                  0.10        —
UKBA LOC Adjustment   —                —                  0.17        —
2011 Tax Settlement   (0.17)           —                  (0.17)      —
Q3 2012               $   1.51         $    1.60          $  4.24     $  4.61
* 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 3rd quarter 2012 and 3rd quarter
2011 FAS/CAS Adjustments of $(0.09) and $(0.14), respectively and the first
nine months of 2012 and first nine months of 2011 FAS/CAS Adjustments of
$(0.36) and $(0.46), respectively.

Net sales for the third quarter 2012 were $6,045 million, compared to $6,116
million in the third quarter 2011. The Company reported strong bookings for
the third quarter 2012 of $7,293 million, resulting in a book-to-bill ratio of
1.21. Bookings in the third quarter 2011 were $6,884 million.

The Company generated strong operating cash flow in the quarter. Operating
cash flow from continuing operations for the third quarter 2012 was $1,111
million compared to $845 million for the third quarter 2011. The increase in
operating cash from continuing operations in the third quarter 2012 was
primarily due to the timing of collections and pension contributions,
partially offset by higher tax payments.

In the third quarter 2012, the Company repurchased 2.2 million shares of
common stock for $125 million as part of its previously announced share
repurchase program. Year-to-date 2012, the Company repurchased 14.1 million
shares of common stock for $725 million.

The Company ended the third quarter 2012 with $1.0 billion of net debt. Net
debt is defined as total debt less cash and cash equivalents and short-term
investments.

Summary Financial
Results
                  3rd Quarter             %       Nine Months           %
($ in millions,
except per share  2012          2011      Change  2012       2011       Change
data)
Net Sales         $  6,045      $ 6,116   -1%     $ 17,975   $ 18,369   -2%
Income from
Continuing
Operations
attributable to   $  501        $ 498     1%      $ 1,423    $ 1,309    9%

 Raytheon
Company
Adjusted Income*  $  532        $ 487     9%      $ 1,545    $ 1,473    5%
EPS from
Continuing        $  1.51       $ 1.42    6%      $ 4.24     $ 3.68     15%
Operations
Adjusted EPS*     $  1.60       $ 1.39    15%     $ 4.61     $ 4.13     12%
Operating Cash
Flow from         $  1,111      $ 845             $ 963      $ 816
Continuing
Operations
Workdays in
Fiscal Reporting  63            63                191        191
Calendar
* 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. Q3 2011
Adjusted Income also excludes the favorable tax settlement discussed above.
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) 3rd Quarter         Nine Months
                2012      2011      2012       2011
Bookings        $ 7,293   $ 6,884   $ 18,612   $ 19,408

Backlog
($ in millions) Period Ending
                Q3 2012    2011       Q3 2011
Backlog         $ 35,015   $ 35,312   $ 34,985
Funded Backlog  $ 22,886   $ 22,462   $ 21,734

The Company had bookings of $7.3 billion in the third quarter 2012 and had a
period ending backlog of $35.0 billion.

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 (7/26/12)
Net Sales ($B)                          24.3 - 24.7*        24.5 - 25.0
FAS/CAS Adjustment ($M)                 (252)*               (284)
Interest Expense, net ($M)              (190) - (200)        (190) - (200)
Diluted Shares (M)                      334 - 335            334 - 335
Effective Tax Rate                      ~32%                 ~32%
EPS from Continuing Operations          $5.36 - $5.46*      $5.15 - $5.30
Adjusted EPS**                          $5.85 - $5.95*      $5.70 - $5.85
Operating Cash Flow from Continuing     1.8 - 2.0*          1.7 - 1.9
Operations ($B)
* 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.

Although it remains uncertain if sequestration under the Budget Control Act
(BCA) will be implemented, sequestration could have a significant impact on
the U.S. Military, the Aerospace and Defense Industry and Federal spending.
Several industry associations estimate that sequestration, if implemented,
could have a severe impact on U.S. Aerospace and Defense Industry employment
nationwide. We believe that Raytheon's large international market presence,
portfolio of programs, technology and focus on high priority areas should help
to mitigate some of the potential overall impact.

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
                  3rd Quarter                   Nine Months
($ in millions)   2012      2011      % Change  2012      2011      % Change
Net Sales         $ 1,275   $ 1,176   8%        $ 3,716   $ 3,667   1%
Operating Income  $ 240     $ 204     18%       $ 692     $ 600     15%
Operating Margin  18.8%     17.3%               18.6%     16.4%

Integrated Defense Systems (IDS) had third quarter 2012 net sales of $1,275
million, up 8 percent compared to $1,176 million in the third quarter 2011.
The increase in net sales was primarily due to higher sales on an
international Patriot program. IDS recorded $240 million of operating income
compared to $204 million in the third quarter 2011. The increase in operating
income was primarily due to favorable contract mix and higher volume in the
third quarter 2012.

During the quarter, IDS booked $123 million for the Upgraded Early Warning
Radar (UEWR) system for the Missile Defense Agency (MDA) and the U.S. Air
Force. IDS also booked $84 million to provide air and missile defense
capability for the U.S. Army.

Intelligence and Information Systems
             3rd Quarter                         Nine Months
($ in        2012          2011        %         2012         2011*     %
millions)                              Change                           Change
Net Sales    $   742       $  760      -2%       $  2,257     $ 2,262   -
Operating    $   60        $  58       3%        $  183       $ 85      NM
Income
Operating    8.1%          7.6%                  8.1%         3.8%
Margin
* First quarter 2011 included an $80 million reduction to operating income due
to the UKBA LOC Adjustment as described in attachment F.
NM - Not
Meaningful

Intelligence and Information Systems (IIS) had third quarter 2012 net sales of
$742 million compared to $760 million in the third quarter 2011. IIS recorded
$60 million of operating income compared to $58 million in the third quarter
2011.

During the quarter, IIS booked $170 million on a contract to provide
intelligence, surveillance and reconnaissance (ISR) support to the U.S. Air
Force. IIS also booked $559 million on a number of classified contracts.

Missile Systems
                 3rd Quarter                   Nine Months
($ in millions)  2012      2011      % Change  2012      2011      % Change
Net Sales        $ 1,443   $ 1,413   2%        $ 4,149   $ 4,108   1%
Operating Income $ 189     $ 178     6%        $ 538     $ 484     11%
Operating Margin 13.1%     12.6%               13.0%     11.8%

Missile Systems (MS) had third quarter 2012 net sales of $1,443 million
compared to $1,413 million in the third quarter 2011. The increase in net
sales was primarily driven by higher sales on the Standard Missile 3 (SM-3)
program. MS recorded $189 million of operating income compared to $178 million
in the third quarter 2011. The increase in operating income was primarily due
to improved program performance.

During the quarter, MS booked $1,242 million for the production and
development of SM-3 for the Missile Defense Agency (MDA). MS also booked $350
million for the production of Tube-launched, Optically-tracked,
Wireless-guided (TOW) missiles for the U.S. Army and Marines, $101 million for
Phalanx weapon systems for the U.S. Navy and an international customer, and
$87 million on Miniature Air-Launch Decoy (MALD®) for the U.S. Air Force.

Network Centric Systems
                 3rd Quarter                 Nine Months
($ in millions)  2012    2011      % Change  2012      2011      % Change
Net Sales        $ 963   $ 1,104   -13%      $ 2,925   $ 3,360   -13%
Operating Income $ 131   $ 162     -19%      $ 370     $ 492     -25%
Operating Margin 13.6%   14.7%               12.6%     14.6%

Network Centric Systems (NCS) had third quarter 2012 net sales of $963 million
compared to $1,104 million in the third quarter 2011. The change in net sales,
as expected, was primarily due to lower sales on U.S. Army production
programs. NCS recorded $131 million of operating income compared to $162
million in the third quarter 2011. The change in operating income was
primarily due to a change in contract mix and lower volume in the third
quarter 2012.

During the quarter, NCS booked $70 million on the Family of Advanced
Beyond-Line-of-Sight Terminals (FAB-T) program for the U.S. Air Force.

Space and Airborne Systems
                 3rd Quarter                   Nine Months
($ in millions)  2012      2011      % Change  2012      2011      % Change
Net Sales        $ 1,322   $ 1,305   1%        $ 3,956   $ 3,914   1%
Operating Income $ 190     $ 171     11%       $ 567     $ 503     13%
Operating Margin 14.4%     13.1%               14.3%     12.9%

Space and Airborne Systems (SAS) had third quarter 2012 net sales of $1,322
million compared to $1,305 million in the third quarter 2011. SAS recorded
$190 million of operating income compared to $171 million in the third quarter
2011. The increase in operating income was primarily due to a change in
contract mix and improved program performance.

During the quarter, SAS booked $105 million for an international sensor
program. SAS also booked $382 million on a number of classified contracts.

Technical Services
                 3rd Quarter               Nine Months
($ in millions)  2012    2011    % Change  2012      2011      % Change
Net Sales        $ 785   $ 817   -4%       $ 2,408   $ 2,467   -2%
Operating Income $ 64    $ 75    -15%      $ 210     $ 228     -8%
Operating Margin 8.2%    9.2%              8.7%      9.2%

Technical Services (TS) had third quarter 2012 net sales of $785 million
compared to $817 million in the third quarter 2011. The change in net sales
was due to lower net sales on a National Science Foundation (NSF) Polar
contract, which was completed in the first quarter 2012. TS recorded operating
income of $64 million compared to $75 million in the third quarter 2011.

During the quarter, TS booked $246 million for work on the Air Traffic Control
Optimum Training Solution (ATCOTS) contract for the Federal Aviation
Administration (FAA). TS also booked $252 million on domestic training
programs and $137 million on foreign 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 Third Quarter 2012 Financial Results

Raytheon's financial results conference call will be held on Thursday,
October25, 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.

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
Third Quarter 2012
(In millions, except per share      Three Months Ended    Nine Months Ended
amounts)
                                    30-Sep-12  02-Oct-11  30-Sep-12  02-Oct-11
Net sales                           $  6,045   $  6,116   $ 17,975   $ 18,369
Operating expenses
Cost of sales                       4,689      4,815      14,000     14,646
Administrative and selling          389        426        1,198      1,288
expenses
Research and development expenses   181        153        543        454
Total operating expenses            5,259      5,394      15,741     16,388
Operating income                    786        722        2,234      1,981
Non-operating (income) expense,
net
Interest expense                    49         41         149        127
Interest income                     (3)        (5)        (6)        (12)
Other (income) expense              (5)        14         (10)       15
Total non-operating (income)        41         50         133        130
expense, net
Income from continuing operations   745        672        2,101      1,851
before taxes
Federal and foreign income taxes    237        165        668        521
Income from continuing operations   508        507        1,433      1,330
Income (loss) from discontinued     (1)        3          (4)        14
operations, net of tax
Net income                          507        510        1,429      1,344
Less: Net income (loss)
attributable to noncontrolling
interests in subsidiaries           7          9          10         21
Net income attributable to          $  500     $  501     $ 1,419    $ 1,323
Raytheon Company
Basic earnings (loss) per share
attributable to Raytheon
Company common stockholders:
Income from continuing operations   $  1.51    $  1.42    $ 4.26     $ 3.70
Income (loss) from discontinued     —          0.01       (0.01)     0.04
operations, net of tax
Net income                          1.51       1.43       4.25       3.73
Diluted earnings (loss) per share
attributable to Raytheon
Company common stockholders:
Income from continuing operations   $  1.51    $  1.42    $ 4.24     $ 3.68
Income (loss) from discontinued     —          0.01       (0.01)     0.04
operations, net of tax
Net income                          1.50       1.43       4.23       3.71
Amounts attributable to Raytheon
Company common
stockholders:
Income from continuing operations   $  501     $  498     $ 1,423    $ 1,309
Income (loss) from discontinued     (1)        3          (4)        14
operations, net of tax
Net income                          $  500     $  501     $ 1,419    $ 1,323
Average shares outstanding
Basic                               332.0      350.5      334.3      354.3
Diluted                             333.0      351.4      335.4      356.4





Attachment B
Raytheon
Company
Preliminary
Segment
Information
Third Quarter
2012
                                                          Operating Income
              Net Sales             Operating Income      As a Percent of
                                                          Net Sales
(In millions,                                             Three Months
except        Three Months Ended    Three Months Ended    Ended
percentages)
              30-Sep-12  02-Oct-11  30-Sep-12  02-Oct-11  30-Sep-12  02-Oct-11
Integrated
Defense       $ 1,275    $ 1,176    $  240     $  204     18.8   %   17.3   %
Systems
Intelligence
and           742        760        60         58         8.1    %   7.6    %
Information
Systems
Missile       1,443      1,413      189        178        13.1   %   12.6   %
Systems
Network
Centric       963        1,104      131        162        13.6   %   14.7   %
Systems
Space and
Airborne      1,322      1,305      190        171        14.4   %   13.1   %
Systems
Technical     785        817        64         75         8.2    %   9.2    %
Services
FAS/CAS       —          —          (47)       (75)
Adjustment
Corporate and (485)      (459)      (41)       (51)
Eliminations
Total         $ 6,045    $ 6,116    $  786     $  722     13.0   %   11.8   %
                                                          Operating Income
              Net Sales             Operating Income      As a Percent of
                                                          Net Sales
(In millions,
except        Nine Months Ended     Nine Months Ended     Nine Months Ended
percentages)
              30-Sep-12  02-Oct-11  30-Sep-12  02-Oct-11  30-Sep-12  02-Oct-11
Integrated
Defense       $ 3,716    $ 3,667    $  692     $  600     18.6   %   16.4   %
Systems
Intelligence
and           2,257      2,262      183        85         8.1    %   3.8    %
Information
Systems
Missile       4,149      4,108      538        484        13.0   %   11.8   %
Systems
Network
Centric       2,925      3,360      370        492        12.6   %   14.6   %
Systems
Space and
Airborne      3,956      3,914      567        503        14.3   %   12.9   %
Systems
Technical     2,408      2,467      210        228        8.7    %   9.2    %
Services
FAS/CAS       —          —          (188)      (254)
Adjustment
Corporate and (1,436)    (1,409)    (138)      (157)
Eliminations
Total         $ 17,975   $ 18,369   $  2,234   $  1,981   12.4   %   10.8   %



Attachment C
Raytheon Company
Other Preliminary Information
Third Quarter 2012
(In millions)                       Funded Backlog        Total Backlog
                                    30-Sep-12  31-Dec-11  30-Sep-12  31-Dec-11
Integrated Defense Systems          $ 6,757    $ 7,100    $ 8,404    $ 9,766
Intelligence and Information        1,051      829        4,002      4,366
Systems
Missile Systems                     6,436      6,205      9,784      8,570
Network Centric Systems             3,159      3,267      3,941      4,160
Space and Airborne Systems          3,553      3,104      6,091      5,864
Technical Services                  1,930      1,957      2,793      2,586
Total                               $ 22,886   $ 22,462   $ 35,015   $ 35,312
                                    Bookings              Bookings
                                    Three Months Ended    Nine Months Ended
                                    30-Sep-12  02-Oct-11  30-Sep-12  02-Oct-11
Total Bookings                      $ 7,293    $ 6,884    $ 18,612   $ 19,408

Attachment D
Raytheon Company
Preliminary Balance Sheet Information
Third Quarter 2012
(In millions)
                                                          30-Sep-12  31-Dec-11
Assets
Cash and cash equivalents                                 $ 3,032    $ 4,000
Short-term investments                                    614        —
Contracts in process, net                                 4,789      4,526
Inventories                                               482        336
Deferred taxes                                            83         221
Prepaid expenses and other current assets                 260        226
Total current assets                                      9,260      9,309
Property, plant and equipment, net                        1,929      2,006
Deferred taxes                                            720        657
Goodwill                                                  12,546     12,544
Other assets, net                                         1,242      1,338
Total assets                                              $ 25,697   $ 25,854
Liabilities and Equity
Current liabilities
Advance payments and billings in excess of costs incurred $ 2,169    $ 2,542
Accounts payable                                          1,190      1,507
Accrued employee compensation                             1,130      941
Other accrued expenses                                    1,179      1,140
Total current liabilities                                 5,668      6,130
Accrued retiree benefits and other long-term liabilities  6,192      6,774
Deferred taxes                                            3          5
Long-term debt                                            4,609      4,605
Equity
Raytheon Company stockholders' equity
Common stock                                              3          3
Additional paid-in capital                                11,900     11,676
Accumulated other comprehensive loss                      (6,506)    (7,001)
Treasury stock, at cost                                   (8,913)    (8,153)
Retained earnings                                         12,578     11,656
Total Raytheon Company stockholders' equity               9,062      8,181
Noncontrolling interests in subsidiaries                  163        159
Total equity                                              9,225      8,340
Total liabilities and equity                              $ 25,697   $ 25,854

Attachment E
Raytheon Company
Preliminary Cash
Flow Information
Third Quarter 2012
                     Three Months Ended            Nine Months Ended
                     30-Sep-12      02-Oct-11      30-Sep-12      02-Oct-11
Net income           $   507        $   510        $   1,429      $   1,344
Loss (Income) from
discontinued         1              (3)            4              (14)
operations, net of
tax
Income from
continuing           508            507            1,433          1,330
operations
Depreciation         80             79             238            230
Amortization         33             34             103            98
Working capital
(excluding pension   432            257            (911)          (873)
and income taxes)**
Other long-term      (12)           (74)           (38)           (55)
liabilities
Pension and other
postretirement       179            (268)          120            (260)
benefits
Other                (109)          310            18             346
Net operating cash
flow from continuing 1,111          845            963            816
operations
Supplemental Cash
Flow Information
Capital spending     (67)           (90)           (204)          (197)
Internal use         (14)           (24)           (60)           (74)
software spending
Acquisitions         (7)            (1)            (7)            (551)
Dividends            (165)          (152)          (478)          (440)
Repurchases of       (125)          (312)          (725)          (937)
common stock
** 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
Third Quarter
2012
Adjusted EPS
Non-GAAP
Reconciliation
                                                               2012                2012
(In millions,
except per share                                               Current Guidance    Prior Guidance
amounts)
                  Three Months Ended    Nine Months Ended      Low end   High end  Low end   High end
                  2012      2011        2012       2011        of range  of range  of range  of range


Diluted earnings
per share from
continuing        $ 1.51    $ 1.42      $ 4.24     $ 3.68      $ 5.36    $ 5.46    $ 5.15    $ 5.30
operations
attributable to
Raytheon Company
common
stockholders
Per share impact
of the FAS/CAS    0.09      0.14        0.36       0.46        0.49      0.49      0.55      0.55
Adjustment (A)
Per share impact
of the UK Border
Agency (UKBA) LOC —         —           —          0.17        —         —         —         —

Adjustment (B)
Per share impact
of the favorable  —         (0.17)      —          (0.17)      —         —         —         —
tax settlement
(C)
Adjusted EPS (3), $ 1.60    $ 1.39      $ 4.61     $ 4.13      $ 5.85    $ 5.95    $ 5.70    $ 5.85
(4)
(A)  FAS/CAS      $ 47      $ 75        $ 188      $ 254       $ 252     $ 252     $ 284     $ 284
     Adjustment
        Tax
        effect    (16)      (26)        (66)       (89)        (88)      (88)      (99)      (99)
        (1)
     After-tax    31        49          122        165         164       164       185       185
     impact
     Diluted      333.0     351.4       335.4      356.4       335.0     334.0     335.0     334.0
     shares
     Per share    $ 0.09    $ 0.14      $ 0.36     $ 0.46      $ 0.49    $ 0.49    $ 0.55    $ 0.55
     impact
(B)  UKBA LOC     $ —       $ —         $ —        $ 80        $ —       $ —       $ —       $ —
     Adjustment
        Tax
        effect    —         —           —          (21)        —         —         —         —
        (2)
     After-tax    —         —           —          59          —         —         —         —
     impact
     Diluted      —         —           —          356.4       —         —         —         —
     shares
     Per share    $ —       $ —         $ —        $ 0.17      $ —       $ —       $ —       $ —
     impact
     Favorable
(C)  tax          $ —       $ (60)      $ —        $ (60)      $ —       $ —       $ —       $ —
     settlement
     Diluted      —         351.4       —          356.4       —         —         —         —
     shares
     Per share    $ —       $ (0.17)    $ —        $ (0.17)    $ —       $ —       $ —       $ —
     impact
Adjusted Income
Non-GAAP
Reconciliation
(In millions)
                  Three Months Ended    Nine Months Ended
                  2012      2011        2012       2011
Income from
continuing
operations
attributable to
Raytheon
     Company
     common       $ 501     $ 498       $ 1,423    $ 1,309
     stockholders
FAS/CAS           31        49          122        165
Adjustment (1)
UKBA LOC          —         —           —          59
Adjustment (2)
Favorable tax     —         (60)        —          (60)
settlement
Adjusted Income   $ 532     $ 487       $ 1,545    $ 1,473
(3), (5)
Adjusted
Operating Margin
Non-GAAP
Reconciliation
                                                               2012                2012
                                                               Current Guidance    Prior Guidance
                  Three Months Ended    Nine Months Ended      Low end   High end  Low end   High end
                  2012      2011        2012       2011        of range  of range  of range  of range
Operating Margin  13.0   %  11.8     %  12.4    %  10.8     %  11.8   %  12.0   %  11.3   %  11.5   %
Impact of the
FAS/CAS           0.8    %  1.2      %  1.0     %  1.4      %  1.0    %  1.0    %  1.2    %  1.2    %
Adjustment
Impact of the
UKBA LOC          —      %  —        %  —       %  0.4      %  —      %  —      %  —      %  —      %
Adjustment
Adjusted
Operating Margin  13.8   %  13.0     %  13.5    %  12.6     %  12.8   %  13.0   %  12.5   %  12.7   %
(3), (6)
(1)  Tax effected at 35% federal statutory tax rate.
(2)  Tax effected at approximately 27% blended global tax rate.
     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
(3)  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.
     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, nine months ended 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
(4)  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.
     Three months and nine months ended 2011 Adjusted EPS also excludes the earnings per share
     impact of a favorable tax settlement in the third quarter of 2011 as a result of our receipt
     of final approval from the IRS and the U.S. Congressional Joint Committee on Taxation of the
     IRS examination of our tax returns for the 2006-2008 tax years.
     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,
(5)  certain other items. In addition to the FAS/CAS Adjustment, nine months ended 2011 Adjusted
     Income also excludes the after-tax impact of the UKBA LOC Adjustment, as described above.
     Three months and nine months ended 2011 Adjusted Income also excludes the impact of the
     favorable tax settlement in the third quarter of 2011, as described above.
     Adjusted Operating Margin is defined as total operating margin excluding the margin impact of
(6)  the FAS/CAS Adjustment and, from time to time, certain other items. In addition to the FAS/CAS
     Adjustment, nine months ended 2011 Adjusted Operating Margin also excludes the impact of the
     UKBA LOC Adjustment, as described above.



Investor Relations Contact
Todd Ernst
781.522.5141
Media Contact
Jon Kasle
781.522.5110

SOURCE Raytheon Company

Website: http://www.raytheon.com
 
Press spacebar to pause and continue. Press esc to stop.