Attached files

file filename
8-K - FORM 8-K - RAYTHEON CO/a8-kq42012.htm


Exhibit 99.1
 
 
Raytheon Company
 
 
Global Headquarters
 
 
Waltham, Mass.
 
 
 
 
 
Investor Relations Contact
 
 
Todd Ernst
 
 
 
781.522.5141
 
 
 
 
 
 
 
Media Contact
 
 
 
Jon Kasle
 
 
 
781.522.5110
For Immediate Release

Raytheon Reports Solid Fourth Quarter and Full-Year 2012 Results

Strong bookings of $7.9 billion in the quarter and $26.5 billion for the year; book-to-bill of 1.23 in the quarter and 1.09 for the year
Fourth quarter net sales of $6.4 billion, up slightly from prior year's fourth quarter; and full-year net sales of $24.4 billion, down 1.5 percent for the year
Fourth quarter 2012 Adjusted EPS1 of $1.60; EPS from continuing operations was $1.41
Full-year 2012 Adjusted EPS1 of $6.21, up 6.2 percent; EPS from continuing operations was $5.65, up 8.2 percent
Strong operating cash flow from continuing operations of $1.0 billion in the quarter and $2.0 billion for the year
__________________________________________________________________________________________________

WALTHAM, Mass., (January 24, 2013) - Raytheon Company (NYSE: RTN) announced fourth quarter 2012 Adjusted EPS1 of $1.60 per diluted share compared to $1.72 per diluted share in the fourth quarter 2011. The change was due to the timing of operational improvements in the fourth quarter 2012 compared to the fourth quarter 2011. On a full-year basis, 2012 operational improvements were relatively consistent with 2011. Fourth quarter 2012 EPS from continuing operations was $1.41 compared to $1.56 in the fourth quarter 2011. Fourth quarter 2012 included a $0.06 net charge associated with the impact of early debt retirement. Fourth quarter 2012 also included an unfavorable FAS/CAS Adjustment of $0.13, compared with an unfavorable FAS/CAS Adjustment of $0.16 in the fourth quarter 2011.
Full-year 2012 Adjusted EPS1 was $6.21 per diluted share compared to $5.85 for the full-year 2011, up 6.2 percent. The increase was primarily driven by capital deployment actions and operational improvements. Full-year 2012 EPS from continuing operations was $5.65 compared to $5.22 for the full-year 2011.
“Raytheon’s solid operating performance in 2012 was a result of our continued focus on improving productivity and program execution, which delivered value to both our customers and shareholders,” said William H. Swanson, Raytheon’s Chairman and CEO. “Customer demand for advanced technologies and affordable solutions drove strong orders for both the fourth quarter and the year, and resulted in a record funded backlog.”
___________________________________
1 Adjusted EPS is EPS from continuing operations attributable to Raytheon Company common stockholders excluding the impact of the FAS/CAS Adjustment, and from time to time, certain other items. Q4 2012 and full-year 2012 Adjusted EPS also excludes the impact of the early retirement of debt as discussed above. Full-year 2011 Adjusted EPS excludes the impact of the UKBA LOC Adjustment in Q1 2011 and the favorable tax settlement in Q3 2011. 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.

1



Net sales for the fourth quarter 2012 were $6,439 million, compared to $6,422 million in the fourth quarter 2011. The Company reported strong bookings for the fourth quarter 2012 of $7,892 million, resulting in a book-to-bill ratio of 1.23. Bookings in the fourth quarter 2011 were $7,147 million.
Net sales in 2012 were $24.4 billion, compared to $24.8 billion in 2011. The Company reported strong bookings in both 2012 and 2011, of $26.5 billion and $26.6 billion, respectively. The book-to-bill ratio for 2012 was 1.09.
Operating cash flow from continuing operations for the fourth quarter 2012 was $988 million compared to $1,286 million for the fourth quarter 2011. The change in operating cash from continuing operations in the fourth quarter 2012 was primarily due to the timing of customer advances.
The Company generated strong operating cash flow from continuing operations for both 2012 and 2011, of $2.0 billion and $2.1 billion, respectively.
In the fourth quarter 2012, the Company repurchased 1.8 million shares of common stock for $100 million as part of its previously announced share repurchase program. For the full-year 2012, the Company repurchased 15.9 million shares of common stock for $825 million.
Also as previously announced, in the fourth quarter 2012, the Company acquired the Government Solutions business of SafeNet Inc., which has become part of Raytheon’s Network Centric Systems (NCS) business, and Teligy, Inc., which has become part of Raytheon’s Intelligence and Information Systems (IIS) business.
In the fourth quarter 2012, the Company issued $1.1 billion in long-term debt, which was used primarily for the early retirement of 2014 and 2015 maturities. The Company ended 2012 with $687 million of net debt. Net debt is defined as total debt less cash and cash equivalents and short-term investments.

Summary Financial Results
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4th Quarter
 
%
 
Full-Year
 
%
($ in millions, except per share data)
2012

 
2011

 
Change
 
2012

 
2011

 
Change
 
 
 
 
 
 
 
 
 
 
 
 
Net Sales
$
6,439

 
$
6,422

 
0.3%
 
$
24,414

 
$
24,791

 
-1.5%
Income from Continuing Operations attributable to
   Raytheon Company
$
466

 
$
539

 
-13.5%
 
$
1,889

 
$
1,848

 
2.2%
Adjusted Income*
$
529

 
$
593

 
-10.8%
 
$
2,074

 
$
2,067

 
0.3%
EPS from Continuing Operations
$
1.41

 
$
1.56

 
-9.6%
 
$
5.65

 
$
5.22

 
8.2%
Adjusted EPS*
$
1.60

 
$
1.72

 
-7.0%
 
$
6.21

 
$
5.85

 
6.2%
Operating Cash Flow from Continuing Operations
$
988

 
$
1,286

 
 
 
$
1,951

 
$
2,102

 
 
Workdays in Fiscal Reporting Calendar
58

 
57

 
 
 
249

 
248

 
 
 
 
 
 
 
 
 
 
 
 
 
 
* Adjusted Income is income from continuing operations attributable to Raytheon Company common stockholders and Adjusted EPS is EPS from continuing operations attributable to Raytheon Company common stockholders, in each case, excluding the after-tax impact of the FAS/CAS Adjustment and, from time to time, certain other items. In addition to the FAS/CAS Adjustment: Q4 and full-year 2012 Adjusted Income and Adjusted EPS exclude the impact of early debt retirement. Full-year 2011 Adjusted Income and Adjusted EPS exclude the impact of the UKBA LOC Adjustment in Q1 2011 and the favorable tax settlement in Q3 2011. 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.
 
 
 
 
 
 
 
 
 
 
 
 

2




Bookings and Backlog
Bookings
 
 
 
 
 
 
 
 
($ in millions)
4th Quarter
 
Full-Year
 
 
2012
 
2011
 
2012
 
2011
 
Bookings
$
7,892

 
$
7,147

 
$
26,504

 
$
26,555

 
 
 
 
 
 
 
 
 
 

Backlog
 
 
 
 
($ in millions)
 Period Ending
 
 
2012
 
2011
 
Backlog
$
36,181

 
$
35,312

 
Funded Backlog
$
24,047

 
$
22,462

 
The Company had bookings of $7.9 billion in the fourth quarter 2012 and ended 2012 with a backlog of $36.2 billion, an increase of $869 million over year-end 2011. The Company ended 2012 with a record funded backlog of $24.0 billion.
Outlook
The Company has provided its financial outlook for 2013. Charts containing additional information on the Company's 2013 outlook are available on the Company's website at www.raytheon.com/ir.
2013 Financial Outlook
 
 
 
 
 
 
2012 Actual
 
2013 Outlook
Net Sales ($B)
 
24.4
 
 23.6 - 24.1
FAS/CAS Adjustment ($M)
 
(255)
 
(286)
Interest Expense, net ($M)
 
(192)
 
 (200) - (210)
Diluted Shares (M)
 
334
 
324 - 327
Effective Tax Rate
 
31.6%
 
 ~30%
EPS from Continuing Operations
 
$5.65
 
$5.16 - $5.31
Adjusted EPS*
 
$6.21
 
$5.65 - $5.80
Operating Cash Flow from Continuing Operations ($B)
 
2.0
 
 2.0 - 2.2
 
 
 
 
 
* Adjusted EPS is EPS from continuing operations attributable to Raytheon Company common stockholders, excluding the after-tax impact of the FAS/CAS Adjustment and, from time to time, certain other items. In addition to the FAS/CAS Adjustment: full-year 2012 also excludes the impact of early debt retirement. 2013 Adjusted EPS guidance also excludes the impact of an expected research and development (R&D) tax credit that relates to 2012. See attachment F for a reconciliation of this measure and a discussion of why the Company is presenting this information.
 

The financial outlook for 2013 does not reflect any of the potential effects of sequestration under the Budget Control Act (BCA). Although it remains uncertain if sequestration will be implemented, it 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.


3



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
 
 
 
 
 
 
 
 
 
 
 
4th Quarter
 
 
 
Full-Year
 
 
($ in millions)
2012
 
2011
 
% Change
 
2012
 
2011
 
% Change
Net Sales
$
1,321

 
$
1,291

 
2%
 
$
5,037

 
$
4,958

 
2%
Operating Income
$
226

 
$
236

 
-4%
 
$
918

 
$
836

 
10%
Operating Margin
17.1
%
 
18.3
%
 
 
 
18.2
%
 
16.9
%
 
 

Integrated Defense Systems (IDS) had fourth quarter 2012 net sales of $1,321 million compared to $1,291 million in the fourth quarter 2011. The increase in net sales was primarily due to higher sales on a missile defense radar program for an international customer. IDS had full-year 2012 net sales of $5,037 million compared to $4,958 million in 2011. The increase in net sales was primarily due to international programs.

IDS recorded $226 million of operating income compared to $236 million in the fourth quarter 2011. IDS recorded $918 million of operating income in 2012 compared to $836 million in 2011. The increase in operating income for full-year 2012 was primarily driven by international programs.

During the quarter, IDS booked $332 million for the production and sustainment of AN/TPY-2 radars for the Missile Defense Agency (MDA). IDS also booked $293 million to provide technical and logistics support for a Hawk and Patriot air and missile defense program for an international customer, $293 million on an Early Warning Surveillance Radar System (EWSRS) support program for an international customer, $251 million on the Zumwalt-class destroyer program for the U.S. Navy, $159 million for the production of Airborne Low Frequency Sonar (ALFS) systems for the U.S. Navy, $128 million to provide Consolidated Contractor Logistics Support (CCLS) for the MDA and $76 million on the Aegis Performance Based Logistics (PBL) contract for the U.S. Navy.

Intelligence and Information Systems
 
 
 
 
 
 
 
 
 
4th Quarter
 
 
 
Full-Year
 
 
($ in millions)
2012
 
2011
 
% Change
 
2012
 
2011*
 
% Change
Net Sales
$
755

 
$
753

 
-
 
$
3,012

 
$
3,015

 
-
Operating Income
$
64

 
$
74

 
-14%
 
$
247

 
$
159

 
NM
Operating Margin
8.5
%
 
9.8
%
 
 
 
8.2
%
 
5.3
%
 
 
* 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
 
 
 
 
 
 
 
 
 
 
 

4



Intelligence and Information Systems (IIS) had fourth quarter 2012 net sales of $755 million compared to $753 million in the fourth quarter 2011. IIS had full-year 2012 net sales of $3,012 million compared to $3,015 million in 2011.

IIS recorded $64 million of operating income compared to $74 million in the fourth quarter 2011. IIS recorded $247 million of operating income in 2012 compared to $159 million in 2011. The change in operating income in 2012 was primarily due to the $80 million UKBA LOC Adjustment in the first quarter 2011.

During the quarter, IIS booked $79 million on the Joint Polar Satellite System (JPSS) program for NASA.
IIS also booked $511 million on a number of classified contracts.

Missile Systems
 
 
 
 
 
 
 
 
 
4th Quarter
 
 
 
Full-Year
 
 
($ in millions)
2012
 
2011
 
% Change
 
2012
 
2011
 
% Change
Net Sales
$
1,544

 
$
1,482

 
4%
 
$
5,693

 
$
5,590

 
2%
Operating Income
$
181

 
$
209

 
-13%
 
$
719

 
$
693

 
4%
Operating Margin
11.7
%
 
14.1
%
 
 
 
12.6
%
 
12.4
%
 
 

Missile Systems (MS) had fourth quarter 2012 net sales of $1,544 million, up 4 percent compared to $1,482 million in the fourth quarter 2011. The increase in net sales was primarily driven by higher sales on the Standard Missile-3 (SM-3) and Rolling Airframe Missile (RAM) programs. MS had full-year 2012 net sales of $5,693 million compared to $5,590 million in 2011. The increase in net sales was primarily driven by higher sales on the SM-3 program.

MS recorded $181 million of operating income compared to $209 million in the fourth quarter 2011. The change in operating income was primarily due to a change in contract mix and a favorable contractual resolution in 2011. MS recorded $719 million of operating income in 2012 compared to $693 million in 2011. The increase in operating income in 2012 was primarily due to favorable program performance.

During the quarter, MS booked $500 million for the production of Paveway™ for the U.S. Air Force and international customers, $303 million for the production and development of Tomahawk for the U.S. Navy and an international customer, $242 million on the RAM for the U.S. Navy and international customers, $175 million for Evolved Sea Sparrow Missile (ESSM) for the U.S. Navy and international customers, and $116 million for the Exoatmospheric Kill Vehicle (EKV) for the MDA.

Network Centric Systems
 
 
 
 
 
 
 
 
 
4th Quarter
 
 
 
Full-Year
 
 
($ in millions)
2012
 
2011
 
% Change
 
2012
 
2011
 
% Change
Net Sales
$
1,133

 
$
1,137

 
-
 
$
4,058

 
$
4,497

 
-10%
Operating Income
$
125

 
$
175

 
-29%
 
$
495

 
$
667

 
-26%
Operating Margin
11.0
%
 
15.4
%
 
 
 
12.2
%
 
14.8
%
 
 


5



Network Centric Systems (NCS) had fourth quarter 2012 net sales of $1,133 million compared to $1,137 million in the fourth quarter 2011. NCS had full-year 2012 net sales of $4,058 million compared to $4,497 million in 2011. The change in net sales, as expected, was primarily due to lower sales on U.S. Army production programs.
NCS recorded $125 million of operating income compared to $175 million in the fourth quarter 2011. The change in operating income was primarily due to a change in contract mix and costs associated with ending a supplier agreement in the fourth quarter 2012. NCS recorded $495 million of operating income in 2012 compared to $667 million in 2011. The change in operating income in 2012 was primarily due to a change in contract mix and lower volume.
During the quarter, NCS booked $650 million on an international Command, Control, Communications, Computers and Intelligence (C4I) program. NCS also booked $82 million on the Navy Multiband Terminal (NMT) program.
Space and Airborne Systems
 
 
 
 
 
 
 
 
 
4th Quarter
 
 
 
Full-Year
 
 
($ in millions)
2012
 
2011
 
% Change
 
2012
 
2011
 
% Change
Net Sales
$
1,377

 
$
1,341

 
3%
 
$
5,333

 
$
5,255

 
1%
Operating Income
$
217

 
$
214

 
1%
 
$
784

 
$
717

 
9%
Operating Margin
15.8
%
 
16.0
%
 
 
 
14.7
%
 
13.6
%
 
 
Space and Airborne Systems (SAS) had fourth quarter 2012 net sales of $1,377 million compared to $1,341 million in the fourth quarter 2011. The increase in net sales was primarily due to higher net sales on an international tactical airborne radar program. SAS had full-year 2012 net sales of $5,333 million compared to $5,255 million in 2011.
SAS recorded $217 million of operating income compared to $214 million in the fourth quarter 2011. SAS recorded $784 million of operating income in 2012 compared to $717 million in 2011. The increase in operating income in 2012 was primarily due to improved program performance and a change in contract mix.
During the quarter, SAS booked $289 million for an international sensor program and $76 million for the production of the Multi-Platform Radar Technology Insertion Program (MP-RTIP) surveillance system for NATO.

Technical Services
 
 
 
 
 
 
 
 
 
4th Quarter
 
 
 
Full-Year
 
 
($ in millions)
2012
 
2011
 
% Change
 
2012
 
2011
 
% Change
Net Sales
$
831

 
$
886

 
-6%
 
$
3,239

 
$
3,353

 
-3%
Operating Income
$
72

 
$
84

 
-14%
 
$
282

 
$
312

 
-10%
Operating Margin
8.7
%
 
9.5
%
 
 
 
8.7
%
 
9.3
%
 
 

Technical Services (TS) had fourth quarter 2012 net sales of $831 million compared to $886 million in the fourth 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 had 2012 net sales of $3,239 million

6



compared to $3,353 million in 2011. The change in net sales was due to lower net sales on a NSF Polar contract.
TS recorded operating income of $72 million compared to $84 million in the fourth quarter 2011. TS recorded operating income of $282 million in 2012 compared to $312 million in 2011.

About Raytheon
Raytheon Company, with 2012 sales of $24 billion and 68,000 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 91 years, Raytheon provides state-of-the-art electronics, mission systems integration and other capabilities in the areas of sensing; effects; and command, control, communications and intelligence systems, as well as a broad range of mission support services. Raytheon is headquartered in Waltham, Mass. For more about Raytheon, visit us at www.raytheon.com and follow us on Twitter @raytheon.

Conference Call on the Fourth Quarter and Full-Year 2012 Financial Results
Raytheon's financial results conference call will be held on Thursday, January 24, 2013 at 9 a.m. ET. Participants will include William H. Swanson, Chairman and CEO; David C. Wajsgras, senior vice president and CFO; and other Company executives.
The dial-in number for the conference call will be (800) 706-7749 in the U.S. or (617) 614-3474 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 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.

# # #







8



Attachment A
 
 
 
 
 
 
 
 
Raytheon Company
 

 
 
 
 
Preliminary Statement of Operations Information
 
 
 
 
 
 
 
 
Fourth Quarter 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In millions, except per share amounts)
 
Three Months Ended
 
Twelve Months Ended
 
 
31-Dec-12
 
31-Dec-11
 
31-Dec-12

31-Dec-11
 
 
 
 
 
 
 
 
 
Net sales
 
$
6,439

 
$
6,422

 
$
24,414

 
$
24,791

Operating expenses
 
 
 
 
 
 
 
 
     Cost of sales
 
5,092

 
5,018

 
19,092

 
19,664

     Administrative and selling expenses
 
431

 
384

 
1,629

 
1,672

     Research and development expenses
 
161

 
171

 
704

 
625

Total operating expenses
 
5,684

 
5,573

 
21,425

 
21,961

Operating income
 
755

 
849

 
2,989

 
2,830

Non-operating (income) expense, net
 
 
 
 
 
 
 
 
     Interest expense
 
52

 
45

 
201

 
172

     Interest income
 
(3
)
 
(2
)
 
(9
)
 
(14
)
     Other expense (income)
 
28

 
(3
)
 
18

 
12

Total non-operating (income) expense, net
 
77

 
40

 
210

 
170

Income from continuing operations before taxes
 
678

 
809

 
2,779

 
2,660

Federal and foreign income taxes
 
210

 
261

 
878

 
782

Income from continuing operations
 
468

 
548

 
1,901

 
1,878

Income (loss) from discontinued operations, net of tax
 
3

 
4

 
(1
)
 
18

Net income
 
471

 
552

 
1,900

 
1,896

Less: Net income (loss) attributable to noncontrolling
 
 
 
 
 
 
 
 
   interests in subsidiaries
 
2

 
9

 
12

 
30

Net income attributable to Raytheon Company
 
$
469

 
$
543

 
$
1,888

 
$
1,866

 
 
 
 
 
 
 
 
 
Basic earnings (loss) per share attributable to Raytheon
 
 
 
 
 
 
 
 
  Company common stockholders:
 
 
 
 
 
 
 
 
     Income from continuing operations
 
$
1.41

 
$
1.56

 
$
5.67

 
$
5.25

     Income (loss) from discontinued operations, net of tax
 
0.01

 
0.02

 

 
0.05

     Net income
 
1.42

 
1.58

 
5.67

 
5.30

 
 
 
 
 
 
 
 
 
Diluted earnings (loss) per share attributable to Raytheon
 
 
 
 
 
 
 
 
  Company common stockholders:
 
 
 
 
 
 
 
 
     Income from continuing operations
 
$
1.41

 
$
1.56

 
$
5.65

 
$
5.22

     Income (loss) from discontinued operations, net of tax
 
0.01

 
0.02

 

 
0.05

     Net income
 
1.42

 
1.57

 
5.65

 
5.28

 
 
 
 
 
 
 
 
 
Amounts attributable to Raytheon Company common
 
 
 
 
 
 
 
 
  stockholders:
 
 
 
 
 
 
 
 
     Income from continuing operations
 
$
466

 
$
539

 
$
1,889

 
$
1,848

     Income (loss) from discontinued operations, net of tax
 
3

 
4

 
(1
)
 
18

     Net income
 
$
469

 
$
543

 
$
1,888

 
$
1,866

 
 
 
 
 
 
 
 
 
Average shares outstanding
 
 
 
 
 
 
 
 
     Basic
 
329.8

 
344.1

 
333.2

 
351.7

     Diluted
 
330.8

 
345.1

 
334.2

 
353.6








Attachment B
 
 
 
 
 
 
 
 
 
 
 
Raytheon Company
 
 

 
 
 
 
 
 
Preliminary Segment Information
 
 
 
 
 
 
 
 
 
 
 
Fourth Quarter 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income
 
Net Sales
 
Operating Income
 
As a Percent of Net Sales
(In millions, except percentages)
Three Months Ended
 
Three Months Ended
 
Three Months Ended
 
31-Dec-12
 
31-Dec-11
 
31-Dec-12
 
31-Dec-11
 
31-Dec-12
 
31-Dec-11
 
 
 
 
 
 
 
 
 
 
 
 
Integrated Defense Systems
$
1,321

 
$
1,291

 
$
226

 
$
236

 
17.1
%
 
18.3
%
Intelligence and Information Systems
755

 
753

 
64

 
74

 
8.5
%
 
9.8
%
Missile Systems
1,544

 
1,482

 
181

 
209

 
11.7
%
 
14.1
%
Network Centric Systems
1,133

 
1,137

 
125

 
175

 
11.0
%
 
15.4
%
Space and Airborne Systems
1,377

 
1,341

 
217

 
214

 
15.8
%
 
16.0
%
Technical Services
831

 
886

 
72

 
84

 
8.7
%
 
9.5
%
FAS/CAS Adjustment

 

 
(67
)
 
(83
)
 
 
 
 
Corporate and Eliminations
(522
)
 
(468
)
 
(63
)
 
(60
)
 
 
 
 
Total
$
6,439

 
$
6,422

 
$
755

 
$
849

 
11.7
%
 
13.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income
 
Net Sales
 
Operating Income
 
As a Percent of Net Sales
(In millions, except percentages)
Twelve Months Ended
 
Twelve Months Ended
 
Twelve Months Ended
 
31-Dec-12
 
31-Dec-11
 
31-Dec-12
 
31-Dec-11
 
31-Dec-12
 
31-Dec-11
 
 
 
 
 
 
 
 
 
 
 
 
Integrated Defense Systems
$
5,037

 
$
4,958

 
$
918

 
$
836

 
18.2
%
 
16.9
%
Intelligence and Information Systems
3,012

 
3,015

 
247

 
159

 
8.2
%
 
5.3
%
Missile Systems
5,693

 
5,590

 
719

 
693

 
12.6
%
 
12.4
%
Network Centric Systems
4,058

 
4,497

 
495

 
667

 
12.2
%
 
14.8
%
Space and Airborne Systems
5,333

 
5,255

 
784

 
717

 
14.7
%
 
13.6
%
Technical Services
3,239

 
3,353

 
282

 
312

 
8.7
%
 
9.3
%
FAS/CAS Adjustment

 

 
(255
)
 
(337
)
 
 
 
 
Corporate and Eliminations
(1,958
)
 
(1,877
)
 
(201
)
 
(217
)
 
 
 
 
Total
$
24,414

 
$
24,791

 
$
2,989

 
$
2,830

 
12.2
%
 
11.4
%






Attachment C
 
 
 
 
 
 
 
Raytheon Company

 
 
 
 
Other Preliminary Information
 
 
 
 
 
 
 
Fourth Quarter 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In millions)
Funded Backlog
 
Total Backlog
 
31-Dec-12
 
31-Dec-11
 
31-Dec-12
 
31-Dec-11
 
 
 
 
 
 
 
 
Integrated Defense Systems
$
7,313

 
$
7,100

 
$
9,431

 
$
9,766

Intelligence and Information Systems
1,067

 
829

 
3,989

 
4,366

Missile Systems
6,939

 
6,205

 
10,030

 
8,570

Network Centric Systems
3,583

 
3,267

 
4,364

 
4,160

Space and Airborne Systems
3,409

 
3,104

 
6,031

 
5,864

Technical Services
1,736

 
1,957

 
2,336

 
2,586

Total
$
24,047

 
$
22,462

 
$
36,181

 
$
35,312

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bookings
 
Bookings
 
Three Months Ended
 
Twelve Months Ended
 
31-Dec-12
 
31-Dec-11
 
31-Dec-12
 
31-Dec-11
 
 
 
 
 
 
 
 
Total Bookings
$
7,892

 
$
7,147

 
$
26,504

 
$
26,555






Attachment D
 
 
 
Raytheon Company

Preliminary Balance Sheet Information
 
 
 
Fourth Quarter 2012
 
 
 
 
 
 
 
(In millions)
 
 
 
 
31-Dec-12
 
31-Dec-11
Assets
 
 
 
     Cash and cash equivalents
$
3,188

 
$
4,000

     Short-term investments
856

 

     Contracts in process, net
4,543

 
4,526

     Inventories
381

 
336

     Deferred taxes
96

 
221

     Prepaid expenses and other current assets
182

 
226

          Total current assets
9,246

 
9,309

 
 
 
 
Property, plant and equipment, net
1,986

 
2,006

Deferred taxes
1,367

 
657

Goodwill
12,756

 
12,544

Other assets, net
1,331

 
1,338

               Total assets
$
26,686

 
$
25,854

 
 
 
 
Liabilities and Equity
 
 
 
Current liabilities
 
 
 
     Advance payments and billings in excess of costs incurred
$
2,398

 
$
2,542

     Accounts payable
1,348

 
1,507

     Accrued employee compensation
1,014

 
941

     Other accrued expenses
1,142

 
1,140

          Total current liabilities
5,902

 
6,130

 
 
 
 
Accrued retiree benefits and other long-term liabilities
7,854

 
6,774

Deferred taxes
9

 
5

Long-term debt
4,731

 
4,605

 
 
 
 
Equity
 
 
 
  Raytheon Company stockholders' equity
 
 
 
     Common stock
3

 
3

     Additional paid-in capital
2,928

 
3,523

     Accumulated other comprehensive loss
(7,788
)
 
(7,001
)
     Retained earnings
12,883

 
11,656

          Total Raytheon Company stockholders' equity
8,026

 
8,181

     Noncontrolling interests in subsidiaries
164

 
159

          Total equity
8,190

 
8,340

               Total liabilities and equity
$
26,686

 
$
25,854






Attachment E
 
 
 
 
 
 
 
Raytheon Company

 
 
 
 
Preliminary Cash Flow Information
 
 
 
 
 
 
 
Fourth Quarter 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Twelve Months Ended
 
31-Dec-12
 
31-Dec-11
 
31-Dec-12
 
31-Dec-11
 
 
 
 
 
 
 
 
Net income
$
471

 
$
552

 
$
1,900

 
$
1,896

Loss (income) from discontinued operations, net of tax
(3
)
 
(4
)
 
1

 
(18
)
Income from continuing operations
468

 
548

 
1,901

 
1,878

 
 
 
 
 
 
 
 
Depreciation
80

 
81

 
318

 
311

Amortization
34

 
35

 
137

 
133

Working capital (excluding pension and income taxes)**
668

 
1,060

 
(243
)
 
187

Other long-term liabilities
(36
)
 
30

 
(74
)
 
(25
)
Pension and other postretirement benefits
(251
)
 
(500
)
 
(131
)
 
(760
)
Other
25

 
32

 
43

 
378

               Net operating cash flow from continuing operations
988

 
1,286

 
1,951

 
2,102

 
 
 
 
 
 
 
 
Supplemental Cash Flow Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital spending
(135
)
 
(143
)
 
(339
)
 
(340
)
Internal use software spending
(16
)
 
(23
)
 
(76
)
 
(97
)
Acquisitions
(294
)
 
(94
)
 
(301
)
 
(645
)
Dividends
(165
)
 
(148
)
 
(643
)
 
(588
)
Repurchases of common stock
(100
)
 
(313
)
 
(825
)
 
(1,250
)
Debt issuance
1,092

 
992

 
1,092

 
992

Debt repayment
(970
)
 

 
(970
)
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
** Working capital (excluding pension and income taxes) is a summation of changes in: contracts in process, net and advance payments and billings in excess of costs incurred, inventories, prepaid expenses and other current assets, accounts payable, accrued employee compensation, and other accrued expenses from the Statements of Cash Flows.
 
 
 
 
 
 
 
 






Attachment F (Page 1 of 2)
 
 
 
 
 
 
 
 
 
 
 
Raytheon Company
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Financial Measures - Adjusted EPS, Adjusted Income and Adjusted Operating Margin
 

 
 
Fourth Quarter 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EPS Non-GAAP Reconciliation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In millions, except per share amounts)
 
 
 
 
 
 
 
 
2013 Guidance(5)
 
 
 
 
 
Three Months Ended
 
Twelve Months Ended
 
Low end
 
High end
 
 
 
 
 
2012
 
2011
 
2012
 
2011
 
of range
 
of range
Diluted earnings per share from continuing operations attributable to Raytheon Company
 
 
 
 
 
 
 
 
 
 
 
 
common stockholders
$
1.41

 
$
1.56

 
$
5.65

 
$
5.22

 
$
5.16

 
$
5.31

Per share impact of the FAS/CAS Adjustment (A)
0.13

 
0.16

 
0.50

 
0.62

 
0.57

 
0.57

Per share impact of the early debt retirement make-whole provision (B)
0.06

 

 
0.06

 

 

 

Per share impact of the UK Border Agency (UKBA) LOC Adjustment (C)

 

 

 
0.17

 

 

Per share impact of the favorable tax settlement (D)

 

 

 
(0.17
)
 

 

Per share impact of the expected 2012 research and development (R&D) tax credit (E)

 

 

 

 
(0.08
)
 
(0.08
)
Adjusted EPS (3), (4)
$
1.60

 
$
1.72

 
$
6.21

 
$
5.85

 
$
5.65

 
$
5.80

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 (A)
FAS/CAS Adjustment
$
67

 
$
83

 
$
255

 
$
337

 
$
286

 
$
286

 
 
Tax effect (1)
(23
)
 
(29
)
 
(89
)
 
(118
)
 
(100
)
 
(100
)
 
After-tax impact
44

 
54

 
166

 
219

 
186

 
186

 
Diluted shares
330.8

 
345.1

 
334.2

 
353.6

 
327.0

 
324.0

 
Per share impact
$
0.13

 
$
0.16

 
$
0.50

 
$
0.62

 
$
0.57

 
$
0.57

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 (B)
Early debt retirement make-whole provision
$
29

 
$

 
$
29

 
$

 
$

 
$

 
 
Tax effect (1)
(10
)
 

 
(10
)
 

 

 

 
After-tax impact
19

 

 
19

 

 

 

 
Diluted shares
330.8

 

 
334.2

 

 

 

 
Per share impact
$
0.06

 
$

 
$
0.06

 
$

 
$

 
$

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 (C)
UKBA LOC Adjustment
$

 
$

 
$

 
$
80

 
$

 
$

 
 
Tax effect (2)

 

 

 
(20
)
 

 

 
After-tax impact

 

 

 
60

 

 

 
Diluted shares

 

 

 
353.6

 

 

 
Per share impact
$

 
$

 
$

 
$
0.17

 
$

 
$

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 (D)
Favorable tax settlement
$

 
$

 
$

 
$
(60
)
 
$

 
$

 
Diluted shares

 

 

 
353.6

 

 

 
Per share impact
$

 
$

 
$

 
$
(0.17
)
 
$

 
$

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 (E)
Expected 2012 R&D tax credit
$

 
$

 
$

 
$

 
$
(25
)
 
$
(25
)
 
Diluted shares

 

 

 

 
327.0

 
324.0

 
Per share impact
$

 
$

 
$

 
$

 
$
(0.08
)
 
$
(0.08
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1
)
Tax effected at 35% federal statutory tax rate.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(2
)
Tax effected at approximately 25% 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, three and twelve months ended 2012 Adjusted EPS also excludes the impact of the charges associated with the make-whole provision on the early retirement of debt. In addition to the FAS/CAS Adjustment, twelve 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 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. Twelve 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 a tax refund for the 2006-2008 tax years. 2013 Adjusted EPS guidance also excludes the earnings per share impact of an expected R&D tax credit that relates to 2012. In January 2013, Congress approved legislation that included the extension of the R&D tax credit. The legislation retroactively reinstated the R&D tax credit for 2012 and extended it through December 31, 2013. As a result, we expect to record the 2012 benefit in 2013.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(5
)
2013 Guidance does not reflect any of the potential effects of sequestration under the Budget Control Act (BCA), if implemented.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




Attachment F (Page 2 of 2)
 
 
 
 
 
 
 
 
 
 
 
Raytheon Company
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Financial Measures - Adjusted EPS, Adjusted Income and Adjusted Operating Margin
 
 
 
 
 
 
Fourth Quarter 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Income Non-GAAP Reconciliation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Twelve Months Ended
 
 
 
 
 
 
 
 
 
2012
 
2011
 
2012
 
2011
 
 
 
 
Income from continuing operations attributable to Raytheon Company common stockholders
$
466

 
$
539

 
$
1,889

 
$
1,848

 
 
 
 
FAS/CAS Adjustment (1)
44

 
54

 
166

 
219

 
 
 
 
Early debt retirement make-whole provision (1)
19

 

 
19

 

 
 
 
 
UKBA LOC Adjustment (2)

 

 

 
60

 
 
 
 
Favorable tax settlement

 

 

 
(60
)
 
 
 
 
Adjusted Income (3), (4)
$
529

 
$
593

 
$
2,074

 
$
2,067

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Operating Margin Non-GAAP Reconciliation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2013 Guidance(6)
 
 
 
 
 
Three Months Ended
 
Twelve Months Ended
 
Low end
 
High end
 
 
 
 
 
2012
 
2011
 
2012
 
2011
 
of range
 
of range
Operating Margin
11.7
%
 
13.2
%
 
12.2
%
 
11.4
%
 
11.1
%
 
11.3
%
Impact of the FAS/CAS Adjustment
1.0
%
 
1.3
%
 
1.0
%
 
1.4
%
 
1.2
%
 
1.2
%
Impact of the UKBA LOC Adjustment
%
 
%
 
%
 
0.3
%
 
%
 
%
Adjusted Operating Margin (3), (5)
12.8
%
 
14.5
%
 
13.3
%
 
13.1
%
 
12.3
%
 
12.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1
)
Tax effected at 35% federal statutory tax rate.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(2
)
Tax effected at approximately 25% 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 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, three and twelve months ended 2012 Adjusted Income also excludes the impact of the charges associated with the make-whole provision on the early retirement of debt. In addition to the FAS/CAS Adjustment, twelve months ended 2011 Adjusted Income also excludes the after-tax impact of the UKBA LOC Adjustment, as described on page 1 of 2 of this attachment. Twelve months ended 2011 Adjusted Income also excludes the impact of the favorable tax settlement in the third quarter of 2011, as described on page 1 of 2 of this attachment.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(5
)
Adjusted Operating Margin is defined as total operating margin excluding the margin impact of the FAS/CAS Adjustment and, from time to time, certain other items. In addition to the FAS/CAS Adjustment, twelve months ended 2011 Adjusted Operating Margin also excludes the impact of the UKBA LOC Adjustment, as described on page 1 of 2 of this attachment.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(6
)
2013 Guidance does not reflect any of the potential effects of sequestration under the BCA, if implemented.