WALTHAM, Mass., Jan. 31, 2008 /PRNewswire-FirstCall/ -- Highlights -- Record bookings of $9.2 billion in quarter and $25.5 billion for year; record backlog of $36.6 billion -- Sales of $6.0 billion in quarter and $21.3 billion for year, both up 8 percent -- Operating income of $646 million in quarter, up 17 percent; $2.3 billion for year, up 20 percent -- Earnings per share (EPS) from continuing operations of $1.45 in quarter and $3.80 for year -- Adjusted EPS from continuing operations of $0.96 in quarter and $3.31 for year, both up 26 percent(1) -- Repurchased 5.4 million shares for $341 million in quarter; 28.7 million shares for $1.6 billion for year
Raytheon Company (NYSE: RTN) reported fourth quarter 2007 income from
continuing operations of
"2007 was a very successful year for the Company; we grew sales 8% in 2007 while increasing operating income by 20%," said William H. Swanson, Raytheon Chairman and CEO. "We ended the year with record bookings and backlog, which positions us well for 2008 and beyond."
Fourth quarter 2007 net income was
Net sales for the fourth quarter 2007 were
Operating cash flow from continuing operations for the fourth quarter 2007
was
Full-Year Financial Results
For the full year the Company reported income from continuing operations
of
In 2007 the Company sold Raytheon Aircraft Company (RAC) and Flight
Options LLC (FO), which together contributed
Total 2007 net sales for the Company were
Operating cash flow from continuing operations was
As part of the Company's previously announced share repurchase program,
during the fourth quarter 2007 the Company repurchased 5.4 million shares of
common stock for
Summary Financial Results 4th Quarter % Full-Year % ($ in millions, except per share data) 2007 2006 Change 2007 2006 Change Net Sales $6,000 $5,561 8% $21,301 $19,707 8% Total Operating Expenses 5,354 5,008 18,973 17,763 Operating Income 646 553 17% 2,328 1,944 20% Non-operating Expenses 7 40 103 153 Income from Cont. Ops. before Taxes $639 $513 25% $2,225 $1,791 24% Income from Continuing Operations $634 $344 84% $1,693 $1,187 43% (Loss) income from Disc. Operations (36) 21 NM 885 96 NM Net Income $598 $365 64% $2,578 $1,283 101% Diluted EPS from Continuing Operations $1.45 $0.76 91% $3.80 $2.63 44% Adjusted EPS from Cont. Ops.(1) $0.96 $0.76 26% $3.31 $2.63 26% Diluted EPS $1.37 $0.81 69% $5.79 $2.85 103% Operating Cash Flow from Cont. Ops. $941 $1,293 $1,249 $2,477 (1) Adjusted EPS from continuing operations is EPS from continuing operations excluding tax-related benefits of $0.49 ($214M) in Q4 '07 and $0.49 ($219M) in full-year '07. Adjusted EPS from continuing operations is a non-GAAP financial measure. See attachment G for a reconciliation of this measure to EPS from continuing operations under GAAP and a discussion of why the Company is presenting this information. Bookings and Backlog Bookings 4th Quarter Full-Year (in millions) 2007 2006 2007 2006 Total Bookings $9,181 $7,633 $25,498 $22,417 Backlog (in millions) 12/31/07 12/31/06 Backlog $36,614 $33,838 Funded Backlog $20,518 $18,186
The Company reported total bookings for the fourth quarter 2007 of
The Company ended 2007 with a record backlog of
Outlook Prior 2008 Financial Outlook Current (10/25/07) Net Sales ($B) 22.4 - 22.9 22.1 - 22.6 FAS/CAS Pension Expense ($M) 150 Not provided Interest Expense, net ($M) 45 - 60 Not provided Diluted Shares (M) 427 - 429 Not provided EPS from Cont. Ops. $3.65 - $3.80 $3.45 - $3.65 Operating Cash Flow from Cont. Ops. ($B) 2.0 - 2.2 1.5 - 1.7 ROIC (%) 9.6 - 10.1 Not provided
The Company has updated full-year 2008 guidance. Charts containing additional information on the Company's 2008 guidance are available on the Company's website at www.raytheon.com. See attachment F for the Company's calculation and use of Return on Invested Capital (ROIC), a non-GAAP financial measure.
Segment Results Integrated Defense Systems 4th Quarter % Full-Year % ($ in millions) 2007 2006 Change 2007 2006 Change Net Sales $1,290 $1,189 8% $4,695 $4,220 11% Operating Income $211 $189 12% $828 $691 20% Operating Margin 16.4% 15.9% 17.6% 16.4%
Integrated Defense Systems (IDS) had fourth quarter 2007 net sales of
During the quarter, IDS booked
Intelligence and Information Systems 4th Quarter % Full-Year % ($ in millions) 2007 2006 Change 2007 2006 Change Net Sales $808 $690 17% $2,742 $2,560 7% Operating Income $66 $63 5% $248 $234 6% Operating Margin 8.2% 9.1% 9.0% 9.1%
Intelligence and Information Systems (IIS) had fourth quarter 2007 net
sales of
During the quarter, IIS booked
Missile Systems 4th Quarter % Full-Year % ($ in millions) 2007 2006 Change 2007 2006 Change Net Sales $1,362 $1,316 3% $4,993 $4,503 11% Operating Income $148 $138 7% $541 $479 13% Operating Margin 10.9% 10.5% 10.8% 10.6%
Missile Systems (MS) had fourth quarter 2007 net sales of
During the quarter, MS booked $242 million for Phalanx Weapons Systems for the U.S. Navy, $234 million for the design and development of the Mid Range Munition (MRM) system and $196 million for the production of Tube-launched Optically guided Wire controlled (TOW) missiles for the U.S. Army. MS also booked $145 million for the production of Enhanced Paveway(TM) for an international customer. Network Centric Systems 4th Quarter % Full-Year % ($ in millions) 2007 2006 Change 2007 2006 Change Net Sales $1,147 $1,011 13% $4,164 $3,561 17% Operating Income $127 $117 9% $506 $379 34% Operating Margin 11.1% 11.6% 12.2% 10.6%
Network Centric Systems (NCS) had fourth quarter 2007 net sales of
During the quarter, NCS booked
Space and Airborne Systems 4th Quarter % Full-Year % ($ in millions) 2007 2006 Change 2007 2006 Change Net Sales $1,243 $1,175 6% $4,288 $4,319 -1% Operating Income $177 $159 11% $560 $604 -7% Operating Margin 14.2% 13.5% 13.1% 14.0%
Space and Airborne Systems (SAS) had fourth quarter 2007 net sales of
SAS booked
Technical Services 4th Quarter % Full-Year % ($ in millions) 2007 2006 Change 2007 2006 Change Net Sales $643 $639 1% $2,174 $2,153 1% Operating Income $47 $50 -6% $139 $153 -9% Operating Margin 7.3% 7.8% 6.4% 7.1%
Technical Services (TS) had fourth quarter 2007 net sales of
During the quarter, TS booked
Discontinued Operations
During the quarter, the Company recorded an after-tax loss from
discontinued operations of
Raytheon Company (NYSE: RTN), with 2007 sales of
Disclosure Regarding Forward-looking Statements
This release and the attachments contain forward-looking statements, including information regarding the Company's 2008 financial outlook, future plans, objectives, business prospects and anticipated financial performance. These forward-looking statements are not statements of historical facts and represent only the Company's current expectations regarding such matters. These statements inherently involve a wide range of known and unknown risks and uncertainties. The Company's actual actions and results could differ materially from what is expressed or implied by these statements. Specific factors that could cause such a difference include, but are not limited to: the Company's dependence on the U.S. government for a significant portion of its business and the risks associated with U.S. government sales, including changes or shifts in defense spending, uncertain funding of programs, potential termination of contracts, and difficulties in contract performance; the ability to procure new contracts; the risks of conducting business in foreign countries; the ability to comply with extensive governmental regulation, including import and export policies and procurement and other regulations; the impact of competition; the ability to develop products and technologies; 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; the outcome of contingencies and litigation matters, including government investigations; the ability to recruit and retain qualified personnel; risks associated with acquisitions, dispositions, joint ventures and other business arrangements; and other factors as may be detailed from time to time in the Company's public announcements and Securities and Exchange Commission filings. In addition, these statements do not give effect to the potential impact of any acquisitions, dispositions or business combinations that may be announced or closed after the date hereof. 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. 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.
Conference Call on the Fourth Quarter and Full-Year 2007 Financial Results
Raytheon's financial results conference call will be held on
The dial-in number for the conference call will be (866) 800 - 8651. The conference call will also be audiocast on the Internet at www.raytheon.com. 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.
Media Contact: Investor Relations Contact: Jon Kasle Greg Smith 781-522-5110 781-522-5141 Attachment A Raytheon Company Preliminary Statement of Operations Information Fourth Quarter 2007 (In millions except per share amounts) Three Months Ended Twelve Months Ended 31-Dec-07 31-Dec-06 31-Dec-07 31-Dec-06 Net sales $6,000 $5,561 $21,301 $19,707 Cost of sales 4,837 4,525 17,037 15,977 Administrative and selling expenses 392 361 1,434 1,322 Research and development expenses 125 122 502 464 Total operating expenses 5,354 5,008 18,973 17,763 Operating income 646 553 2,328 1,944 Interest expense 41 70 196 272 Interest income (36) (28) (163) (75) Other expense (income), net 2 (2) 70 (44) Non-operating expense, net 7 40 103 153 Income from continuing operations before taxes 639 513 2,225 1,791 Federal and foreign income taxes 5 169 532 604 Income from continuing operations 634 344 1,693 1,187 Income (loss) from discontinued operations, net of tax 8 21 (57) 96 (Loss) gain on sales of discontinued operations, net of tax (44) - 942 - (Loss) income from discontinued operations (36) 21 885 96 Net income $598 $365 $2,578 $1,283 Earnings per share from continuing operations Basic $1.50 $0.78 $3.91 $2.69 Diluted $1.45 $0.76 $3.80 $2.63 (Loss) earnings per share from discontinued operations Basic $(0.09) $0.05 $2.04 $0.22 Diluted $(0.08) $0.05 $1.99 $0.21 Earnings per share Basic $1.41 $0.83 $5.95 $2.90 Diluted $1.37 $0.81 $5.79 $2.85 Average shares outstanding Basic 423.2 440.1 433.0 441.8 Diluted 436.8 452.3 445.7 450.9 Attachment B Raytheon Company Preliminary Segment Information Fourth Quarter 2007 (In millions) Operating Income As a Percent Net Sales Operating Income of Sales Three Months Ended Three Months Ended Three Months Ended 31-Dec-07 31-Dec-06 31-Dec-07 31-Dec-06 31-Dec-07 31-Dec-06 Integrated Defense Systems $1,290 $1,189 $211 $189 16.4% 15.9% Intelligence and Information Systems 808 690 66 63 8.2% 9.1% Missile Systems 1,362 1,316 148 138 10.9% 10.5% Network Centric Systems 1,147 1,011 127 117 11.1% 11.6% Space and Airborne Systems 1,243 1,175 177 159 14.2% 13.5% Technical Services 643 639 47 50 7.3% 7.8% FAS/CAS Pension Adjustment - - (67) (91) Corporate and Eliminations (493) (459) (63) (72) Total $6,000 $5,561 $646 $553 10.8% 9.9% Operating Income As a Percent Net Sales Operating Income of Sales Twelve Months Ended Twelve Months Ended Twelve Months Ended 31-Dec-07 31-Dec-06 31-Dec-07 31-Dec-06 31-Dec-07 31-Dec-06 Integrated Defense Systems $4,695 $4,220 $828 $691 17.6% 16.4% Intelligence and Information Systems 2,742 2,560 248 234 9.0% 9.1% Missile Systems 4,993 4,503 541 479 10.8% 10.6% Network Centric Systems 4,164 3,561 506 379 12.2% 10.6% Space and Airborne Systems 4,288 4,319 560 604 13.1% 14.0% Technical Services 2,174 2,153 139 153 6.4% 7.1% FAS/CAS Pension Adjustment - - (259) (362) Corporate and Eliminations (1,755) (1,609) (235) (234) Total $21,301 $19,707 $2,328 $1,944 10.9% 9.9% Attachment C Raytheon Company Other Preliminary Information Fourth Quarter 2007 Funded Backlog Backlog (In millions) (In millions) 31-Dec-07 31-Dec-06 31-Dec-07 31-Dec-06 Integrated Defense Systems $9,296 $7,934 $4,781 $4,088 Intelligence and Information Systems 5,636 3,935 2,325 893 Missile Systems 9,379 9,504 5,218 5,135 Network Centric Systems 5,102 5,059 3,957 4,037 Space and Airborne Systems 5,276 5,591 3,037 2,770 Technical Services 1,925 1,815 1,200 1,263 Total $36,614 $33,838 $20,518 $18,186 Bookings Bookings (In millions) (In millions) Three Months Ended Twelve Months Ended 31-Dec-07 31-Dec-06 31-Dec-07 31-Dec-06 Total Bookings $9,181 $7,633 $25,498 $22,417 Attachment D Raytheon Company Preliminary Balance Sheet Information Fourth Quarter 2007 (In millions) 31-Dec-07 31-Dec-06 Assets Cash and cash equivalents $2,655 $2,460 Accounts receivable, less allowance for doubtful accounts 126 141 Contracts in process 3,821 3,600 Inventories 386 376 Deferred taxes 432 257 Prepaid expenses and other current assets 196 108 Assets held for sale - 2,575 Total current assets 7,616 9,517 Property, plant and equipment, net 2,058 2,025 Deferred taxes - 170 Prepaid retiree benefits 617 527 Goodwill 11,627 11,461 Other assets, net 1,363 1,417 Assets held for sale - 374 Total assets $23,281 $25,491 Liabilities and Stockholders' Equity Notes payable and current portion of long-term debt $- $687 Advance payments and billings in excess of costs incurred 1,845 1,885 Accounts payable 1,141 910 Accrued employee compensation 902 937 Other accrued expenses 900 1,043 Liabilities held for sale - 1,253 Total current liabilities 4,788 6,715 Accrued retiree benefits and other long-term liabilities 3,016 4,053 Deferred taxes 451 - Long-term debt 2,268 3,278 Liabilities held for sale - 179 Minority interest 216 165 Stockholders' equity 12,542 11,101 Total liabilities and stockholders' equity $23,281 $25,491 Attachment E Raytheon Company Preliminary Cash Flow Information Fourth Quarter 2007 (In millions) Three Months Ended Twelve Months Ended 31-Dec-07 31-Dec-06 31-Dec-07 31-Dec-06 Net income $598 $365 $2,578 $1,283 Less: Loss (income) from discontinued operations, net of tax 36 (21) (885) (96) Income from continuing operations 634 344 1,693 1,187 Depreciation 74 76 288 285 Amortization 23 20 84 76 Working capital 444 824 (85) 377 Discontinued operations (8) 258 (51) 266 Net activity in financing receivables 17 72 88 168 Other (251) (43) (819) 384 Net operating cash flow 933 1,551 1,198 2,743 Capital spending (153) (149) (313) (294) Internal use software spending (34) (27) (85) (77) Acquisitions (211) - (211) (87) Investment activity and divestitures 26 3 3,143 53 Dividends (109) (107) (440) (420) Repurchase of common stock (341) - (1,642) (352) Debt repayments (118) (16) (1,724) (437) Discontinued operations - (21) (29) (73) Other 53 64 298 202 Total cash flow $46 $1,298 $195 $1,258 Attachment F Raytheon Company Preliminary Return on Invested Capital Non-GAAP Financial Measure Fourth Quarter 2007 We define Return on Invested Capital (ROIC) as income from continuing operations 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 cumulative minimum pension liability/impact of FAS 158. ROIC is not a measure of financial performance under generally accepted accounting principles (GAAP) and may not be defined and calculated by other companies in the same manner. ROIC should be considered supplemental to and not a substitute for financial information prepared in accordance with GAAP. We use ROIC as a measure of efficiency and effectiveness of our use of capital and as an element of management compensation. Return on Invested Capital (In millions) 2008 Guidance Low end High end of range of range Income from continuing operations Net interest expense, after-tax* Combined Combined Lease expense, after-tax* Return $1,655 $1,720 Net debt ** Equity less investment in discontinued operations Lease expense x 8 plus financial guarantees Combined Combined Minimum pension liability (cumulative) Invested capital from continuing operations*** $17,300 $17,100 ROIC 9.6% 10.1% * Effective 2008 tax rate: 34.1% (2008 guidance) ** Net debt is defined as total debt less cash and cash equivalents and is calculated using a 2 point average *** Calculated using a 2 point average Attachment G Raytheon Company Preliminary Adjusted EPS from Continuing Operations Non-GAAP Reconciliation Fourth Quarter 2007 Three Months Ended Twelve Months Ended 31-Dec-07 31-Dec-06 31-Dec-07 31-Dec-06 Diluted EPS from continuing operations as reported under GAAP $1.45 $0.76 $3.80 $2.63 Less: Diluted EPS from tax-related benefits (0.49) - (0.49) - Adjusted EPS from continuing operations * $0.96 $0.76 $3.31 $2.63 * Adjusted EPS from continuing operations is not a measure of financial performance under generally accepted accounting principles (GAAP). It should be considered supplemental to and not a substitute for financial performance in accordance with GAAP. We use Adjusted EPS from continuing operations to facilitate management's internal comparisons to the Company's historical operating results, to competitors' operating results, and to provide greater transparency to investors of supplemental information used by management in its financial and operational decision-making, including management's evaluation of the Company's operating performance. Adjusted EPS from continuing operations excludes the tax-related benefits recognized in the fourth quarter of 2007 because the Company believes that such items are not indicative of its core operating results, are not indicative of trends, and do not provide meaningful comparisons with other reporting periods.
SOURCE Raytheon Company