Raytheon Reports Strong Fourth Quarter and Full-Year 2018 Results

WALTHAM, Mass., Jan. 31, 2019 /PRNewswire/ -- Raytheon Company (NYSE: RTN) today announced net sales for the fourth quarter 2018 of $7.4 billion, up 8.5 percent compared to $6.8 billion in the fourth quarter 2017. Fourth quarter 2018 EPS from continuing operations was $2.93 compared to $1.35 in the fourth quarter 2017. The increase in the fourth quarter 2018 EPS from continuing operations was primarily driven by operational improvements and lower taxes primarily associated with tax reform.

Net sales in 2018 were $27.1 billion, up 6.7 percent compared to $25.3 billion in 2017. Full-year 2018 EPS from continuing operations was $10.15 compared to $6.94 for the full-year 2017.

"Raytheon had a very successful year in 2018. We accelerated our sales growth yet again and achieved a new company record for operating cash flow," said Thomas A. Kennedy, Raytheon Chairman and CEO. "We ended the year with record bookings and backlog which positions us well for 2019 and beyond."

The company generated strong operating cash flow for both the fourth quarter and full-year. Operating cash flow from continuing operations for the fourth quarter 2018 was $2.4 billion. Operating cash flow from continuing operations for the full-year 2018 was a record $3.4 billion, after making the $1.25 billion pretax discretionary pension contribution in the third quarter 2018. Operating cash flow from continuing operations for the fourth quarter 2017 and full-year 2017 was $1.6 billion and $2.7 billion, respectively, after making the $1.0 billion pretax discretionary pension contribution in the fourth quarter 2017. Operating cash flow from continuing operations for the fourth quarter and full-year 2018 was better than the company's prior guidance primarily due to improved working capital.

In the fourth quarter 2018, the company repurchased 2.3 million shares of common stock for $400 million. For the full-year 2018, the company repurchased 6.7 million shares of common stock for $1,325 million.

The company had bookings of $8.4 billion in the fourth quarter 2018, resulting in a book-to-bill ratio of 1.15. Fourth quarter 2017 bookings were $8.5 billion. Full-year 2018 bookings were a record $32.2 billion, resulting in a book-to-bill ratio of 1.19. Full-year 2017 bookings were $27.7 billion.


       
              Summary Financial Results

    ---

                                                                                                                                  4th Quarter        
            
              %                                       Twelve Months        
            
              %



       ($ in millions, except per share data)                                                                        2018               2017                          Change                        2018            2017                           Change




       Bookings                                                                                                             $
            8,447                     $
            8,541       (1.1)%                                  $
            32,162                     $
            27,718        16.0%



       Net Sales                                                                                                            $
            7,360                     $
            6,783         8.5%                                  $
            27,058                     $
            25,348         6.7%



       Income from Continuing Operations attributable to                                                                      $
            833                    $
            393(1)       112.0%                                $
            2,910(2)                   $
            2,022(1)        43.9%



            Raytheon Company



       EPS from Continuing Operations                                                                                        $
            2.93                   $
            1.35(1)       117.0%                                $
            10.15(2)                    $
            6.94(1)        46.3%



       Operating Cash Flow from Continuing Operations                                                                       $
            2,433                     $
            1,624                                                $
            3,428                      $
            2,747



       Workdays in Fiscal Reporting Calendar                                                                           58                 58                                                         249             248


                                (1)
              
              Fourth quarter and twelve months 2017 Income from Continuing Operations attributable to Raytheon Company included a provisional tax-related expense of approximately $171 million due to the enactment of the Tax Cuts and Jobs Act of 2017, which had an EPS impact of
                                 $0.59.


                                (2)
              
              As previously disclosed, in the third quarter 2018, some of the company's pension plans purchased a group annuity contract to transfer $923 million of outstanding pension benefit obligations related to certain U.S. retirees and beneficiaries of the company's
                                 previously discontinued operations. In connection with this transaction, the company recognized a non-cash, non-operating pension settlement charge of $288 million pretax, $228 million after tax, primarily related to the accelerated recognition of actuarial losses in those plans, which is
                                 included in twelve months 2018 Income from Continuing Operations attributable to Raytheon Company. Twelve months 2018 EPS from Continuing Operations included an unfavorable $0.79 impact related to the settlement charge.



Backlog at the end of 2018 was a record $42.4 billion, an increase of $4.2 billion or 11 percent compared to the end of 2017.


       
                Backlog

    ---

                                      Period Ending



       ($ in millions)      2018       2017




       Backlog                   $
     42,420         $
     38,210



Outlook

The company has provided its financial outlook for 2019. Charts containing additional information on the company's 2019 outlook are available on the company's website.

                     2019 Financial Outlook

    ---

                                            2018 Actual               2019 Outlook



        Net Sales ($B)                             27.1   
          28.6 - 29.1


        Deferred Revenue
         Adjustment ($M)                           (10)                        (2)


        Amortization of
         Acquired Intangibles
         ($M)                                     (116)                      (114)


        FAS/CAS Operating
         Adjustment ($M)                          1,428                       1,463


        Retirement Benefits
         Non-service Expense,
         non-operating ($M)                     (1,230)                      (726)


        Interest Expense, net
         ($M)                                     (153) 
          (153) - (158)


        Diluted Shares (M)                          287    
          279 - 281


        Effective Tax Rate                         8.4%              17.0% - 17.5%


        EPS from Continuing
         Operations                              $10.15      
          $11.40 - $11.60


        Operating Cash Flow
         from Continuing
         Operations ($B)                            3.4    
          3.9 - 4.1

Segment Results

The company's reportable segments are: Integrated Defense Systems (IDS); Intelligence, Information and Services (IIS); Missile Systems (MS); Space and Airborne Systems (SAS); and Forcepoint(TM).


       
                Integrated Defense Systems

    ---

                                                           4th Quarter                                  Twelve Months



       ($ in millions)                          2018           2017        % Change         2018       2017                % Change




       Net Sales                                     $
          1,684    $
         1,553  8%                       $
          6,180          $
       5,804 6%



       Operating Income                                $
          247      $
         247                           $
          1,023            $
       935 9%



       Operating Margin                        14.7%         15.9%                     16.6%     16.1%

Integrated Defense Systems (IDS) had fourth quarter 2018 net sales of $1,684 million, up 8 percent compared to $1,553 million in the fourth quarter 2017. The increase in net sales for the quarter was primarily driven by higher net sales on two international Patriot(®) programs awarded in 2018. IDS had full-year 2018 net sales of $6,180 million compared to $5,804 million in 2017. The increase in net sales for the full-year was primarily driven by higher net sales from an international Patriot program awarded in the first quarter 2018.

IDS recorded $247 million of operating income in both the fourth quarter 2018 and the fourth quarter 2017. IDS recorded $1,023 million of operating income in 2018 compared to $935 million in 2017. The increase in operating income for the full-year was primarily driven by a favorable change in mix.

During the quarter, IDS booked $676 million to provide advanced Patriot air and missile defense capability for Sweden. IDS also booked $380 million to provide Guidance Enhanced Missiles (GEM-T) for an international customer; $140 million to provide Consolidated Contractor Logistics Support (CCLS) for the Missile Defense Agency (MDA); and $95 million on the Army Navy/Transportable Radar Surveillance-Model 2 (AN/TPY-2) radar sustainment program for the MDA.


       
                Intelligence, Information and Services

    ---

                                                                      4th Quarter                                 Twelve Months



       ($ in millions)                                     2018           2017        % Change         2018      2017                % Change




       Net Sales                                                $
          1,711    $
         1,572   9%                     $
          6,722          $
       6,177  9%



       Operating Income                                           $
          144      $
         117  23%                       $
          538            $
       455 18%



       Operating Margin                                    8.4%          7.4%                      8.0%     7.4%

Intelligence, Information and Services (IIS) had fourth quarter 2018 net sales of $1,711 million, up 9 percent compared to $1,572 million in the fourth quarter 2017. IIS had full-year 2018 net sales of $6,722 million compared to $6,177 million in 2017. The increase in net sales for both the quarter and the full-year was primarily driven by higher net sales on classified programs in both cyber and space, and the Development, Operations and Maintenance (DOMino) cyber program.

IIS recorded $144 million of operating income in the fourth quarter 2018 compared to $117 million in the fourth quarter 2017. IIS recorded $538 million of operating income in 2018 compared to $455 million in 2017. The increase in operating income for both the quarter and full-year was primarily driven by higher net program efficiencies and higher volume.

During the quarter, IIS booked $545 million on a number of classified programs. IIS also booked $142 million on domestic and foreign training programs in support of Warfighter FOCUS activities.


       
                Missile Systems

    ---

                                                4th Quarter                                    Twelve Months



       ($ in millions)               2018           2017        % Change           2018       2017                % Change




       Net Sales                          $
          2,317    $
         2,185    6%                       $
          8,298          $
     7,787   7%



       Operating Income                     $
          273      $
         278  (2)%                         $
          973          $
     1,010 (4)%



       Operating Margin             11.8%         12.7%                       11.7%     13.0%

Missile Systems (MS) had fourth quarter 2018 net sales of $2,317 million, up 6 percent compared to $2,185 million in the fourth quarter 2017. MS had full-year 2018 net sales of $8,298 million compared to $7,787 million in 2017. The increase in net sales for both the quarter and full-year was primarily driven by higher net sales on classified programs.

MS recorded $273 million of operating income in the fourth quarter 2018 compared to $278 million in the fourth quarter 2017. MS recorded $973 million of operating income in 2018 compared to $1,010 million in 2017. The decrease in operating margin for both the quarter and the full-year was primarily due to a change in mix.

During the quarter, MS booked $452 million for AIM-9X Sidewinder short-range air-to-air missiles; $193 million for Standard Missile-2 (SM-2); $149 million for StormBreaker(TM), formerly Small Diameter Bomb II (SDB II(TM)); $132 million for Phalanx(®) Close-In Weapon Systems (CIWS); $132 million for Paveway(TM); $110 million for the Iron Dome Tamir production program; and $75 million for the David's Sling weapon system's Stunner Missile. MS also booked $563 million on a number of classified contracts.


       
                Space and Airborne Systems

    ---

                                                           4th Quarter                                   Twelve Months



       ($ in millions)                          2018           2017        % Change          2018       2017                % Change




       Net Sales                                     $
          1,880    $
         1,670  13%                       $
          6,748          $
       6,430 5%



       Operating Income                                $
          262      $
         242   8%                         $
          884            $
       862 3%



       Operating Margin                        13.9%         14.5%                      13.1%     13.4%

Space and Airborne Systems (SAS) had fourth quarter 2018 net sales of $1,880 million, up 13 percent compared to $1,670 million in the fourth quarter 2017. The increase in net sales for the quarter was primarily driven by higher net sales on classified programs. SAS had full-year 2018 net sales of $6,748 million compared to $6,430 million in 2017. The increase in net sales for the full-year was primarily driven by higher net sales on a domestic tactical radar systems production program, and surveillance and targeting systems programs.

SAS recorded $262 million of operating income in the fourth quarter 2018 compared to $242 million in the fourth quarter 2017. The increase in operating income for the quarter was primarily due to higher volume. SAS recorded $884 million of operating income in 2018 compared to $862 million in 2017. The increase in operating income for the full-year was primarily due to higher net program efficiencies and higher volume, partially offset by mix.

During the quarter, SAS booked $429 million for the Next Generation Overhead Persistent Infrared (Next Gen OPIR) program for the U.S. Air Force; $347 million to provide support and sustainment services to the U.K. Royal Air Force's Shadow aircraft fleet; and $173 million for radar components for the U.S. Navy and the Royal Australian Air Force. SAS also booked $544 million on a number of classified contracts.


     
                Forcepoint


                                                 4th Quarter                                   Twelve Months



     ($ in millions)                  2018         2017        % Change             2018      2017              % Change




     Net Sales                             $
          172      $
       156       10%                    $
            634       $
     608      4%



     Operating Income (Loss)                 $
          2      $
       (8)   
     
     NM                      $
            5        $
     33  
     
     NM





     Operating Margin                 1.2%      (5.1)%                         0.8%      5.4%


                   NM = Not Meaningful

Forcepoint had fourth quarter 2018 net sales of $172 million, up 10 percent compared to $156 million in the fourth quarter 2017. Forcepoint had full-year 2018 net sales of $634 million compared to $608 million in 2017.

Forcepoint recorded $2 million of operating income in the fourth quarter 2018 compared to a loss of $8 million in the fourth quarter 2017. Forcepoint recorded $5 million of operating income in 2018 compared to $33 million in 2017. The decrease in operating income for the full-year was primarily driven by higher operating costs.

About Raytheon
Raytheon Company, with 2018 sales of $27 billion and 67,000 employees, is a technology and innovation leader specializing in defense, civil government and cybersecurity solutions. With a history of innovation spanning 97 years, Raytheon provides state-of-the-art electronics, mission systems integration, C5I® products and services, sensing, effects, and mission support for customers in more than 80 countries. Raytheon is headquartered in Waltham, Massachusetts. Follow us on Twitter.

Conference Call on the Fourth Quarter and Full-Year 2018 Financial Results
Raytheon's financial results conference call will be held on Thursday, January 31, 2019 at 9 a.m. ET. Participants will include Thomas A. Kennedy, Chairman and CEO; Anthony F. O'Brien, vice president and CFO; and other company executives.

The dial-in number for the conference call will be (866) 588-8312 in the U.S. or (409) 220-9941 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, a government shutdown, or otherwise, uncertain funding of programs, potential termination of contracts and performance under undefinitized contract awards; difficulties in contract performance; the resolution of program terminations; the ability to procure new contracts; the risks of conducting business in foreign countries; the unpredictability of timing of international bookings; the ability to comply with extensive governmental regulation, including export and import requirements such as the International Traffic in Arms Regulations and the Export Administration Regulations, anti-bribery and anti-corruption requirements including the Foreign Corrupt Practices Act, industrial cooperation agreement obligations, and procurement and other regulations; dependence on U.S. government approvals for international contracts; changes in government procurement practices; the impact of competition; the ability to develop products and technologies, and the impact of associated investments and costs; the ability to recruit and retain qualified personnel; the impact of potential security and cyber threats, and other disruptions; the risk that actual pension returns, discount rates or other actuarial assumptions, including the long-term return on asset assumption, are significantly different than the company's current assumptions; the risk of cost overruns, particularly for the company's fixed-price contracts; dependence on material and component availability, subcontractor and partner performance and key suppliers; risks of a negative government audit; risks associated with acquisitions, investments, dispositions, joint ventures and other business arrangements; the ability to grow in the government and commercial cybersecurity markets; risks of an impairment of goodwill or other intangible assets; the impact of financial markets and global economic conditions; the use of accounting estimates in the company's financial statements; the outcome of contingencies and litigation matters, including government investigations; the risk of environmental liabilities; 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.


     Attachment A


     Raytheon Company


     Preliminary Statement of Operations Information


     Fourth Quarter 2018


     (In millions, except per share amounts)












                                                                           
            Three Months Ended                      
           Twelve Months Ended


                                                                       31-Dec-18                       31-Dec-17       31-Dec-18                        31-Dec-17






     Net sales                                                                  $
              7,360                               $
              6,783                  $
      27,058  $
       25,348




     Operating expenses



     Cost of sales                                                        5,393                                 4,985                                       19,573      18,340



     General and administrative expenses                                    753                                   698                                        2,947       2,777



     Total operating expenses                                             6,146                                 5,683                                       22,520      21,117




     Operating income                                                     1,214                                 1,100                                        4,538       4,231




     Non-operating (income) expense, net



     Retirement benefits non-service expense                                237                                   230                                        1,230         913



     Interest expense                                                        46                                    48                                          184         205



     Interest income                                                       (10)                                  (7)                                        (31)       (21)



     Other (income) expense, net                                             14                                   (5)                                           8          21




     Total non-operating (income) expense, net                              287                                   266                                        1,391       1,118




     Income from continuing operations before taxes                         927                                   834                                        3,147       3,113



     Federal and foreign income taxes                                        99                                   447                                          264       1,114




     Income from continuing operations                                      828                                   387                                        2,883       1,999



     Income (loss) from discontinued operations, net of tax                 (1)                                                                              (1)          2




     Net income                                                             827                                   387                                        2,882       2,001



     Less: Net income (loss) attributable to noncontrolling interests



          in subsidiaries                                                   (5)                                  (6)                                        (27)       (23)




     Net income attributable to Raytheon Company                                  $
              832                                 $
              393                   $
      2,909   $
       2,024






     Basic earnings per share attributable to Raytheon Company



        common stockholders:



     Income from continuing operations                                           $
              2.93                                $
              1.35                   $
      10.16    $
       6.95



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



     Net income                                                            2.93                                  1.35                                        10.16        6.96





     Diluted earnings per share attributable to Raytheon Company



        common stockholders:



     Income from continuing operations                                           $
              2.93                                $
              1.35                   $
      10.15    $
       6.94



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



     Net income                                                            2.93                                  1.35                                        10.15        6.95





     Amounts attributable to Raytheon Company common



        stockholders:



     Income from continuing operations                                            $
              833                                 $
              393                   $
      2,910   $
       2,022



     Income (loss) from discontinued operations, net of tax                 (1)                                                                              (1)          2



     Net income                                                                   $
              832                                 $
              393                   $
      2,909   $
       2,024






     Average shares outstanding



     Basic                                                                284.4                                 289.6                                        286.5       291.1



     Diluted                                                              284.7                                 290.0                                        286.8       291.4


     Attachment B


     Raytheon Company


     Preliminary Segment Information


     Fourth Quarter 2018


     (In millions, except percentages)










                                                      
             Net Sales                           
             Operating Income               
        Operating Income

                                                                                                                                                As a Percent of Net Sales



                                                  
             Three Months Ended                     
             Three Months Ended                 Three Months Ended


                                             31-Dec-18                         31-Dec-17          31-Dec-18                      31-Dec-17        
              31-Dec-18            
     31-Dec-17






     Integrated Defense Systems                         $
              1,684                                     $
              1,553                                $
              247                       $
       247         14.7% 15.9%





     Intelligence, Information and Services     1,711                                      1,572                                        144                                 117               8.4%               7.4%





     Missile Systems                            2,317                                      2,185                                        273                                 278              11.8%              12.7%





     Space and Airborne Systems                 1,880                                      1,670                                        262                                 242              13.9%              14.5%





     Forcepoint                                   172                                        156                                          2                                 (8)              1.2%             (5.1)%





     Eliminations                               (404)                                     (346)                                      (44)                               (35)




     Total business segment                     7,360                                      6,790                                        884                                 841              12.0%              12.4%





     Acquisition Accounting Adjustments                                                     (7)                                      (29)                               (37)



     FAS/CAS Operating Adjustment                                                                                                     356                                 325



     Corporate                                                                                                                          3                                (29)




     Total                                              $
              7,360                                     $
              6,783                              $
              1,214                     $
       1,100         16.5% 16.2%







                                                                                                                                               
              Operating Income

                                                                                                                                                        As a Percent of Net Sales



                                                      
             Net Sales                           
             Operating Income



                                                 
             Twelve Months Ended                    
             Twelve Months Ended                 Twelve Months Ended


                                             31-Dec-18                         31-Dec-17          31-Dec-18                      31-Dec-17        
              31-Dec-18            
     31-Dec-17






     Integrated Defense Systems                         $
              6,180                                     $
              5,804                              $
              1,023                       $
       935         16.6% 16.1%





     Intelligence, Information and Services     6,722                                      6,177                                        538                                 455               8.0%               7.4%





     Missile Systems                            8,298                                      7,787                                        973                               1,010              11.7%              13.0%





     Space and Airborne Systems                 6,748                                      6,430                                        884                                 862              13.1%              13.4%





     Forcepoint                                   634                                        608                                          5                                  33               0.8%               5.4%





     Eliminations                             (1,514)                                   (1,423)                                     (170)                              (148)




     Total business segment                    27,068                                     25,383                                      3,253                               3,147              12.0%              12.4%





     Acquisition Accounting Adjustments          (10)                                      (35)                                     (126)                              (160)



     FAS/CAS Operating Adjustment                                                                                                   1,428                               1,303



     Corporate                                                                                                                       (17)                               (59)




     Total                                             $
              27,058                                    $
              25,348                              $
              4,538                     $
       4,231         16.8% 16.7%





     Attachment C


     Raytheon Company


     Other Preliminary Information


     Fourth Quarter 2018


     (In millions)















     
                Backlog                                                                                           31-Dec-18                         31-Dec-17






     Integrated Defense Systems                                                                                                $
              11,557                                  $
       9,186



     Intelligence, Information and Services                                                                           6,233                                        6,503



     Missile Systems                                                                                                   13,976                                       13,426



     Space and Airborne Systems                                                                                        10,126                                        8,611



     Forcepoint                                                                                                           528                                          484




     Total backlog                                                                                                             $
              42,420                                 $
       38,210







                                                                           
            Three Months Ended                   
             Twelve Months Ended



     
                Bookings                                            31-Dec-18                       31-Dec-17     31-Dec-18                         31-Dec-17






     Total bookings                                                             $
              8,447                                $
              8,541                                 $
       32,162             $
      27,718







                                                                           
            Three Months Ended                   
             Twelve Months Ended



     
                General and Administrative Expenses                 31-Dec-18                       31-Dec-17     31-Dec-18                         31-Dec-17






     Administrative and selling expenses                                        $
              505                                  $
              530                                  $
       2,106              $
      2,077



     Research and development expenses                                    248                                   168                                         841                           700



     Total general and administrative expenses                                  $
              753                                  $
              698                                  $
       2,947              $
      2,777








     
                Cash, Cash Equivalents and Restricted Cash                                                        31-Dec-18                         31-Dec-17






     Cash and cash equivalents                                                                                                $
              3,608                                  $
       3,103



     Restricted cash                                                                                                                                            16                            12



     Cash, cash equivalents and restricted cash shown in Attachment E                                                                                                $
        3,624                 $
     3,115



     Attachment D


     Raytheon Company


     Preliminary Balance Sheet Information


     Fourth Quarter 2018


     (In millions)












                                                                              31-Dec-18              31-Dec-17




     
                Assets



     Current assets



     Cash and cash equivalents                                                          $
        3,608                     $
        3,103



     Short-term investments                                                          -                            297



     Receivables, net                                                            1,648                           1,324



     Contract assets                                                             5,594                           5,247



     Inventories                                                                   758                             594



     Prepaid expenses and other current assets                                     528                             761




     Total current assets                                                       12,136                          11,326





     Property, plant and equipment, net                                          2,840                           2,439



     Goodwill                                                                   14,864                          14,871



     Other assets, net                                                           2,024                           2,224



     Total assets                                                                      $
        31,864                    $
        30,860






     
                Liabilities, Redeemable Noncontrolling Interest and Equity



     Current liabilities



     Commercial paper                                                                     $
        300                       $
        300



     Contract liabilities                                                        3,309                           2,927



     Accounts payable                                                            1,964                           1,519



     Accrued employee compensation                                               1,509                           1,342



     Other current liabilities                                                   1,206                           1,260




     Total current liabilities                                                   8,288                           7,348





     Accrued retiree benefits and other long-term liabilities                    6,938                           8,287



     Long-term debt                                                              4,755                           4,750





     Redeemable noncontrolling interest                                            411                             512





     Equity



     Raytheon Company stockholders' equity



     Common stock                                                                    3                               3



     Additional paid-in capital                                                      -



     Accumulated other comprehensive loss(1)                                   (8,618)                        (7,935)



     Retained earnings(1)                                                       20,087                          17,895




     Total Raytheon Company stockholders' equity                                11,472                           9,963



     Noncontrolling interests in subsidiaries                                        -




     Total equity                                                               11,472                           9,963




     Total liabilities, redeemable noncontrolling interest and equity                  $
        31,864                    $
        30,860



              (1)              In the first quarter 2018 we adopted
                                  ASU 2018-02, Income Statement -
                                  Reporting Comprehensive Income (Topic
                                  220): Reclassification of Certain Tax
                                  Effects from Accumulated Other
                                  Comprehensive Income. As a result, we
                                  reclassified $1,451 million from
                                  accumulated other comprehensive loss
                                  to retained earnings related to the
                                  reclassification of stranded income
                                  tax effects of the Tax Cuts and Jobs
                                  Act of 2017.


     Attachment E


     Raytheon Company


     Preliminary Cash Flow Information


     Fourth Quarter 2018


     (In millions)










                                                                                                          
            Twelve Months Ended


                                                                                                      31-Dec-18                        31-Dec-17




     Cash flows from operating activities



     Net income                                                                                                $
              2,882                         $
     2,001



     (Income) loss from discontinued operations, net of tax                                                  1                                       (2)




     Income from continuing operations                                                                   2,883                                     1,999



     Adjustments to reconcile to net cash provided by (used in) operating activities from continuing



       operations, net of the effect of acquisitions and divestitures



     Depreciation and amortization                                                                         568                                       550



     Stock-based compensation                                                                              165                                       173



     Loss on repayment of long-term debt                                                                     -                                       39



     Deferred income taxes                                                                                (24)                                      252



     Changes in assets and liabilities



     Receivables, net                                                                                    (327)                                    (157)



     Contract assets and contract liabilities                                                               28                                        88



     Inventories                                                                                         (166)                                       14



     Prepaid expenses and other current assets                                                              73                                       204



     Income taxes receivable/payable                                                                       174                                     (193)



     Accounts payable                                                                                      406                                      (94)



     Accrued employee compensation                                                                         165                                       111



     Other current liabilities                                                                           (108)                                      106



     Accrued retiree benefits                                                                            (421)                                    (250)



     Other, net                                                                                             12                                      (95)




     Net cash provided by (used in) operating activities from continuing operations                      3,428                                     2,747



     Net cash provided by (used in) operating activities from discontinued operations                        -                                      (2)



     Net cash provided by (used in) operating activities                                                 3,428                                     2,745




     Cash flows from investing activities



     Additions to property, plant and equipment                                                          (763)                                    (543)



     Proceeds from sales of property, plant and equipment                                                    2                                        46



     Additions to capitalized internal use software                                                       (58)                                     (68)



     Purchases of short-term investments                                                                     -                                    (696)



     Maturities of short-term investments                                                                  309                                       517



     Payments for purchases of acquired companies, net of cash received                                      -                                     (93)



     Proceeds from sale of business, net of transaction costs                                               11



     Other                                                                                                (22)                                       20




     Net cash provided by (used in) investing activities                                                 (521)                                    (817)




     Cash flows from financing activities



     Dividends paid                                                                                      (975)                                    (910)



     Net borrowings (payments) on commercial paper                                                           -                                      300



     Repayments of long-term debt                                                                            -                                    (591)



     Loss on repayment of long-term debt                                                                     -                                     (38)



     Repurchases of common stock under share repurchase programs                                       (1,325)                                    (800)



     Repurchases of common stock to satisfy tax withholding obligations                                   (93)                                     (85)



     Contribution from noncontrolling interests in Forcepoint                                                -                                        8



     Other                                                                                                 (5)




     Net cash provided by (used in) financing activities                                               (2,398)                                  (2,116)




     Net increase (decrease) in cash, cash equivalents and restricted cash                                 509                                     (188)



     Cash, cash equivalents and restricted cash at beginning of the year                                 3,115                                     3,303



     Cash, cash equivalents and restricted cash at end of period                                               $
              3,624                         $
     3,115



     Attachment F


     Raytheon Company


     Supplemental EPS Information


     Fourth Quarter 2018


     (In millions, except per share amounts)












                                                                                                                                                                                         
            Three Months Ended                       
     Twelve Months Ended


                                                                                                                                                                   31-Dec-18            31-Dec-17                          31-Dec-18            31-Dec-17





     Per share impact of the pension settlement charge (A)                                                                    
              $     
         $                                                 $
              0.79                            
              $



     Per share impact of the enactment of the Tax Cuts and Jobs Act of 2017 (B)                                               
              $             $
       0.59                           
            $                                                           $
       0.59




                                                                  
              (A) 
     Pension settlement charge                                
     $            
        $                                                          $
             288                           
        $


                                                                                   Tax effect (at 21% statutory rate)                                                              (60)



                                                                                 
     After-tax impact                                                                                 228


                                                                                 
     Diluted shares                                                                                 286.8



                                                                                 
     Per share impact                                         
     $            
        $                                                         $
             0.79                           
        $





                                                                  
              (B)   Tax impact of the enactment of the Tax Cuts and Jobs Act
                                                                                    of 2017                                                 
     $                    $
             171                            
              $                                                   $
      171


                                                                                 
     Diluted shares                                                 290.0                                                                              291.4



                                                                                 
     Per share impact                                         
     $                   $
             0.59                            
              $                                                  $
      0.59


Raytheon Company
Global Headquarters
Waltham, Mass.

Investor Relations Contact
Kelsey DeBriyn
781.522.5141

Media Contact
Corinne Kovalsky
781.522.5899

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SOURCE Raytheon Company