Raytheon Reports Strong Second Quarter 2019 Results
WALTHAM, Mass., July 25, 2019 /PRNewswire/ -- Raytheon Company (NYSE: RTN) today announced net sales for the second quarter 2019 of $7.2 billion, up 8.1 percent compared to $6.6 billion in the second quarter 2018. Second quarter 2019 EPS from continuing operations was $2.92 compared to $2.78 in the second quarter 2018. The increase in the second quarter 2019 EPS from continuing operations was primarily driven by operational improvements and pension-related items, partially offset by a favorable tax-related EPS impact of $0.33 in the second quarter 2018 related to a discretionary pension plan contribution.
"The company had very strong second quarter operating results, with our bookings, sales, operating margin, EPS, and cash flow all exceeding our expectations," said Thomas A. Kennedy, Raytheon Chairman and CEO. "We begin the second half with continued confidence in our growth outlook given our innovative technologies, breadth of franchises, and record backlog.
"Integration planning for the merger with United Technologies is progressing well, with the integration team developing detailed execution plans to capture revenue and cost synergies rapidly and ensure seamless operations post close. We continue to expect the transaction to close in the first half of 2020."
Operating cash flow from continuing operations for the second quarter 2019 was $823 million compared to $1,156 million for the second quarter 2018. The decrease in operating cash flow from continuing operations in the second quarter 2019 was primarily due to the timing of collections. Operating cash flow from continuing operations for the second quarter 2019 was better than the company's prior guidance.
In the second quarter 2019, the company repurchased 1.7 million shares of common stock for $300 million. Year-to-date 2019, the company repurchased 4.4 million shares of common stock for $800 million.
The company had record bookings of $9.5 billion in the second quarter 2019, resulting in a book-to-bill ratio of 1.32. Second quarter 2018 bookings were $8.7 billion.
Summary Financial Results
---
2nd Quarter
% Six Months
%
($ in millions, except per share data) 2019 2018 Change 2019 2018 Change
Bookings $
9,475 $
8,694 9.0% $
14,843 $
15,005 (1.1)%
Net Sales $
7,159 $
6,625 8.1% $
13,888 $
12,892 7.7%
Income from Continuing Operations attributable to
Raytheon Company $
817 $
799 2.3% $
1,598 $
1,433 11.5%
EPS from Continuing Operations $
2.92 $
2.78 5.0% $
5.69 $
4.98 14.3%
Operating Cash Flow from Continuing Operations $
823 $
1,156 $
412 $
1,439
Workdays in Fiscal Reporting Calendar 64 64 127 128
Backlog at the end of the second quarter 2019 was a record $43.1 billion, an increase of $3.3 billion or 8 percent compared to the end of the second quarter 2018.
Backlog
---
Period Ending
($ in millions) Q2 2019 Q2 2018 2018
Backlog $
43,131 $
39,881 $
42,420
Outlook
The company has increased 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
---
Current Prior (4/25/19)
Net
Sales
($B)
28.8 - 29.3*
28.6 - 29.1
Deferred
Revenue
Adjustment
($M) (2) (2)
Amortization
of
Acquired
Intangibles
($M) (110) (110)
FAS/
CAS
Operating
Adjustment
($M) 1,463 1,463
Retirement
Benefits
Non-
service
Expense,
non-
operating
($M) (726) (726)
Interest
Expense,
net
($M)
~(145)*
(153) - (158)
Diluted
Shares
(M)
~281*
279 - 281
Effective
Tax
Rate 17.0% - 17.5% 17.0% - 17.5%
EPS
from
Continuing
Operations
$11.50 - $11.70*
$11.40 - $11.60
Operating
Cash
Flow
from
Continuing
Operations
($B)
4.0 - 4.2*
3.9 - 4.1
*Denotes
change
from
prior
guidance
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
2nd Quarter Six Months
($ in millions) 2019 2018 % Change 2019 2018 % Change
Net Sales $
1,641 $
1,514 8% $
3,191 $
3,003 6%
Operating Income $
264 $
262 1% $
522 $
535 (2)%
Operating Margin 16.1% 17.3% 16.4% 17.8%
Integrated Defense Systems (IDS) had second quarter 2019 net sales of $1,641 million, up 8 percent compared to $1,514 million in the second quarter 2018. The increase in net sales for the quarter was primarily driven by higher net sales on various international Patriot(®) programs.
IDS recorded $264 million of operating income in the second quarter 2019 compared to $262 million in the second quarter 2018.
During the quarter, IDS booked $485 million and $375 million to provide advanced Patriot air and missile defense capability for Romania and the State of Qatar, respectively. IDS also booked $506 million for National Advanced Surface-to-Air Missile System (NASAMS(TM)) for Australia; $344 million on the Army Navy/Transportable Radar Surveillance-Model 2 (AN/TPY-2) radar program for the Kingdom of Saudi Arabia; $206 million on the Multi-Function Radio Frequency System (MFRFS) program for the U.S. Army; and $93 million to provide engineering support services for an international customer.
Shortly after the quarter close, as previously announced, IDS received a direct commercial contract worth approximately $1.8 billion to provide NASAMS to the State of Qatar.
Intelligence, Information and Services
---
2nd Quarter Six Months
($ in millions) 2019 2018 % Change 2019 2018 % Change
Net Sales $
1,777 $
1,687 5% $
3,554 $
3,269 9%
Operating Income $
161 $
128 26% $
348 $
245 42%
Operating Margin 9.1% 7.6% 9.8% 7.5%
Intelligence, Information and Services (IIS) had second quarter 2019 net sales of $1,777 million, up 5 percent compared to $1,687 million in the second quarter 2018. The increase in net sales for the quarter was primarily driven by higher net sales on classified programs in both cyber and space.
IIS recorded $161 million of operating income in the second quarter 2019 compared to $128 million in the second quarter 2018. The increase in operating income for the quarter was primarily driven by higher net program efficiencies.
During the quarter, IIS booked $821 million on a number of classified programs. IIS also booked $146 million on domestic and foreign training programs in support of Warfighter FOCUS activities, and $105 million to provide cybersecurity support for an international customer.
Missile Systems
2nd Quarter Six Months
($ in millions) 2019 2018 % Change 2019 2018 % Change
Net Sales $
2,210 $
2,051 8% $
4,216 $
3,899 8%
Operating Income $
253 $
231 10% $
443 $
443
Operating Margin 11.4% 11.3% 10.5% 11.4%
Missile Systems (MS) had second quarter 2019 net sales of $2,210 million, up 8 percent compared to $2,051 million in the second quarter 2018. The increase in net sales for the quarter was primarily due to higher net sales on classified programs, the High-speed Anti-radiation Missile (HARM(®)) program, and the Phalanx(®) program.
MS recorded $253 million of operating income in the second quarter 2019 compared to $231 million in the second quarter 2018. The increase in operating income for the quarter was primarily due to a favorable change in program mix and higher volume.
During the quarter, MS booked $477 million for AIM-9X Sidewinder short-range air-to-air missiles for the U.S. Navy, U.S. Air Force and international customers; $232 million for Tube-launched, Optically-tracked, Wireless-guided (TOW(®)) missiles for the U.S. Army, U.S. Marine Corps and international customers; $200 million for Excalibur(® )for the U.S. Army; $190 million for the Coyote(®) Rapid Development Program (CRDP) for a U.S. customer; $120 million for StormBreaker(TM) for the U.S. Air Force; and $101 million for HARM for the U.S. Air Force and international customers. MS also booked $448 million on a number of classified contracts.
Space and Airborne Systems
2nd Quarter Six Months
($ in millions) 2019 2018 % Change 2019 2018 % Change
Net Sales $
1,817 $
1,605 13% $
3,470 $
3,173 9%
Operating Income $
229 $
206 11% $
441 $
399 11%
Operating Margin 12.6% 12.8% 12.7% 12.6%
Space and Airborne Systems (SAS) had second quarter 2019 net sales of $1,817 million, up 13 percent compared to $1,605 million in the second quarter 2018. The increase in net sales for the quarter included higher net sales on classified programs, the Next Generation Overhead Persistent Infrared (Next Gen OPIR) program, and an international tactical radar systems program.
SAS recorded $229 million of operating income in the second quarter 2019 compared to $206 million in the second quarter 2018. The increase in operating income for the quarter was primarily due to higher volume.
During the quarter, SAS booked $218 million for radar components for the U.S. Navy; $93 million for the Multi-Spectral Targeting System (MTS) for the U.S. Air Force; $88 million for radar warning receivers for the U.S. Air Force; and $77 million for missile seekers for the U.S. Navy and an international customer. SAS also booked $876 million on a number of classified contracts.
Forcepoint
2nd Quarter Six Months
($ in millions) 2019 2018 % Change 2019 2018 % Change
Net Sales $
156 $
148 5% $
314 $
289 9%
Operating Income (Loss) $
(3) $
(8)
NM $
(12) $
(15)
NM
Operating Margin (1.9)% (5.4)% (3.8)% (5.2)%
NM = Not Meaningful
Forcepoint had second quarter 2019 net sales of $156 million, up 5 percent compared to $148 million in the second quarter 2018.
Forcepoint recorded a loss of $3 million in the second quarter 2019 compared to a loss of $8 million in the second quarter 2018.
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 Second Quarter 2019 Financial Results
Raytheon's financial results conference call will be held on Thursday, July 25, 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) 219-7829 in the U.S. or (478) 205-0667 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 (sometimes referred to as Raytheon) 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: risks associated with the announcement of the proposed merger with United Technologies Corporation (UTC), including its effect on our customer, supplier and other business relationships, employee retention and hiring, resources and management's attention, our ability to pursue new business and investment opportunities, our operating results and business generally, and the market price of our common stock; risks associated with the successful and timely completion of the proposed merger with UTC and the related integration, as described in more detail below; 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; changes in tax laws and regulations, or their interpretation; and other factors as may be detailed from time to time in the company's public announcements and Securities and Exchange Commission filings.
Risks associated with the successful and timely completion of the proposed merger with UTC and the related integration include (1) the effect of economic conditions in the industries and markets in which UTC and Raytheon operate in the U.S. and globally and any changes therein, including financial market conditions, fluctuations in commodity prices, interest rates and foreign currency exchange rates, levels of end-market demand in construction and in both the commercial and defense segments of the aerospace industry, levels of air travel, financial condition of commercial airlines, the impact of weather conditions and natural disasters, the financial condition of our customers and suppliers, 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, and uncertain funding of programs); (2) challenges in the development, production, delivery, support, performance and realization of the anticipated benefits (including our expected returns under customer contracts) of advanced technologies and new products and services; (3) the scope, nature, impact or timing of the proposed merger and the spin-offs by UTC of its Otis and Carrier businesses into separate companies (the separation transactions) and other merger, acquisition and divestiture activity, including among other things the integration of or with other businesses and realization of synergies and opportunities for growth and innovation and incurrence of related costs and expenses; (4) future levels of indebtedness, including indebtedness that may be incurred in connection with the proposed merger and the separation transactions, and capital spending and research and development spending; (5) future availability of credit and factors that may affect such availability, including credit market conditions and our capital structure; (6) the timing and scope of future repurchases by the combined company of its common stock, which may be suspended at any time due to various factors, including market conditions and the level of other investing activities and uses of cash; (7) delays and disruption in delivery of materials and services from suppliers; (8) company and customer-directed cost reduction efforts and restructuring costs and savings and other consequences thereof (including the potential termination of U.S. government contracts and performance under undefinitized contract awards and the potential inability to recover termination costs); (9) new business and investment opportunities; (10) the ability to realize the intended benefits of organizational changes; (11) the anticipated benefits of diversification and balance of operations across product lines, regions and industries; (12) the outcome of legal proceedings, investigations and other contingencies; (13) pension plan assumptions and future contributions; (14) the impact of the negotiation of collective bargaining agreements and labor disputes; (15) the effect of changes in political conditions in the U.S. and other countries in which UTC, Raytheon and the businesses of each operate, including the effect of changes in U.S. trade policies or the U.K.'s pending withdrawal from the European Union, on general market conditions, global trade policies and currency exchange rates in the near term and beyond; (16) the effect of changes in tax (including U.S. tax reform enacted on December 22, 2017, which is commonly referred to as the Tax Cuts and Jobs Act of 2017), environmental, regulatory and other laws and regulations (including, among other things, 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) in the U.S. and other countries in which UTC, Raytheon and the businesses of each operate; (17) negative effects of the announcement or pendency of the proposed merger or the separation transactions on the market price of UTC's and/or Raytheon's respective common stock and/or on their respective financial performance; (18) the ability of the parties to receive the required regulatory approvals for the proposed merger (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction) and approvals of UTC's stockholders and Raytheon's stockholders and to satisfy the other conditions to the closing of the merger on a timely basis or at all; (19) the occurrence of events that may give rise to a right of one or both of the parties to terminate the merger agreement; (20) risks relating to the value of the UTC shares to be issued in the proposed merger, significant transaction costs and/or unknown liabilities; (21) the possibility that the anticipated benefits from the proposed merger cannot be realized in full or at all or may take longer to realize than expected, including risks associated with third-party contracts containing consent and/or other provisions that may be triggered by the proposed transaction; (22) risks associated with transaction-related litigation; (23) the possibility that costs or difficulties related to the integration of UTC's and Raytheon's operations will be greater than expected; (24) risks relating to completed merger, acquisition and divestiture activity, including UTC's integration of Rockwell Collins, including the risk that the integration may be more difficult, time-consuming or costly than expected or may not result in the achievement of estimated synergies within the contemplated time frame or at all; (25) the ability of each of Raytheon, UTC, the companies resulting from the separation transactions and the combined company to retain and hire key personnel; (26) the expected benefits and timing of the separation transactions, and the risk that conditions to the separation transactions will not be satisfied and/or that the separation transactions will not be completed within the expected time frame, on the expected terms or at all; (27) the intended qualification of (i) the merger as a tax-free reorganization and (ii) the separation transactions as tax-free to UTC and UTC's stockholders, in each case, for U.S. federal income tax purposes; (28) the possibility that any opinions, consents, approvals or rulings required in connection with the separation transactions will not be received or obtained within the expected time frame, on the expected terms or at all; (29) expected financing transactions undertaken in connection with the proposed merger and the separation transactions and risks associated with additional indebtedness; (30) the risk that dissynergy costs, costs of restructuring transactions and other costs incurred in connection with the separation transactions will exceed UTC's estimates; and (31) the impact of the proposed merger and the separation transactions on the respective businesses of Raytheon and UTC and the risk that the separation transactions may be more difficult, time-consuming or costly than expected, including the impact on UTC's resources, systems, procedures and controls, diversion of its management's attention and the impact on relationships with customers, suppliers, employees and other business counterparties.
There can be no assurance that the proposed merger, the separation transactions or any other transaction described above will in fact be consummated in the manner described or at all. For additional information on identifying factors that may cause actual results to vary materially from those stated in forward-looking statements, see the preliminary joint proxy statement/prospectus (defined below) and the reports of UTC and Raytheon on Forms 10-K, 10-Q and 8-K filed with or furnished to the Securities and Exchange Commission (the "SEC") from time to time.
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.
Additional Information and Where to Find It
In connection with the proposed merger, on July 17, 2019, UTC filed with the SEC a registration statement on Form S-4, which includes a preliminary joint proxy statement of UTC and Raytheon that also constitutes a preliminary prospectus of UTC (the "preliminary joint proxy statement/prospectus"), which will be mailed to stockholders of UTC and stockholders of Raytheon once the registration statement becomes effective and the preliminary joint proxy statement/prospectus is in definitive form (the "definitive joint proxy statement/prospectus"), and each party will file other documents regarding the proposed merger with the SEC. In addition, in connection with the separation transactions, subsidiaries of UTC will file registration statements on Form 10 or Form S-1. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PRELIMINARY JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED OR THAT WILL BE FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders will be able to obtain copies of the registration statements and the definitive joint proxy statement/prospectus free of charge from the SEC's website or from UTC or Raytheon. The documents filed by UTC with the SEC may be obtained free of charge at UTC's website at www.utc.com or at the SEC's website at www.sec.gov. These documents may also be obtained free of charge from UTC by requesting them by mail at UTC Corporate Secretary, 10 Farm Springs Road, Farmington, CT, 06032, by telephone at 1-860-728-7870 or by email at corpsec@corphq.utc.com. The documents filed by Raytheon with the SEC may be obtained free of charge at Raytheon's website at www.raytheon.com or at the SEC's website at www.sec.gov. These documents may also be obtained free of charge from Raytheon by requesting them by mail at Raytheon Company, Investor Relations, 870 Winter Street, Waltham, MA, 02541, by telephone at 1-781-522-5123 or by email at invest@raytheon.com.
Participants in the Solicitation
Raytheon and UTC and their respective directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed merger. Information about Raytheon's directors and executive officers is available in Raytheon's proxy statement dated April 16, 2019, for its 2019 Annual Meeting of Shareholders. Information about UTC's directors and executive officers is available in UTC's proxy statement dated March 18, 2019, for its 2019 Annual Meeting of Shareowners. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, are contained in the preliminary joint proxy statement/prospectus and will be contained in the definitive joint proxy statement/prospectus and other relevant materials to be filed with the SEC regarding the transaction when they become available. Investors should carefully read the preliminary joint proxy statement/prospectus and the definitive joint proxy statement/prospectus when it becomes available before making any voting or investment decisions. You may obtain free copies of these documents from Raytheon or UTC as indicated above.
No Offer or Solicitation
This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.
Attachment A
Raytheon Company
Preliminary Statement of Operations Information
Second Quarter 2019
(In millions, except per share amounts)
Three Months Ended
Six Months Ended
30-Jun-19 1-Jul-18 30-Jun-19 1-Jul-18
Net sales $
7,159 $
6,625 $
13,888 $
12,892
Operating expenses
Cost of sales 5,205 4,777 10,082 9,309
General and administrative expenses 778 748 1,517 1,442
Total operating expenses 5,983 5,525 11,599 10,751
Operating income 1,176 1,100 2,289 2,141
Non-operating (income) expense, net
Retirement benefits non-service expense 181 238 362 477
Interest expense 45 46 89 93
Interest income (7) (8) (20) (15)
Other (income) expense, net (8) (3) (28) 2
Total non-operating (income) expense, net 211 273 403 557
Income from continuing operations before taxes 965 827 1,886 1,584
Federal and foreign income taxes 152 37 298 170
Income from continuing operations 813 790 1,588 1,414
Income (loss) from discontinued operations, net of tax 1
Net income 813 791 1,588 1,414
Less: Net income (loss) attributable to noncontrolling interests
in subsidiaries (4) (9) (10) (19)
Net income attributable to Raytheon Company $
817 $
800 $
1,598 $
1,433
Basic earnings per share attributable to Raytheon Company
common stockholders:
Income from continuing operations $
2.92 $
2.78 $
5.69 $
4.98
Income (loss) from discontinued operations, net of tax
Net income 2.92 2.78 5.69 4.98
Diluted earnings per share attributable to Raytheon Company
common stockholders:
Income from continuing operations $
2.92 $
2.78 $
5.69 $
4.98
Income (loss) from discontinued operations, net of tax
Net income 2.92 2.78 5.69 4.97
Amounts attributable to Raytheon Company common
stockholders:
Income from continuing operations $
817 $
799 $
1,598 $
1,433
Income (loss) from discontinued operations, net of tax 1
Net income $
817 $
800 $
1,598 $
1,433
Average shares outstanding
Basic 279.7 287.3 280.8 287.9
Diluted 279.9 287.6 281.0 288.2
Attachment B
Raytheon Company
Preliminary Segment Information
Second Quarter 2019
(In millions, except percentages)
Operating Income As a
Percent of Net Sales
Net Sales
Operating Income
Three Months Ended
Three Months Ended Three Months Ended
30-Jun-19
1-Jul-18 30-Jun-19 1-Jul-18
30-Jun-19
1-Jul-18
Integrated Defense Systems $
1,641 $
1,514 $
264 $
262 16.1% 17.3%
Intelligence, Information and Services 1,777 1,687 161 128 9.1% 7.6%
Missile Systems 2,210 2,051 253 231 11.4% 11.3%
Space and Airborne Systems 1,817 1,605 229 206 12.6% 12.8%
Forcepoint 156 148 (3) (8) (1.9)% (5.4)%
Eliminations (442) (376) (46) (41)
Total business segment 7,159 6,629 858 778 12.0% 11.7%
Acquisition Accounting Adjustments (4) (27) (34)
FAS/CAS Operating Adjustment 363 353
Corporate (18) 3
Total $
7,159 $
6,625 $
1,176 $
1,100 16.4% 16.6%
Operating Income As a
Percent of Net Sales
Net Sales
Operating Income
Six Months Ended
Six Months Ended Six Months Ended
30-Jun-19
1-Jul-18 30-Jun-19 1-Jul-18
30-Jun-19
1-Jul-18
Integrated Defense Systems $
3,191 $
3,003 $
522 $
535 16.4% 17.8%
Intelligence, Information and Services 3,554 3,269 348 245 9.8% 7.5%
Missile Systems 4,216 3,899 443 443 10.5% 11.4%
Space and Airborne Systems 3,470 3,173 441 399 12.7% 12.6%
Forcepoint 314 289 (12) (15) (3.8)% (5.2)%
Eliminations (856) (733) (93) (81)
Total business segment 13,889 12,900 1,649 1,526 11.9% 11.8%
Acquisition Accounting Adjustments (1) (8) (55) (67)
FAS/CAS Operating Adjustment 729 707
Corporate (34) (25)
Total $
13,888 $
12,892 $
2,289 $
2,141 16.5% 16.6%
Attachment C
Raytheon Company
Other Preliminary Information
Second Quarter 2019
(In millions)
Backlog 30-Jun-19 31-Dec-18
Integrated Defense Systems $
12,260 $
11,557
Intelligence, Information and Services 6,652 6,233
Missile Systems 12,778 13,976
Space and Airborne Systems 10,947 10,126
Forcepoint 494 528
Total backlog $
43,131 $
42,420
Three Months Ended
Six Months Ended
Bookings 30-Jun-19 1-Jul-18 30-Jun-19 1-Jul-18
Total bookings $
9,475 $
8,694 $
14,843 $
15,005
Three Months Ended
Six Months Ended
General and Administrative Expenses 30-Jun-19 1-Jul-18 30-Jun-19 1-Jul-18
Administrative and selling expenses $
578 $
540 $
1,122 $
1,068
Research and development expenses 200 208 395 374
Total general and administrative expenses $
778 $
748 $
1,517 $
1,442
Cash, Cash Equivalents and Restricted Cash 30-Jun-19 31-Dec-18
Cash and cash equivalents $
2,173 $
3,608
Restricted cash 13 16
Cash, cash equivalents and restricted cash shown in Attachment E $
2,186 $
3,624
Attachment D
Raytheon Company
Preliminary Balance Sheet Information
Second Quarter 2019
(In millions)
30-Jun-19 31-Dec-18
Assets
Current assets
Cash and cash equivalents $
2,173 $
3,608
Receivables, net 1,607 1,648
Contract assets 6,130 5,594
Inventories 932 758
Prepaid expenses and other current assets(1) 684 529
Total current assets 11,526 12,137
Property, plant and equipment, net 2,982 2,840
Operating lease right-of-use assets(1) 888 805
Goodwill 14,882 14,864
Other assets, net 1,908 2,024
Total assets $
32,186 $
32,670
Liabilities, Redeemable Noncontrolling Interests and Equity
Current liabilities
Commercial paper and current portion of long-term debt $
800 $
300
Contract liabilities 2,944 3,309
Accounts payable 1,368 1,964
Accrued employee compensation 1,361 1,509
Other current liabilities(1) 1,398 1,381
Total current liabilities 7,871 8,463
Accrued retiree benefits and other long-term liabilities(1) 6,699 6,922
Long-term debt 4,257 4,755
Operating lease liabilities(1) 720 647
Redeemable noncontrolling interests 435 411
Equity
Raytheon Company stockholders' equity
Common stock 3 3
Additional paid-in capital -
Accumulated other comprehensive loss (8,182) (8,618)
Retained earnings 20,383 20,087
Total Raytheon Company stockholders' equity 12,204 11,472
Noncontrolling interests in subsidiaries -
Total equity 12,204 11,472
Total liabilities, redeemable noncontrolling interests and equity $
32,186 $
32,670
(1) In the first
quarter 2019 we
adopted
Accounting
Standards
Update (ASU)
2016-02,
Leases (Topic
842). As a
result we
recast certain
amounts on our
balance sheet
to reflect the
recognition of
operating lease
right-of-use
assets and
operating lease
liabilities and
other
reclassifications.
Included in
other current
liabilities is
$207 million
and $194
million at June
30, 2019 and
December 31,
2018,
respectively,
related to the
current portion
of operating
lease
liabilities.
Attachment E
Raytheon Company
Preliminary Cash Flow Information
Second Quarter 2019
(In millions)
Six Months Ended
30-Jun-19 1-Jul-18
Cash flows from operating activities
Net income $
1,588 $
1,414
(Income) loss from discontinued operations, net of tax -
Income from continuing operations 1,588 1,414
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 291 274
Stock-based compensation 91 101
Deferred income taxes 3 8
Changes in assets and liabilities
Receivables, net 53 7
Contract assets and contract liabilities (865) (442)
Inventories (174) (133)
Prepaid expenses and other current assets (17) 62
Income taxes receivable/payable (203) 168
Accounts payable (502) (73)
Accrued employee compensation (157) (98)
Other current liabilities 17 (70)
Accrued retiree benefits 365 239
Other, net (78) (18)
Net cash provided by (used in) operating activities from continuing operations 412 1,439
Net cash provided by (used in) operating activities from discontinued operations - 1
Net cash provided by (used in) operating activities 412 1,440
Cash flows from investing activities
Additions to property, plant and equipment (438) (366)
Additions to capitalized internal-use software (25) (28)
Maturities of short-term investments - 309
Payments for purchases of acquired companies, net of cash received (8)
Proceeds from sale of business, net of transaction costs - 11
Other 2 (3)
Net cash provided by (used in) investing activities (469) (77)
Cash flows from financing activities
Dividends paid (510) (480)
Net borrowings (payments) on commercial paper -
Repurchases of common stock under share repurchase programs (800) (800)
Repurchases of common stock to satisfy tax withholding obligations (66) (91)
Other (5) (5)
Net cash provided by (used in) financing activities (1,381) (1,376)
Net increase (decrease) in cash, cash equivalents and restricted cash (1,438) (13)
Cash, cash equivalents and restricted cash at beginning of the year 3,624 3,115
Cash, cash equivalents and restricted cash at end of period $
2,186 $
3,102
Attachment F
Raytheon Company
Supplemental EPS Information
Second Quarter 2019
(In millions, except per share amounts)
Three Months Ended
Six Months Ended
30-Jun-19 1-Jul-18 30-Jun-19 1-Jul-18
Per share impact of tax benefit from third quarter 2018 discretionary
pension contribution (A)
$ $
0.33
$ $
0.33
(A) Tax benefit from third quarter 2018 discretionary pension
contribution
$ $
95
$ $
95
Diluted shares 287.6 288.2
Per share impact
$ $
0.33
$ $
0.33
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
