LEXINGTON, Mass., July 18 /PRNewswire/ -- Raytheon Company (NYSE: RTN)
today reported sales of $4.3 billion for its 2001 second quarter, up 4 percent
from $4.1 billion in the second quarter of 2000. Sales in last year's second
quarter included $68 million related to businesses that have since been sold.
Income from continuing operations was $117 million, or $0.33 per diluted
share, compared with $95 million, or $0.28 per diluted share, in last year's
second quarter. Backlog at the end of the quarter was $25.9 billion, compared
with $25.4 billion a year ago.
Although the company continued to see softness in its commercial markets,
this was offset by stronger sales and earnings in the defense businesses in
the first half of 2001 compared with 2000. Consolidated cash outflow from
operations was $10 million in the quarter, compared with an outflow of $46
million a year ago. Discontinued operations consumed $137 million in the
second quarter of 2001. Net debt at the end of the quarter was $8.3 billion,
compared with $10.1 billion at the end of the second quarter of 2000.
"I am very pleased with the improvements we're seeing in many of our
operations," said Daniel P. Burnham, Raytheon's chairman and chief executive
officer. "Despite difficult and uncertain market conditions in our commercial
businesses, our defense core is strong." Burnham added: "We've made
significant progress toward reducing debt through operational efficiency,
selling non-core businesses and our recent equity offering."
At this point, the company can tighten its previously disclosed range to
$1.55 to $1.60 per share from continuing operations for the year 2001.
Including the impact of discontinued operations, the company posted a net
loss in the second quarter of $67 million, or $0.19 per diluted share, versus
net income of $49 million, or $0.14 per diluted share, in the second quarter
of 2000.
Electronic Systems
Electronic Systems (ES) reported second quarter sales of $2.0 billion, up
14 percent compared with last year. In the year earlier quarter, sales
included $29 million related to the optical systems business, which was sold
in December 2000. ES continued to improve margins, recording operating income
of $264 million in the quarter, up 26 percent from $209 million in the second
quarter of 2000. ES had backlog of $11.8 billion at the end of the quarter.
During the quarter, ES won a $177 million award from the U.S. Air Force
for continued production of the AIM-120 Advanced Medium Range Air-to-Air
Missile (AMRAAM). The firm-fixed price contract is for production of 426
AMRAAMs, supporting missile deliveries, program engineering and logistic
services through 2003. Missiles will be produced for the Air Force, U.S.
Navy, Japan, Taiwan, and Singapore.
On June 20, the Republic of China (Taiwan) Army destroyed a tactical
ballistic missile target and a simulated cruise missile target during the
first live firings of its Patriot Air and Missile Defense system. The tests
of the Patriot Advanced Capability Phase 2 (PAC-2) missile system demonstrated
the Taiwanese Army's operational readiness with Patriot against a range of
threats from tactical ballistic missiles to cruise missiles.
On July 15, Raytheon participated in a successful integrated system test
of the Ground-based Midcourse Defense Segment (formerly National Missile
Defense) program. The Raytheon designed and built exoatmospheric kill
vehicle, PAVE PAWS Early Warning Radar and Ground Based Radar-Prototype were
key components of the test, which was the second intercept of a ballistic
missile target.
Command, Control, Communication and Information Systems
Command, Control, Communication and Information Systems (C3I) recorded
second quarter sales of $931 million, up 10 percent over last year. The
increase is due to higher volume in classified programs. Operating income in
the quarter was $95 million, up slightly from the second quarter of 2000. C3I
had backlog of $5.8 billion at the end of the quarter.
Raytheon's transatlantic joint venture with Thales began operations on
June 1. Thales Raytheon Systems Company (TRS) will focus on air defense
command and control systems and ground based surveillance radar. With about
1,300 employees worldwide, TRS has annual pro forma revenues of $600 million.
Technical Services
Technical Services (TS) reported sales of $498 million for the second
quarter, up 7 percent from a year ago. Operating income was $42 million, an 11
percent increase from $38 million a year ago. The business had backlog of
$1.9 billion at the end of the quarter.
During the quarter, JT3 LLC, a joint venture equally owned by Raytheon
Technical Services Company and EG&G Technical Services, was awarded the U.S.
Air Force Joint Range Technical Services (J-TECH) contract, potentially worth
$1.7 billion. JT3 will provide instrumented test and training range support
to the Air Force and the U.S. Navy.
Aircraft Integration Systems
Aircraft Integration Systems (AIS) reported sales of $251 million for the
second quarter, compared with $303 million a year ago. The decrease in sales
was due primarily to several Navy, Air Force and commercial programs nearing
completion, partially offset by increased volume on the Airborne Standoff
Radar (ASTOR) program. The business recorded an operating loss of $35 million,
compared with operating income of $31 million in the second quarter of 2000.
During the second quarter of 2001, AIS took a contract write-down of $35
million on the Boeing Business Jet programs and other contract adjustments of
$20 million. AIS had backlog of $1.9 billion at the end of the quarter.
Commercial Electronics
Commercial Electronics (CE) reported second quarter sales of $117 million,
compared with $155 million in the second quarter of 2000. Sales in the second
quarter of 2000 included $39 million from the Recreational Marine business,
which was sold in January 2001. CE posted an operating loss of $15 million
for the quarter, compared with an operating loss of $9 million a year ago.
The operating loss from the second quarter of 2000 included $5 million of
income from Recreational Marine.
Raytheon Aircraft Company
Raytheon Aircraft Company (RAC) reported sales of $768 million, compared
with $810 million for the second quarter of 2000. RAC shipped 117 aircraft in
the quarter, compared with 145 in the second quarter of 2000. RAC had
operating income of $27 million in the quarter, compared with operating income
of $35 million a year ago. In the current market environment, margins on T-6A,
Beechjets and used aircraft continue to be under pressure. The business had
backlog of $4.0 billion at the end of the quarter.
During the quarter, RAC's Premier I business jet received Federal Aviation
Administration certification for single-pilot operations and flight into known
icing, and production certification for the aircraft. Deliveries of the all-
new design, composite fuselage $5.3 million jet began in June.
On June 28, Raytheon finalized its divestiture of a majority stake in
Raytheon Aerospace Company, a subsidiary of RAC, to Veritas Capital Inc.
Raytheon received a net $155 million in cash, retained $47 million in
receivables and $66 million in preferred and common equity in the business.
The resulting reduction in net debt is expected to be approximately $200
million this year. The transaction resulted in an after-tax gain on sale of
$12 million in the quarter of non-operating income.
During the quarter, RAC responded to a softening market by announcing
workforce reductions and adjustments in production rates. In April, the unit
began layoffs in its Kansas-based administrative staff. In June, RAC revised
its outlook for aircraft deliveries for the year to 468, down from 508
planned, and announced it would reduce production rates on Beechjet and King
Air aircraft and begin layoffs in its production workforce.
Discontinued Operations
The company recorded a second quarter loss from discontinued operations of
$184 million after-tax, or $0.52 per diluted share. The loss consisted of
$125 million pretax for two Massachusetts construction projects on which
Washington Group International (WGI) defaulted and Raytheon has performance
guarantees; $71 million pretax related to the impact of certain retained
assets resulting from WGI's bankruptcy; $45 million pretax on other guaranteed
projects; and $40 million pretax for cost growth on four large, international
turnkey projects that Raytheon retained as part of the sale of its engineering
and construction business to WGI.
During the quarter, Raytheon appointed Phil LePore, president of Raytheon
Technical Services, to oversee the company's various engineering and
construction issues. LePore will be in this assignment for several months. In
addition, Bob Marshall, former president of EBASCO, will serve as the
executive responsible for managing the two Massachusetts projects. He will
report to LePore. The company expects to complete a detailed contract
estimate on the two Massachusetts projects in early August and will reflect
the results of that estimate in its second quarter Form 10-Q.
With headquarters in Lexington, Mass., Raytheon Company is a global
technology leader in defense, government and commercial electronics, and
business and special mission aircraft.
Conference Call on Second Quarter 2001 Financial Results
There will be a live webcast of Raytheon's earnings teleconference on
http://www.raytheon.com beginning at 9 a.m. ET on July 19 to review the company's
second quarter results.
A replay of the conference will be run from Noon ET July 19 through Noon
ET July 23. The replay number is 800-633-8284 for U.S. callers and
858-812-6440 for international callers. The reservation number for the replay
is 19330535.
Forward-Looking Statements
Certain statements made in this release contain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995
regarding the company's future plans, objectives, and expected performance.
Specifically, statements that are not historical facts, including statements
accompanied by words such as "believe," "expect," "estimate," "intend," or
"plan" are intended to identify forward-looking statements and convey the
uncertainty of future events or outcomes. The company cautions readers that
any such forward-looking statements are based on assumptions that the company
believes are reasonable, but are subject to a wide range of risks, and actual
results may differ materially. Important factors that could cause actual
results to differ include, but are not limited to: differences in anticipated
and actual program results; risks inherent with large long-term fixed price
contracts, particularly the ability to contain cost growth; the ultimate
resolution of contingencies and legal matters; the ability to realize
anticipated cost efficiencies; timely development and certification of new
aircraft; the effect of market conditions, particularly in relation to the
general aviation and commuter aircraft markets; the impact on recourse
obligations of RAC due to changes in the collateral values of financed
aircraft, particularly commuter aircraft; the ability to finance ongoing
operations at attractive rates; government customers' budgetary constraints;
government import and export policies; termination of government contracts;
financial and governmental risks related to international transactions; delays
and uncertainties regarding the timing of the award of international programs;
the integration of acquisitions; the impact of competitive products and
pricing; and risks associated with the continuing project obligations and
retained assets and liabilities of Raytheon Engineers & Constructors,
including the final determination by the company of the required expenditures
to complete the two Massachusetts construction projects, the confirmation of
the actual physical progress completed at the time of WGI's abandonment of
those projects, the impacts associated with the re-mobilization of the
projects and WGI's compliance with its contractual obligations and cooperation
with the contractor hired by Raytheon to complete the two projects, among
other things. Further information regarding the factors that could cause
actual results to differ materially from projected results can be found in the
company's filings with the Securities and Exchange Commission, including "Item
1-Business" in the company's Annual Report on Form 10-K for the year ended
December 31, 2000.
Attachment A
Raytheon Company
Financial Information
Second Quarter 2001
(In millions,
except per share amounts) Three Months Ended Six Months Ended
01-Jul-01 02-Jul-00 01-Jul-01 02-Jul-00
Net sales $4,307 $4,124 $8,275 $8,355
Cost of sales 3,499 3,289 6,731 6,770
Administrative and selling
expenses 323 317 617 628
Research and development expenses 128 150 254 273
Total operating expenses 3,950 3,756 7,602 7,671
Operating income 357 368 673 684
Interest expense, net 171 185 351 365
Other (income) expense, net (24) 14 (54) 9
Non-operating expense, net 147 199 297 374
Income from continuing operations
before taxes 210 169 376 310
Federal and foreign income taxes 93 74 162 135
Income from continuing operations 117 95 214 175
Discontinued operations
Loss from discontinued
operations, net of tax - - - (70)
Loss on disposal of discontinued
operations, net of tax (184) (46) (405) (237)
(184) (46) (405) (307)
Net income (loss) $(67) $49 $(191) $(132)
Earnings per share from continuing
operations
Basic $0.33 $0.28 $0.62 $0.52
Diluted $0.33 $0.28 $0.61 $0.52
Loss per share from discontinued
operations
Basic $(0.53) $(0.14) $(1.17) $(0.91)
Diluted $(0.52) $(0.14) $(1.16) $(0.90)
Earnings (loss) per share
Basic $(0.19) $0.14 $(0.55) $(0.39)
Diluted $(0.19) $0.14 $(0.55) $(0.39)
Average shares outstanding
Basic 349.9 338.2 345.0 338.2
Diluted 354.3 340.0 349.7 339.3
Attachment B
Raytheon Company
Segment Information
Second Quarter 2001
Net Sales Operating Income
(In millions) Three Months Ended Three Months Ended
01-Jul-01 02-Jul-00 01-Jul-01 02-Jul-00
Electronic Systems $2,023 $1,781 $264 $209
Command, Control, Communication
and Information Systems 931 846 95 93
Technical Services 498 466 42 38
Aircraft Integration Systems 251 303 (35) 31
Commercial Electronics 117 155 (15) (9)
Aircraft 768 810 27 35
Corporate and Eliminations (281) (237) (21) (29)
Total $4,307 $4,124 $357 $368
Note: Corporate and Eliminations includes certain company-wide activities
that have not been attributed to a particular segment and intercompany
eliminations.
Raytheon Company
Segment Information
Second Quarter 2001
Operating Income
As a Percent of Sales
Three Months Ended
01-Jul-01 02-Jul-00
Electronic Systems 13.0% 11.7%
Command, Control, Communication
and Information Systems 10.2% 11.0%
Technical Services 8.4% 8.2%
Aircraft Integration Systems -13.9% 10.2%
Commercial Electronics -12.8% -5.8%
Aircraft 3.5% 4.3%
Corporate and Eliminations
Total 8.3% 8.9%
Attachment C
Raytheon Company
Other Information
Second Quarter 2001
(In millions, except total employees and aircraft shipments)
Backlog
01-Jul-01 02-Jul-00
Electronic Systems $11,775 $11,946
Command, Control, Communication
and Information Systems 5,767 4,804
Technical Services 1,854 1,742
Aircraft Integration Systems 1,937 2,080
Commercial Electronics 515 510
Aircraft 4,010 4,315
$25,858 $25,397
U.S. government backlog included
above $17,229 $16,561
Total Employees
01-Jul-01 02-Jul-00
Total employees 87,500 94,300
Aircraft Shipments (Units)
Three Months Ended
01-Jul-01 02-Jul-00
Hawker 17 17
Premier I 1 -
Beechjet (Commercial) 5 13
King Air 42 39
1900D Commuter 2 17
Pistons 42 42
T-6A 8 15
Special Mission - 2
Total aircraft shipments 117 145
Attachment D
Raytheon Company
Preliminary Financial Information
Second Quarter 2001
(In millions)
Balance sheets
01-Jul-01 31-Dec-00 02-Jul-00
Assets
Cash and cash equivalents $529 $871 $389
Accounts receivable 555 505 787
Contracts in process 3,981 4,061 4,311
Inventories 2,274 1,908 1,945
Deferred federal and foreign income
taxes 554 476 442
Prepaid expenses and other current
assets 155 178 242
Net assets from discontinued
operations - 14 241
Total current assets 8,048 8,013 8,357
Property, plant and equipment, net 2,514 2,491 2,465
Goodwill, net 13,029 13,281 13,469
Other assets, net 3,103 2,992 2,873
Total assets $26,694 $26,777 $27,164
Liabilities and Stockholders' Equity
Notes payable and current portion of
long-term debt $255 $877 $1,430
Advance payments, less contracts in
process 1,042 1,135 1,032
Accounts payable 1,060 1,099 1,002
Accrued salaries and wages 520 549 542
Other accrued expenses 1,063 1,205 1,599
Net liabilities from discontinued
operations 425 - -
Total current liabilities 4,365 4,865 5,605
Accrued retiree benefits and other
long-term liabilities 1,182 1,262 1,318
Deferred federal and foreign income
taxes 770 773 509
Long-term debt 8,565 9,054 9,045
Trust preferred securities 856 - -
Stockholders' equity 10,956 10,823 10,687
Total liabilities and
stockholders' equity $26,694 $26,777 $27,164
Debt-to-capital ratio
01-Jul-01 31-Dec-00 02-Jul-00
Debt $8,820 $9,931 $10,475
Capital 20,632 20,754 21,162
Debt-to-capital ratio 42.7% 47.9% 49.5%
Attachment E
Raytheon Company
Preliminary Cash Flow Information
Second Quarter 2001
(In millions)
Cash flow information
Three Months Ended
01-Jul-01 02-Jul-00
Income from continuing operations $117 $95
Depreciation 80 67
Amortization 106 103
Working capital (99) 39
Capital spending (94) (78)
Internal use software spending (46) (16)
Discontinued operations (137) (205)
Other 63 (51)
Subtotal - operating cash flow (10) (46)
Net activity in financing receivables (33) (39)
Divestitures 155 15
Dividends (68) (68)
Offering proceeds 1,213 -
Other 12 22
Change in net debt $1,269 $(116)
Restructuring amounts included in
operating cash flow above $15 $75
Segment operating cash flow
information
Three Months Ended
01-Jul-01 02-Jul-00
Electronic Systems $56 $132
Command, Control, Communication
and Information Systems 77 11
Technical Services 2 (29)
Aircraft Integration Systems 10 56
Commercial Electronics (20) 18
Aircraft (74) (47)
Discontinued operations (137) (205)
Other 76 18
$(10) $(46)
Contacts:
David Polk (News Media)
781.8 60.2386
Timothy Oliver (Investor Relations)
781.860.2167
SOURCE Raytheon Company
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Related links:
http://www.raytheon.com
CONTACT:
David Polk (News Media), 781-860-2386, or
Timothy Oliver (Investor Relations), 781-860-2167, both of
Raytheon
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