LEXINGTON, Mass., July 20 /PRNewswire/ -- Raytheon Company
(NYSE: RTNA, RTNB) today reported second quarter 2000 sales from continuing
operations of $4.1 billion, compared with sales of $4.6 billion in the second
quarter of 1999. Sales were down year over year, as expected. Divestitures
accounted for $136 million of the decline year over year. The remainder
reflects lower volume in missiles and missile defense systems. Income from
continuing operations for the quarter was $95 million, or $0.28 per diluted
share, compared with $277 million, or $0.81 per diluted share in the second
quarter of 1999.
As previously announced, the company completed the sale of its engineering
and construction unit. The impact of the sale in the second quarter was a $46
million loss on disposal of discontinued operations. Net income for the
second quarter of 2000 was $49 million, or $0.14 per diluted share, versus
$290 million, or $0.84 per diluted share the previous year.
The company's backlog from continuing operations at the end of the quarter
was a record $25.6 billion, up 20 percent compared with $21.2 billion a year
earlier. Backlog was up 4 percent from $24.6 billion at the end of the first
quarter, on bookings of $5.1 billion during the second quarter of 2000.
Operating cash flow was moderately negative for the quarter, a $31 million
requirement, including a $167 million use of cash in discontinued operations.
This was driven by strong cash collections in the company's defense
businesses. Net debt at the end of the second quarter was $10.1 billion.
"For the year-to-date, cash outflow was better than planned, reflecting
efforts throughout the company to improve working capital management and focus
on the fundamentals of the business," said Daniel P. Burnham, Raytheon's
chairman and chief executive officer. "Our increasing backlog gives us
confidence in our revenue growth outlook for 2001 and beyond. While we are
generally pleased with our performance for the quarter, we recognize that
there is still work to be done. Throughout the organization, we will continue
to emphasize meeting commitments to our customers and to our shareholders."
Electronic Systems
Electronic Systems (ES) reported sales of $1.8 billion for the quarter,
versus $2.1 billion a year ago. Volume was down in missiles and missile
defense systems, as expected. ES reported operating income of $209 million,
compared with $345 million in the prior year. Factors contributing to the
decline in operating income included lower volume, adverse mix and certain
non-recurring items which, on balance, benefited 1999.
Significant business wins in the quarter included booking of $756 million
for the engineering and manufacturing development phase of Theater High
Altitude Area Defense (THAAD) ground-based radar. The company also won a $118
million contract from the U.S. Naval Sea Systems Command for STANDARD Missile-
2 production and upgrades.
ES had backlog of $11.9 billion at the end of the second quarter, compared
with $9.1 billion a year ago.
Command, Control, Communication and Information Systems
Command, Control, Communication and Information Systems (C3I) reported
sales of $846 million for the second quarter of 2000, versus $988 million in
the same quarter of 1999. Sales were lower due to the sale of the flight
simulator business and the planned wind-down of certain international
projects. For the full year, sales are likely to be down due to the flight
simulator divestiture and delays in international orders. C3I had operating
income of $93 million, compared with $148 million a year ago. The decline in
operating income was driven by lower volume and certain non-recurring items in
1999.
Raytheon booked $150 million in the quarter as part of a Federal Aviation
Administration (FAA) contract to incorporate modifications to the Standard
Terminal Automation Replacement System (STARS). The company is under contract
to develop and install STARS at 172 FAA terminal area control facilities and
up to 199 military radar approach control facilities over the next decade.
C3I's backlog at the end of the quarter totaled $4.8 billion, compared
with $5.7 billion at the close of the second quarter of 1999. The decrease is
due entirely to an adjustment to bookings in the fourth quarter of 1999
related to a large commercial contract awarded in the first quarter of 1999.
Technical Services
Technical Services (TS) had second quarter 2000 sales of $466 million,
compared with $501 million in the year-ago quarter. Operating income for the
unit was $38 million, compared with $42 million in the second quarter of 1999.
The sale of the flight simulator business in the first quarter 2000 had an
unfavorable impact on both sales and operating income in the 2000 second
quarter, compared with the prior year.
TS had backlog of $1.7 billion at the end of the quarter, compared with
$1.4 billion at the end of the second quarter of 1999.
Aircraft Integration Systems
Aircraft Integration Systems (AIS) recorded second quarter 2000 sales of
$303 million, compared with $288 million in the 1999 second quarter. Sales
from the Airborne Standoff Radar (ASTOR) contract accounted for the increase
during the quarter. AIS had operating income of $31 million in the second
quarter 2000 and in the second quarter of 1999.
AIS had backlog of $2.1 billion at the end of the second quarter,
compared with $1.0 billion at the end of the second quarter 1999. The
increase is primarily due to the ASTOR program, which was booked in the fourth
quarter of 1999.
Commercial Electronics
Commercial Electronics (CE) recorded sales of $155 million in the second
quarter, compared with $206 million a year ago. The decline in sales was due
primarily to the divestiture of Cedarapids Inc. in the third quarter of 1999.
CE recorded an operating loss of $9 million in the second quarter of 2000,
compared with operating income of $7 million in the second quarter of 1999.
Operating income was down due primarily to the divestiture of Cedarapids,
volume shortfalls at Raytheon Marine's High Seas division, and investments in
new technology ventures transferred from defense electronics to commercial
electronics.
CE had backlog of $0.7 billion at the end of the 2000 second quarter,
compared with $0.6 billion a year ago.
Raytheon Aircraft Company
Raytheon Aircraft Company (RAC) had second quarter sales of $810 million,
compared with $742 million a year ago. The increase was driven by higher
deliveries, with 145 aircraft shipped in the quarter. Operating income was
$35 million, compared with $69 million a year ago. Despite higher sales,
operating income was down primarily due to pricing pressure on commuter
aircraft, the sale of finance receivables, narrower spreads on customer
financing due to higher interest rates, and SAP implementation costs.
In May, Raytheon agreed to sell up to $800 million of general aviation and
corporate aviation finance receivables generated at RAC to debis Capital
Services, a business unit of DaimlerChrysler Services (debis) AG, to reduce
off-balance-sheet debt at RAC. During the quarter, the company completed the
sale of approximately $350 million of receivables under the agreement. Under
a separate agreement, Raytheon and debis entered into a financing partnership
designed to leverage debis' financial capabilities to support RAC customers
worldwide.
RAC had backlog of $4.3 billion at the end of the second quarter, compared
with $3.4 billion a year ago.
Raytheon Company is a global technology leader that provides products and
services in the areas of commercial and defense electronics and business and
special mission aircraft. Raytheon has operations throughout the United
States and serves customers in more than 70 countries.
Certain statements made in this news release constitute 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,"
"anticipate," "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 there can be no assurance that
actual results may not 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; the ultimate resolution of contingencies and legal
matters; the ability to realize anticipated cost efficiencies; the ability to
contain cost growth, particularly at RAC; timely development and certification
of new aircraft; the effect of market conditions, particularly as it affects
the general aviation market; the impact on recourse obligations of RAC due to
changes in the collateral values of financed 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; the integration of acquisitions; the impact of competitive
products and pricing; and the availability of raw materials, particularly at
Commercial Electronics, 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 reports filed 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, 1999.
Attachment A
Raytheon Company
Financial Information
Second Quarter 2000
Three Months Ended Six Months Ended
(In millions, except
per share amounts) 02-Jul-00 04-Jul-99 02-Jul-00 04-Jul-99
Net sales $4,124 $4,565 $8,355 $8,901
Cost of sales 3,289 3,440 6,770 6,781
Administrative and
selling expenses 317 364 628 669
Research and development
expenses 150 135 273 246
Total operating
expenses 3,756 3,939 7,671 7,696
Operating income 368 626 684 1,205
Interest expense, net 185 174 365 349
Other expense (income),
net 14 (7) 9 2
Non-operating expense,
net 199 167 374 351
Income from continuing
operations before taxes 169 459 310 854
Federal and foreign
income taxes 74 182 135 337
Income from continuing
operations 95 277 175 517
Discontinued operations
Income (loss) from
discontinued operations,
net of tax - 13 (70) 31
Loss on disposal of
discontinued operations,
net of tax (46) - (237) -
(46) 13 (307) 31
Income (loss) before
accounting change 49 290 (132) 548
Cumulative effect of change
in accounting principle,
net of tax - - - 53
Net income (loss) $49 $290 $(132) $495
Earnings per share
from continuing operations
Basic $0.28 $0.82 $0.52 $1.54
Diluted $0.28 $0.81 $0.52 $1.51
Earnings (loss) per share
from discontinued operations
Basic $(0.14) $0.04 $(0.91) $0.09
Diluted $(0.14) $0.04 $(0.90) $0.09
Earnings (loss) per share
before accounting change
Basic $0.14 $0.86 $(0.39) $1.63
Diluted $0.14 $0.84 $(0.39) $1.60
Earnings (loss) per share
Basic $0.14 $0.86 $(0.39) $1.47
Diluted $0.14 $0.84 $(0.39) $1.45
Average shares outstanding
Basic 338.3 336.9 338.3 336.6
Diluted 340.0 343.7 339.3 341.8
Attachment B
Raytheon Company
Segment Information
Second Quarter 2000
Operating Income
Net Sales Operating Income As a Percent of
Sales
(In millions) Three Months Three Months Three Months
Ended Ended Ended
02-Jul 04-Jul 02-Jul 04-Jul 02-Jul 04-Jul
00 99 00 99 00 99
Electronic
Systems $1,781 $2,053 $209 $345 11.7% 16.8%
Command, Control,
Communication and
Information
Systems 846 988 93 148 11.0% 15.0%
Technical Services 466 501 38 42 8.2% 8.4%
Aircraft Integration
Systems 303 288 31 31 10.2% 10.8%
Commercial
Electronics 155 206 (9) 7 -5.8% 3.4%
Aircraft 810 742 35 69 4.3% 9.3%
Corporate and
Eliminations (237) (213) (29) (16)
Total $4,124 $4,565 $368 $626 8.9% 13.7%
Note: Certain prior year amounts were reclassified to conform to the
current year presentation including the combination of the Defense Systems and
Sensors and Electronic Systems segments into Electronic Systems, the break-out
of previously aggregated segments, and the addition of Corporate and
Eliminations. Corporate and Eliminations includes certain company-wide
activities that have not been attributed to a particular segment and
intercompany eliminations. In addition, the Engineering and Construction
segment has been discontinued.
Attachment C
Raytheon Company
Other Information
Second Quarter 2000
(In millions, except total employees and aircraft shipments)
Backlog
02-Jul-00 04-Jul-99
Electronic Systems $11,946 $9,088
Command, Control, Communication
and Information Systems 4,804 5,688
Technical Services 1,742 1,435
Aircraft Integration Systems 2,080 963
Commercial Electronics 677 628
Aircraft 4,315 3,440
$25,564 $21,242
U.S. government backlog included above $16,561 $13,102
Total Employees
02-Jul-00 04-Jul-99
Total employees 94,300 99,700
Aircraft Shipments (Units)
Three Months Ended
02-Jul-00 04-Jul-99
Hawker 19 14
Beechjet (Commercial) 13 11
King Air 39 30
1900D Commuter 17 7
Pistons 42 36
T-6A 15 -
Total aircraft shipments 145 98
Attachment D
Raytheon Company
Preliminary Financial Information
Second Quarter 2000
(In millions)
Balance sheets
02-Jul-00 31-Dec-99 04-Jul-99
Assets
Cash and cash equivalents $389 $230 $108
Accounts receivable 787 819 870
Contracts in process 4,311 4,348 4,530
Inventories 1,945 1,950 2,110
Deferred federal
and foreign income taxes 442 490 700
Prepaid expenses
and other current assets 242 192 288
Net assets from
discontinued operations 241 573 664
Total current assets 8,357 8,602 9,270
Property, plant and
equipment, net 2,465 2,387 2,243
Goodwill, net 13,469 13,596 13,748
Other assets, net 2,873 2,704 2,794
Total assets $27,164 $27,289 $28,055
Liabilities and Stockholders' Equity
Notes payable and
current portion
of long-term debt $1,430 $2,471 $2,089
Advance payments, less
contracts in process 1,032 1,245 880
Accounts payable 1,002 1,204 1,496
Accrued salaries and wages 542 497 596
Other accrued expenses 1,599 1,716 1,820
Total current liabilities 5,605 7,133 6,881
Accrued retiree benefits
and other long-term
liabilities 1,318 1,411 1,694
Deferred federal and
foreign income taxes 509 488 537
Long-term debt 9,045 7,298 7,790
Stockholders' equity 10,687 10,959 11,153
Total liabilities and
stockholders' equity $27,164 $27,289 $28,055
Debt-to-capital ratio
02-Jul-00 31-Dec-99 04-Jul-99
Debt $10,475 $9,769 $9,879
Capital 21,162 20,728 21,032
Debt-to-capital ratio 49.5% 47.1% 47.0%
Attachment E
Raytheon Company
Preliminary Cash Flow Information
Second Quarter 2000
(In millions)
Cash flow information
Three Months Ended
02-Jul-00 04-Jul-99
Income from continuing operations $95 $277
Depreciation 67 62
Amortization 103 99
Working capital - (207)
Capital spending (78) (96)
Discontinued operations (167) (187)
Other (51) 59
Subtotal - operating cash flow (31) 7
Net activity in financing receivables (39) (12)
Divestitures 15 17
Dividends (68) (67)
Share repurchase - (65)
Other 7 121
Change in net debt $(116) $1
Restructuring amounts included in operating
cash flow above $65 $171
Segment operating cash flow information
Three Months Ended
02-Jul-00 04-Jul-99
Electronic Systems $134 $104
Command, Control, Communication
and Information Systems 11 84
Technical Services (29) (32)
Aircraft Integration Systems 56 (28)
Commercial Electronics 18 40
Aircraft (44) (11)
Discontinued operations (167) (187)
Other (10) 37
$(31) $7
For more information, please contact:
David Polk
781.860.2386
SOURCE Raytheon Company
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Related links:
http://www.raytheon.com
CONTACT:
David Polk of Raytheon Company, 781-860-2386
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