LEXINGTON, Mass., Oct. 17 /PRNewswire/ -- Raytheon Company (NYSE: RTN)
today reported sales of $4.0 billion for the third quarter of 2001, down from
$4.2 billion in the third quarter a year ago. The year-over-year decline in
sales is due to divestitures and lower deliveries at Raytheon Aircraft Company
(RAC). Sales for the defense businesses, adjusting for divestitures, were up
6 percent year-over-year. As a result of the charge announced earlier related
to RAC, the company reported a loss from continuing operations of $262
million, or $0.73 per diluted share. Excluding the charge, income from
continuing operations was $127 million, or $0.35 per diluted share, compared
with $133 million, or $0.39 per diluted share, in the third quarter of 2000.
The company's backlog at the end of the quarter was $25.1 billion.
Consolidated operating cash outflow was $357 million, compared with
positive operating cash flow of $212 million a year ago. Cash outflow was
driven by discontinued operations, which consumed $254 million, and RAC, which
consumed $260 million. The defense businesses generated $162 million. Net debt
at the end of the quarter was $8.8 billion, compared with $9.9 billion at the
end of the third quarter of 2000. Following the end of the quarter, Raytheon
received a $500 million payment as part of a $635.5 million reimbursement from
Hughes Electronics Corporation, as previously announced.
The company expects continued strength in its defense businesses this
year, however, it will not be sufficient to offset the deterioration in the
commercial businesses. Therefore, the company is revising its outlook for
2001 EPS from continuing operations, excluding third quarter charges related
to RAC, to $1.35 to $1.40, due entirely to the decline in profit contribution
from RAC. The company also said 2002 EPS from continuing operations is
expected to be $1.35 to $1.40, reflecting an expected $0.35 per share
reduction in pension income. The reduction in pension income primarily
reflects the year-to-date performance of the equity markets. In the
aggregate, the company's pension plans are adequately funded and the estimated
reduction will not have an impact on cash flow in 2002.
Economic EPS for 2002 (excluding the effects of pension and amortization
of goodwill) is expected to be in the range of $2.40 to $2.45, versus $2.10 to
$2.15 for 2001. The company's estimate does not reflect any additional
increases in defense spending due to recent world events.
Including the impact of discontinued operations, the company posted a net
loss in the third quarter of $285 million, or $0.79 per diluted share,
compared with net income of $105 million, or $0.31 per diluted share, in the
third quarter of 2000.
"Our defense businesses are performing well and are ahead of plan in
sales, margin and cash for the year-to-date," said Raytheon Chairman and Chief
Executive Officer Daniel P. Burnham. "Our commercial businesses continue to
be hurt by the softening economy, but we remain optimistic about our future
prospects because we are well-positioned for growth in defense."
Electronic Systems
Electronic Systems (ES) reported third quarter sales of $2.0 billion, up
from $1.9 billion in the third quarter of 2000. Operating income was $281
million, compared with $296 million in the third quarter of 2000. Performance
at ES is better than both the plan and prior year through the first nine
months. Year-to-date, excluding divestitures, sales are up 7 percent over the
prior year. Margins increased from 12.3 percent in 2000 to 13.3 percent in
2001. ES had backlog of $11.2 billion at the end of the quarter.
During the quarter, Raytheon received a $212 million award from NATO for
low rate initial production of the Evolved SeaSparrow Missile (ESSM). ESSM is
designed to protect Navy ships by destroying currently fielded and near-term
projected anti-ship missiles. Also during the quarter, Raytheon's Tomahawk
cruise missile system completed another successful test launch from a Royal
Navy attack submarine. The test marked the first use of a joint U.S./UK
version of the Advanced Tomahawk Weapon Control System software, which
promotes commonality and interoperability between the Royal Navy and U.S.
Navy.
Command, Control, Communication and Information Systems
Command, Control, Communication and Information Systems (C3I) recorded
third quarter sales of $945 million, up 12 percent from $843 million last
year. The increase is due primarily to higher volume in classified programs
and secure network programs. Operating income in the quarter was $94 million,
up from $87 million in the third quarter of 2000. Year-to-date, C3I income is
higher than both plan and prior year. Sales through nine months, excluding
divestitures, are up 9 percent over the prior year. Margins have improved
from 9.8 percent to 10.0 percent. C3I had backlog of $5.7 billion at the end
of the quarter.
During the quarter, Raytheon's leadership in network centric command and
control continued. The U.S. Navy's Cooperative Engagement Capability (CEC) --
developed by Raytheon and Johns Hopkins University's Applied Physics
Laboratory -- passed its Operational Evaluation Test (OPEVAL), clearing the
way for a Department of Defense full-scale production decision. CEC is a
unique sensor networking system that integrates radar measurements in real
time, which enables a fleet of warships to defend against advanced threats --
such as cruise missiles -- at ranges not previously possible. In addition, a
$110 million contract was awarded for the Army Airborne Command and Control
System that provides a Corps/Division/Brigade command post on UH60 helicopters
for on-the-move situational awareness to maneuver commanders and battle staff.
Under the aegis of Raytheon's Intelligence, Surveillance, Reconnaissance
initiative (ISR.Net), the company won several awards, including a $203 million
contract from National Imagery and Mapping Agency for the Information
Dissemination Services - Direct Delivery (IDS-D) program. IDS-D receives,
processes and directs large volumes of data and imagery intelligence to the
armed services and intelligence community.
Also during the quarter, Raytheon and the U.S. Air Force accomplished the
first precision approach and landing by a civilian aircraft using a military
global positioning station (GPS). Raytheon designed and developed the
differential GPS ground station under an Air Force contract for the Joint
Precision Approach and Landings System program.
Technical Services
Technical Services (TS) reported sales of $522 million for the third
quarter, up 13 percent from $461 million a year ago. Operating income was $38
million, an increase of 6 percent from a year ago. Margin for the quarter is
down slightly, due to the mix of contracts. Sales and margin at TS are higher
than plan and prior year on a year-to-date basis. Sales are up, excluding
divestitures, 13 percent through the first nine months, compared to the prior
year. Margins are up slightly, from 7.5 percent in 2000, to 7.8 percent in
2001. The business had backlog of $1.8 billion at the end of the quarter.
During the third quarter, TS received five contract awards from the
Defense Threat Reduction Agency to continue its work supporting the U.S.
government's Cooperative Threat Reduction (CTR) and Strategic Arms Reduction
Treaty (START) monitoring efforts in the former Soviet Union.
Aircraft Integration Systems
Aircraft Integration Systems (AIS) reported sales of $259 million for the
third quarter, compared with $277 million in the same quarter of 2000. On a
year-to-date basis, sales are down 12 percent, as expected, due to several
Navy, Air Force and commercial programs nearing completion, partially offset
by increased volume on the Airborne Standoff Radar (ASTOR) program. AIS
recorded operating income of $24 million, compared with operating income of
$11 million in the third quarter of 2000. The prior period included a
contract write-down on the Boeing Business Jet program. Through the first
nine months of the year, margin is down from 6.5 percent in 2000 to 0.3
percent in 2001. This decrease is driven by contract adjustments made in the
second quarter of 2001, including a write-down on the Boeing Business Jet
program. The business shipped three Boeing Business Jets in the third quarter
and expects to ship the last four in the fourth quarter of 2001. AIS had
backlog of $1.9 billion at the end of the quarter.
During the quarter, the first aerodynamic validation flight for the UK
Ministry of Defence's new ASTOR (Airborne Standoff Radar) system took place in
Wichita, Kansas. The Raytheon-developed airborne radar surveillance system,
carried aboard a specially configured Global Express aircraft, provides
day/night and all-weather imagery of the ground over a large area. The
imagery can be analyzed on board the aircraft and passed in near real-time to
ground stations and other military systems. The first production aircraft is
scheduled for delivery to Raytheon's AIS facility in Greenville, Texas, in
2002. Subsequent aircraft will be modified and equipped by Raytheon Systems
Limited in the UK.
Commercial Electronics
Commercial Electronics (CE) reported third quarter sales of $101 million,
compared with $156 million in the third quarter of 2000. The lower sales were
due to the divestiture of Recreational Marine and reduced industry-wide demand
for cellular handset components. These factors also contributed to a
shortfall to plan and prior year, through the first nine months of 2001. Sales
are down 13 percent through the first nine months versus the prior year, after
adjusting for the divestiture. CE posted an operating loss of $22 million for
the quarter, compared with an operating loss of $15 million a year ago. The
increase in the loss is driven primarily by pricing pressures tied to current
market conditions.
Raytheon Aircraft Company
Raytheon Aircraft Company (RAC) reported sales of $449 million, compared
with $749 million for the third quarter of 2000. The sales decline was due to
the divestiture of Raytheon Aerospace Company and lower aircraft shipments.
RAC shipped 73 aircraft in the quarter, compared with 114 in the third quarter
of 2000. As previously announced, RAC reported third quarter charges of $693
million in connection with its commuter aircraft business and $52 million
related to used general aviation aircraft. Including the effect of the
charges, RAC recorded an operating loss of $758 million, compared with
operating income of $40 million a year ago. Performance at RAC is
significantly below both plan and prior year through the first nine months of
2001. Adjusting for the divestiture, sales are down 20 percent over prior
year on a year-to-date basis. Margins have decreased from 4.4 percent, to 0.5
percent, excluding the charge taken during the quarter. Cash flow at RAC
worsened due to lower demand for used aircraft and a resulting rise in used
aircraft inventory.
RAC announced it was implementing further workforce reductions, cutting
additional costs, and reducing factory and fleet inventory expenses to bring
costs in line with a slowing economy. For the entire year, RAC will lay off a
total of approximately 1,700 people. The business also continues to review
production rates.
On August 11, RAC's largest airplane, the new super mid-size Hawker
Horizon, made its first flight. The Horizon is one-third larger than the
company's mid-size Hawker 800XP, and has trans-Atlantic flight capability.
Discontinued Operations
The company recorded a third quarter loss from discontinued operations of
$23 million after-tax, or $0.06 per diluted share. The company's performance
against cost to complete estimates for two Massachusetts power plants and
other guaranteed projects remains in line with its previous disclosures.
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 third quarter 2001 Financial Results
There will be a conference call beginning at 9 a.m. ET on Oct. 18 to
review the company's third quarter results. To listen to the call, dial
877.604.2081 (in the U.S.) or 706.679.7694 (international callers). There
will also be an audio cast of the call on http://www.raytheon.com. Slides will also
be available on the website.
A replay of the conference will be run from Noon ET Oct. 18 through Noon
ET October 22. The replay number is 800-642-1687 for U.S. callers and 706-
645-9291 for international callers. The reservation number for the replay is
1979868.
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 of 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 (RE&C), the ultimate outcome of disputes with
Washington Group International relating to the sale of RE&C, and timely
completion of two Massachusetts construction 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.
Contacts:
David Polk (News Media)
781.860.2386
Timothy Oliver (Investor Relations)
781.860.2167
Attachment A
Raytheon Company
Financial Information
Third Quarter 2001
(In millions, except per share amounts)
Three Months Ended Nine Months Ended
30-Sep-01 01-Oct-00 30-Sep-01 01-Oct-00
Net sales $3,961 $4,160 $12,236 $12,515
Cost of sales 3,883 3,317 10,614 10,087
Administrative
and selling expenses 312 288 929 916
Research and
development expenses 110 122 364 395
Total operating expenses 4,305 3,727 11,907 11,398
Operating income (loss) (344) 433 329 1,117
Interest expense, net 165 193 516 558
Other expense
(income), net 18 4 (36) 13
Non-operating
expense, net 183 197 480 571
Income (loss)
from continuing
operations before
taxes (527) 236 (151) 546
Federal and
foreign income
taxes (265) 103 (103) 238
Income (loss)
from continuing
operations (262) 133 (48) 308
Discontinued operations
Loss from discontinued
operations, net of tax - - - (70)
Loss on disposal of
discontinued operations,
net of tax (23) (28) (549) (265)
(23) (28) (549) (335)
Net income (loss) $(285) $105 $(597) $(27)
Earnings (loss) per share from continuing operations
Basic $(0.73) $0.39 $(0.14) $0.91
Diluted $(0.73) $0.39 $(0.14) $0.91
Loss per share from discontinued operations
Basic $(0.06) $(0.08) $(1.57) $(0.99)
Diluted $(0.06) $(0.08) $(1.57) $(0.99)
Earnings (loss) per share
Basic $(0.79) $0.31 $(1.71) $(0.08)
Diluted $(0.79) $0.31 $(1.71) $(0.08)
Average shares outstanding
Basic 359.4 338.3 349.8 338.2
Diluted 359.4(1) 341.6 349.8(1) 339.9
(1)Diluted average shares outstanding for the three and nine months ended
September 30, 2001 do not include the effect of stock plans since their
inclusion would have an antidilutive effect on earnings per share.
Attachment B
Raytheon Company
Segment Information
Third Quarter 2001
Net Sales Operating Income
(In millions) Three Months Ended Three Months Ended
30-Sep-01 01-Oct-00 30-Sep-01 01-Oct-00
Electronic Systems $1,985 $1,938 $281 $296
Command, Control, Communication
and Information Systems 945 843 94 87
Technical Services 522 461 38 36
Aircraft Integration Systems 259 277 24 11
Commercial Electronics 101 156 (22) (15)
Aircraft 449 749 (758) 40
Corporate and Eliminations (300) (264) (1) (22)
Total $3,961 $4,160 $(344) $433
Operating Income
As a Percent of Sales
Three Months Ended
30-Sep-01 01-Oct-00
Electronic Systems 14.2% 15.3%
Command, Control, Communication
and Information Systems 9.9% 10.3%
Technical Services 7.3% 7.8%
Aircraft Integration Systems 9.3% 4.0%
Commercial Electronics -21.8% -9.6%
Aircraft -168.8% 5.3%
Corporate and Eliminations
Total -8.7% 10.4%
(In millions) Net Sales Operating Income
Nine Months Ended Nine Months Ended
30-Sep-01 01-Oct-00 30-Sep-01 01-Oct-00
Electronic Systems $5,872 $5,597 $779 $688
Command, Control, Communication
and Information Systems 2,731 2,535 273 249
Technical Services 1,499 1,348 117 101
Aircraft Integration Systems 774 878 2 57
Commercial Electronics 339 485 (43) (4)
Aircraft 1,854 2,374 (735) 105
Corporate and Eliminations (833) (702) (64) (79)
Total $12,236 $12,515 $329 $1,117
Operating Income
As a Percent of Sales
Nine Months Ended
30-Sep-01 01-Oct-00
Electronic Systems 13.3% 12.3%
Command, Control, Communication
and Information Systems 10.0% 9.8%
Technical Services 7.8% 7.5%
Aircraft Integration Systems 0.3% 6.5%
Commercial Electronics -12.7% -0.8%
Aircraft -39.6% 4.4%
Corporate and Eliminations
Total 2.7% 8.9%
Note: Corporate and Eliminations includes certain company-wide activities
that have not been attributed to a particular segment and intercompany
eliminations.
Attachment C
Raytheon Company
Other Information
Third Quarter 2001
(In millions, except total employees and aircraft shipments)
Backlog
30-Sep-01 01-Oct-00
Electronic Systems $11,199 $11,613
Command, Control, Communication
and Information Systems 5,673 4,789
Technical Services 1,774 1,614
Aircraft Integration Systems 1,919 2,105
Commercial Electronics 488 688
Aircraft 4,031 4,309
$25,084 $25,118
U.S. government backlog included
above $16,452 $16,118
Total Employees
30-Sep-01 01-Oct-00
Total employees 87,700 94,500
Aircraft Shipments (Units)
Three Months Ended
30-Sep-01 01-Oct-00
Hawker 8 14
Premier I 2 -
Beechjet (Commercial) 4 10
King Air 16 34
1900D Commuter - 12
Pistons 30 29
T-6A 13 15
Total aircraft shipments 73 114
Attachment D
Raytheon Company
Preliminary Financial Information
Third Quarter 2001
(In millions)
Balance sheets
30-Sep-01 31-Dec-00 01-Oct-00
Assets
Cash and cash equivalents $604 $871 $171
Accounts receivable 515 505 688
Contracts in process 3,919 4,061 4,426
Inventories 2,347 1,908 1,934
Deferred federal and foreign income
taxes 699 476 471
Prepaid expenses and other current
assets 798 178 151
Net assets from discontinued
operations - 14 50
Total current assets 8,882 8,013 7,891
Property, plant and equipment, net 2,279 2,491 2,452
Goodwill, net 12,385 13,281 13,378
Other assets, net 3,237 2,992 2,889
Total assets $26,783 $26,777 $26,610
Liabilities and Stockholders' Equity
Notes payable and current portion of
long-term debt $1,748 $877 $972
Advance payments, less contracts in
process 887 1,135 966
Accounts payable 903 1,099 988
Accrued salaries and wages 656 549 644
Other accrued expenses 1,468 1,205 1,368
Net liabilities from discontinued
operations 386 - -
Total current liabilities 6,048 4,865 4,938
Accrued retiree benefits and other
long-term liabilities 1,082 1,262 1,316
Deferred federal and foreign income
taxes 607 773 591
Long-term debt 7,623 9,054 9,049
Trust preferred securities 856 - -
Stockholders' equity 10,567 10,823 10,716
Total liabilities and
stockholders' equity $26,783 $26,777 $26,610
Debt-to-capital ratio
30-Sep-01 31-Dec-00 01-Oct-00
Debt $9,371 $9,931 $10,021
Capital 20,794 20,754 20,737
Debt-to-capital ratio 45.1% 47.9% 48.3%
Attachment E
Raytheon Company
Preliminary Cash Flow Information
Third Quarter 2001
(In millions)
Cash flow information
Three Months Ended
30-Sep-01 01-Oct-00
Income from continuing operations $(262) $133
Depreciation 77 78
Amortization 107 105
Working capital 147 96
Capital spending (108) (96)
Internal use software spending (30) (26)
Discontinued operations (254) (85)
Other (34) 7
Subtotal - operating cash flow (357) 212
Net activity in financing receivables (11) 2
Divestitures - 1
Dividends (72) (68)
Other (36) 89
Change in net debt $(476) $236
Restructuring amounts included in
operating cash flow above $11 $42
Segment operating cash flow
information
Three Months Ended
30-Sep-01 01-Oct-00
Electronic Systems $131 $110
Command, Control, Communication
and Information Systems 1 167
Technical Services 13 55
Aircraft Integration Systems 17 (17)
Commercial Electronics (9) (4)
Aircraft (260) (26)
Discontinued operations (254) (85)
Other 4 12
$(357) $212
SOURCE Raytheon Company
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Related links:
http://www.raytheon.com
CONTACT:
David Polk (News Media), +1-781-860-2386, or
Timothy Oliver (Investor Relations), +1-781-860-2167, both of
Raytheon Company
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