LEXINGTON, Mass., Oct. 18 /PRNewswire/ -- Raytheon Company
(NYSE: RTNA, RTNB) today reported third quarter sales of $4.2 billion, up from
$4.1 billion for the 1999 third quarter. The company ended the quarter with
total backlog of $25.1 billion, up 14 percent from $22.0 billion a year ago.
Income from continuing operations was $133 million, or $0.39 per diluted
share, compared with a net loss from continuing operations of $89 million, or
$0.26 per diluted share, in the third quarter 1999. Included in the 1999 third
quarter were charges of $464 million, or $0.84 per diluted share.
Operating cash flow was $238 million for the quarter, after a cash
requirement of $85 million for discontinued operations. Compared with the
1999 third quarter, cash flow performance was stronger across all continuing
operations. Net debt at the end of the third quarter was $9.9 billion,
compared with $10.1 billion at the end of the second quarter 2000.
"We are pleased with the way the organization has performed in the first
nine months of 2000. We had some impressive wins during the third quarter and
backlog remains strong," said Daniel P. Burnham, Raytheon's chairman and chief
executive officer. "We have realized our goal of sequential improvement in
earnings and cash flow during the first three quarters of this year and are
driving to meet our goals for year-end. Looking ahead to next year, we expect
to grow with our markets and grow earnings faster than revenue." Burnham
added that the company is comfortable with the current First Call range of
$1.40-$1.50 per share from continuing operations for the full year 2000.
The company posted third quarter 2000 net income of $105 million, or $0.31
per diluted share. This included a $28 million loss on disposal of
discontinued operations amounting to $0.08 per diluted share. In the third
quarter 1999 the company recorded a net loss of $163 million, or $0.48 per
diluted share, including a loss from discontinued operations of $74 million,
or $0.22 per diluted share. During the quarter, Raytheon also finalized the
sale of its engineering and construction business. The total cash impact of
discontinued operations in the quarter - operating uses offset by sales
proceeds - was an outflow of $11 million.
Electronic Systems
Electronic Systems (ES) reported sales for the quarter of $1.9 billion,
down slightly from $2.0 billion a year ago. ES had operating income of $296
million in the third quarter, compared with $108 million a year ago. ES had
$220 million of charges in the third quarter of 1999. Operating margin for
the business was up significantly, at 15.3 percent, compared with 5.4 percent
in the 1999 third quarter. Included in the third quarter 2000 was a reversal
of previously recorded restructuring charges of $21 million, partially offset
by restructuring related period costs of $14 million.
ES won a number of key awards during the quarter, including:
-- A $1.2 billion multi-year joint venture contract with Lockheed Martin
for Javelin Antitank Weapon System production. Raytheon booked $139 million
of the award in the third quarter, which represents Raytheon's portion of the
first year of the four-year contract period.
-- A $126 million engineering and manufacturing development (EMD) contract
from the U.S. Army for TOW Fire-and-forget missiles.
-- A $75 million contract award from the U.S. Navy to produce 272 guidance
sections for the High Speed Anti-Radiation Missile (HARM) to upgrade the
Navy's inventory to the latest version. The upgraded missiles will help to
replace those used by the Navy during the Kosovo conflict.
-- The company was also awarded $234 million in the quarter for a new
classified program.
Raytheon announced in September that the U.S. Department of Defense (DoD)
has approved its AIM-9X Sidewinder for low-rate initial production. The DoD
plans to procure more than 10,000 AIM-9X missiles over the next 10 years.
They will be integrated and deployed by the U.S. Navy and Air Force on the
F/A-18E/F, F-16 and F-22. Also during the quarter, the company had successful
tests of its Ground Based Radar for the National Missile Defense system,
Standard Missile 2, Extended Range Guided Munition (ERGM) and Stinger air
defense missile.
ES had backlog of $11.6 billion at the end of the third quarter, compared
with $9.5 billion a year ago.
Command, Control, Communication and Information Systems
Command, Control, Communication and Information Systems (C3I) reported
sales of $843 million for the third quarter 2000, compared with $840 million a
year ago. In the intervening period, Raytheon divested its flight simulation
business. C3I posted operating income of $87 million in the quarter, compared
with $1 million in the 1999 third quarter. Operating income was negatively
affected in the quarter by contract adjustments on several communications
programs, partially offset by reserve reversals. Included in C3I's third
quarter 1999 results were charges of $73 million.
In August, Raytheon Systems Limited (RSL), the UK subsidiary of Raytheon,
announced that it was named the preferred supplier for the UK Ministry of
Defence (MoD) Successor Identification Friend or Foe (SIFF) program at a value
of approximately $150 million. RSL is currently in negotiations with the MoD
and the company expects to book the award in the fourth quarter 2000.
C3I had backlog of $4.8 billion at the end of the third quarter 2000,
compared with $6.0 billion at the end of the third quarter 1999. The decrease
is due 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) recorded third quarter 2000 sales of $461 million,
compared with $444 million in the third quarter 1999. Operating income for TS
was $36 million, compared with $21 million a year ago. Included in the third
quarter 1999 were charges of $6 million.
In August, Raytheon announced that it won a $250 million multi-year
contract to provide base operations support for the U.S. Air Force at Johnston
Atoll in the Marshall Islands.
TS had backlog of $1.6 billion at the end of the third quarter, compared
with $1.3 billion a year ago.
Aircraft Integration Systems
Aircraft Integration Systems (AIS) had sales of $277 million in the 2000
third quarter, compared with sales of $210 million in the same quarter of
1999. AIS had operating income of $11 million, compared with an operating
loss of $78 million in the 1999 third quarter. Further contract write-downs
on the Boeing Business Jet program negatively affected operating income at AIS
in the quarter. Included in the third quarter 1999 were charges of $107
million.
AIS had backlog of $2.1 billion at the end of the third quarter 2000,
compared with $1.0 billion a year ago.
Commercial Electronics
Commercial Electronics (CE) posted third quarter 2000 sales of $156
million, compared with $171 million in the third quarter 1999. CE had an
operating loss of $15 million in the third quarter, versus an operating loss
of $33 million for the same period last year. Contributing to the loss in the
2000 third quarter was an $8 million restructuring charge at Raytheon Marine's
High Seas division as well as continuing investments in new technology
ventures transferred from defense electronics to commercial electronics. In
the year-earlier period, the unit took a charge of $44 million.
Raytheon Aircraft Company
Raytheon Aircraft Company (RAC) recorded sales of $749 million in the
third quarter, up 6 percent from a year ago on higher aircraft deliveries.
Year-to-date, RAC has shipped 396 aircraft, nearly as many as it shipped in
all of 1999.
Operating income for RAC was $40 million for the quarter, compared with
$75 million in the third quarter 1999. Operating income was down primarily
due to a contract cost adjustment on a fixed price T-6A military trainer
option recently exercised by the customer, the sale of finance receivables,
and narrower spreads on customer financing due to higher interest rates.
At the National Business Aviation Association convention held in October,
RAC introduced the Hawker 450, a light mid-size business jet. This new entry
to RAC's product line will be the next in a family of aircraft featuring a
composite fuselage and swept aluminum wing design. RAC has already received
105 orders for the Hawker 450, more than half of which are from external
customers.
RAC had backlog of $4.3 billion at the end of the 2000 third quarter,
compared with $3.5 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,"
"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; 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
Third Quarter 2000
(In millions, except per share amounts)
Three Months Ended Nine Months Ended
01-Oct-00 03-Oct-99 01-Oct-00 03-Oct-99
Net sales $4,160 $4,122 $12,515 $13,023
Cost of sales 3,317 3,577 10,087 10,358
Administrative and
selling expenses 288 361 916 1,030
Research and
development expenses 122 115 395 361
Total operating
expenses 3,727 4,053 11,398 11,749
Operating income 433 69 1,117 1,274
Interest expense, net 193 177 558 526
Other expense, net 4 10 13 12
Non-operating
expense, net 197 187 571 538
Income (loss) from
continuing operations
before taxes 236 (118) 546 736
Federal and foreign
income taxes 103 (29) 238 308
Income (loss) from
continuing operations 133 (89) 308 428
Discontinued operations
Loss from discontinued
operations, net of tax - (74) (70) (43)
Loss on disposal
of discontinued
operations,
net of tax (28) - (265) -
(28) (74) (335) (43)
Income (loss) before
accounting change 105 (163) (27) 385
Cumulative effect
of change in
accounting principle,
net of tax - - - 53
Net income (loss) $105 $(163) $ (27) $332
Earnings (loss)
per share from
continuing operations
Basic $0.39 $(0.26) $0.91 $1.27
Diluted $0.39 $(0.26) $0.91 $1.25
Loss per share from
discontinued operations
Basic $(0.08) $(0.22) $(0.99) $(0.13)
Diluted $(0.08) $(0.22) $(0.99) $(0.13)
Earnings (loss) per share
before accounting change
Basic $0.31 $(0.48) $(0.08) $1.14
Diluted $0.31 $(0.48) $(0.08) $1.12
Earnings (loss) per share
Basic $0.31 $(0.48) $(0.08) $0.98
Diluted $0.31 $(0.48) $(0.08) $0.97
Average shares outstanding
Basic 338.3 338.0 338.2 337.1
Diluted 341.6 338.0 339.9 342.4
Attachment B
Raytheon Company
Segment Information
Third Quarter 2000
(In millions)
Operating Income
Net Sales Operating Income As a Percent of Sales
Three Months Ended Three Months Ended Three Months Ended
01-Oct-00 03-Oct-99 01-Oct-00 03-Oct-99 01-Oct-00 03-Oct-99
Electronic
Systems $1,938 $1,986 $296 $108 15.3% 5.4%
Command, Control,
Communication
and Information
Systems 843 840 87 1 10.3% 0.1%
Technical Services 461 444 36 21 7.8% 4.7%
Aircraft
Integration
Systems 277 210 11 (78) 4.0% -37.1%
Commercial
Electronics 156 171 (15) (33) -9.6% -19.3%
Aircraft 749 706 40 75 5.3% 10.6%
Corporate and
Eliminations (264) (235) (22) (25)
Total $4,160 $4,122 $433 $69 10.4% 1.7%
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
Third Quarter 2000
(In millions, except total employees and aircraft shipments)
Backlog
01-Oct-00 03-Oct-99
Electronic Systems $11,613 $9,500
Command, Control, Communication
and Information Systems 4,789 6,037
Technical Services 1,614 1,258
Aircraft Integration Systems 2,105 1,041
Commercial Electronics 688 597
Aircraft 4,309 3,517
$25,118 $21,950
U.S. government backlog included above $16,118 $13,522
Total Employees
01-Oct-00 03-Oct-99
Total employees 94,500 98,600
Aircraft Shipments (Units)
Three Months Ended
01-Oct-00 03-Oct-99
Hawker 14 17
Beechjet (Commercial) 10 14
King Air 34 32
1900D Commuter 12 7
Pistons 29 28
T-6A 15 1
Total aircraft shipments 114 99
Attachment D
Raytheon Company
Preliminary Financial Information
Third Quarter 2000
(In millions)
Balance sheets 01-Oct-00 31-Dec-99 03-Oct-99
Assets
Cash and cash equivalents $171 $ 230 $113
Accounts receivable 688 819 750
Contracts in process 4,426 4,348 4,595
Inventories 1,934 1,950 1,969
Deferred federal and
foreign income taxes 471 490 667
Prepaid expenses and
other current assets 151 192 285
Net assets from
discontinued operations 50 573 663
Total current assets 7,891 8,602 9,042
Property, plant and
equipment, net 2,452 2,387 2,280
Goodwill, net 13,378 13,596 13,673
Other assets, net 2,889 2,704 2,845
Total assets $26,610 $27,289 $27,840
Liabilities and Stockholders' Equity
Notes payable and
current portion of
long-term debt $972 $2,471 $3,112
Advance payments,
less contracts in process 966 1,245 739
Accounts payable 988 1,204 1,145
Accrued salaries and wages 644 497 627
Other accrued
expenses 1,368 1,716 1,670
Total current liabilities 4,938 7,133 7,293
Accrued retiree benefits and
other long-term liabilities 1,316 1,411 1,721
Deferred federal and
foreign income taxes 591 488 560
Long-term debt 9,049 7,298 7,296
Stockholders' equity 10,716 10,959 10,970
Total liabilities and
stockholders' equity $26,610 $27,289 $27,840
Debt-to-capital ratio
01-Oct-00 31-Dec-99 03-Oct-99
Debt $10,021 $9,769 $10,408
Capital 20,737 20,728 21,378
Debt-to-capital ratio 48.3% 47.1% 48.7%
Attachment E
Raytheon Company
Preliminary Cash Flow Information
Third Quarter 2000
(In millions)
Cash flow information
Three Months Ended
01-Oct-00 03-Oct-99
Income (loss) from continuing operations $133 $ (88)
Depreciation 78 69
Amortization 105 102
Working capital 96 (540)
Capital spending (96) (110)
Discontinued operations (85) (72)
Other 7 1
Subtotal - operating cash flow 238 (638)
Net activity in financing receivables 2 (1)
Divestitures 74 190
Dividends (68) (67)
Share repurchase - (3)
Other (10) (5)
Change in net debt $236 $(524)
Restructuring amounts included in
operating cash flow above $42 $188
Segment operating cash flow information
Three Months Ended
01-Oct-00 03-Oct-99
Electronic Systems $110 $(210)
Command, Control, Communication
and Information Systems 167 127
Technical Services 55 11
Aircraft Integration Systems (17) (39)
Commercial Electronics (4) (35)
Aircraft (26) (126)
Discontinued operations (85) (72)
Other 38 (294)
$238 $(638)
Contact:
David Polk
781.860.2386
SOURCE Raytheon Company
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CONTACT:
David Polk of Raytheon, 781-860-2386
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