Raytheon Reports Solid Second Quarter 2015 Results

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- Strong bookings of $7.6 billion; book-to-bill ratio of 1.30

- Net sales of $5.8 billion, up 3 percent

- EPS from continuing operations of $1.65

- Solid operating cash flow from continuing operations of $376 million

- Updated full-year 2015 guidance

WALTHAM, Mass., July 23, 2015 /PRNewswire/ -- Raytheon Company RTN announced net sales for the second quarter 2015 were $5.8 billion compared to $5.7 billion in the second quarter 2014. Second quarter 2015 EPS from continuing operations was $1.65 compared to $1.59 in the second quarter 2014. Second quarter 2015 EPS from continuing operations included a favorable FAS/CAS Adjustment of $0.10 compared to a favorable FAS/CAS Adjustment of $0.18 in the second quarter 2014. In addition, second quarter 2015 EPS from continuing operations included, as expected, a $0.29 favorable impact from a tax settlement. It also included a $0.09 unfavorable impact associated with Raytheon|Websense acquisition accounting adjustments and acquisition related costs discussed in further detail below.

The Company had bookings of $7.6 billion in the second quarter 2015, resulting in a book-to-bill ratio of 1.30. In the second quarter 2014, bookings were $6.8 billion. Year-to-date 2015 bookings were $12.1 billion, resulting in a   book-to-bill ratio of 1.08. Year-to-date 2014 bookings were $11.1 billion.

"Our strategy to position the company for global growth is delivering results, which are reflected in the strong bookings and sales growth in the second quarter, as well as our improved growth outlook for 2015," said Thomas A. Kennedy, Raytheon Chairman and CEO. "Additionally, we continue to pursue a balanced capital deployment strategy to create value for our customers and shareholders."

Operating cash flow from continuing operations for the second quarter 2015 was $376 million compared to $153 million for the second quarter 2014. The increase in operating cash flow from continuing operations in the second quarter 2015 was primarily due to the timing of required pension contributions and the collection of the eBorders settlement with the U.K. Home Office, which was resolved in the first quarter 2015, partially offset by higher cash taxes.

Summary Financial Results























2nd Quarter


%


Six Months


%

($ in millions, except per share data)

2015


2014


Change


2015


2014


Change













Bookings

$

7,580



$

6,772



11.9%


$

12,051



$

11,065



8.9%

Net Sales

$

5,848



$

5,701



2.6%


$

11,136



$

11,209



-0.7%

Income from Continuing Operations attributable to Raytheon Company

$

504



$

499



1.0%


$

1,055



$

1,088



-3.0%

EPS from Continuing Operations

$

1.65



$

1.59



3.8%


$

3.44



$

3.46



-0.6%

Operating Cash Flow from Continuing Operations

$

376



$

153





$

431



$

812




Workdays in Fiscal Reporting Calendar

64



64





125



126




























In the second quarter 2015, the Company repurchased 1.9 million shares of common stock for $200 million. Year-to-date 2015, the Company repurchased 4.6 million shares of common stock for $500 million. The Company now expects its share repurchases in 2015 to be $1.0 billion, an increase of $250 million from its original expectation.

The Company ended the second quarter 2015 with $2.8 billion of net debt. Net debt is defined as total debt less cash and cash equivalents and short-term investments.

As previously announced, on May 29, 2015, the Company and Vista Equity Partners completed a transaction creating a new joint venture company that combines Websense, Inc. (Websense), formerly a Vista Equity portfolio company, and Raytheon Cyber Products, formerly part of Raytheon's Intelligence, Information and Services business. The newly formed commercial cybersecurity company, which is 80.3 percent owned by Raytheon and 19.7 percent by Vista Equity Partners, is known on an interim basis as Raytheon|Websense.

Second quarter 2015 results include Websense restructuring costs, and items related to the Raytheon|Websense transaction which are excluded from segment operating performance since management does not consider those items in evaluating the segment.

Raytheon|Websense Acquisition Accounting Adjustments and Acquisition Related Costs1





($ in millions, except per share data)

Operating
Income


EPS





Deferred Revenue Adjustment2

$

(10)



$

(0.02)


Amortization of Intangibles

$

(8)



$

(0.01)


Acquisition Related Costs

$

(23)



$

(0.05)


    Amounts excluded from segment results

$

(41)



$

(0.08)






Restructuring Costs (recorded in Raytheon|Websense segment results)

$

(5)



$

(0.01)


    Total

$

(46)



$

(0.09)






1See Attachment F for a reconciliation of how each of these items is calculated.

2Deferred Revenue Adjustment represents the impact of fair value adjustments to deferred revenue related to Raytheon|Websense, including historical Raytheon Cyber Products acquisitions.

 

Backlog

($ in millions)

 Period Ending


Q2 2015


Q2 2014


2014

Backlog

$

34,494



$

33,019



$

33,571


Funded Backlog

$

25,332



$

23,580



$

23,092


Backlog at the end of the second quarter 2015 was $34.5 billion, an increase of approximately $1.5 billion compared to the second quarter 2014. Funded backlog was $25.3 billion, an increase of approximately $1.8 billion compared to the second quarter 2014.

Outlook

The Company has updated its financial outlook for 2015 to reflect improved operating performance to date compared to prior guidance and the impact of the Raytheon|Websense transaction. Charts containing additional information on the Company's 2015 outlook are available on the Company's website at www.raytheon.com/ir.

2015 Financial Outlook





Current1


Prior (4/23/15)

Net Sales ($B)

22.7 - 23.2*


22.3 - 22.8

RW Deferred Revenue Adjustment ($M)2

(61)*


NA

RW Amortization of Intangibles ($M)2

(58)*


NA

FAS/CAS Adjustment ($M)

197


197

Interest Expense, net ($M)

 (225) - (235)


 (225) - (235)

Diluted Shares (M)

305 - 306*


305 - 307

Effective Tax Rate

 Approx. 27.0%


 Approx. 27.0%

EPS from Continuing Operations

$6.47 - $6.62*


$6.67 - $6.82

Operating Cash Flow from Continuing Operations ($B)

2.5 - 2.7*


2.4 - 2.7





1Updated to reflect the impact of the creation of Raytheon|Websense (RW) on May 29, 2015.

2RW Deferred Revenue Adjustment and RW Amortization of Intangibles represent the unfavorable impact of the acquisition accounting adjustments to record acquired deferred revenue at fair value and the amortization of acquired intangible assets, respectively, related to Raytheon|Websense, including historical Raytheon Cyber Products acquisitions

NA = Not Applicable

* 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 Raytheon|Websense (RW).

Integrated Defense Systems











2nd Quarter




Six Months


($ in millions)

2015


2014


% Change


2015


2014

% Change

Net Sales

$

1,698


$

1,549


10%


$

3,131


$

3,030

3%

Operating Income

$

215


$

219


-2%


$

410


$

445

-8%

Operating Margin


12.7%



14.1%





13.1%



14.7%


Integrated Defense Systems (IDS) had second quarter 2015 net sales of $1,698 million compared to $1,549 million in the second quarter 2014. The increase in net sales was primarily driven by higher sales on international Patriot programs, including the recognition of previously deferred precontract costs and program activity in the quarter.

IDS recorded $215 million of operating income in the second quarter 2015 compared to $219 million in the second quarter 2014. The change in operating margin in the second quarter 2015 was primarily due to a change in program mix. 

Included in operating income in the second quarter 2015 was an adjustment of $33 million to eliminate all remaining estimated incentive fees related to the Air Warfare Destroyer (AWD) program due to the shipbuilder extending the planned schedule and related increase in costs to complete its portion of the program. Included in operating income in the second quarter 2014 was an adjustment of $38 million from a decrease in estimated incentive fees on the AWD program driven by an increase in expected costs by the shipbuilder to complete its portion of the program.

During the quarter, IDS booked $2.0 billion to provide advanced Patriot air and missile defense capability for the Kingdom of Saudi Arabia. IDS also booked $132 million to provide satellite communication ground terminals for an international customer and $77 million on the NextGen Weather Processor (NWP) program for the Federal Aviation Administration (FAA).

Intelligence, Information and Services1










2nd Quarter




Six Months



($ in millions)

2015


2014


% Change


2015


2014


% Change

Net Sales

$

1,496


$

1,493



$

2,868


$

2,922


-2%

Operating Income2

$

108


$

123


-12%


$

392


$

246


NM

Operating Margin


7.2%



8.2%





13.7%



8.4%



1 Revised to exclude Raytheon Cyber Products (RCP), formerly part of IIS. As discussed on page 2, RCP was combined with Websense, Inc. to create Raytheon|Websense, a new commercial cybersecurity joint venture, which is reported as a separate business segment.

2 Six Months 2015 operating income includes the favorable $181 million impact of the first quarter 2015 eBorders settlement.

NM = Not Meaningful











Intelligence, Information and Services (IIS) had second quarter 2015 net sales of $1,496 million compared to $1,493 million in the second quarter 2014.

IIS recorded $108 million of operating income in the second quarter 2015 compared to $123 million in the second quarter 2014. The change in operating income was primarily due to program mix.

During the quarter, IIS booked $387 million on domestic training programs and $151 million on foreign training programs in support of Warfighter FOCUS activities. IIS also booked $376 million on a number of classified contracts.

Missile Systems










2nd Quarter




Six Months



($ in millions)

2015


2014


% Change


2015


2014


% Change

Net Sales

$

1,559


$

1,539


1%


$

3,032


$

3,113


-3%

Operating Income

$

183


$

190


-4%


$

390


$

398


-2%

Operating Margin


11.7%



12.3%





12.9%



12.8%



Missile Systems (MS) had second quarter 2015 net sales of $1,559 million compared to $1,539 million in the second quarter 2014.

MS recorded $183 million of operating income in the second quarter 2015 compared to $190 million in the second quarter 2014. The change in operating margin was primarily due to higher net program efficiencies in the second quarter 2014.

During the quarter, MS booked $529 million for Standard Missile-3 (SM-3®) for the Missile Defense Agency (MDA), $511 million on Evolved SeaSparrow Missile (ESSM) for the U.S. Navy and international customers, $363 million for Paveway™ for international customers, and $143 million for Standard Missile-6 (SM-6™) for the U.S. Navy. MS also booked $99 million on a classified program.

Space and Airborne Systems










2nd Quarter




Six Months



($ in millions)

2015


2014


% Change


2015


2014


% Change

Net Sales

$

1,416


$

1,505


-6%


$

2,774


$

2,903


-4%

Operating Income

$

186


$

202


-8%


$

359


$

392


-8%

Operating Margin


13.1%



13.4%





12.9%



13.5%



Space and Airborne Systems (SAS) had second quarter 2015 net sales of $1,416 million compared to $1,505 million in the second quarter 2014. The change in net sales was primarily due to lower sales on international tactical radar systems programs.

SAS recorded $186 million of operating income in the second quarter 2015 compared to $202 million in the second quarter 2014. The change in operating income was primarily due to lower volume in the second quarter 2015 combined with higher net program efficiencies in the second quarter 2014.

During the quarter, SAS booked $153 million on a multimission radar program for the U.S. Navy and an international customer, $99 million on an Active Electronically Scanned Array (AESA) radar Performance Based Logistics (PBL) contract for an international customer, and $82 million to provide communication subsystems for the U.S. Navy and an international customer. SAS also booked $250 million on a number of classified contracts.

Raytheon|Websense1








2nd Quarter



Six Months


($ in millions)

2015


2014

% Change


2015


2014

% Change

Net Sales

$

57



$

28


104%


$

81



$

51


59%

Operating Income/(loss)

$

(1)



$

3


-133%


$

(1)



$

7


-114%

Operating Margin

(1.8)%




10.7%




(1.2)%




13.7%



1 Excludes the unfavorable impact of the Raytheon|Websense acquisition accounting adjustments and certain acquisition related costs. See page 2 for more information on these items.

Raytheon|Websense (RW) is a new joint venture company that was created on May 29, 2015 through the combination of Websense, Inc. and Raytheon Cyber Products (RCP), formerly part of Raytheon's Intelligence, Information and Services business. The RW segment results have been presented to reflect RCP results for all periods and Websense results after the acquisition date.

RW had second quarter 2015 net sales of $57 million compared to $28 million in the second quarter 2014. 

RW recorded a loss of $1 million in the second quarter 2015 compared to $3 million of operating income in the second quarter 2014. The second quarter 2015 operating loss reflects higher RCP research and development and selling and marketing expenses to develop and launch new commercial products compared to second quarter 2014, as well as approximately $5 million of restructuring costs associated with the combination of Websense and RCP.

About Raytheon
Raytheon Company, with 2014 sales of $23 billion and 61,000 employees worldwide, is a technology and innovation leader specializing in defense, civil government and cybersecurity markets throughout the world. With a history of innovation spanning 93 years, Raytheon provides state-of-the-art electronics, mission systems integration and other capabilities in the areas of sensing; effects; and command, control, communications and intelligence systems, as well as cybersecurity and a broad range of mission support services. Raytheon is headquartered in Waltham, Mass. For more about Raytheon, visit us at www.raytheon.com and follow us on Twitter @raytheon.

Conference Call on the Second Quarter 2015 Financial Results
Raytheon's financial results conference call will be held on Thursday, July 23, 2015 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 (800) 884-5695 in the U.S. or (617) 786-2960 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 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: 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 under the amended Budget Control Act of 2011, a government shutdown, or otherwise, uncertain funding of programs, potential termination of contracts, and 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 and obtain approvals, including import and export policies, the Foreign Corrupt Practices Act, the International Traffic in Arms Regulations, industrial cooperation agreement obligations, and procurement and other regulations; the impact of competition; the ability to develop products and technologies; the impact of changes in the financial markets and global economic conditions; the risk that actual pension returns, discount rates or other actuarial assumptions are significantly different than the Company's assumptions; the risk of cost overruns, particularly for the Company's fixed-price contracts; dependence on component availability, subcontractor and partner performance and key suppliers; risks of a negative government audit; the use of accounting estimates in the Company's financial statements; risks associated with acquisitions, dispositions, joint ventures and other business arrangements; risks of an impairment of goodwill or other intangible assets; the outcome of contingencies and litigation matters, including government investigations; the ability to recruit and retain qualified personnel; the impact of potential security and cyber threats, and other disruptions; and other factors as may be detailed from time to time in the Company's public announcements and Securities and Exchange Commission filings. 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. This release and the attachments also contain non-GAAP financial measures. A GAAP reconciliation and a discussion of the Company's use of these measures are included in this release or the attachments.

 

 

Attachment A









Raytheon Company



Preliminary Statement of Operations Information









Second Quarter 2015


















(In millions, except per share amounts)


Three Months Ended


Six Months Ended



28-Jun-15


29-Jun-14


28-Jun-15


29-Jun-14










Net sales


$

5,848



$

5,701



$

11,136



$

11,209


Operating expenses









     Cost of sales


4,525



4,301



8,358



8,462


     General and administrative expenses


675



641



1,290



1,200


Total operating expenses


5,200



4,942



9,648



9,662


Operating income


648



759



1,488



1,547


Non-operating (income) expense, net









     Interest expense


59



54



117



105


     Interest income


(2)



(2)



(6)



(5)


     Other (income) expense, net


(1)



(6)



(3)



(6)


Total non-operating (income) expense, net


56



46



108



94


Income from continuing operations before taxes


592



713



1,380



1,453


Federal and foreign income taxes


90



212



324



359


Income from continuing operations


502



501



1,056



1,094


Income (loss) from discontinued operations, net of tax


1



52



1



59


Net income


503



553



1,057



1,153


Less: Net income (loss) attributable to noncontrolling









   interests in subsidiaries


(2)



2



1



6


Net income attributable to Raytheon Company


$

505



$

551



$

1,056



$

1,147











Basic earnings (loss) per share attributable to Raytheon









  Company common stockholders:









     Income from continuing operations


$

1.65



$

1.59



$

3.44



$

3.47


     Income (loss) from discontinued operations, net of tax




0.17





0.19


     Net income


1.65



1.76



3.44



3.65











Diluted earnings (loss) per share attributable to Raytheon









  Company common stockholders:









     Income from continuing operations


$

1.65



$

1.59



$

3.44



$

3.46


     Income (loss) from discontinued operations, net of tax




0.17





0.19


     Net income


1.65



1.76



3.44



3.65











Amounts attributable to Raytheon Company common









  stockholders:









     Income from continuing operations


$

504



$

499



$

1,055



$

1,088


     Income (loss) from discontinued operations, net of tax


1



52



1



59


     Net income


$

505



$

551



$

1,056



$

1,147











Average shares outstanding









     Basic


305.4



312.9



306.8



313.9


     Diluted


305.7



313.5



307.2



314.6


 

 

Attachment B













Raytheon Company





Preliminary Segment Information













Second Quarter 2015

















































Operating Income



Net Sales


Operating Income


As a Percent of Net Sales

(In millions, except percentages)


Three Months Ended


Three Months Ended


Three Months Ended



28-Jun-15


29-Jun-14


28-Jun-15


29-Jun-14


28-Jun-15


29-Jun-14














Integrated Defense Systems


$

1,698



$

1,549



$

215



$

219



12.7%


14.1%






















Intelligence, Information and Services


1,496



1,493



108



123



7.2%


8.2%


















Missile Systems


1,559



1,539



183



190



11.7%


12.3%


















Space and Airborne Systems


1,416



1,505



186



202



13.1%


13.4%


















Raytheon|Websense(1)


57



28



(1)



3



(1.8)%


10.7%


















Eliminations


(368)



(413)



(39)



(42)






Total business segment


5,858



5,701



652



695



11.1%


12.2%


















Raytheon|Websense Acquisition Accounting Adjustments


(10)





(18)



(1)






FAS/CAS Adjustment






49



87






Corporate






(35)



(22)






Total


$

5,848



$

5,701



$

648



$

759



11.1%


13.3%





































Operating Income



Net Sales


Operating Income


As a Percent of Net Sales

(In millions, except percentages)


Six Months Ended


Six Months Ended


Six Months Ended



28-Jun-15


29-Jun-14


28-Jun-15


29-Jun-14


28-Jun-15


29-Jun-14














Integrated Defense Systems


$

3,131



$

3,030



$

410



$

445



13.1%


14.7%






















Intelligence, Information and Services


2,868



2,922



392



246



13.7%


8.4%


















Missile Systems


3,032



3,113



390



398



12.9%


12.8%


















Space and Airborne Systems


2,774



2,903



359



392



12.9%


13.5%


















Raytheon|Websense(1)


81



51



(1)



7



(1.2)%


13.7%


















Eliminations


(740)



(810)



(76)



(82)






Total business segment


11,146



11,209



1,474



1,406



13.2%


12.5%


















Raytheon|Websense Acquisition Accounting Adjustments


(10)





(20)



(3)






FAS/CAS Adjustment






98



174






Corporate






(64)



(30)






Total


$

11,136



$

11,209



$

1,488



$

1,547



13.4%


13.8%














(1)   Excludes the unfavorable impact of the Raytheon|Websense acquisition accounting adjustments and certain acquisition related costs. See Attachment F for more information on these items.

 

 

Attachment B - Pro Forma















Raytheon Company







Pro Forma Segment Information















Full Year 2013, Quarters within and Full Year 2014, and First Quarter 2015























As previously announced, on May 29, 2015, we acquired Websense, Inc. from Vista Equity Partners and combined it with Raytheon Cyber Products (RCP), formerly part of our IIS segment, to create Raytheon|Websense, a new cybersecurity joint venture company (with Vista Equity Partners). In connection with these transactions, we reorganized our operating and reporting structure with Raytheon|Websense as our fifth reporting segment. The amounts, discussion and presentation of our business segments, including corporate and eliminations for intersegment activity, as set forth in our Form 10-Q, reflect our new structure. The Raytheon|Websense results reflect RCP results for all periods and Websense results after the acquisition date of May 29, 2015.


















Net Sales


Net Sales


(In millions)

Three Months Ended


Twelve Months Ended



29-Mar-15


31-Dec-14


28-Sep-14


29-Jun-14


30-Mar-14


31-Dec-14


31-Dec-13

















Integrated Defense Systems

$

1,433



$

1,627



$

1,428



$

1,549



$

1,481



$

6,085



$

6,489
































Intelligence, Information and Services

1,372



1,517



1,450



1,493



1,429



5,889



5,970

























Missile Systems

1,473



1,719



1,477



1,539



1,574



6,309



6,599

























Space and Airborne Systems

1,358



1,660



1,509



1,505



1,398



6,072



6,371

























Raytheon|Websense(1)

24



23



30



28



23



104



87

























Eliminations

(372)



(403)



(420)



(413)



(397)



(1,633)



(1,810)



Total business segment

5,288



6,143



5,474



5,701



5,508



22,826



23,706

























Raytheon|Websense Acquisition Accounting Adjustments















Total

$

5,288



$

6,143



$

5,474



$

5,701



$

5,508



$

22,826



$

23,706



















Operating Income


Operating Income


(In millions)

Three Months Ended


Twelve Months Ended



29-Mar-15


31-Dec-14


28-Sep-14


29-Jun-14


30-Mar-14


31-Dec-14


31-Dec-13

















Integrated Defense Systems

$

195



$

299



$

230



$

219



$

226



$

974



$

1,115
































Intelligence, Information and Services

284



131



118



123



123



495



507

























Missile Systems

207



212



190



190



208



800



830

























Space and Airborne Systems

173



217



237



202



190



846



920

























Raytheon|Websense(1)



(1)



5



3



4



11



13

























Eliminations

(37)



(41)



(43)



(42)



(40)



(166)



(170)



Total business segment

822



817



737



695



711



2,960



3,215

























Raytheon|Websense Acquisition Accounting Adjustments

(2)



(2)



(1)



(1)



(2)



(6)



(9)



FAS/CAS Adjustment

49



70



42



87



87



286



(249)



Corporate

(29)



(16)



(15)



(22)



(8)



(61)



(19)



Total

$

840



$

869



$

763



$

759



$

788



$

3,179



$

2,938



















Operating Income


Operating Income



As a Percentage of Net Sales


As a Percentage of Net Sales


(In millions)

Three Months Ended


Twelve Months Ended



29-Mar-15


31-Dec-14


28-Sep-14


29-Jun-14


30-Mar-14


31-Dec-14


31-Dec-13

















Integrated Defense Systems

13.6%


18.4%


16.1%


14.1%


15.3%


16.0%


17.2%

















Intelligence, Information and Services

20.7%


8.6%


8.1%


8.2%


8.6%


8.4%


8.5%

















Missile Systems

14.1%


12.3%


12.9%


12.3%


13.2%


12.7%


12.6%

















Space and Airborne Systems

12.7%


13.1%


15.7%


13.4%


13.6%


13.9%


14.4%

















Raytheon|Websense(1)

—%


(4.3)%


16.7%


10.7%


17.4%


10.6%


14.9%

















Eliminations

9.9%


10.2%


10.2%


10.2%


10.1%


10.2%


9.4%


Total business segment

15.5%


13.3%


13.5%


12.2%


12.9%


13.0%


13.6%

















Raytheon|Websense Acquisition Accounting Adjustments















FAS/CAS Adjustment















Corporate















Total

15.9%


14.1%


13.9%


13.3%


14.3%


13.9%


12.4%

















(1)   Excludes the unfavorable impact of the Raytheon|Websense acquisition accounting adjustments and certain acquisition related costs. See Attachment F for more information on these items.


 

 


Attachment C














Raytheon Company










Other Preliminary Information














Second Quarter 2015




























(In millions)





Funded Backlog


Total Backlog








28-Jun-15


31-Dec-14


28-Jun-15


31-Dec-14















Integrated Defense Systems







$

10,398



$

8,939



$

12,544



$

11,495
























Intelligence, Information and Services






2,739



2,854



5,423



5,825



















Missile Systems







7,316



6,992



9,880



9,269




















Space and Airborne Systems







4,456



4,259



6,221



6,930




















Raytheon|Websense







423



48



426



52




















Total







$

25,332



$

23,092



$

34,494



$

33,571











































Three Months Ended


Six Months Ended








28-Jun-15


29-Jun-14


28-Jun-15


29-Jun-14















Total Bookings







$

7,580



$

6,772



$

12,051



$

11,065











































Three Months Ended


Six Months Ended








28-Jun-15


29-Jun-14


28-Jun-15


29-Jun-14















Administrative and selling expenses






$

489



$

517



$

962



$

965


Research and development expenses






$

186



$

124



$

328



$

235


Total general and administrative expenses






$

675



$

641



$

1,290



$

1,200
















 















Attachment C - Pro Forma














Raytheon Company














Pro Forma Other Information













Full Year 2013, Quarters within and Full Year 2014, and First Quarter 2015





















As previously announced, on May 29, 2015, we acquired Websense, Inc. from Vista Equity Partners and combined it with Raytheon Cyber Products (RCP), formerly part of our IIS segment, to create Raytheon|Websense, a new cybersecurity joint venture company (with Vista Equity Partners). In connection with these transactions, we reorganized our operating and reporting structure with Raytheon|Websense as our fifth reporting segment. The amounts, discussion and presentation of our business segments, including corporate and eliminations for intersegment activity, as set forth in our Form 10-Q, reflect our new structure. The Raytheon|Websense results reflect RCP results for all periods and Websense results after the acquisition date of May 29, 2015.















(In millions)





Funded Backlog


Total Backlog








31-Dec-14


31-Dec-13


31-Dec-14


31-Dec-13















Integrated Defense Systems







$

8,939



$

9,397



$

11,495



$

10,916
























Intelligence, Information and Services







2,854



2,550



5,825



5,811




















Missile Systems







6,992



6,859



9,269



9,162




















Space and Airborne Systems







4,259



4,166



6,930



7,751




















Raytheon|Websense







48



42



52



45




















Total







$

23,092



$

23,014



$

33,571



$

33,685

















Bookings


Bookings

(In millions)

Three Months Ended


Twelve Months Ended


29-Mar-15


31-Dec-14


28-Sep-14


29-Jun-14


30-Mar-14


31-Dec-14


31-Dec-13















Integrated Defense Systems

$

1,483



$

3,352



$

1,764



$

657



$

1,180



$

6,953



$

5,869






























Intelligence, Information and Services

933



993



1,185



2,030



997



5,205



4,964























Missile Systems

1,405



1,388



1,430



2,482



1,083



6,383



5,221























Space and Airborne Systems

631



1,356



1,454



1,581



1,019



5,410



5,996























Raytheon|Websense

19



20



45



22



14



101



82























Total

$

4,471



$

7,109



$

5,878



$

6,772



$

4,293



$

24,052



$

22,132






























 

 

Attachment D




Raytheon Company


Preliminary Balance Sheet Information


Second Quarter 2015





(In millions)





28-Jun-15


31-Dec-14

Assets




Current assets




     Cash and cash equivalents

$

1,828



$

3,222


     Short-term investments

666



1,497


     Contracts in process, net

5,514



4,985


     Inventories

519



414


     Prepaid expenses and other current assets

177



174


          Total current assets

8,704



10,292






Property, plant and equipment, net

1,929



1,935


Goodwill

14,683



13,061


Other assets, net

3,121



2,612


               Total assets

$

28,437



$

27,900






Liabilities, Redeemable Noncontrolling Interest, and Equity

 




Current liabilities




     Advance payments and billings in excess of costs incurred

$

1,975



$

2,284


     Accounts payable

1,171



1,250


     Accrued employee compensation

964



1,059


     Accrued income taxes

103



31


     Other current liabilities

1,428



1,306


          Total current liabilities

5,641



5,930






Accrued retiree benefits and other long-term liabilities

6,865



6,919


Long-term debt

5,333



5,330






Redeemable noncontrolling interest

343








Equity




  Raytheon Company stockholders' equity




     Common stock

3



3


     Additional paid-in capital

834



1,309


     Accumulated other comprehensive loss

(7,095)



(7,458)


     Retained earnings

16,314



15,671


          Total Raytheon Company stockholders' equity

10,056



9,525


     Noncontrolling interests in subsidiaries

199



196


          Total equity

10,255



9,721


               Total liabilities, redeemable noncontrolling interest and equity

$

28,437



$

27,900


 

 

Attachment E








Raytheon Company


Preliminary Cash Flow Information








Second Quarter 2015
















(In millions)

Three Months Ended


Six Months Ended


28-Jun-15


29-Jun-14


28-Jun-15


29-Jun-14









Net income

$

503



$

553



$

1,057



$

1,153


(Income) loss from discontinued operations, net of tax

(1)



(52)



(1)



(59)


Income from continuing operations

502



501



1,056



1,094










Depreciation

76



76



149



149


Amortization

40



33



74



67


Working capital (excluding pension and income taxes)*

56



(181)



(1,076)



(711)


Other long-term liabilities

(38)



(5)



(43)



(17)


Pension and other postretirement benefit plans

141



(208)



408



(28)


Other, net

(401)



(63)



(137)



258


Net operating cash flow from continuing operations

$

376



$

153



$

431



$

812










Supplemental Cash Flow Information
















Capital spending

$

(88)



$

(62)



$

(143)



$

(101)


Internal use software spending

(13)



(14)



(26)



(26)


Acquisitions

(1,886)





(1,892)




Purchases of short-term investments



(26)



(148)



(1,371)


Sales of short-term investments

74



425



209



882


Maturities of short-term investments

524



195



774



595


Dividends

(205)



(189)



(391)



(363)


Repurchases of common stock under stock repurchase programs

(200)



(250)



(500)



(450)


Sale of noncontrolling interest in Raytheon|Websense

343





343












Cash Flow related to Raytheon|Websense Transaction
















Acquisition of Websense

$

(1,891)



$



$

(1,891)



$


Sale of noncontrolling interest in Raytheon|Websense

343





343




Net cash flow related to Raytheon|Websense

$

(1,548)



$



$

(1,548)



$










* Working capital (excluding pension and income taxes) is a summation of changes in: contracts in process, net and advance payments and billings in excess of costs incurred, inventories, prepaid expenses and other current assets, accounts payable, accrued employee compensation, and other current liabilities from the Consolidated Statements of Cash Flows.









 

 


Attachment F




Raytheon Company






Supplemental EPS Information









Second Quarter 2015




















(In millions, except per share amounts)


Three Months Ended


Six Months Ended






28-Jun-15


29-Jun-14


28-Jun-15


29-Jun-14

Per share impact of the FAS/CAS Adjustment (A)

$

0.10



$

0.18



$

0.21



$

0.36


















Per share impact of Raytheon|Websense deferred revenue adjustment (B)

(0.02)





(0.02)
















Per share impact of Raytheon|Websense amortization of acquired intangible assets (C)

(0.01)





(0.02)
















Per share impact of Raytheon|Websense acquisition related costs (D)

(0.05)





(0.05)
















Per share impact of Raytheon|Websense restructuring costs (E)

(0.01)





(0.01)
















Per share impact of the IRS tax settlement (F)

0.29





0.29
















(A)

FAS/CAS Adjustment

$

49



$

87



$

98



$

174




Tax effect (at 35% statutory rate)

(17)



(31)



(34)



(61)



After-tax impact

32



56



64



113



Diluted shares

305.7



313.5



307.2



314.6



Per share impact

$

0.10



$

0.18



$

0.21



$

0.36














(B)

Raytheon|Websense deferred revenue adjustment (1)

$

(10)



$



$

(10)



$












Amount attributable to Raytheon Company (80.3%)

(8)





(8)






Tax effect (at 35% statutory rate)

3





3





After-tax impact

(5)





(5)





Diluted shares

305.7



313.5



307.2



314.6



Per share impact

$

(0.02)



$



$

(0.02)



$











(C)

Raytheon|Websense amortization of intangibles(1)

$

(8)



$

(1)



$

(10)



$

(3)












Amount attributable to Raytheon Company (80.3%)

(6)



(1)



(8)



(2)




Tax effect (at 35% statutory rate)

2





3



1



After-tax impact

(4)



(1)



(5)



(1)



Diluted shares

305.7



313.5



307.2



314.6



Per share impact

$

(0.01)



$



$

(0.02)



$














(D)

Raytheon|Websense acquisition related costs

$

(23)



$



$

(25)



$












Amount attributable to Raytheon Company (80.3%) (2)

(22)





(24)






Tax effect (at 35% statutory rate)

8





8





After-tax impact

(14)





(16)





Diluted shares

305.7



313.5



307.2



314.6



Per share impact

$

(0.05)



$



$

(0.05)



$














 (E)

Raytheon|Websense restructuring costs

$

(5)



$



$

(5)



$













Amount attributable to Raytheon Company (80.3%)

(4)





(4)






Tax effect (at 35% statutory rate)

1





1





After-tax impact

(3)





(3)





Diluted shares

305.7



313.5



307.2



314.6



Per share impact

$

(0.01)



$



$

(0.01)



$














(F)

IRS tax settlement

$

88



$



$

88



$



Diluted shares

305.7



313.5



307.2



314.6



Per share impact

$

0.29



$



$

0.29



$


























(1)

Raytheon|Websense deferred revenue adjustment and Raytheon|Websense amortization of intangibles represent the unfavorable impact of the acquisition accounting adjustments to record acquired deferred revenue at fair value and the amortization of acquired intangible assets, respectively, related to Raytheon|Websense, including historical Raytheon Cyber Products acquisitions.

(2)

Raytheon|Websense acquisition related costs include $6 million of costs for the three and six months ended June 28, 2015 for which 80.3% is attributable to Raytheon Company. The remaining $17 million and $19 million for the three and six months ended June 28, 2015, respectively, were 100% attributable to Raytheon Company.

 

Investor Relations Contact
Todd Ernst
781.522.5141

Media Contact
Pam Erickson
781.522.5822

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/raytheon-reports-solid-second-quarter-2015-results-300117457.html

SOURCE Raytheon Company

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