WALTHAM, Mass., Oct. 24, 2019 /PRNewswire/ -- Raytheon
Company (NYSE: RTN) today announced net sales for the third quarter
2019 of $7.4 billion, up 9.4 percent
compared to $6.8 billion in the third
quarter 2018. Third quarter 2019 EPS from continuing operations was
$3.08 compared to $2.25 in the third quarter 2018. The increase in
the third quarter 2019 EPS from continuing operations was primarily
driven by operational improvements and the unfavorable $0.80 per share impact in the third quarter 2018
related to the pension plan annuity transaction.
As previously announced, on October 11,
2019 at their respective special meetings, Raytheon and
United Technologies shareholders overwhelmingly approved all of the
proposals necessary to complete the merger of equals
transaction. The expected close of the merger remains on track
for the first half of 2020, subject to the satisfaction of
customary closing conditions, including receipt of required
regulatory approvals, as well as completion by United Technologies
of the separation of its Otis and Carrier businesses.
"Raytheon delivered strong bookings, sales growth, EPS and cash
generation in the third quarter," said Thomas A. Kennedy, Raytheon Chairman and CEO.
"Bookings strength across our broad portfolio of proven technology
solutions positions the company well for future growth.
"I am pleased that the shareholders of Raytheon and United
Technologies voted in favor of our powerful strategic combination.
The vote reflects a significant milestone on our path to unite two
world-class companies with complementary technologies."
Operating cash flow from continuing operations for the third
quarter 2019 was an inflow of $1,278
million compared to an outflow of $444 million for the third quarter 2018. The
increase in operating cash flow from continuing operations in the
third quarter 2019 was primarily due to the $1.25 billion pretax discretionary pension plan
contribution in the third quarter 2018 and the timing of
collections in the third quarter 2019. Operating cash flow from
continuing operations for the third quarter 2019 was better than
the company's prior guidance.
The company had bookings of $9.4
billion in the third quarter 2019, resulting in a
book-to-bill ratio of 1.27. Third quarter 2018 bookings were
$8.7 billion.
Summary Financial
Results
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3rd
Quarter
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%
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Nine
Months
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%
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($ in millions,
except per share data)
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2019
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2018
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Change
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2019
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2018
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Change
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Bookings
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$
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9,439
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$
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8,710
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8.4%
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$
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24,282
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$
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23,715
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2.4%
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Net Sales
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$
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7,446
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$
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6,806
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9.4%
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$
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21,334
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$
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19,698
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8.3%
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Total Business
Segment Operating Income
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$
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901
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$
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843
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6.9%
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$
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2,550
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$
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2,369
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7.6%
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Total Operating
Income
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$
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1,206
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$
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1,183
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1.9%
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$
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3,495
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$
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3,324
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5.1%
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Income from
Continuing Operations attributable to
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Raytheon Company
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$
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861
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$
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644
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33.7%
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$
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2,459
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$
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2,077
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18.4%
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EPS from Continuing
Operations
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$
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3.08
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$
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2.25
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36.9%
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$
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8.77
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$
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7.23
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21.3%
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Operating Cash Flow
from Continuing Operations
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$
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1,278
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$
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(444)
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$
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1,690
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$
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995
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Workdays in Fiscal
Reporting Calendar
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63
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63
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190
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191
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Backlog at the end of the third quarter 2019 was a record
$44.6 billion, an increase of
$3.0 billion or 7 percent compared to
the end of the third quarter 2018.
Backlog
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Period
Ending
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($ in
millions)
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Q3
2019
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Q3
2018
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2018
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Backlog
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$
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44,614
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$
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41,599
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$
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42,420
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Outlook
The company has increased its financial outlook for 2019. Charts
containing additional information on the company's 2019 outlook are
available on the company's website.
2019 Financial
Outlook
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Current
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Prior
(7/25/19)
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Net Sales
($B)
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29.1 -
29.4
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*
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28.8 -
29.3
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Total Business
Segment Operating Income ($M)
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3,525 -
3,615
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*
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3,480 -
3,600
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Deferred Revenue
Adjustment ($M)
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(2)
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(2)
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Amortization of
Acquired Intangibles ($M)
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(110)
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(110)
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FAS/CAS Operating
Adjustment ($M)1
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1,454
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*
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1,463
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Retirement Benefits
Non-service Expense, non-operating ($M)2
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(688)
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*
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(726)
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Interest Expense, net
($M)
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~(145)
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~(145)
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Diluted Shares
(M)
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~280
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*
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~281
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Effective Tax
Rate
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17.0% -
17.5%
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17.0% -
17.5%
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EPS from Continuing
Operations
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$11.70 -
$11.80
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*
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$11.50 -
$11.70
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Operating Cash Flow
from Continuing Operations ($B)
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4.0 - 4.2
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4.0 - 4.2
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*Denotes change
from prior guidance
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1 The full-year 2019
FAS/CAS Operating Adjustment had a $9 million ($0.03 per share)
unfavorable adjustment, of which approximately $7 million
($0.02 per share) was recorded in the third quarter 2019 and
approximately $2 million ($0.01 per share) is expected to be
recorded in the fourth
quarter 2019. This is due to the update in the third quarter 2019
of the actuarial estimates for pension and other postretirement
benefit plans.
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2 The full-year 2019
Retirement Benefits Non-service Expense had a $38 million ($0.11
per share) favorable adjustment, of which approximately
$29 million ($0.08 per share) was recorded in the third quarter
2019 and approximately $9 million ($0.03 per share) is expected to
be recorded in
the fourth quarter 2019. This is due to the update in the third
quarter 2019 of the actuarial estimates for pension and other
postretirement benefit
plans.
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Segment Results
The company's reportable segments are: Integrated Defense
Systems (IDS); Intelligence, Information and Services (IIS);
Missile Systems (MS); Space and Airborne Systems (SAS); and
Forcepoint™.
Integrated Defense
Systems
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3rd
Quarter
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Nine
Months
|
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($ in
millions)
|
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2019
|
2018
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%
Change
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2019
|
2018
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%
Change
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Net Sales
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$
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1,755
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$
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1,493
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18%
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$
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4,946
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$
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4,496
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10%
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Operating
Income
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$
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282
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$
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241
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17%
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$
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804
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$
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776
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4%
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Operating
Margin
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16.1%
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16.1%
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16.3%
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17.3%
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Integrated Defense Systems (IDS) had third quarter 2019 net
sales of $1,755 million, up 18
percent compared to $1,493 million in
the third quarter 2018. The increase in net sales for the quarter
was primarily driven by higher net sales on an international air
and missile defense system program awarded in the third quarter
2019.
IDS recorded $282 million of
operating income in the third quarter 2019 compared to $241 million in the third quarter 2018. The
increase in operating income for the quarter was primarily driven
by higher volume.
During the quarter, as previously announced, IDS booked
$1.8 billion on a direct commercial
contract to provide National Advanced Surface-to-Air Missile System
(NASAMS™) to the State of Qatar.
IDS also booked $355 million to
provide technical and logistics support for the Hawk and
Patriot® air and missile defense program for the
Kingdom of Saudi Arabia and
$105 million to provide advanced
Patriot air and missile defense capability for Germany.
After the quarter close, as previously announced, IDS was
selected by the U.S. Army to develop the Lower Tier Air and Missile
Defense Sensor (LTAMDS).
Intelligence,
Information and Services
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3rd
Quarter
|
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Nine
Months
|
|
|
($ in
millions)
|
|
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2019
|
2018
|
%
Change
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2019
|
2018
|
%
Change
|
|
Net Sales
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|
$
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1,855
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$
|
1,742
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6%
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$
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5,409
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$
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5,011
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8%
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Operating
Income
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$
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161
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$
|
149
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8%
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$
|
509
|
$
|
394
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29%
|
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Operating
Margin
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8.7%
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8.6%
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9.4%
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7.9%
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|
Intelligence, Information and Services (IIS) had third quarter
2019 net sales of $1,855 million, up
6 percent compared to $1,742 million
in the third quarter 2018. The increase in net sales for the
quarter was primarily driven by higher net sales on classified
programs in both cyber and space.
IIS recorded $161 million of
operating income in the third quarter 2019 compared to $149 million in the third quarter 2018. The
increase in operating income for the quarter was primarily driven
by higher volume and a gain on an investment.
During the quarter, IIS booked $582
million on a number of classified programs. IIS also booked
$148 million on domestic and foreign
training programs in support of Warfighter FOCUS activities;
$133 million to perform operations
and sustainment for the U.S. Air Force's Launch and Test Range
System (LTRS); and $117 million on
the Air and Space Operations Center Weapon System (AOC WS) program
for the U.S. Air Force.
Missile
Systems
|
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3rd
Quarter
|
|
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Nine
Months
|
|
|
($ in
millions)
|
|
|
2019
|
2018
|
%
Change
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2019
|
2018
|
%
Change
|
|
Net Sales
|
|
|
$
|
2,165
|
$
|
2,082
|
4%
|
|
$
|
6,381
|
$
|
5,981
|
7%
|
|
Operating
Income
|
|
|
$
|
219
|
$
|
257
|
(15)%
|
|
$
|
662
|
$
|
700
|
(5)%
|
|
Operating
Margin
|
|
|
10.1%
|
12.3%
|
|
|
10.4%
|
11.7%
|
|
|
Missile Systems (MS) had third quarter 2019 net sales of
$2,165 million, up 4 percent compared
to $2,082 million in the third
quarter 2018. The increase in net sales for the quarter was
primarily due to higher net sales on classified programs.
MS recorded $219 million of
operating income in the third quarter 2019 compared to $257 million in the third quarter 2018. The
decrease in operating income for the quarter was primarily due to
lower net program efficiencies.
During the quarter, MS booked $421
million for Phalanx® for the U.S. Navy, U.S. Army
and international customers; $391
million for Tomahawk for the U.S. Navy and an international
customer; $221 million for Evolved
Seasparrow Missile (ESSM®) for the U.S. Navy and
international customers; $101
million for Paveway™ for the U.S. Air Force and
international customers; and $92
million for Commander's Independent Thermal Viewers (CITV)
for the U.S. Army. MS also booked $655
million on a number of classified contracts.
Space and Airborne
Systems
|
|
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3rd
Quarter
|
|
|
Nine
Months
|
|
|
($ in
millions)
|
|
|
2019
|
2018
|
%
Change
|
|
2019
|
2018
|
%
Change
|
|
Net Sales
|
|
|
$
|
1,939
|
$
|
1,695
|
14%
|
|
$
|
5,409
|
$
|
4,868
|
11%
|
|
Operating
Income
|
|
|
$
|
272
|
$
|
223
|
22%
|
|
$
|
713
|
$
|
622
|
15%
|
|
Operating
Margin
|
|
|
14.0%
|
13.2%
|
|
|
13.2%
|
12.8%
|
|
|
Space and Airborne Systems (SAS) had third quarter 2019 net
sales of $1,939 million, up 14
percent compared to $1,695 million in
the third quarter 2018. The increase in net sales for the quarter
included higher net sales on classified programs, protected
communication systems programs, and the Next Generation Overhead
Persistent Infrared (Next Gen OPIR) program.
SAS recorded $272 million of
operating income in the third quarter 2019 compared to $223 million in the third quarter 2018. The
increase in operating income for the quarter was primarily due to
higher volume and a favorable change in mix.
During the quarter, SAS booked $175
million on the Global Aircrew Strategic Network Terminal
(Global ASNT) program for the U.S. Air Force; $136 million for radar components for
South Korea; $88 million on the Family of Advanced
Beyond-Line-of-Sight Terminals (FAB-T) program for the U.S. Air
Force; and $78 million on the Next
Generation Jammer (NGJ) program for the U.S. Navy. SAS also booked
$583 million on a number of
classified contracts.
Forcepoint
|
|
|
|
|
3rd
Quarter
|
|
|
Nine
Months
|
|
|
($ in
millions)
|
|
|
2019
|
2018
|
%
Change
|
|
2019
|
2018
|
%
Change
|
|
Net Sales
|
|
|
$
|
167
|
$
|
173
|
(3)%
|
|
$
|
481
|
$
|
462
|
4%
|
|
Operating Income
(Loss)
|
|
|
$
|
14
|
$
|
18
|
(22)%
|
|
$
|
2
|
$
|
3
|
(33)%
|
|
Operating
Margin
|
|
|
8.4%
|
10.4%
|
|
|
0.4%
|
0.6%
|
|
|
Forcepoint had third quarter 2019 net sales of $167 million compared to $173 million in the third quarter 2018.
Forcepoint recorded $14 million of
operating income in the third quarter 2019 compared to $18 million in the third quarter 2018.
About Raytheon
Raytheon Company, with 2018 sales of
$27 billion and 67,000 employees, is
a technology and innovation leader specializing in defense, civil
government and cybersecurity solutions. With a history of
innovation spanning 97 years, Raytheon provides state-of-the-art
electronics, mission systems integration, C5I® products
and services, sensing, effects, and mission support for customers
in more than 80 countries. Raytheon is headquartered in
Waltham, Massachusetts. Follow us
on Twitter.
Conference Call on the Third Quarter 2019 Financial
Results
Raytheon's financial results conference call will be
held on Thursday, October 24, 2019 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 (866)
219-7829 in the U.S. or (478) 205-0667 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 (sometimes referred
to as Raytheon) 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: risks associated
with the announcement of the proposed merger with United
Technologies Corporation (UTC), including its effect on our
customer, supplier and other business relationships, employee
retention and hiring, resources and management's attention, our
ability to pursue new business and investment opportunities, our
operating results and business generally, and the market price of
our common stock; risks associated with the successful and timely
completion of the proposed merger with UTC and the related
integration, as described in more detail below; 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, a
government shutdown, or otherwise, uncertain funding of programs,
potential termination of contracts and performance under
undefinitized contract awards; 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, including export and import requirements such as the
International Traffic in Arms Regulations and the Export
Administration Regulations, anti-bribery and anti-corruption
requirements including the Foreign Corrupt Practices Act,
industrial cooperation agreement obligations, and procurement and
other regulations; dependence on U.S. government approvals for
international contracts; changes in government procurement
practices; the impact of competition; the ability to develop
products and technologies, and the impact of associated investments
and costs; the ability to recruit and retain qualified personnel;
the impact of potential security and cyber threats, and other
disruptions; the risk that actual pension returns, discount rates
or other actuarial assumptions, including the long-term return on
asset assumption, are significantly different than the company's
current assumptions; the risk of cost overruns, particularly for
the company's fixed-price contracts; dependence on material and
component availability, subcontractor and partner performance and
key suppliers; risks of a negative government audit; risks
associated with acquisitions, investments, dispositions, joint
ventures and other business arrangements; the ability to grow in
the government and commercial cybersecurity markets; risks of an
impairment of goodwill or other intangible assets; the impact of
financial markets and global economic conditions; the use of
accounting estimates in the company's financial statements; the
outcome of contingencies and litigation matters, including
government investigations; the risk of environmental liabilities;
changes in tax laws and regulations, or their interpretation; and
other factors as may be detailed from time to time in the company's
public announcements and Securities and Exchange Commission
filings.
Risks associated with the successful and timely completion of
the proposed merger with UTC and the related integration include:
(1) the effect of economic conditions in the industries and markets
in which UTC and Raytheon operate in the U.S. and globally and any
changes therein, including financial market conditions,
fluctuations in commodity prices, interest rates and foreign
currency exchange rates, levels of end market demand in
construction and in both the commercial and defense segments of the
aerospace industry, levels of air travel, financial condition of
commercial airlines, the impact of weather conditions and natural
disasters, the financial condition of our customers and suppliers,
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, a government shutdown,
or otherwise, and uncertain funding of programs); (2) challenges in
the development, production, delivery, support, performance and
realization of the anticipated benefits (including our expected
returns under customer contracts) of advanced technologies and new
products and services; (3) the scope, nature, impact or timing of
the proposed merger and the separation transactions and other
merger, acquisition and divestiture activity, including among other
things the integration of or with other businesses and realization
of synergies and opportunities for growth and innovation and
incurrence of related costs and expenses; (4) future levels of
indebtedness, including indebtedness that may be incurred in
connection with the proposed merger and the separation
transactions, and capital spending and research and development
spending; (5) future availability of credit and factors that may
affect such availability, including credit market conditions and
our capital structure; (6) the timing and scope of future
repurchases by the combined company of its common stock, which may
be suspended at any time due to various factors, including market
conditions and the level of other investing activities and uses of
cash; (7) delays and disruption in delivery of materials and
services from suppliers; (8) company and customer-directed cost
reduction efforts and restructuring costs and savings and other
consequences thereof (including the potential termination of U.S.
government contracts and performance under undefinitized contract
awards and the potential inability to recover termination costs);
(9) new business and investment opportunities; (10) the ability to
realize the intended benefits of organizational changes; (11) the
anticipated benefits of diversification and balance of operations
across product lines, regions and industries; (12) the outcome of
legal proceedings, investigations and other contingencies; (13)
pension plan assumptions and future contributions; (14) the impact
of the negotiation of collective bargaining agreements and labor
disputes; (15) the effect of changes in political conditions in the
U.S. and other countries in which UTC, Raytheon and the businesses
of each operate, including the effect of changes in U.S. trade
policies or the U.K.'s pending withdrawal from the European Union,
on general market conditions, global trade policies and currency
exchange rates in the near term and beyond; (16) the effect of
changes in tax (including U.S. tax reform enacted on December 22, 2017, which is commonly referred to
as the Tax Cuts and Jobs Act of 2017), environmental, regulatory
and other laws and regulations (including, among other things,
export and import requirements such as the International Traffic in
Arms Regulations and the Export Administration Regulations,
anti-bribery and anti-corruption requirements, including the
Foreign Corrupt Practices Act, industrial cooperation agreement
obligations, and procurement and other regulations) in the U.S. and
other countries in which UTC, Raytheon and the businesses of each
operate; (17) negative effects of the announcement or pendency of
the proposed merger or the separation transactions on the market
price of UTC's and/or Raytheon's respective common stock and/or on
their respective financial performance; (18) the ability of the
parties to receive the required regulatory approvals for the
proposed merger (and the risk that such approvals may result in the
imposition of conditions that could adversely affect the combined
company or the expected benefits of the transaction) and to satisfy
the other conditions to the closing of the merger on a timely basis
or at all; (19) the occurrence of events that may give rise to a
right of one or both of the parties to terminate the merger
agreement; (20) risks relating to the value of the UTC shares to be
issued in the proposed merger, significant transaction costs and/or
unknown liabilities; (21) the possibility that the anticipated
benefits from the proposed merger cannot be realized in full or at
all or may take longer to realize than expected, including risks
associated with third party contracts containing consent and/or
other provisions that may be triggered by the proposed transaction;
(22) risks associated with transaction-related litigation; (23) the
possibility that costs or difficulties related to the integration
of UTC's and Raytheon's operations will be greater than expected;
(24) risks relating to completed merger, acquisition and
divestiture activity, including UTC's integration of Rockwell
Collins, including the risk that the integration may be more
difficult, time-consuming or costly than expected or may not result
in the achievement of estimated synergies within the contemplated
time frame or at all; (25) the ability of each of Raytheon, UTC,
the companies resulting from the separation transactions and the
combined company to retain and hire key personnel; (26) the
expected benefits and timing of the separation transactions, and
the risk that conditions to the separation transactions will not be
satisfied and/or that the separation transactions will not be
completed within the expected time frame, on the expected terms or
at all; (27) the intended qualification of (i) the merger as a
tax-free reorganization and (ii) the separation transactions as
tax-free to UTC and UTC's shareowners, in each case, for U.S.
federal income tax purposes; (28) the possibility that any
opinions, consents, approvals or rulings required in connection
with the separation transactions will not be received or obtained
within the expected time frame, on the expected terms or at all;
(29) expected financing transactions undertaken in connection with
the proposed merger and the separation transactions and risks
associated with additional indebtedness; (30) the risk that
dissynergy costs, costs of restructuring transactions and other
costs incurred in connection with the separation transactions will
exceed UTC's estimates; and (31) the impact of the proposed merger
and the separation transactions on the respective businesses of
Raytheon and UTC and the risk that the separation transactions may
be more difficult, time-consuming or costly than expected,
including the impact on UTC's resources, systems, procedures and
controls, diversion of its management's attention and the impact on
relationships with customers, suppliers, employees and other
business counterparties.
There can be no assurance that the proposed merger, the
separation transactions or any other transaction described above
will in fact be consummated in the manner described or at all. For
additional information on identifying factors that may cause actual
results to vary materially from those stated in forward-looking
statements, see the joint proxy statement/prospectus (defined
below) and the reports of UTC and Raytheon on Forms 10-K, 10-Q and
8-K filed with or furnished to the Securities and Exchange
Commission (the "SEC") from time to time.
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.
Additional Information and Where to Find It
In
connection with the proposed merger, on September 4, 2019, UTC filed with the SEC an
amendment to the registration statement on Form S-4 originally
filed on July 17, 2019, which
includes a joint proxy statement of UTC and Raytheon that also
constitutes a prospectus of UTC (the "joint proxy
statement/prospectus"). The registration statement was declared
effective by the SEC on September 9,
2019, and UTC and Raytheon commenced mailing the joint proxy
statement/prospectus to shareowners of UTC and stockholders of
Raytheon on or about September 10,
2019. Each party will file other documents regarding the
proposed merger with the SEC. In addition, in connection with the
separation transactions, subsidiaries of UTC will file registration
statements on Form 10 or Form S-1. INVESTORS AND SECURITY HOLDERS
ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER
RELEVANT DOCUMENTS FILED OR THAT WILL BE FILED WITH THE SEC WHEN
THEY BECOME AVAILABLE, BECAUSE THEY CONTAIN OR WILL CONTAIN
IMPORTANT INFORMATION. Investors and security holders may obtain
copies of the registration statements and the joint proxy
statement/prospectus free of charge from the SEC's website or from
UTC or Raytheon. The documents filed by UTC with the SEC may be
obtained free of charge at UTC's website at www.utc.com or at the
SEC's website at www.sec.gov. These documents may also be obtained
free of charge from UTC by requesting them by mail at UTC Corporate
Secretary, 10 Farm Springs Road, Farmington, CT, 06032, by telephone at
1-860-728-7870 or by email at corpsec@corphq.utc.com. The documents
filed by Raytheon with the SEC may be obtained free of charge at
Raytheon's website at www.raytheon.com or at the SEC's website at
www.sec.gov. These documents may also be obtained free of charge
from Raytheon by requesting them by mail at Raytheon Company,
Investor Relations, 870 Winter Street, Waltham, MA, 02451, by telephone at
1-781-522-5123 or by email at invest@raytheon.com.
No Offer or Solicitation
This communication shall not
constitute an offer to sell or the solicitation of an offer to buy
any securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the U.S. Securities Act of 1933, as
amended.
Attachment
A
Raytheon
Company
Preliminary Statement
of Operations Information
Third Quarter
2019
(In millions, except
per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
|
29-Sep-19
|
|
30-Sep-18
|
|
29-Sep-19
|
|
30-Sep-18
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
7,446
|
|
|
$
|
6,806
|
|
|
$
|
21,334
|
|
|
$
|
19,698
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
5,499
|
|
|
4,871
|
|
|
15,581
|
|
|
14,180
|
|
|
General and
administrative expenses
|
|
741
|
|
|
752
|
|
|
2,258
|
|
|
2,194
|
|
|
Total operating
expenses
|
|
6,240
|
|
|
5,623
|
|
|
17,839
|
|
|
16,374
|
|
|
Operating
income
|
|
1,206
|
|
|
1,183
|
|
|
3,495
|
|
|
3,324
|
|
|
Non-operating
(income) expense, net
|
|
|
|
|
|
|
|
|
|
Retirement benefits
non-service expense
|
|
152
|
|
|
516
|
|
|
514
|
|
|
993
|
|
|
Interest
expense
|
|
45
|
|
|
45
|
|
|
134
|
|
|
138
|
|
|
Interest
income
|
|
(10)
|
|
|
(6)
|
|
|
(30)
|
|
|
(21)
|
|
|
Other (income)
expense, net
|
|
(17)
|
|
|
(8)
|
|
|
(45)
|
|
|
(6)
|
|
|
Total non-operating
(income) expense, net
|
|
170
|
|
|
547
|
|
|
573
|
|
|
1,104
|
|
|
Income from
continuing operations before taxes
|
|
1,036
|
|
|
636
|
|
|
2,922
|
|
|
2,220
|
|
|
Federal and foreign
income taxes
|
|
175
|
|
|
(5)
|
|
|
473
|
|
|
165
|
|
|
Income from
continuing operations
|
|
861
|
|
|
641
|
|
|
2,449
|
|
|
2,055
|
|
|
Income (loss) from
discontinued operations, net of tax
|
|
(1)
|
|
|
—
|
|
|
(1)
|
|
|
—
|
|
|
Net income
|
|
860
|
|
|
641
|
|
|
2,448
|
|
|
2,055
|
|
|
Less: Net income
(loss) attributable to noncontrolling interests
|
|
in
subsidiaries
|
|
—
|
|
|
(3)
|
|
|
(10)
|
|
|
(22)
|
|
|
Net income
attributable to Raytheon Company
|
|
$
|
860
|
|
|
$
|
644
|
|
|
$
|
2,458
|
|
|
$
|
2,077
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share attributable to Raytheon Company
|
|
common stockholders:
|
|
|
|
|
|
|
|
|
|
Income from continuing
operations
|
|
$
|
3.08
|
|
|
$
|
2.25
|
|
|
$
|
8.78
|
|
|
$
|
7.24
|
|
|
Income (loss) from
discontinued operations, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Net income
|
|
3.08
|
|
|
2.25
|
|
|
8.77
|
|
|
7.23
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share attributable to Raytheon Company
|
|
common stockholders:
|
|
|
|
|
|
|
|
|
|
Income from continuing
operations
|
|
$
|
3.08
|
|
|
$
|
2.25
|
|
|
$
|
8.77
|
|
|
$
|
7.23
|
|
|
Income (loss) from
discontinued operations, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Net income
|
|
3.08
|
|
|
2.25
|
|
|
8.77
|
|
|
7.23
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts attributable
to Raytheon Company common
|
|
stockholders:
|
|
|
|
|
|
|
|
|
|
Income from continuing
operations
|
|
$
|
861
|
|
|
$
|
644
|
|
|
$
|
2,459
|
|
|
$
|
2,077
|
|
|
Income (loss) from
discontinued operations, net of tax
|
|
(1)
|
|
|
—
|
|
|
(1)
|
|
|
—
|
|
|
Net income
|
|
$
|
860
|
|
|
$
|
644
|
|
|
$
|
2,458
|
|
|
$
|
2,077
|
|
|
|
|
|
|
|
|
|
|
|
|
Average shares
outstanding
|
|
|
|
|
|
|
|
|
|
Basic
|
|
279.1
|
|
|
285.7
|
|
|
280.2
|
|
|
287.2
|
|
|
Diluted
|
|
279.4
|
|
|
286.0
|
|
|
280.5
|
|
|
287.5
|
|
|
Attachment
B
Raytheon
Company
Preliminary Segment
Information
Third Quarter
2019
(In millions, except
percentages)
|
|
|
|
|
|
Net Sales
|
|
Operating
Income
|
|
Operating
Income
As a Percent of Net
Sales
|
|
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
|
|
29-Sep-19
|
|
30-Sep-18
|
|
29-Sep-19
|
|
30-Sep-18
|
|
29-Sep-19
|
|
30-Sep-18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Integrated Defense
Systems
|
|
$
|
1,755
|
|
|
$
|
1,493
|
|
|
$
|
282
|
|
|
$
|
241
|
|
|
16.1%
|
|
16.1%
|
|
Intelligence,
Information and Services(1)
|
|
1,855
|
|
|
1,742
|
|
|
161
|
|
|
149
|
|
|
8.7%
|
|
8.6%
|
|
Missile
Systems
|
|
2,165
|
|
|
2,082
|
|
|
219
|
|
|
257
|
|
|
10.1%
|
|
12.3%
|
|
Space and Airborne
Systems
|
|
1,939
|
|
|
1,695
|
|
|
272
|
|
|
223
|
|
|
14.0%
|
|
13.2%
|
|
Forcepoint
|
|
167
|
|
|
173
|
|
|
14
|
|
|
18
|
|
|
8.4%
|
|
10.4%
|
|
Eliminations
|
|
(435)
|
|
|
(377)
|
|
|
(47)
|
|
|
(45)
|
|
|
|
|
|
|
Total business
segment
|
|
7,446
|
|
|
6,808
|
|
|
901
|
|
|
843
|
|
|
12.1%
|
|
12.4%
|
|
Acquisition
Accounting Adjustments
|
|
—
|
|
|
(2)
|
|
|
(28)
|
|
|
(30)
|
|
|
|
|
|
|
FAS/CAS Operating
Adjustment
|
|
—
|
|
|
—
|
|
|
361
|
|
|
365
|
|
|
|
|
|
|
Corporate and
Reclassification(1)
|
|
—
|
|
|
—
|
|
|
(28)
|
|
|
5
|
|
|
|
|
|
|
Total
|
|
$
|
7,446
|
|
|
$
|
6,806
|
|
|
$
|
1,206
|
|
|
$
|
1,183
|
|
|
16.2%
|
|
17.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
Operating
Income
|
|
Operating
Income
As a Percent of Net
Sales
|
|
|
|
Nine Months
Ended
|
|
Nine Months
Ended
|
|
Nine Months
Ended
|
|
|
|
29-Sep-19
|
|
30-Sep-18
|
|
29-Sep-19
|
|
30-Sep-18
|
|
29-Sep-19
|
|
30-Sep-18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Integrated Defense
Systems
|
|
$
|
4,946
|
|
|
$
|
4,496
|
|
|
$
|
804
|
|
|
$
|
776
|
|
|
16.3%
|
|
17.3%
|
|
Intelligence,
Information and Services(1)
|
|
5,409
|
|
|
5,011
|
|
|
509
|
|
|
394
|
|
|
9.4%
|
|
7.9%
|
|
Missile
Systems
|
|
6,381
|
|
|
5,981
|
|
|
662
|
|
|
700
|
|
|
10.4%
|
|
11.7%
|
|
Space and Airborne
Systems
|
|
5,409
|
|
|
4,868
|
|
|
713
|
|
|
622
|
|
|
13.2%
|
|
12.8%
|
|
Forcepoint
|
|
481
|
|
|
462
|
|
|
2
|
|
|
3
|
|
|
0.4%
|
|
0.6%
|
|
Eliminations
|
|
(1,291)
|
|
|
(1,110)
|
|
|
(140)
|
|
|
(126)
|
|
|
|
|
|
|
Total business
segment
|
|
21,335
|
|
|
19,708
|
|
|
2,550
|
|
|
2,369
|
|
|
12.0%
|
|
12.0%
|
|
Acquisition
Accounting Adjustments
|
|
(1)
|
|
|
(10)
|
|
|
(83)
|
|
|
(97)
|
|
|
|
|
|
|
FAS/CAS Operating
Adjustment
|
|
—
|
|
|
—
|
|
|
1,090
|
|
|
1,072
|
|
|
|
|
|
|
Corporate and
Reclassification(1)
|
|
—
|
|
|
—
|
|
|
(62)
|
|
|
(20)
|
|
|
|
|
|
|
Total
|
|
$
|
21,334
|
|
|
$
|
19,698
|
|
|
$
|
3,495
|
|
|
$
|
3,324
|
|
|
16.4%
|
|
16.9%
|
|
|
|
(1)
|
In the third quarter
of 2019, the company recognized a non-cash gain of $14 million on
an investment, which is included in IIS's operating income and
reclassified to other (income) expense,
net on the company's consolidated statements of
operations.
|
Attachment
C
Raytheon
Company
Other Preliminary
Information
Third Quarter
2019
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Backlog
|
|
|
|
|
|
|
29-Sep-19
|
|
31-Dec-18
|
|
|
|
|
|
|
|
|
|
|
|
|
Integrated Defense
Systems
|
|
|
|
|
|
|
$
|
13,535
|
|
|
$
|
11,557
|
|
|
Intelligence,
Information and Services
|
|
|
|
|
|
6,645
|
|
|
6,233
|
|
|
Missile
Systems
|
|
|
|
|
|
|
12,702
|
|
|
13,976
|
|
|
Space and Airborne
Systems
|
|
|
|
|
|
|
11,203
|
|
|
10,126
|
|
|
Forcepoint
|
|
|
|
|
|
|
529
|
|
|
528
|
|
|
Total
backlog
|
|
|
|
|
|
|
$
|
44,614
|
|
|
$
|
42,420
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
Bookings
|
|
|
29-Sep-19
|
|
30-Sep-18
|
|
29-Sep-19
|
|
30-Sep-18
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
bookings
|
|
|
$
|
9,439
|
|
|
$
|
8,710
|
|
|
$
|
24,282
|
|
|
$
|
23,715
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
General and
Administrative Expenses
|
|
|
29-Sep-19
|
|
30-Sep-18
|
|
29-Sep-19
|
|
30-Sep-18
|
|
|
|
|
|
|
|
|
|
|
|
|
Administrative and
selling expenses
|
|
$
|
570
|
|
|
$
|
533
|
|
|
$
|
1,692
|
|
|
$
|
1,601
|
|
|
Research and
development expenses
|
|
171
|
|
|
219
|
|
|
566
|
|
|
593
|
|
|
Total general and
administrative expenses
|
|
$
|
741
|
|
|
$
|
752
|
|
|
$
|
2,258
|
|
|
$
|
2,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, Cash
Equivalents and Restricted Cash
|
|
|
|
|
|
|
29-Sep-19
|
|
31-Dec-18
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
|
|
|
$
|
2,646
|
|
|
$
|
3,608
|
|
|
Restricted
cash
|
|
|
|
16
|
|
|
16
|
|
|
Cash, cash
equivalents and restricted cash shown in Attachment E
|
|
|
|
$
|
2,662
|
|
|
$
|
3,624
|
|
|
Attachment
D
Raytheon
Company
Preliminary Balance
Sheet Information
Third Quarter
2019
(In
millions)
|
|
|
|
|
|
|
|
29-Sep-19
|
|
31-Dec-18
|
|
Assets
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash and cash
equivalents
|
$
|
2,646
|
|
|
$
|
3,608
|
|
|
Receivables,
net
|
1,473
|
|
|
1,648
|
|
|
Contract
assets
|
6,498
|
|
|
5,594
|
|
|
Inventories
|
802
|
|
|
758
|
|
|
Prepaid expenses and
other current assets(1)
|
610
|
|
|
529
|
|
|
Total current
assets
|
12,029
|
|
|
12,137
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
3,103
|
|
|
2,840
|
|
|
Operating lease
right-of-use assets(1)
|
855
|
|
|
805
|
|
|
Goodwill
|
14,881
|
|
|
14,864
|
|
|
Other assets,
net
|
1,949
|
|
|
2,024
|
|
|
Total
assets
|
$
|
32,817
|
|
|
$
|
32,670
|
|
|
|
|
|
|
|
Liabilities,
Redeemable Noncontrolling Interests and Equity
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Commercial paper and
current portion of long-term debt
|
$
|
500
|
|
|
$
|
300
|
|
|
Contract
liabilities
|
2,977
|
|
|
3,309
|
|
|
Accounts
payable
|
1,470
|
|
|
1,964
|
|
|
Accrued employee
compensation
|
1,445
|
|
|
1,509
|
|
|
Other current
liabilities(1)
|
1,423
|
|
|
1,381
|
|
|
Total current
liabilities
|
7,815
|
|
|
8,463
|
|
|
|
|
|
|
|
Accrued retiree
benefits and other long-term liabilities(1)
|
6,642
|
|
|
6,922
|
|
|
Long-term
debt
|
4,258
|
|
|
4,755
|
|
|
Operating lease
liabilities(1)
|
692
|
|
|
647
|
|
|
|
|
|
|
|
Redeemable
noncontrolling interests
|
428
|
|
|
411
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
Raytheon Company
stockholders' equity
|
|
|
|
|
Common
stock
|
3
|
|
|
3
|
|
|
Additional paid-in
capital
|
34
|
|
|
—
|
|
|
Accumulated other
comprehensive loss
|
(8,042)
|
|
|
(8,618)
|
|
|
Retained
earnings
|
20,987
|
|
|
20,087
|
|
|
Total Raytheon Company
stockholders' equity
|
12,982
|
|
|
11,472
|
|
|
Noncontrolling
interests in subsidiaries
|
—
|
|
|
—
|
|
|
Total
equity
|
12,982
|
|
|
11,472
|
|
|
Total liabilities,
redeemable noncontrolling interests and equity
|
$
|
32,817
|
|
|
$
|
32,670
|
|
|
|
|
(1)
|
In the first quarter
2019 we adopted Accounting Standards Update (ASU) 2016-02,
Leases (Topic 842). As a result we recast certain amounts on
our balance sheet to reflect the recognition of operating lease
right-of-use assets and operating lease liabilities and other
reclassifications. Included in other current liabilities is $201
million and $194 million at September 29, 2019 and
December 31, 2018, respectively, related to the current
portion of operating lease liabilities.
|
Attachment
E
Raytheon
Company
Preliminary Cash Flow
Information
Third Quarter
2019
(In
millions)
|
|
|
Nine Months
Ended
|
|
|
29-Sep-19
|
|
30-Sep-18
|
|
Cash flows from
operating activities
|
|
|
|
|
Net income
|
$
|
2,448
|
|
|
$
|
2,055
|
|
|
(Income) loss from
discontinued operations, net of tax
|
1
|
|
|
—
|
|
|
Income from
continuing operations
|
2,449
|
|
|
2,055
|
|
|
Adjustments to
reconcile to net cash provided by (used in) operating activities
from continuing
|
|
|
operations, net of the effect of
acquisitions and divestitures
|
|
|
|
|
Depreciation and
amortization
|
446
|
|
|
417
|
|
|
Stock-based
compensation
|
122
|
|
|
137
|
|
|
Deferred income
taxes
|
(55)
|
|
|
(16)
|
|
|
Changes in assets and
liabilities
|
|
|
|
|
Receivables,
net
|
187
|
|
|
(205)
|
|
|
Contract assets and
contract liabilities
|
(1,205)
|
|
|
(468)
|
|
|
Inventories
|
(44)
|
|
|
(212)
|
|
|
Prepaid expenses and
other current assets
|
7
|
|
|
72
|
|
|
Income taxes
receivable/payable
|
(192)
|
|
|
194
|
|
|
Accounts
payable
|
(419)
|
|
|
(64)
|
|
|
Accrued employee
compensation
|
(73)
|
|
|
(91)
|
|
|
Other current
liabilities
|
90
|
|
|
(44)
|
|
|
Accrued retiree
benefits
|
515
|
|
|
(748)
|
|
|
Other, net
|
(138)
|
|
|
(32)
|
|
|
Net cash provided by
(used in) operating activities from continuing
operations
|
1,690
|
|
|
995
|
|
|
Net cash provided by
(used in) operating activities from discontinued
operations
|
(1)
|
|
|
1
|
|
|
Net cash provided by
(used in) operating activities
|
1,689
|
|
|
996
|
|
|
Cash flows from
investing activities
|
|
|
|
|
Additions to
property, plant and equipment
|
(653)
|
|
|
(546)
|
|
|
Additions to
capitalized internal-use software
|
(46)
|
|
|
(42)
|
|
|
Maturities of
short-term investments
|
—
|
|
|
309
|
|
|
Payments for
purchases of acquired companies, net of cash received
|
(8)
|
|
|
—
|
|
|
Proceeds from sale of
business, net of transaction costs
|
—
|
|
|
11
|
|
|
Other
|
1
|
|
|
(9)
|
|
|
Net cash provided by
(used in) investing activities
|
(706)
|
|
|
(277)
|
|
|
Cash flows from
financing activities
|
|
|
|
|
Dividends
paid
|
(773)
|
|
|
(728)
|
|
|
Net borrowings
(payments) on commercial paper
|
(300)
|
|
|
—
|
|
|
Repurchases of common
stock under share repurchase programs
|
(800)
|
|
|
(925)
|
|
|
Repurchases of common
stock to satisfy tax withholding obligations
|
(67)
|
|
|
(91)
|
|
|
Other
|
(5)
|
|
|
(5)
|
|
|
Net cash provided by
(used in) financing activities
|
(1,945)
|
|
|
(1,749)
|
|
|
Net increase
(decrease) in cash, cash equivalents and restricted cash
|
(962)
|
|
|
(1,030)
|
|
|
Cash, cash
equivalents and restricted cash at beginning of the year
|
3,624
|
|
|
3,115
|
|
|
Cash, cash
equivalents and restricted cash at end of period
|
$
|
2,662
|
|
|
$
|
2,085
|
|
|
Attachment
F
Raytheon
Company
Supplemental EPS
Information
Third Quarter
2019
(In millions, except
per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
|
|
|
|
29-Sep-19
|
|
30-Sep-18
|
|
29-Sep-19
|
|
30-Sep-18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share impact of
the pension settlement charge (A)
|
$
|
—
|
|
|
$
|
0.80
|
|
|
$
|
—
|
|
|
$
|
0.79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A) Pension settlement charge
|
$
|
—
|
|
|
$
|
288
|
|
|
$
|
—
|
|
|
$
|
288
|
|
|
Tax
effect (at 21% statutory rate)
|
—
|
|
|
(60)
|
|
|
—
|
|
|
(60)
|
|
|
After-tax
impact
|
—
|
|
|
228
|
|
|
—
|
|
|
228
|
|
|
Diluted
shares
|
279.4
|
|
|
286.0
|
|
|
280.5
|
|
|
287.5
|
|
|
Per
share impact
|
$
|
—
|
|
|
$
|
0.80
|
|
|
$
|
—
|
|
|
$
|
0.79
|
|
|
Raytheon Company
Global Headquarters
Waltham, Mass.
Investor Relations Contact
Kelsey DeBriyn
781.522.5141
Media Contact
Corinne Kovalsky
781.522.5899
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SOURCE Raytheon Company