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Raytheon Company

27 Jan 11. Raytheon Company (NYSE: RTN) announced fourth quarter 2010 Adjusted EPS of $1.57 per diluted share compared to $1.31 per diluted share in the fourth quarter 2009(1), up 20 percent. The increase was primarily driven by operational improvements and capital deployment actions. Fourth quarter 2010 EPS from continuing operations was $1.37 compared to $1.30 in the fourth quarter 2009. Fourth quarter 2010 and fourth quarter 2009 EPS from continuing operations included net charges of $0.10 and $0.03, respectively, associated with the impacts of the early debt retirements. Fourth quarter 2010 also included FAS/CAS pension expense of $0.11, compared to $0.01 of FAS/CAS pension income in the fourth quarter 2009.

“Raytheon’s focus on performance drove solid operating results,” said William H. Swanson, Raytheon’s Chairman and CEO. “The depth and breadth of our product portfolio coupled with outstanding execution positions the company well going forward.”

Net sales in the fourth quarter 2010 were $6.9bn compared to $6.7bn in the fourth quarter 2009.

Operating cash flow from continuing operations in the fourth quarter 2010 was $861m after a $750m discretionary cash contribution made to the Company’s pension plans, compared to $1,073m in the fourth quarter 2009. The strong operating cash flow from continuing operations in the fourth quarter 2010 was primarily due to the timing of collections and lower cash taxes.

In the fourth quarter 2010, the Company repurchased 5.3m shares of common stock for $250m, as part of its previously announced share repurchase program. For the full-year 2010 the Company repurchased 29.0 m shares of common stock for $1,450m.

As previously announced, in the fourth quarter 2010, the Company issued $2.0bn in long-term debt and retired $678m in long-term debt maturing in 2012 and 2013. As a result of the debt retirement and issuance of longer maturities, the Company extended the term of its debt structure at lower interest rates.

Also as previously announced, in the fourth quarter 2010, the Company signed a definitive agreement to acquire Applied Signal Technology, Inc. (AST) and commenced a cash tender offer to purchase all of the outstanding shares of common stock of AST. The transaction is expected to close in the first quarter 2011 and AST will become part of Raytheon’s Space and Airborne Systems (SAS) business.

Full-Year Financial Results

Full-year 2010 Adjusted EPS was $5.58 per diluted share compared to $4.87 for the full-year 2009(2), up 15 percent. The increase was primarily driven by operational improvements and capital deployment actions. Full-year 2010 EPS from continuing operations was $4.79 compared to $4.89 for the full-year 2009.

Net sales in 2010 were $25.2bn, compared to $24.9bn in 2009. The Company generated strong operating cash flow for the year. Operating cash flow from continuing operations was $1.9bn in 2010 after a $750m discretionary cash contribution made to the Company’s pension plans, compared to $2.7bn in 2009. The Company made $1,902m in total cash contributions to its pension plans in full-year 2010 compared to $1,115m in full-year 2009.
The Company ended 2010 with a strong balance sheet, with $3.6bn in cash and cash equivalents, and $3.6bn in total debt.

Segment Results

Integrated Defense Systems

Fourth Quarter

Integrated Defense Systems (IDS) had fourth quarter 2010 net sales of $1,463m compared to $1,541m in the fourth quarter 2009. The change in net sales was primarily due to lower sales on various U.S. Navy programs and on two joint battlefield sensor programs, partially offset by higher sales on international Patriot programs. IDS recorded $240 m of operating income compared to $249m in the fourth quarter 2009. The change in operating income was primarily due to lower sales.

During the quarter, IDS booked $131m to provide Patriot Guidance Enhanced Missile-Tactical (GEM-T) missiles for Kuwait, $120m to provide Consolida

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