STRONG SHOWING FROM RAYTHEON

24 Jul 08. Raytheon Company (NYSE: RTN) reported second quarter 2008 income from continuing operations of $426m or $1.00 per diluted share compared to $355m or $0.79 per diluted share in the second quarter 2007.
Second quarter 2008 income from continuing operations was higher primarily due to operational improvements and lower pension expense, as well as a prior-year $39m charge ($59m pretax) or $0.09 per diluted
share for the early retirement of debt.

“All of our businesses performed well and the Company had a strong second quarter,” said William H. Swanson, Raytheon’s Chairman and CEO. “We are increasing our financial outlook for the year as a result of our solid performance.”

Second quarter 2008 net income was $426m or $1.00 per diluted share compared to $1,335m or $2.97 per diluted share in the second quarter 2007. Net income for the second quarter 2007 included $980m in discontinued operations or $2.18 per diluted share primarily due to the
sale of Raytheon Aircraft Company (RAC), which was completed in the second quarter 2007.

Net sales for the second quarter 2008 were $5.9bn, up 11 percent from $5.3bn in the second quarter 2007, with growth across all of the
Company’s businesses.

Operating cash flow from continuing operations for the second quarter
2008 was a positive $767m compared to an outflow of $30m for the second quarter 2007. The improvement in the second quarter 2008 was primarily due to cash tax payments of $316 million made in the second quarter 2007 attributable to the gain on the sale of RAC and a reduction in working capital items in the second quarter 2008.

In the second quarter 2008 the Company repurchased 5.2 million shares of common stock for $340m, as part of the Company’s previously announced share repurchase program. The Company has repurchased 10.7 million shares of common stock year-to-date for $680m.

Summary Financial Results

2nd Quarter % Six Months %($ in millions, except per share data)
2008 2007 Change 2008 2007 Change
Net Sales $5,870 $5,278 11% $11,224 $10,082 11%
Total Operating
Expenses 5,208 4,689 9,954 8,972
Operating Income 662 589 12% 1,270 1,110 14%
Non-operating
Expenses 15 53 31 88
Income from Cont.
Ops. before Taxes 647 536 21% 1,239 1,022 21%

Income from Continuing
Operations 426 355 20% 826 679 22%

Inc. (Loss) from Disc. Ops., Net of
Tax* – 980 NM (2) 1,002 NM
Net Income 426 1,335 NM 824 1,681 NM

Diluted EPS from
Continuing Ops. 1.00 0.79 27% 1.92 1.51 27%
Diluted EPS 1.00 2.97 NM 1.92 3.73 NM

Operating Cash Flow
from Cont. Ops.** 767 $(30) $834 $(383)
Workdays in Fiscal
Reporting Calendar 64 64 127 123

* Includes after-tax net gain of $986m on sale of Raytheon Aircraft Company (RAC) in Q2 ’07
** Includes $316 million cash tax payment related to the completion of
the RAC sale in Q2 ’07
NM – Not meaningful for comparison purposes due to the gain on sale of RACin Q2 ’07

Bookings and Backlog

Bookings 2nd Quarter Six Months
(in millions) 2008 2007 2008 2007

Total Bookings $6,008 $4,832 $12,524 $9,990

Backlog Period Ending
(in millions) 06/29/08 12/31/07

Backlog $37,527 $36,614
Funded Backlog $22,226 $20,518

The Company reported total bookings for the second qu