<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: FEBRUARY 25, 2000
Raytheon Company
(Exact name of registrant as specified in its charter)
Delaware 1-13699 95-1778500
(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification No.)
incorporation)
141 Spring Street 02421
Lexington, Massachusetts (Zip Code)
(Address of principal
executive offices)
(781) 862-6600
(Registrant's telephone number,
including area code)
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<PAGE>
-2-
Item 5. Other Events.
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On January 25, 2000, the Registrant announced financial results for
its fiscal year ended December 31, 1999. In connection with this announcement,
the Registrant issued a press release, a copy of which is incorporated herein by
reference.
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits
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(c) The following exhibits are filed as part of this report:
99.1 Press relese dated January 25, 2000.
<PAGE>
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SIGNATURE
Pursuant to the requirement of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
RAYTHEON COMPANY
/s/ John W. Kapples
-----------------------------------------
John W. Kapples
Vice President and Secretary
Dated: February 25, 2000
<PAGE>
Exhibit 99.1
Raytheon reports 1999 full year and fourth quarter results; Company ends year
with record backlog of $28.4 billion
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[Raytheon Logo Appears Here] Raytheon Company
Corporate Communications
141 Spring Street
Lexington, Massachusetts
02421 USA
News release
FOR IMMEDIATE RELEASE
Contact:
David Polk
781.860.2386
www.raytheon.com
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Raytheon reports 1999 full year and fourth quarter results;
Company ends year with record backlog of $28.4 billion
LEXINGTON, Mass., (Jan. 25, 2000) - Raytheon Company (NYSE: RTNA, RTNB) today
reported 1999 revenue of $19.8 billion, up 2 percent from the year earlier, and
diluted earnings per share of $1.19, in line with the estimate provided by the
company on January 18, and down from 1998 diluted earnings per share of $2.47.
Revenue was up slightly due to increased sales in missile defense systems and
some improvement in the power business of Raytheon Engineers & Constructors
(RE&C). The decline in earnings was due to contract-related adjustments, pricing
pressures, and the cumulative effect of two internal accounting changes
consistent with SOP 98-5 and SAB 101. Results for 1998 also included gains from
divestitures.
Total bookings for the year were $24.8 billion, compared with $22.2 billion in
bookings for 1998, resulting in record backlog of $28.4 billion, up 18 percent
over December 1998.
Fourth quarter 1999 revenue was $4.8 billion, down 8 percent from the previous
year. Diluted earnings per share in the quarter were $0.21, compared with $1.00
in the fourth quarter of 1998. The revenue decline in the quarter is due
primarily to lower missile shipments; certain non-recurring events from the 1998
fourth quarter in the electronics businesses; aircraft shipments and accounting
adjustments at Raytheon Aircraft Company (RAC); and the divestiture of
Cedarapids, Inc. These factors, along with contract adjustments in the
electronics businesses and cost performance at both RAC and RE&C, contributed to
lower earnings for the quarter.
On December 6, 1999, the SEC issued Staff Accounting Bulletin (SAB) 101, which
clarified conditions for recognizing revenue on bill and hold transactions. As
previously announced, the company recently completed a review of revenue
recognition practices at RAC. Based on that evaluation, Raytheon has now
restated its financial results consistent with SAB 101. This restatement
resulted in a negative effect of $0.11 per share on fourth quarter earnings.
Operating cash flow during the fourth quarter was $778 million, resulting in net
debt of $9.5 billion at year-end, compared with $8.6 billion at the end of 1998.
<PAGE>
Raytheon reports 1999 full year and fourth quarter results; Company ends year
with record. . . Page 2 of 8
"Despite all the challenges Raytheon faced in 1999, we are moving forward with
some of the best technology in the industry, talented people and strong customer
relationships," said Daniel P. Burnham, Raytheon chairman and chief executive
officer. "We intend to take all of the steps necessary to improve execution in
every area of the business and generate free cash flow for debt reduction."
Electronics Businesses
- ----------------------
Raytheon's electronics businesses reported fourth quarter operating income of
$360 million on revenue of $3.5 billion. Operating income for the fourth quarter
of 1998 was $658 million on revenue of $3.8 billion. The decline in revenue was
due primarily to lower missile shipments, the divestiture of Cedarapids, Inc.,
and lower sales at Training and Services due to the discontinuance of Raytheon
Data Systems. Contributing to lower operating profit were estimate-at-completion
(EAC) adjustments due to higher overhead rates at Sensors and Electronic Systems
(SES); contract cost adjustments on the Boeing Business Jet program at Aircraft
Integration Systems; and year-end balance sheet and contract reviews at Command,
Control, Communication and Information Systems. These were offset by $65 million
of favorable adjustments to restructuring-related reserves. Events in the 1998
fourth quarter, including claim settlements and contract closeouts at SES,
contributed to higher revenue and operating profit in the 1998 period.
Operational highlights included:
. The signing of a $1.3 billion ((Pound Sign)800 million) contract for the UK
Ministry of Defence's Airborne Stand Off Radar (ASTOR) program. ASTOR is a
radar surveillance system that provides day/night and all-weather imagery of
the ground over a large area.
. Selection by the Boeing Company to develop an Active Electronically Scanned
Array (AESA) radar for the F/A-18F Super Hornet. Under an Advance Agreement
between Boeing and the U.S. Navy, Raytheon will develop an integrated AESA
radar prototype. The next step would be a Navy contract award, expected in
early 2001, for engineering and manufacturing development. If the contract is
awarded, delivery of radars would begin in 2004.
. A $1.1 billion contract award by the National Science Foundation (NSF) to
provide science, operations and maintenance support services for the U.S.
Antarctic Program. Under the contract, Raytheon will provide everything needed
to sustain year-round research programs at three research stations and on two
research vessels on and around the continent of Antarctica.
The electronics businesses had backlog of $20.8 billion at the end of the fourth
quarter, compared with $17.6 billion at the end of 1998.
Raytheon Engineers & Constructors
- ---------------------------------
RE&C reported operating income of $5 million on revenue of $656 million in the
1999 fourth quarter, compared with operating income of $22 million on revenue of
$658 million for the same period in 1998. Cost growth and project delays,
particularly in one international program, continued to erode operating margins
at RE&C. Also material to the quarter were losses related to the settlement of
two claims.
During the quarter, RE&C won an award for $1.1 billion in new work for two power
projects in Massachusetts. Under the contract, awarded by Sithe Energies, Inc.,
RE&C will be the turnkey
<PAGE>
Raytheon reports 1999 full year and fourth quarter results; Company ends year
with record. ' ' Page 3 of 8
contractor for two gas-fired power plants, providing complete project
management, engineering, equipment procurement, construction and startup
services.
RE&C had backlog of $3.4 billion at the end of the quarter, compared with $3.9
billion at the end of 1998.
Raytheon Aircraft Company
- -------------------------
RAC recorded an operating loss of $38 million on revenue of $632 million in the
1999 fourth quarter, compared with operating income of $40 million on revenue of
$788 million in the fourth quarter of 1998. RAC shipped 10 fewer aircraft in the
1999 fourth quarter than it did in the 1998 period, and 19 fewer aircraft than
forecast due to production and shipment delays. All of the delayed 19 aircraft
are expected to ship in the first half of 2000. Also contributing to lower
operating profit were cost performance on existing and new product lines and the
impact of the bill and hold restatement of $57 million in the fourth quarter
versus $41 million in the comparable period last year.
Raytheon Travel Air, RAC's fractional aircraft ownership division, reported a
record fourth quarter with revenue of $82 million, bringing 1999 revenue to $230
million. Both revenue and fractional share ownership grew in excess of 75
percent during 1999, and Travel Air was ranked No. 1 in customer satisfaction
and program reliability based on a survey by Aviation Research Group/U.S.
Respondents.
RAC had backlog of $4.3 billion at the end of the quarter, compared with $2.5
billion at the end of 1998.
Raytheon Company is a global technology leader that provides products and
services in the areas of commercial and defense electronics, engineering and
construction, and business and special mission aircraft. Raytheon has operations
throughout the United States and serves customers in 80 countries.
This news release contains forward-looking statements, within the meaning of the
Private Securities Litigation Reform Act concerning the company's financial
results, future plans, objectives, expected performance and potential new
business awards. Specifically, statements in this release that are not
historical facts, including statements accompanied by words such as "believe,"
"expect," "anticipate," "estimate," "intend," or "plan" are intended to identify
forward-looking statements and convey the uncertainty of future events or
outcomes. The company cautions readers that any such forward-looking statements
are based on assumptions that the company believes are reasonable, but are
subject to a wide-range of risks, and, there is no assurance that actual results
may not differ materially. Important factors that could cause actual results to
differ include but are not limited to: differences in anticipated and actual
program results, the ability to realize anticipated cost efficiencies, the
ability to contain cost growth, particularly at RAC and RE&C, the ability to
finance ongoing operations at attractive rates, the effect of market conditions,
the impact of competitive products and pricing, and the integration of
acquisitions, among other things. Further information regarding the factors that
could cause actual results to differ from projected results can be found in the
company's reports filed with the SEC, including "Item 1 - Business" in
Raytheon's most recent Form 10-K, and this press release should be read in
conjunction with cautionary statements contained therein.
<PAGE>
Raytheon reports 1999 full year and fourth quarter results; Company ends year
with record. . . Page 4 of 8
C-2536
Attachment A
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Raytheon Company
Financial Information
Fourth Quarter 1999
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
------------------ -------------------
(In millions, except per share
amounts) 31-Dec-99 31-Dec-98 31-Dec-99 31-Dec-98
<S> <C> <C> <C> <C>
Net sales $ 4,830 $ 5,258 $ 19,841 $ 19,419
-------- -------- -------- --------
Cost of sales 3,938 3,930 16,256 15,167
Administrative and selling
expenses 418 458 1,550 1,664
Research and development
expenses 147 150 508 582
-------- -------- -------- --------
Total operating expenses 4,503 4,538 18,314 17,413
-------- -------- -------- --------
Operating income 327 720 1,527 2,006
-------- -------- -------- --------
Interest expense, net 180 178 713 711
Other income, net (12) (33) (14) (142)
-------- -------- -------- --------
Non-operating expense, net 168 145 699 569
-------- -------- -------- --------
Income before taxes 159 575 828 1,437
Federal and foreign income
tax provision 87 234 371 593
-------- -------- -------- --------
Income before
accounting change 72 341 457 844
Cumulative effect of change
in accounting principle,
net of tax -- -- 53 --
-------- -------- -------- --------
Net income $ 72 $ 341 $ 404 $ 844
-------- -------- -------- --------
Earnings per common
share before accounting
change:
Basic $ 0.21 $ 1.01 $ 1.35 $ 2.50
Diluted $ 0.21 $ 1.00 $ 1.34 $ 2.47
Earnings per common
share:
Basic $ 0.21 $ 1.01 $ 1.20 $ 2.50
Diluted $ 0.21 $ 1.00 $ 1.19 $ 2.47
Average common shares
outstanding:
Basic 338.3 337.0 337.4 337.9
Diluted 338.8 341.2 340.8 341.9
</TABLE>
<PAGE>
Raytheon reports 1999 full year and fourth quarter results; Company ends year
with record. . . Page 5 of 8
Attachment B
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Raytheon Company
Segment Information
Fourth Quarter 1999
<TABLE>
<CAPTION>
Operating Income (Loss)
Net Sales Operating Income (Loss) As a Percent of Sales
(In millions) Three Months Ended Three Months Ended Three Months Ended
------------------ ------------------ -----------------
31-Dec-99 31-Dec-98 31-Dec-99 31-Dec-98 31-Dec-99 31-Dec-98
<S> <C> <C> <C> <C> <C> <C>
Defense Systems $1,315 $1,346 $ 269 $259 20.5% 19.2%
Sensors and Electronic
Systems 589 709 59 197 10.0% 27.8%
Command, Control,
Communication
and Information
Systems 921 916 71 131 7.7% 14.3%
Aircraft Integration
Systems, Training
and Services,
Commercial
Electronics and
Other 717 841 (39) 71 -5.4% 8.4%
------ ------ ---- -----
Total Electronics 3,542 3,812 360 658 10.2% 17.3%
Engineering and
Construction 656 658 5 22 0.8% 3.3%
Aircraft 632 788 (38) 40 -6.0% 5.1%
------ ------ ---- -----
Total $4,830 $5,258 $ 327 $720 6.8% 13.7%
------ ------ ---- -----
</TABLE>
<PAGE>
Raytheon reports 1999 full year and fourth quarter results; Company ends year
with record . . . Page 6 of 8
<TABLE>
<CAPTION>
Operating Income (Loss)
Net Sales Operating Income (Loss) As a Percent of Sales
(In millions) Three Months Ended Three Months Ended Three Months Ended
------------------ ------------------ -----------------
31-Dec-99 31-Dec-98 31-Dec-99 31-Dec-98 31-Dec-99 31-Dec-98
<S> <C> <C> <C> <C> <C> <C>
Defense Systems $ 5,215 $ 4,941 $ 785 $ 880 15.1% 17.8%
Sensors and Electronic
Systems 2,695 2,934 332 556 12.3% 19.0%
Command, Control,
Communication
and Information
Systems 3,576 3,529 301 371 8.4% 10.5%
Aircraft Integration
Systems, Training
and Services,
Commercial
Electronics and
Other 3,003 3,418 8 225 0.3% 6.6%
------- ------- ------ ------
Total Electronics 14,489 14,822 1,426 2,032 9.8% 13.7%
Engineering and
Construction 2,656 2,065 (61) (253) -2.3% 12.3%
Aircraft 2,696 2,532 162 227 6.0% 9.0%
------- ------- ------ ------
Total $19,841 $19,419 $1,527 $2,006 7.7% 10.3%
------- ------- ------ ------
</TABLE>
Note: Certain prior year amounts were reclassified to conform to the
current year presentation.
<PAGE>
Raytheon reports 1999 full year and fourth quarter results; Company ends year
with record. . . Page 7 of 8
Attachment C
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Raytheon Company
Other Information
Fourth Quarter 1999
(In millions, except total employees and aircraft shipments)
<TABLE>
<CAPTION>
Backlog
-------
31-Dec-99 31-Dec-98
<S> <C> <C>
Electronics $ 20,783 $ 17,648
Engineering and Construction 3,355 3,888
Aircraft 4,282 2,509
-------- --------
Total backlog $ 28,420 $ 24,045
-------- --------
U.S. government backlog included above $ 16,107 $ 14,622
-------- --------
<CAPTION>
Total Employees
---------------
31-Dec-99 31-Dec-98
<S> <C> <C>
Total employees 105,300 108,200
-------- --------
<CAPTION>
Aircraft Shipments (Units)
-------------------------
Three Months Ended
------------------
31-Dec-99 31-Dec-98
<S> <C> <C>
Hawker 11 18
Beechjet (Commercial) 12 14
King Air 38 37
1900D Commuter 1 14
Pistons 49 38
T-6A -- --
-------- --------
Total aircraft shipments 111 121
-------- --------
</TABLE>
<PAGE>
Raytheon reports 1999 full year and fourth quarter results; Company ends year
with record. . . Page 8 of 8
Attachment D
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Raytheon Company
Preliminary Financial Information
Fourth Quarter 1999
(In millions)
<TABLE>
<CAPTION>
Balance sheets
31-Dec-99 03-Oct-99 31-Dec-98
<S> <C> <C> <C>
Assets
Cash and cash equivalents $ 230 $ 113 $ 421
Accounts receivable 851 785 618
Contracts in process 5,215 5,537 4,859
Inventories 1,950 2,003 1,991
Deferred federal and foreign income taxes 490 667 840
Prepaid expenses and other current assets 195 290 236
------- ------ ------
Total current assets 8,931 9,395 8,965
Property, plant and equipment, net 2,417 2,311 2,275
Goodwill, net 14,034 14,115 14,396
Other assets, net 2,728 2,863 2,596
------- ------ ------
Total assets $28,110 $28,684 $28,232
------- ------ ------
Liabilities and Stockholders' Equity
Notes payable and current portion of long-term debt $ 2,472 $ 3,112 $ 827
Advance payments, less contracts in process 1,599 1,033 1,251
Accounts payable 1,561 1,571 2,071
Accrued salaries and wages 549 675 703
Other accrued expenses 1,705 1,679 2,180
------- ------ ------
Total current liabilities 7,886 8,070 7,032
Accrued retiree benefits and other long-term liabilities 1,414 1,724 1,679
Deferred federal and foreign income taxes 553 624 561
Long-term debt 7,298 7,296 8,163
Stockholders' equity 10,959 10,970 10,797
------- ------ ------
Total liabilities and stockholders' equity $28,110 $28,684 $28,232
------- ------ ------
<CAPTION>
Debt-to-capital ratio
31-Dec-99 03-Oct-99 31-Dec-98
<S> <C> <C> <C>
Total debt $ 9,770 $10,408 $ 8,990
Total capital 20,729 21,378 19,787
------- ------ ------
Debt-to-capital ratio 47.1% 48.7% 45.4%
------- ------ ------
<CAPTION>
Cash flow information
Three Months Ended
--------------------
31-Dec-99 31-Dec-98
<S> <C> <C>
Net income $ 72 $ 341
Depreciation 83 76
Amortization 119 97
Working capital 959 1,033
Capital spending (240) (135)
Other (215) (394)
----- ------
Subtotal - operating cash flow 778 1,018
Net activity in financing receivables 173 322
Acquisitions and divestitures 23 251
Dividends (68)
Share repurchase -- (61)
Other (151) (109)
----- ------
Change in net debt $ 755 $1,353
Restructuring amounts included in ----- ------
operating cash flow above $ 168 $ 213
----- ------
</TABLE>
Contact Corporate Communications
[email protected]
--------------------
For public inquiries, please call 781-862-6600
