Raytheon annual report- highlights

[luvu]

Those of you paying attention will note that this figure was previously witheld. The $28 million is what Raytheon paid for the remaining 4% of Flight Options represented mostly by Brantley Capital's interest. If you do the math this brings Raytheon's valuation of the entire fractional company to $700 million. Raytheon's cash investment has only been $223 million. Not a bad deal to get $700 million in valuation for only $223 million invested. That works out to over 300% return for the four years post merger.


"In December 2005, the Company settled all disputes with the FO minority shareholders and acquired the minority shares for $28 million in cash and assumed liabilities and now owns 100% of FO. The Company’s net investment in FO was approximately $223 million at December 31, 2005."


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In SEC filings, Raytheon refers to Flight Options as "other" and attributes an operating loss to "other" of $117 million for 2005.

But under the fine print under segment free cash flows, as previously reported on this forum, you will find the fine print:

"Corporate free cash flow includes the difference between amounts charged to the segments for interest and taxes on an intercompany basis and the amounts actually paid by the Company."

And in this subsection you will find that the actual free cash flows for "other" for 2005 are reported as a POSITIVE $52 million.

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As Flight Options contract negotiating committee squares off for negotiations in the coming months, knowledge of the games Raytheon plays with numbers becomes crucial. For instance, over $200 million last year in maintenance expenditures carried on the Flight Options' books which one could reasonably argue ought to have been expensed to RAC under a contract for warranty similar to the deal Netjets negotiated.

Even meeting half way on this one maintenance warranty question with RAC is enough to pay for a $100,000 per pilot annual raise. So, when the other side of the table cries they can't afford industry leading wages, the pilot team needs to dig deep into the fine print and understand enough to know for a fact if and when they are being lied to.


http://yahoo.brand.edgar-online.com/fetchFilingFrameset.aspx?FilingID=4248882&Type=HTML

 

[jetwash]

Thanks for the great info.
I will ask a few friends of mine in the business to confirm your post.

 

[luvu]

free cash flow- pay attention folks

In previous SEC filings, Raytheon was quite open about what its published "free cash flow" numbers really meant. A discussion on this board at the time exposed the story behind this number versus the operating income and loss figures reported at the same time.

In short, Raytheon uses internal "free cash flow" numbers to cut through the BS they report to the SEC and use for other shall will say "political" or "union negotiating" purposes.

Previous SEC filings by Raytheon stated:

"The Company believes disclosure of free cash flow performance provides investors greater transparency with respect to information used by management in its financial and operational decision making."

This "honest" explanation of Raytheon's "free cash flow" numbers is missing from the annual report.

Can we expect Raytheon reporting of "free cash flow" by segment to cease entirely in future reports?

Stay tuned race fans. Very soon you will be very glad you have the resources of Teamsters National behind you. Not only do they keep REAL LAWYERS on the payroll. They actually know a REAL ACCOUNTANT or two who will earn every penny paid to him to sift through Raytheon's multiple shells.