Questions surrounding the viability of the Medium Extended Air Defense System don't really worry Raytheon CEO William Swanson.
"That's something for the government to sort out," Swanson told Wall Street analysts during a conference call this morning on the company's third-quarter earnings.
Inside the Army reported earlier this month that with the Army's air and missile defense portfolio review in full swing, service acquisition chief Malcolm O'Neill and Missile Defense Agency Director Lt. Gen. Patrick O'Reilly had met recently to discuss how they might work together on MEADS:
The gathering comes ahead of a meeting of defense acquisition chiefs later this month on the sidelines of a NATO Conference of National Armaments Directors. "I think there will be a frank discussion between us, the Germans and the Italians," O'Neill told sister publication Inside the Army, calling the Oct. 28 meeting on MEADS, set for NATO headquarters in Brussels, an "important milestone."
Topics of discussion, according to O'Neill, include the program's progress, cost, and "options to continue as a team" or otherwise. As for the meeting with O'Reilly, no decisions regarding MEADS have been made, O'Neill stressed.
The Army, which pays for the U.S. contribution to MEADS, has long viewed the program with trepidation and has made several attempts to bow out of it. But MEADS has traditionally enjoyed support from the Office of the Secretary of Defense, raising the question of how much power the Army has to influence its fate.
Swanson said the company's Patriot missile business would likely not be hurt by MEADS, regardless of what decision is made on the latter program, adding that Patriot has 12 customers around the world, compared to three for MEADS. "We expect Patriot to be around for a long time," he said.
Raytheon this morning announced third-quarter 2010 adjusted earnings per share of $1.36 per diluted share, up 9 percent compared to $1.25 per diluted share in the third quarter of last year, according to a company statement.
"The increase was primarily driven by operational improvements," the statement reads.
"Strong program performance and cost reduction activities drove operating margins and earnings for the quarter," Swanson said in the statement. "Our consistent focus on providing our customers with innovative and affordable solutions positions us well to address the future challenges and opportunities in our industry."
Raytheon's net third-quarter sales were $6.3 billion compared to $6.2 billion in the same quarter last year. The company's operating cash flow from continuing operations was $413 million during the quarter, down from $749 million in the same quarter last year, according to the statement. "Operating cash flow from continuing operations in the third quarter 2009 was favorably impacted by the timing of collections on several production programs."
As for the company's individual business segments:
Integrated Defense Systems (IDS) had third quarter 2010 net sales of $1,319 million compared to $1,387 million in the third quarter 2009. The change in net sales was primarily due to lower volume on various U.S. Navy programs and on two joint battlefield sensor programs, partially offset by higher volume on international Patriot programs. IDS recorded $208 million of operating income compared to $217 million in the third quarter 2009.
During the quarter, IDS booked $190 million for a U.S. Army/Navy Transportable Radar Surveillance (AN/TPY-2) radar for the Missile Defense Agency (MDA). IDS also booked $104 million on the Zumwalt-class destroyer program and $103 million on the Aegis weapon system for the U.S. Navy.
. . . Intelligence and Information Systems (IIS) had third quarter 2010 net sales of $735 million compared to $805 million in the third quarter 2009. The change in net sales was primarily due to lower volume on various classified programs, on a U.S. Air Force program and on the UK Border Agency program. IIS recorded $60 million of operating income in the third quarter 2010 compared to $68 million in the third quarter 2009.
During the quarter, IIS booked $447 million on a number of classified contracts.
. . . Missile Systems (MS) had third quarter 2010 net sales of $1,391 million compared to $1,396 million in the third quarter 2009. MS recorded $162 million of operating income compared to $145 million in the third quarter 2009. The increase in operating income was primarily due to operational improvements.
During the quarter, MS booked $2,179 million, including $545 million for the production of Advanced Medium-Range Air-to-Air Missiles (AMRAAM) for the U.S. Air Force and international customers, $451 million for engineering and manufacturing development on the competitively awarded Small Diameter Bomb II (SDB II) contract for the U.S. Air Force and U.S. Navy, $237 million for Standard Missile-3 (SM-3) for the Missile Defense Agency (MDA) and an international customer, $204 million for the production of Rolling Airframe Missiles (RAM) for the U.S. Navy and an international customer, $119 million for the Javelin program for the U.S. Army and international customers, $112 million for the production of AIM-9X Sidewinder short range air-to-air missiles for the U.S. Navy and international customers, and $106 million for development work on the Exoatmospheric Kill Vehicle (EKV) for the MDA.
. . . Network Centric Systems (NCS) had third quarter 2010 net sales of $1,227 million compared to $1,212 million in the third quarter 2009. NCS recorded $172 million of operating income in both the third quarter 2010 and the third quarter 2009.
During the quarter, NCS booked $84 million for airborne tactical communications systems for multiple customers.
. . . Space and Airborne Systems (SAS) had third quarter 2010 net sales of $1,238 million compared to $1,134 million in the third quarter 2009, primarily due to growth on classified business and on an international tactical radar program. SAS recorded $191 million of operating income compared to $159 million in the third quarter 2009. The increase in operating income was primarily due to operational improvements.
During the quarter, SAS booked $87 million for the production of Active Electronically Scanned Array (AESA) radars for the U.S. Air Force and Air National Guard. SAS also booked $265 million on a number of classified contracts.
. . . Technical Services (TS) had third quarter 2010 net sales of $873 million compared to $797 million in the third quarter 2009, primarily due to continued growth in domestic and foreign training programs supporting the U.S. Army’s Warfighter Field Operations Customer Support (FOCUS) activities. TS recorded operating income of $77 million compared to $60 million in the third quarter 2009. The increase in operating income was primarily due to operational improvements.
During the quarter, TS booked $306 million on domestic training programs and $121 million on foreign training programs in support of the Warfighter FOCUS activities.