updated 2/1/2007 12:39:00 PM ET 2007-02-01T17:39:00

Raytheon Co. on Thursday said fourth quarter earnings rose 32 percent, driven by growing defense contract bookings and strong sales of missiles and battle operations communications systems.

The world’s fifth-largest defense contractor also slightly raised its financial forecast for the current year.

Waltham, Mass.-based Raytheon said net income for the October-December period rose to $365 million, or 81 cents per share, up from $276 million, or 61 cents per share, in the year-ago period.

The figures were boosted by a $73 million profit in the latest quarter compared with $45 million a year ago at Wichita, Kan.-based Raytheon Aircraft — a unit that Raytheon is selling to focus on its core government and defense business, despite the division’s recently improving performance.

Raytheon announced a $3.3 billion deal in December to sell the unit to Hawker Beechcraft Corp., a new company formed by an affiliate of Goldman Sachs and Onex Partners. The unit makes Hawker and Beechcraft planes for commercial and military markets.

Raytheon reported the aircraft unit as a discontinued operation in its financial results for the latest quarter and the comparable quarter a year ago.

Excluding the aircraft operations, Raytheon’s net sales last quarter were $5.7 billion, up 12 percent from $5.1 billion in the same period a year earlier.

Raytheon’s quarterly profit from continuing operations — a measure that excludes the aircraft operations — was $292 million, or 65 cents per share, up from $231 million, or 51 cents per share, a year ago. Those figures also exclude other various one-time charges for both quarters, besides the aircraft operations.

On that basis, the profit for the latest quarter matched the 65-cents-per share consensus forecast of analysts surveyed by Thomson Financial.

Shares of Raytheon rose 31 cents to $52.21 in midday trading on the New York Stock Exchange, where the stock was near the upper end of its 52-week range of $40.57 to $54.17.

Raytheon’s full-year profit was $1.283 billion, or $2.85 per share, up from $871 million, or $1.92 per share, in 2005.

The 80,000-employee company said it added $7.8 billion in government and defense contract bookings in the fourth quarter compared with $5.5 billion in the year-ago quarter. During the quarter, Raytheon booked $558 million in additional work for the Navy’s DDG 1000 Destroyer Program.

Fourth-quarter sales at Raytheon’s Missile Systems division rose 17 percent to $1.32 billion, while sales at the Integrated Defense Systems unit rose 14 percent to $1.189 billion. That Tewksbury, Mass.-based unit develops surveillance and communications technology to coordinate battle operations.

Raytheon on Thursday also increased its financial expectations for this year, citing strong sales and a reduction in pension expenses. The company now projects a 2007 profit in the range of $2.85 to $3 per share, up from its earlier per-share forecast of $2.75 to $2.90. Sales are projected to reach $21.4 billion to $21.9 billion, compared with the company’s earlier forecast of $21.3 billion to $21.8 billion.

Analysts forecast $21.76 billion in revenue and a profit of $2.94 per share.

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