Defense contractor Raytheon ( RTN ) beat first-quarter earnings expectations and raised full-year guidance, but pension costs continued to weigh on the company's balance sheet.

The Massachusetts-based company has net income on continuing operations of $101 million, or 24 cents a share, compared to $111 million, or 27 cents a share, in the first quarter of 2003. Overall, net income was $128 million, or 30 cents a share, vs. $95 million, or 23 cents a share, in the year-ago period. Revenue rose 11% to $4.67 billion, up 11% from a year ago.

Based on a Thomson First Call survey, analysts expected a profit of $87.4 million, or 21 cents a share, on revenue of $4.53 billion.

Raytheon said a noncash pension expense hurt the bottom line by 15 cents a share on a year-over-year basis.

Government and defense sales increased 9% to $4.1 billion during the quarter.

Raytheon also raised guidance for full-year 2004. The company now expects EPS from continuing operations to be $1.30 to $1.40 a share, up from its previous forecast of $1.25 to $1.35 a share. Revenue is now forecast at $20 billion, instead of the previous range of $19.5 billion to $20 billion.

The consensus forecast is for EPS of $1.31 and revenue of $19.67 billion.

Raytheon shares closed at $31.57 Wednesday.

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