Raytheon [RTN] yesterday posted sharply lower net income in its third quarter due to higher taxes and lower operating income in its business segments, although results easily beat consensus estimates of financial analysts.

Sales were also lower as Raytheon, like its competitors, deals with delays in the release of contract funds amid an uncertain fiscal environment and a continuing resolution to fund the FY ’12 federal budget, delays in the award of international contracts, which is typical, and its own cost cutting efforts, which can reduce revenues on cost-type contracts with the government.

Bookings on the other hand were strong, $6.9 billion, outpacing sales and giving the company confidence that its sales outlook remains healthy, even though it lowered its revenue guidance again for the year.

Referring to the bookings and the company’s outlook beyond 2011, William Swanson, the company’s chairman and CEO, said yesterday that “I think the forward is there.” If the Defense Department’s budget is “flat to slightly negative due to inflation,” Raytheon believe its international business in backlog as well as demand for its technology would “offset this impact” and allow the company to achieve sales in 2012 that are flat or even up a little bit depending on timing, he said.

Raytheon is not seeing programs canceled, only delayed, Swanson said. Customers are having difficulty figuring out their spending plans amid the uncertainty, he indicated, but added that, “I would tell you that we don’t see programs disappearing.”

As U.S. forces withdraw from Iraq and eventually Afghanistan, Swanson believes that after resizing and regrouping the military, “as a country we’re going to have smaller forces that have to operate globally at a moment’s notice. They’re going to have different tools and technologies to help them bridge that gap. We’re going to have to recapitalize what we’ve worn out because we’ve never seen an OPTEMPO like this, for this long.”

Net income was down 31 percent in the quarter to $501 million, $1.43 earnings per share (EPS), against $728 million ($1.94 EPS) a year ago, beating consensus estimates by a dime. The quarter included a $1 million gain from discontinued operations versus $88 million a year ago, higher income taxes of $166 million versus $77 million, and increased pension expenses.

Segment operating income, excluding pension adjustments and other corporate expenses, declined $11 million in the quarter to $848 million.

Sales were down 2 percent to $6.1 billion from $6.3 billion. Free cash flow was a strong $745 million.

The downward pressure points in terms of segment sales were Integrated Defense Systems (IDS), Network Centric Systems (NCS) and Technical Services due to less revenue on an international Patriot program and the Navy’s Zumwalt-class destroyer, lower sales on Army programs, and the winding down of programs for the Defense Threat Reduction Agency and the Transportation Security Administration.

IDS, NCS, Space and Airborne Services and Technical Services all posted operating income declines, partially offset by a double-digit increase at Missile Systems due to improved program performance.

Operating margins, excluding pension adjustments, were 11.8 percent, off just 10 basis points from a year ago.

As for the 2011 outlook, sales guidance is now between $25 billion to $25.3 billion versus $25.5 billion to $25.6 billion previously. Guidance was lowered due to the various program delays, the continuing resolution, and Raytheon’s cost cutting initiatives.

Less than forecasted pension expense and a slightly lower stock share count led the company to raise its guidance for EPS from continuing operations to between $4.94 and $5.04 versus $4.82 and $4.97 previously.

Total backlog at the end of the third quarter stood at $35 billion, up about $400 million since the end of 2010.