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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 26, 2001
RAYTHEON COMPANY
(Exact Name of Registrant as Specified in Charter)
Delaware 0-12591 95-1778500
(State or Other (Commission File Number) (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
141 Spring Street
Lexington, Massachusetts 02421
(Address of Principal Executive Offices) (Zip Code)
(781) 862-6600
(Registrant's telephone number, including area code)
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-1-
Item 5. Other Events.
Certain officers of Raytheon Company have presented and intend to
continue presenting materials in the form of a slide show presentation and/or
printed materials to meetings of analysts, investment banking firms and
prospective investors. These presentations began on April 27, 2001, and are
continuing. Among the materials presented is the information attached hereto as
Exhibit 99.1 and incorporated in this Item 5 by reference, all of which has been
previously filed in response to Item 9 on Form 8-K on April 26, 2001.
-2-
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: May 3, 2001
RAYTHEON COMPANY
By: /s/ John W. Kapples
---------------------------------------
Name: John W. Kapples
Title: Vice President and Secretary
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EXHIBIT LIST
Exhibit No. Description
99.1 Presentation
-4-
[Slide 1]
RAYTHEON
13 Million Equity Units
11 Million Common Shares
May 2001
Aircraft Integration Systems
[Photograph depicting example of Aircraft Integration Systems in assembly
operation]
[Photograph of missile launch]
Electronic Systems
Raytheon Technical Services
[Photograph of employee operating a system]
Raytheon Commercial Electronics
[Photograph of night time vehicular navigation system]
Raytheon Aircraft
[Photograph of Premier I jet aircraft]
C3I
[Photograph of employees monitoring systems]
[Slide 2]
RAYTHEON
THE OFFERING
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o Equity Units
o Number of Units: 13 Million
o Yield: __% - __%
o Conversion Premium: __% - __%
o Common Shares
o 11 Million Class B Common Shares
o Use of Proceeds - Reduce Debt
o Expected Pricing - Week of April 30th
[Slide 3]
RAYTHEON
RAYTHEON TODAY
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o Defense Spending Is on the Rise
o #1 Defense Electronics Contractor
o Well Positioned for Emerging DoD Needs
o Critical Enabling Technologies for a Broad Array of Missions and Platforms
o Strong Current Trends in Bookings, Margins and Cash Flow in Core Business
o Earnings Expected to Grow Faster Than Revenues
[Graphic illustration of Exoatmospheric Kill Vehicle]
Missile Defense
[Graphic illustration of the operation of communication systems between naval
ships]
C3I/ISR
POSITIONED FOR GROWTH
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[Slide 4]
RAYTHEON
RAYTHEON TODAY
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2000 External Sales: $17 Billion
[pie chart depicting the numbers provided below]
Electronic Systems $7.4B 43%
C3I $3.3B 20%
Aircraft Integration $1.2B 7%
Technical Services $1.3B 8%
Raytheon Aircraft Company $3.2B 19%
Commercial Electronics $0.5B 3%
STRONG ELECTRONICS & TECHNOLOGY BUSINESSES
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[Slide 5]
RAYTHEON
CORPORATE STRATEGY
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o Focus on Fundamentals
o Concentrate Resources on Defense Electronics and Selected Commercial
Opportunities
o Capitalize on Technology and Program Breadth to Grow Top Line
o Strengthen Balance Sheet
INTEGRATING CAPABILITIES TO DELIVER VALUE
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[Slide 6]
RAYTHEON
FOCUS ON FUNDAMENTALS - DRIVING RESULTS
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[Graphic represents connection between Actions and Benefits]
ACTION BENEFIT
Strengthen Program Management Improving Run-Rate Defense
Margins
Six Sigma, Productivity and Working Capital Six Sigma and Productivity
Contributed $100 Million in
Net Income and $200 Million
in Cash Flow in 2000
Improve Early Warning Systems & Predictability Met or Exceeded EPS and
Cash Expectations in Each
of the Last 5 Quarters
HAS LED TO $1.4B SWING IN CASH FLOW
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[Slide 7]
RAYTHEON
DEFENSE SPENDING IS ON THE RISE
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o Major Modernization and Recapitalization Needs
o New Administration - Priorities in Defense Spending
o Deterrence Against New Threats
o National Missile Defense
o Chem-Bio Detection
o Information Warfare
o Increased Reliance on C3I/ISR
o Digital Battlefield
o Enhanced Situational Awareness
o Airborne / Space-based Surveillance
o Military Transformation
o New Electronics for Existing Platforms
o UAV, UCAVS
o Small Carriers
Historical and Projected DoD Budget (Procurement + R&D)
[Line graph depicting the positive growth of Modernization Budget Authority
and Modernization Budget Outlays]
MARKET TREND IS POSITIVE
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[Slide 8]
RAYTHEON
DEFENSE ELECTRONICS & ISR GROWING
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Total U.S. Defense Electronics Spending
[Graph demonstrating projected Defense Electronics Spending through 2006 with
Procurement at 6% CAGR, RDT&E at 1% CAGR and O&M at 4% CAGR]
Market Position
- ---------------------------------------------------------
Company Defense Electronics ISR
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Raytheon #1 #1
Lockheed Martin #2 #2
Northrop Grumman #3 #3
BAE Systems #4 NA
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Source: Company's Estimates
LEADER IN THE DOD'S "SWEET SPOT"
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[Slide 9]
RAYTHEON
EMERGING MISSIONS PLAY TO RAYTHEON'S STRENGTHS
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[Graphic represents connection between Priority Mission Areas and Growth Areas]
PRIORITY MISSION AREAS GROWTH AREAS
- -------------------------- ------------------------------------------
RTN Core
Missile Defense Competency
----------
Precision Strike Radars X
Intelligence, Surveillance, EO Sensors X
Reconnaissance
Missile Systems X
Information Warfare
Guidance and Control X
ATC Upgrades
Signal Processing X
Combating Terrorism
Space Vehicles Electronics X
Systems Integration X
Upgrades and Modifications to X
Existing Platforms
[Slide 10]
RAYTHEON
LEADER IN MISSILE DEFENSE TECHNOLOGY
o Key DoD Plus-Ups Expected
o $5 Billion Potential
o Raytheon Solutions Address Entire Spectrum of Threats
o Barriers to Entry
[Graphic illustrating missile defense in operation]
Threat
Inter-Continental Theater/Cruise Tactical
------------------------------------------------------------
Radars X X X
Communications X X X
Interceptors X X X
Systems Integration X X X
Technology Base X X X
------------------------------------------------------------
Raytheon Solutions
- EKV - SM-3 LEAP - HAWK
- GBR - THAAD - PATRIOT
- SBIRS - JLENS - CLAWS
CLEAR COMPETITIVE ADVANTAGE
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[Slide 11]
RAYTHEON
RAYTHEON - "LIFTING THE FOG OF WAR"
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[Full-page graphic of Digital Battlefield]
MAKING THE DIGITAL BATTLEFIELD POSSIBLE
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[Slide 12]
RAYTHEON
REAL, NOT THEORY: CEC AND ASTOR
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ASTOR: $3+ Billion Potential Revenue Over 10 Years
o Defense Electronics Surveillance System with Wings
o Complete Mission Capability
o Produces Highly Accurate, Dynamic Imagery of the Ground, any Time, in any
Weather
o International Opportunities Exist
[Graphic illustration of Astor]
CEC: $3+ Billion Potential Revenue Over 10 Years
o Transmit Information Across Shipboard Sensors, Aircraft and other Ships
o 26 Prototypes Delivered to U.S. Navy, 156 Production Units Planned
o Potential for other U.S. Services and International Naval Applications
[Graphic illustration of the operation of communication systems between naval
ships]
PROVEN CAPABILITY TO EXPAND THE VISION OF PERSONNEL
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[Slide 13]
RAYTHEON
MISSION FOCUSED - PLATFORM INDEPENDENT
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Missile/Air Defense
[Graphic of Exoatmospheric Kill Vehicle]
o EKV Interceptor - NMD
o SM3 LEAP Interceptor - TMD
o Early Warning/Ground Based Radars
o THAAD Radar
o Patriot o HAWK
o CLAWS o JLENS
Radar
[Graphic of Radar System]
o F-15, F-14, F/A-18 E/F, AV-8B
o JSF o F-22
o B-2 Stealth Bomber
o THAAD Radar o GBR
o Firefinder o Patiot Radar
o MFR/HPD o Sentinel
EO Fire Control
[Graphic of EO Fire Control]
o FLIR (F-15, F-16, F/A-18 E/F)
o JSF o V-22
o Global Hawk o Future Scout
o M1 Tank o M2 BFVs
o Helicopters o TWS
Shiboard Electronics
[Graphic of Ships]
o DDG-51
o CVN-77
o LPD-17
o DD-21
Missile Systems
[Photograph of Missile Launch]
o Air-to-Air: AMRAAM, Sparrow, AIM-9X
o Strike: GBU-15, JSOW, Paveway, Maverick, HARM, Tomahawk, ERGM, ACM
o Air Defense: THAAD, Patriot, HAWK, Stinger
o Ship Defense: STANDARD, ESSM, RAM, PHALANX
o Land Combat: TOW, EFOGM, Javelin, TERM
Electronic Warfare
[Graphic of Electronic Warfare]
o F-15 o F/A-18 E/F
o F-16 o B-1 Bomber
o JSF o SH-60
o CVX Frigates o DDG-51
ISR/C3I
[Graphic of employees monitoring systems]
o Cooperative Engagement Capability (CEC)
o STARS o SBIRS
o JSTAR o Global Hawk
o CZISR o U-2
o Naval and Maritime o FIA
Integrated System
(N&MIS)
Undersea Systems
[Graphic of Undersea Systems]
o C3I
o Torpedoes (MK 46, MK 48, MK 50)
o Trident Electronics
o Sonar Systems
GROWTH, DIVERSIFICATION & STABILITY
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[Slide 14]
RAYTHEON
DEFENSE ELECTRONICS HIGHLIGHTS
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KEY AWARDS (2000)
- ----------------
Backlog Lifetime
------- --------
o THAAD (Radar) $1,400 M $3.5 B
o F/A-18 APG-73 (Radar) $260 M $0.8 B
o Javelin Multiyear II $230 M $3.0 B
o EKV (NMD) $220 M $2.0 B
o AMRAAM Lot 14 $200 M $2.5 B
PRODUCT/OPERATIONAL MILESTONES
- ------------------------------
o 1st AMRAAM on F-22
o Global Hawk Flight Testing
o THAAD Design Set
o 630,000th TOW Delivery
o 6,000th Javelin Seeker
CUSTOMER SATISFACTION
- ---------------------
o Design and Engineering Award for JLENS
o F-22 Award of Distribution
o Collier Trophy from National Aeronautic Association
[Bar Graph depicting Backlog sales with the following data]
1998 $17.2 Billion
1999 $20.2 Billion
2000 $21.6 Billion
2001E $22.9 Billion
[Bar Graph depicting Run-rate Operating Margins with the following data]
1999 8.4%
2000 8.7%
2001E 9.3%
LARGEST BUSINESS . . . BUILDING MOMENTUM
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[Slide 15]
RAYTHEON
RAYTHEON AIRCRAFT HIGHLIGHTS
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o 19% of Sales
o In Midst of Major Portfolio Update to Composite Technology
o Stronger and Lighter
o Increased Interior Space
o Significantly Lower Parts Count
o Lower Cost of Ownership
o Premier Certified Q1 - Production Ramp-up
o Horizon Rolled-out
o T-6A: Price Negotiation on Next Lot
o TravelAir up 60% in Q1
o Cash Positive in 2001 and Beyond
o Six Sigma / LEAN Are Taking Hold
[Bar Graph depicting Total Backlog Sales with the following data]
1998 $2.5 Billion
1999 $4.3 Billion
2000 $4.4 Billion
[Bar Graph depicting Premier/Horizon Deliveries (Units) with the following data]
Premier Horizon
------- -------
2001 36
2002 60
2003 60 7
2004 60 22
2005 60 36
COMPOSITE TECHNOLOGY CHANGES THE GAME
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[Slide 16]
RAYTHEON
LEVERAGING DEFENSE TECHNOLOGIES
INTO COMMERCIAL AND GOVERNMENT MARKETS
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o Optical Components
o Telecom Service Providers
o IR Sensors and Imagery
o Automotive
o Information Assurance and Security
o Government
o Wireless Communications
o Telecom Equipment Manufacturers
[Graphic of IR Sensors and Imagery]
[Graphic of Optical Component]
[Graphic of Information Assurance and Security]
[Graphic of Wireless Communications]
INTERESTING UPSIDE. . . DISCIPLINED PROCESS
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[Slide 17]
RAYTHEON
MANAGEMENT INCENTIVES
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Top Management Compensation
[Pie chart depicting the following data]
Options 52%
Base Pay 24%
Annual Bonus 24%
[Graphic illustrating relationship between Annual Bonus and Cash Bonus Targets]
Cash Bonus Targets
[Pie chart depicting the following data]
Cash Flow 40%
Sales 10%
Bookings 10%
Profit 20%
People/Six Sigma 20%
o Option Vesting Tied to Stock Appreciation
o Cash Bonus Tied to Financial Targets - Primary Cash
ALIGNED WITH FINANCIAL GOALS
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[Slide 18]
RAYTHEON
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FINANCIAL REVIEW
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[Slide 19]
RAYTHEON
FINANCIAL TRENDS - FIRST QUARTER 2001
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o Strong Booking Environment in Defense Business
o U.S. Government Backlog up 10% Year-on-Year
o Operating Income up 28% (after Divestitures) in Defense Business
o Margins Increased from 8.5% to 10.5%
o Continuation of Cash Flow Strength in Core Businesses
o $170 Million Improvement from Continuing Operations
o Economy-Driven Weakness in Commercial Bookings
o Actions in Place at Raytheon Aircraft
o Provision of $325 Million for WGI Exposure
o Expected Remaining Exposures: Zero to $125 million
o Divestiture Plan Ahead of Schedule
o $300 Million Proceeds by First Half
CORE BUSINESS IS PERFORMING
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[Slide 20]
RAYTHEON
MARGIN TRENDS ARE IMPROVING
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"Zero Margin" Contracts
[Line Graph representing decline from first quarter 2000 to first quarter 2001]
Operating Margin
[Bar Graph illustrating Operating Margin according to Run Rate and Other
Effects]
Run Rate Other Effects
1999 7.5% 4.4%
2000 7.9% 1.7%
2001E 8.7% 1.0%
DECLINE IN ACQUISITION-RELATED BENEFITS, OFFSET BY
GAINS IN PRODUCTIVITY AND PROGRAM MANAGEMENT
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[Slide 21]
RAYTHEON
IMPROVING CASH FLOW
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Rolling Four Quarter Operating Cash Flow
[Bar Graph illustrating Operating Cash Flow by quarters with the following data]
Q4 99 ($732) Million
Q1 00 ($473) Million
Q2 00 ($482) Million
Q3 00 $411 Million
Q4 00 $518 Million
Q1 01 $694 Million
o Balance Sheet and Cash Management Fundamentals
o Negative Cash Flow Programs
o Working Capital Efficiency
o Seasonality
o Return on RAC Investment
GETTING CASH FLOW TO DRIVE EARNINGS
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[Slide 22]
RAYTHEON
IMPROVING BALANCE SHEET
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(DOLLARS IN MILLIONS)
PRO FORMA
4/2/00 4/1/01 FOR OFFERINGS
------ ------ -------------
TOTAL DEBT $10,151 $10,043 $9,104
NET DEBT 9,970 9,560 8,621
EQUITY UNITS - - 650
SHAREHOLDERS' EQUITY 10,732 10,700 10,995
TOTAL CAPITALIZATION 20,883 20,743 20,749
NET DEBT/CAPITALIZATION 47.7% 46.1% 41.6%
OFFERINGS SUPPLEMENT INTERNAL CASH, OTHER ACTIONS
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[Slide 23]
RAYTHEON
FINANCIAL OBJECTIVES
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o Revenue Growth: 4 - 6%
o Operating Cash Flow: $3+ Billion Over 5 Years
o EPS Growth: 10+%
o Debt-to-Capitalization: Mid 30%
[Slide 24]
RAYTHEON
RAYTHEON: WELL POSITIONED FOR GROWTH
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[Text in Box] [Text in Box] [Text in Box] [Text in Oval]
Defense Well Improved Accelerated
Budget + Positioned + Program = Earnings and
Growth Programs Management Cash Flow Growth
[Photograph of missile launch]
[Photograph of military personnel]
[Photograph of jet]
[Slide 25]
RAYTHEON
FORWARD-LOOKING STATEMENTS
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CERTAIN STATEMENTS MADE IN THIS PRESENTATION CONSTITUTE FORWARD-LOOKING
STATEMENTS, WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT,
REGARDING THE COMPANY'S FUTURE PLANS, OBJECTIVES, AND EXPECTED PERFORMANCE.
STATEMENTS THAT ARE NOT HISTORICAL FACTS, INCLUDING STATEMENTS ACCOMPANIED BY
WORDS SUCH AS "BELIEVE," "EXPECT," "ESTIMATE," "INTEND," OR "PLAN" ARE INTENDED
TO IDENTIFY FORWARD-LOOKING STATEMENTS AND CONVEY THE UNCERTAINTY OF FUTURE
EVENTS OR OUTCOMES. THE COMPANY CAUTIONS THAT ANY SUCH FORWARD-LOOKING
STATEMENTS ARE BASED ON ASSUMPTIONS THAT THE COMPANY BELIEVES ARE REASONABLE,
BUT ARE SUBJECT TO A WIDE RANGE OF RISKS, AND ACTUAL RESULTS MAY DIFFER
MATERIALLY.
IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER INCLUDE, BUT ARE NOT
LIMITED TO: DIFFERENCES IN ANTICIPATED AND ACTUAL PROGRAM RESULTS; RISKS
INHERENT IN LARGE LONG-TERM FIXED PRICE CONTRACTS, PARTICULARLY THE ABILITY TO
CONTAIN COST GROWTH; THE ULTIMATE RESOLUTION OF CONTINGENCIES AND LEGAL MATTERS;
THE ABILITY TO REALIZE ANTICIPATED COST EFFICIENCIES; TIMELY DEVELOPMENT AND
CERTIFICATION OF NEW AIRCRAFT; THE EFFECT OF MARKET CONDITIONS, PARTICULARLY IN
RELATION TO THE GENERAL AVIATION MARKET; THE IMPACT ON RECOURSE OBLIGATIONS OF
RAC DUE TO CHANGES IN THE COLLATERAL VALUES OF FINANCED AIRCRAFT, PARTICULARLY
COMMUTER AIRCRAFT; THE ABILITY TO FINANCE ONGOING OPERATIONS AT ATTRACTIVE
RATES; GOVERNMENT CUSTOMERS' BUDGETARY CONSTRAINTS; TERMINATION OF GOVERNMENT
CONTRACTS; FINANCIAL AND GOVERNMENTAL RISKS RELATED TO INTERNATIONAL
TRANSACTIONS; DELAYS AND UNCERTAINTIES REGARDING THE TIMING OF INTERNATIONAL
PROGRAM AWARDS; THE INTEGRATION OF ACQUISITIONS; THE IMPACT OF COMPETITIVE
PRODUCTS AND PRICING; AND RISKS ASSOCIATED WITH THE CONTINUING PROJECT
OBLIGATIONS AND RETAINED ASSETS AND LIABILITIES OF RAYTHEON ENGINEERS &
CONSTRUCTORS, AMONG OTHER THINGS. FURTHER INFORMATION REGARDING THE FACTORS THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM PROJECTED RESULTS CAN BE
FOUND IN THE COMPANY'S MOST RECENT REPORTS FILED WITH THE SEC.