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): December 1, 2000
RAYTHEON COMPANY
(Exact name of registrant as specified in its charter)
Delaware 1-13699 95-1778500
(State of Incorporation) (Commission File Number) (IRS Employer
Identification Number)
141 Spring Street
Lexington, Massachusetts 02421
(Address of principal executive offices (Zip Code)
Registrant's telephone number, including area code: (781) 862-6600
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Item 7. Financial Statements and Exhibits
(a) Exhibits
The following Exhibits are furnished as part of Item 9 of this
report:
(99.1) Presentation to be made at the Lehman Brothers Industrial
Conference on December 1, 2000
Item 9. Regulation FD Disclosure
On December 1, 2000, Daniel P. Burnham, Chairman and Chief Executive
Officer of Raytheon Company, will make a presentation to securities analysts and
investors at the Lehman Brothers Industrial Conference in Palm Beach, Florida.
Mr. Burnham's presentation is attached hereto as Exhibit 99.1 and is
incorporated in this Item 9 by reference. You can listen to the Lehman Brothers
Industrial Conference live by dialing the following toll-free number:
1-800-521-5469. Mr. Burnham is scheduled to begin his presentation at 8:50 a.m.
Eastern Standard Time. Mr. Burnham's presentation can also be viewed on our
website at http://www.raytheon.com.
Cautionary Statement
Certain statements made in this report constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995
regarding the Company's future plans, objectives, and expected performance.
Specifically, 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 readers 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 with large long-term fixed price contracts; the
ultimate resolution of contingencies and legal matters; the ability to realize
anticipated cost efficiencies; the ability to contain cost growth, particularly
at Raytheon Aircraft ; timely development and certification of new aircraft; the
effect of market conditions, particularly as it affects the general aviation
market; the impact on recourse obligations of Raytheon Aircraft 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; government import and export policies;
termination of government contracts; financial and governmental risks related to
international transactions; the integration of acquisitions; the impact of
competitive products and pricing; the availability of raw materials,
particularly at Commercial Electronics; 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 reports filed with the Securities and Exchange
Commission, including "Item 1-Business" in the Company's Annual Report on Form
10-K for the year ended December 31, 1999.
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SIGNATURE
Pursuant to the requirements of Section 12 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: December 1, 2000
RAYTHEON COMPANY
By: /s/Franklyn A. Caine
Franklyn A. Caine
Senior Vice President and
Chief Financial Officer
EXHIBIT INDEX Exhibit Number Description 99.1 Presentation to be made at the Lehman Brothers Industrial Conference on December 1, 2000
1 EXHIBIT 99.1 C3I [PHOTO] [PHOTO] Aircraft Electronic Systems Integration Systems [PHOTO] [PHOTO] [PHOTO] Raytheon Technical Services Raytheon Lehman Industrial Conference [PHOTO] [PHOTO] Raytheon Commercial Raytheon Systems Limited Raytheon Aircraft Electronics [PHOTO] December 1, 2000
2 Raytheon Disclosure Regarding Forward-Looking Statements Certain statements made in this presentation contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act, regarding the company's future plans, objectives and expected performance. Specifically, statements that are not historical facts, including statements accompanied by words such as "believe," "expect," "anticipate," "estimate," "intend," or "plan," are intended to identify forward-looking statements and convey the uncertainty of future events or outcomes. The company cautions readers 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 there is no assurance that actual results may not differ materially. Information regarding the factors that could cause actual results to differ from projected results can be found in the company's reports filed with the SEC, including Raytheon's most recent Forms 10-K and 10-Q.
3 Raytheon Major Strategic Initiatives 1. Significantly increase focus on Focus on cash and productivity Fundamentals 2. Drive a culture of performance and accountability 3. Manage the business to generate Strengthen the cash flow balance sheet 4. Monetize poorly-positioned businesses 5. Grow businesses faster than their Achieve real markets growth 6. Exploit potential of the commercial electronics businesses Initiatives for improved shareholder value
4 Raytheon Progress to Date o Seeing results from Raytheon Six Sigma o Improving our basic processes o Meeting our financial management goals o Dealing with portfolio issues o Building strong backlog for the future Focus and execution producing tangible results
5 Raytheon Focus on Fundamentals Raytheon Six Sigma o Trained 448 experts with another 136 in training o Qualified 620 specialists with another 4,300 on the way o Started 830 projects with 315 already completed o Potential `00 benefits: - $50+ million in operating income - $75+ million in cash flow Raytheon Six Sigma is driving productivity
6 Raytheon Focus on Fundamentals Supply Chain Management o $7.1 billion annual spend o $100 million through reverse auction process: Reverse Auctions: Historic Spend Relocation $58 M International Freight $ 7 M 15 - 20% Expected Savings Industrial Gas $ 6 M Property & Maintenance Svcs. $29 M - ---------- o Targeting $200+ million through additional channels with potential 20-25% savings Unlocking the power of enterprise leverage
7 Raytheon Focus on Fundamentals Driving a New Culture o 40% of top 250 people new to job within the last year o Reduced 1-2 layers of management o New senior executives: - Finance, Human Resources - Manufacturing, Supply Chain o Launched extensive learning initiatives with RLI Lean, agile culture to drive future results
8 Raytheon Focus on Fundamentals Improving Basic Processes o Integrated Product Development System o Earned Value Management System o ECAC disciplines o Investment in systems and tools Process discipline contributes to reliability
9 Raytheon EVMS Program Analysis Behind Schedule and Underspent Ahead of Schedule and Underspent C P Target Area I Behind Schedule and Overspent Ahead of Schedule and Overspent (SPI)
10 Raytheon Strengthen the Balance Sheet Increased Focus on Cash o Improved DFAS processing time by 3 days $ 75 million o Increased use of electronic billing process enhancements $ 25 million o Greater use of milestone payments $150 million o Benefit from Paid Cost Rule change $ 60 million Over 5,000 people will be trained in cash and balance sheet awareness this year
11 Raytheon Strengthen the Balance Sheet Financial Management Initiatives o Monetize non-core businesses to reduce debt: - expected divestiture proceeds $400+ million in `00 - additional opportunities exist for $250+ million o Reduce off-balance sheet debt: - down $1.2 billion through September - finding alternative financing for RAC customers Improving credit quality and financial flexibility remains a top priority
12 Raytheon Achieve Real Growth DoD Procurement + R&D Outlays [LINE GRAPH] 4% CAGR `00-'04 * Raytheon Company estimates relative to FY `99 Actual and expected FY `01 budget Outlays, our best "proxy" for revenues, showing modest growth
13 Raytheon Achieve Real Growth Building a Strong Backlog o Up 14% year-over-year through September o Significant contributors over past 18 months: - THAAD - ASTOR - EKV - Horizon - Javelin - Antarctica - Classified - NRO o Average backlog life now extended to over 3 years Ensuring our base for future revenue streams
14 Raytheon Achieve Real Growth Top `01 DoD Modernization Programs 5-Year DoD Raytheon Bookings Program Participation Potential - ------- ------------- --------- BMD SM-3 LEAP, EKV $2-5 B CVN-77 Multi-Function Radar, Volume Search 1-3 B F-22 Core Integrated Processor 2-4 B DDG-51 Electronics Integration, Tomahawk 1-3 B F/A-18 E/F Radar, EW, AMRAAM 1-3 B C-17 -- none -- 0 NSSN Command & Control, Torpedoes 1-2 B V-22 Airborne EO Systems 1-2 B LPD-17 Surface Ship System Integration 1-2 B JSF Integrated Radar, EO Targeting, EW 1-2 B Raytheon plays in 9 of DoD's top 10 programs
15 Raytheon Achieve Real Growth Raytheon's Role in Missile Defense o National Missile Defense - Providing EKV, X-Band and Early Warning Radars - Development and testing continue, despite delay in deployment [PHOTO] Up to $5 billion total potential o Theater Missile Defense - Major player in all aspects of TMD - FY `01 budget at full funding, with some plus ups Raytheon will play a major role in a key strategic program
16 Raytheon Achieve Real Growth Raytheon's Role in JSF Electronics [GRAPHIC] Potential Processor Distributed IR Raytheon System Targeting FLIR Common RF System Integrator Electronic Warfare Radar Supplier Could mean up to $30 billion over the long term % of Aircraft Flyaway Cost Wide-ranging capabilities = Larger role
17 Raytheon Achieve Real Growth Raytheon's Role in Command & Control Cooperative Engagement Capability o Transmit information gathered from shipboard sensors to aircraft and other ships o 26 prototype systems have been delivered to U.S. Navy o 156 production units planned o Potential for other U.S. services and international naval applications [PHOTO] $3 billion potential over 10 years Proven capability to expand the vision of the fleet
18 Raytheon Leveraging Defense Technologies in Commercial Markets o IR sensors and imagery o Optical components o Wireless communications o Information assurance and security [PHOTO] [PHOTO] [PHOTO] Opportunities to create significant shareholder value
19 Raytheon Raytheon Aircraft Company Market o Continued strength in general aviation o Some weakness in commuter market [PHOTO] Competitive Position/Performance o Well regarded product/brand o Modernizing its product line with composite technology o Balance of products and services o Production cost issues being closely monitored o Premier I certification delay Significant cash flow returns from new product introductions
20 Raytheon Premier I Certification Progress Flight Test Summary [LINE GRAPH] Certification now 95% complete as we work through tire burst and rudder centering issues
21 Raytheon Our Goals for Year 2000 Earnings per Share $1.40 - 1.50 Net debt at year-end $9.2 B Off balance sheet financing Sell $0.5B Operating income and Sequential cash flow improvement
22 Raytheon Risks and Opportunities Risks o International bookings o Cost issues: - BBJ - RAC o 1900D market outlook o Premier I delay o RE&C retained contracts Opportunities o Productivity initiatives flowing to bottom line o Cash management efforts: - Collection practice improvements - Timing on international collections - Real process productivity gains o Divestitures Working to maintain the balance
23 Raytheon A Preliminary View of 2001 o Top line growth in line with markets: - Defense markets @ 2-4% - Commercial markets @ 8+% - General aviation market @ 0-2% o EPS of $1.55 - 1.70 - Stabilized defense margins - Improving commercial margins - No increase in international mix - No material change in interest expense o Improvement in operating cash flow - Minimal restructuring spending - Raytheon Six Sigma focuses on the cash cycle - Modest proceeds from non-core divestitures Improving fundamentals produce better financial results
24 Raytheon Lehman Industrial Conference December 1, 2000