<PAGE>
RULE NO. 424(b)(2)
REGISTRATION NO. 333-44321
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED FEBRUARY 13, 1998)
$1,600,000,000
RAYTHEON
$500,000,000 5.95% NOTES DUE 2001
$450,000,000 6.30% NOTES DUE 2005
$300,000,000 6.55% NOTES DUE 2010
$350,000,000 6.75% DEBENTURES DUE 2018
---------------
INTEREST PAYABLE MARCH 15 AND SEPTEMBER 15
---------------
The 5.95% Notes Due 2001 (the "Notes Due 2001") will mature on March 15, 2001
and will not be redeemable prior to maturity. The 6.30% Notes Due 2005 (the
"Notes Due 2005") will mature on March 15, 2005 and will not be
redeemable prior to maturity. The 6.55% Notes Due 2010 (the "Notes Due
2010") will mature on March 15, 2010. The 6.75% Debentures Due 2018
(the "Debentures Due 2018") will mature on March 15, 2018. The Notes
Due 2010 and the Debentures Due 2018 will be redeemable as a whole
or in part at the option of Raytheon at any time, at a
redemption price equal to the greater of (i) 100% of the
principal amount of such Notes or Debentures, as the case may
be, and (ii) the sum of the present values of the remaining
scheduled payments of principal and interest thereon
discounted to the date of redemption on a semiannual
basis (assuming a 360-day year consisting of twelve
30-day months) at the Treasury Rate (as defined
herein) plus, in each case, 12.5 basis points and
accrued interest thereon to the date of
redemption. The Notes Due 2001, the Notes Due
2005, the Notes Due 2010 and the Debentures
Due 2018 (collectively, the "Offered
Securities") will not be subject to any
sinking fund. The Offered Securities
each will be represented by Book-Entry
Securities (as defined herein)
registered in the name of The
Depository Trust Company
("DTC"), or its nominee.
Interests in such Book-Entry
Securities will be shown on,
and transfers thereof will be
effected only through, records
maintained by DTC and its
participants. Except as
described herein, Offered
Securities in definitive form
will not be issued. See
"Description of the Offered
Securities" herein.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
---------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) RAYTHEON(1)(3)
------------ -------------- --------------
<S> <C> <C> <C>
Per Note Due 2001................... 99.877% .350% 99.527%
Total.............................. $499,385,000 $1,750,000 $497,635,000
Per Note Due 2005................... 99.775% .625% 99.150%
Total.............................. $448,987,500 $2,812,500 $446,175,000
Per Note Due 2010................... 99.940% .675% 99.265%
Total.............................. $299,820,000 $2,025,000 $297,795,000
Per Debenture Due 2018.............. 99.607% .875% 98.732%
Total.............................. $348,624,500 $3,062,500 $345,562,000
</TABLE>
- -------
(1)Plus accrued interest, if any, from March 15, 1998.
(2) Raytheon has agreed to indemnify the Underwriters (as defined herein)
against certain liabilities, including liabilities under the Securities
Act of 1933, as amended.
(3)Before deducting expenses estimated at $750,000, payable by Raytheon.
---------------
The Offered Securities are offered, subject to prior sale, when, as and if
accepted by the several Underwriters, and subject to approval of certain legal
matters by Cravath, Swaine & Moore, counsel for the Underwriters. It is
expected that delivery of the Offered Securities will be made on or about
March 23, 1998 through the book-entry facilities of DTC, against payment in
immediately available funds.
---------------
CREDIT SUISSE FIRST BOSTON MORGAN STANLEY DEAN WITTER
---------------
GOLDMAN, SACHS & CO. MERRILL LYNCH & CO. J.P. MORGAN & CO.
---------------
BEAR, STEARNS & CO. INC.
CHASE SECURITIES INC.LEHMAN BROTHERS SALOMON SMITH BARNEY
---------------
<TABLE>
<S> <C>
ABN AMRO INCORPORATED BANCAMERICA ROBERTSON STEPHENS
BLAYLOCK & PARTNERS, L.P. BT ALEX. BROWN
CIBC OPPENHEIMER CITICORP SECURITIES, INC.
COMMERZBANK CAPITAL MARKETS CORPORATION DEUTSCHE MORGAN GRENFELL
FIRST CHICAGO CAPITAL MARKETS, INC. MURIEL SIEBERT & CO., INC.
SBC WARBURG DILLON READ INC. SCOTIA CAPITAL MARKETS
UBS SECURITIES
</TABLE>
The date of this Prospectus Supplement is March 18, 1998
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THE OFFERING OF THE OFFERED SECURITIES MAY
ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE
OF THE OFFERED SECURITIES OR ANY SECURITIES THE PRICES OF WHICH MAY BE USED TO
DETERMINE PAYMENTS ON THE OFFERED SECURITIES. SPECIFICALLY, THE UNDERWRITERS
OR AGENTS SPECIFIED IN THIS PROSPECTUS SUPPLEMENT MAY OVERALLOT IN CONNECTION
WITH THE OFFERING, AND MAY BID FOR AND PURCHASE THE OFFERED SECURITIES OR ANY
SECURITIES THE PRICES OF WHICH MAY BE USED TO DETERMINE PAYMENTS ON THE
OFFERED SECURITIES IN THE OPEN MARKET. FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE "UNDERWRITING" IN THIS PROSPECTUS SUPPLEMENT AND "PLAN OF DISTRIBUTION" IN
THE ACCOMPANYING PROSPECTUS.
NO DEALER, SALESMAN, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS, AND ANY SUCH OTHER INFORMATION, OR REPRESENTATIONS, IF GIVEN OR
MADE, MUST NOT BE RELIED UPON AS HAVING BEEN SO AUTHORIZED. THE DELIVERY OF
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS OR ANY SALE MADE
HEREUNDER OR THEREUNDER AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION
INCLUDED OR INCORPORATED BY REFERENCE HEREIN OR THEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO ITS DATE. NEITHER THIS PROSPECTUS SUPPLEMENT NOR THE
ACCOMPANYING PROSPECTUS CONSTITUTES AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY OR THEREBY IN ANY
JURISDICTION WHERE, AND TO ANY PERSON WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION.
----------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Disclosure Regarding
Forward-Looking
Statements............. S-1
The Company............. S-2
Recent Developments..... S-3
Recent Financial
Results................ S-5
Use of Proceeds......... S-5
Capitalization.......... S-6
Ratio of Net Debt to
Total Capitalization... S-7
Ratio of Earnings to
Fixed Charges.......... S-7
Selected Summary
Unaudited Pro Forma
Financial Data......... S-8
Selected Summary
Financial Data......... S-9
Description of the
Offered Securities..... S-12
Certain United States
Federal Income Tax
Consequences........... S-14
Underwriting............ S-15
Notice to Canadian
Residents.............. S-16
Unaudited Pro Forma
Combined Condensed
Financial Statements... S-18
PROSPECTUS
Available Information... 2
Incorporation of Certain
Documents by Reference. 3
The Company............. 4
Recent Developments..... 4
Use of Proceeds......... 5
Ratio of Earnings to
Combined Fixed Charges
and Preferred Stock
Dividends.............. 5
Description of Debt
Securities............. 5
Description of Preferred
Stock.................. 16
Description of Common
Stock.................. 18
Description of
Securities Warrants.... 23
Plan of Distribution.... 24
Validity of Offered
Securities............. 25
Experts................. 25
</TABLE>
<PAGE>
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus Supplement and the Prospectus include "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. All statements other than statements of historical facts included in
this Prospectus Supplement and the Prospectus that the Company expects or
anticipates will or may occur in the future, including, without limitation,
certain statements under "The Company," "Recent Developments" and located
elsewhere herein regarding the Company's financial position, business strategy
and measures to implement that strategy, including changes to operations,
competitive strengths, goals, expansion and growth of the Company's and its
subsidiaries' business and operations, plans, references to future success and
other such matters are forward-looking statements. These statements are based
on certain assumptions and analyses made by the Company in light of its
experience and its perception of historical trends, current conditions and
expected future developments as well as other factors it believes are
appropriate in the circumstances. However, whether actual results and
developments will conform with the Company's expectations and predictions is
subject to a number of risks and uncertainties, including without limitation:
(1) the significant considerations discussed in this Prospectus Supplement and
the Prospectus, (2) competition from others, (3) the ability of the Company to
successfully integrate TI Defense (as defined) and Hughes Defense (as defined)
and to consolidate activities and operations into Raytheon in a manner that
avoids business disruptions and achieves anticipated cost and revenue
synergies, (4) the ability of the Company to successfully implement its
consolidation plans for Raytheon Engineers & Constructors, (5) the magnitude
and timing of new business awards, (6) declines in the procurement portion of
the U.S. defense budget, (7) changes in general economic and business
conditions, (8) other factors which might be described from time to time in
the Company's filings with the Commission and (9) other factors which are
beyond the control of the Company and its subsidiaries. Consequently, all of
the forward-looking statements made in this Prospectus Supplement and the
Prospectus are qualified by these cautionary statements, and there can be no
assurance that the actual results or developments anticipated by the Company
will be realized or, even if substantially realized, that they will have the
expected consequences to or effects on the Company and its subsidiaries or
their businesses or operations. Additionally, important factors that could
cause actual results to differ materially from the Company's expectations
("cautionary statements") are disclosed in the documents incorporated by
reference herein, including statements under "Risk Factors" in Raytheon
Company's Solicitation Statement/Prospectus dated November 10, 1997 or "Item
1--Business" of Raytheon Company's Annual Report on Form 10-K for the year
ended December 31, 1996. All subsequent forward-looking statements
attributable to the Company or persons acting on its behalf are expressly
qualified in their entirety by the cautionary statements. The Company
expressly disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statement.
S-1
<PAGE>
THE COMPANY
Raytheon Company ("Raytheon" or the "Company") is a global technology
leader, with worldwide 1997 pro forma sales of more than $20 billion. The
Company provides products and services in the areas of defense and commercial
electronics, engineering and construction, and business and special mission
aircraft. Raytheon has operations throughout the United States and serves
customers in more than 80 countries around the world. In the past year
Raytheon has acquired (the "TI Acquisition") the defense systems and
electronics business of Texas Instruments ("TI Defense") and merged with (the
"Hughes Merger") the defense business of Hughes Electronics Corporation
("Hughes Defense").
ELECTRONICS
Defense Electronics. Raytheon's defense electronics businesses are engaged
in the design, manufacture and service of advanced electronic devices,
equipment and systems for both government and commercial customers. In
addition to defense electronics systems, Raytheon has been successful in the
conversion of certain defense electronics technologies to commercial and non-
defense applications such as air traffic control, environmental monitoring and
communications.
Simultaneously with the consummation of the Hughes Merger on December 17,
1997, Raytheon announced the creation of Raytheon Systems Company ("RSC") to
integrate Raytheon's defense electronics businesses. See "Recent
Developments." RSC includes the business units of Raytheon formerly known as
Raytheon Electronic Systems, Raytheon E-Systems and Raytheon TI Systems, along
with Hughes Defense. RSC currently consists of the following five business
units:
. Defense Systems--anti-tactical ballistic missile systems; air defense;
air-to-air, surface-to-air, and air-to-ground missiles; naval and
maritime systems; ship self-defense systems; torpedoes; strike,
interdiction and cruise missiles; and advanced munitions.
. Sensors and Electronic Systems--ground, shipboard and airborne fire
control and surveillance systems; primary and secondary air traffic
control radars; ground- and space-based electro-optic sensors; electronic
warfare; and GPS systems.
. Command, Control and Communication Systems--command, control and
communications systems; air traffic control systems; tactical radios;
satellite communication ground control terminals; wide area surveillance
systems; advanced transportation systems; and simulators and simulation
systems.
. Intelligence, Information and Aircraft Systems--ground-based information
processing systems; large scale information retrieval, processing and
distribution systems; global broadcast systems; airborne surveillance and
intelligence systems integration; aircraft modifications; and head-of-
state aircraft systems.
. Training and Services--training services and integrated training
programs; technical services; and logistics and support. In addition, in
connection with the reorganization of Raytheon's defense electronics
operations, a majority of the operations of Raytheon Service Company,
formerly a unit of Raytheon Engineers & Constructors, has been moved to
RSC's Training and Services business unit. Raytheon Service Company
provides operations, maintenance and technical services for many U.S.
defense systems and agencies.
Raytheon believes that the formation of RSC will allow the Company to reduce
costs significantly over the next few years by eliminating overlapping
activities, focusing research and development and bid and proposal
expenditures, unifying the purchase of materials and services and
rationalizing facilities. Raytheon believes that RSC's organizational
structure will bring together the best practices and technologies from across
Raytheon's businesses. Additionally, Raytheon expects revenue growth through
enhanced systems integration and capabilities and improved technology.
Raytheon believes that RSC will incur significant cash costs as the result of
ongoing consolidation efforts. Although the magnitude of such cash costs
cannot be ascertained at this time, the Company expects that such cash costs
may be $800 million or more. See "Recent Developments" and "Recent Financial
Results."
S-2
<PAGE>
Commercial Electronics. Raytheon's commercial electronics businesses
produce, among other things, marine radars and other marine electronics,
transmit/receive modules for satellite communications projects, and other
electronic components for a wide range of applications.
ENGINEERING AND CONSTRUCTION
Raytheon Engineers & Constructors ("RE&C") is one of the largest engineering
and construction firms in the United States, serving markets throughout the
world. RE&C is engaged in the design, construction and maintenance of
facilities and plants operated by a range of customers, including independent
power producers, utilities, petroleum companies, pulp and paper companies,
industrial concerns and governments. RE&C also retains a portion of the
operations of Raytheon Service Company, the majority of which has been
transferred to RSC. See "Recent Developments."
AIRCRAFT
Raytheon Aircraft offers one of the broadest product lines in the general
aviation market. Raytheon Aircraft manufactures, markets and supports piston-
powered aircraft, jet props and light and medium jets for the world's
commercial, regional airline and military aircraft markets. Raytheon Aircraft
is the prime contractor for the U.S. Air Force/U.S. Navy Joint Primary
Aircraft Training System (JPATS).
RECENT DEVELOPMENTS
On January 23, 1998, RSC announced several planned cost reduction measures.
In addition to closing 20 facilities and partially closing six facilities over
the next two years, RSC plans to reduce employment by approximately 10%--or
8,700 jobs--over the same time period. Also, 2,700 engineers will be
reassigned to help fill technical positions, generally near their current
locations. These steps will result in a planned reduction of facility space
from 42 million square feet to 34 million square feet.
Raytheon management believes that the anticipated benefits of the cost
reduction efforts should be progressively realized over the next few years
beginning later in 1998. The associated costs of the efforts will be incurred
partially in advance of achieving the anticipated benefits. Raytheon's
management believes that the Company's quarterly earnings per share will be
below results of 1997's equivalent periods until sufficient benefits of the
integration are realized, which is not expected before the second half of
1998, principally due to the increased number of shares outstanding, increased
goodwill charges and interest expense incurred in conjunction with the TI
Acquisition and the Hughes Merger.
However, Raytheon may encounter unforeseen difficulties integrating TI
Defense, Hughes Defense and Raytheon or may not realize the full benefits
expected from such integration. The challenges posed by these consolidations
include the integration of numerous geographically separated manufacturing
facilities and research and development centers. The success of this
transition to an integrated entity will be significantly influenced by
Raytheon's ability to integrate different management structures and will
require significant management time and resources. Any material delays,
disruptions or unexpected costs incurred in connection with such integration
could have a material adverse effect on Raytheon's business, operating results
or financial condition.
On January 23, 1998, Raytheon also announced a planned effort to reduce
costs at RE&C to improve its competitive position. Raytheon expects to close
or partially close 16 offices at RE&C in early 1998 and reduce RE&C's
workforce by approximately 1,000 positions. These actions come in response to
RE&C's 1997 profit performance, which declined from 1996. The Company believes
that RE&C's results were adversely affected, in part, by a slowdown in some of
RE&C's served global engineering and construction markets.
On December 17, 1997, the predecessor to the Company completed the Hughes
Merger pursuant to which it merged with and into HE Holdings, Inc., a Delaware
corporation ("HE Holdings"). At the time of the Hughes Merger, the operations
and assets of HE Holdings consisted of Hughes Defense, a major supplier of
advanced
S-3
<PAGE>
defense electronics systems and services, principally in naval systems;
airborne and ground-based radars, ground-, air- and ship-launched missiles;
tactical communications; electro-optical systems; complex information systems
and training systems and services. Immediately following the Hughes Merger,
the surviving corporation changed its name to Raytheon Company. The value of
the transaction was $9.5 billion (subject to post-closing adjustments),
including approximately $4.0 billion in debt, and approximately $5.5 billion
in equity in the form of Class A Common Stock distributed to the common
stockholders of General Motors Corporation, the former parent of Hughes
Defense.
In connection with the Hughes Merger, on May 30, 1997 HE Holdings arranged
revolving credit facilities with a syndicate of banks totaling $5.0 billion,
$3.0 billion of which had an initial maturity of 5 years and $2.0 billion of
which had an initial maturity of 364 days (collectively, the "Hughes Defense
Facilities"). Hughes Defense incurred indebtedness in the amount of
approximately $4.0 billion under the Hughes Defense Facilities immediately
prior to the Hughes Merger. The proceeds of this indebtedness were contributed
to an affiliate of Hughes Electronics Corporation prior to the Hughes Merger
but the obligation remains with the Company.
Raytheon's revolving credit facilities, including the Hughes Defense
Facilities, include, among others, covenants which require (1) repayment and
reduction of the outstanding commitment of such facilities or similar
facilities with 75% of the net cash proceeds from any capital markets
financings and asset sales for a period of two years from the closing date and
(2) the ratio of total debt to total capitalization not to exceed 65% until
July 2, 1999, 60% from July 2, 1999 to January 1, 2002 and 55% thereafter.
Indebtedness under Raytheon's revolving credit facilities, including the
Hughes Defense Facilities, ranks pari passu with other senior unsecured
indebtedness of Raytheon, including the Offered Securities.
On July 11, 1997, the Company consummated the TI Acquisition, subject to
post-closing adjustments. The businesses of TI Defense, a premier supplier of
advanced defense systems, including tactical missiles, precision-guided
weapons, radar, night vision systems and electronic warfare systems, are now
conducted through Raytheon Systems Company.
DIVESTITURES
On February 23, 1998, Raytheon announced that it had entered into an
agreement to sell its Commercial Laundry business to a company organized by
Bain Capital, Inc. and Raytheon Commercial Laundry management. There can be no
assurance, however, that the sale will be consummated.
On January 13, 1998, Raytheon sold the Monolithic Microwave Integrated
Circuit operations of TI Defense to TriQuint Semiconductor, Inc. for
approximately $39 million.
On December 31, 1997, Raytheon completed the sales of Switchcraft, Inc., a
manufacturer of switching and connection equipment, to a company organized by
Cortec Group, Inc. and Switchcraft management for $69 million. Also, on the
same day, the Company completed the sale of Raytheon Semiconductor, Inc., a
manufacturer of silicon semiconductor components, to Fairchild Semiconductor
Corporation for $120 million.
On September 10, 1997, Raytheon sold its home appliance, heating and air
conditioning and commercial cooking businesses to Goodman Manufacturing
Company, L.P. As previously announced in February 1997, the Company is
continuing the strategic review of its electronic controls business, part of
its former appliances segment.
Raytheon is also in the process of selling portions of Hughes Defense's
electro-optics business and portions of TI Defense's focal-plane array
business in accordance with an agreement with the Department of Justice
relating to the Hughes Merger.
S-4
<PAGE>
RECENT FINANCIAL RESULTS
On January 26, 1998, Raytheon announced its financial results for the
quarter and the year ended December 31, 1997. Prior to restructuring and
special charges, fourth quarter earnings were $244.4 million, or $0.98 per
share, on sales of $4.0 billion, representing a 38% increase in earnings and
an 18% increase in sales over the prior year's quarter. Earnings included a
$0.16 per share gain from the sale of Raytheon Semiconductor and Switchcraft.
The Company incurred fourth quarter pre-tax restructuring and special charges
of $495.0 million ($321.7 million after-tax). On an after-tax basis, the
restructuring and special charges included $221.0 million relating to the
electronics segment, $81.2 million relating to the engineering and
construction segment and $19.5 million relating to the aircraft segment. After
giving effect to the fourth quarter restructuring and special charges, fourth
quarter results were a loss of $77.3 million, or $(0.31) per share.
Prior to the fourth quarter restructuring and special charges, annual
earnings were $848.5 million, or $3.55 per share, on sales of $13.7 billion,
representing an 8% increase in earnings and an 11% increase in sales over the
prior year's results (not including a special charge during the 1996 fiscal
year). After giving effect to the fourth quarter restructuring and special
charges, annual earnings were $526.8 million, or $2.20 per share.
Raytheon's 1997 results include only a partial year of financial information
for TI Defense following its acquisition by Raytheon in July and less than two
weeks of financial information for Hughes Defense following the Hughes Merger
in December. On a pro forma basis, Raytheon's 1997 revenues would have been in
excess of $20 billion. This information should be read in conjunction with the
information relating to Raytheon in "Selected Summary Financial Data" included
elsewhere in this Prospectus Supplement. These financial data are not audited
and are not necessarily indicative of the results that may be expected for
future periods.
Hughes Defense's fourth quarter and full year 1997 operating and net income
were below the results of the prior year's fourth quarter and full year due
principally to provisions taken in Hughes Defense's Information Systems
business unit, primarily on certain air traffic control, training contracts
and other contracts and activities.
USE OF PROCEEDS
The net proceeds from the sale of the Offered Securities (the "Offering")
will be used by Raytheon primarily to refinance debt incurred in connection
with the Hughes Merger, including bank and/or commercial paper borrowings.
S-5
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of Raytheon (a) as of
December 31, 1997 and (b) pro forma after giving effect to the Offering and
the application of the proceeds thereof (without deduction for expenses) as
described under "Use of Proceeds." This table should be read in conjunction
with the Unaudited Pro Forma Combined Condensed Financial Statements included
elsewhere in this Prospectus Supplement and the historical audited financial
statements of Raytheon, TI Defense and Hughes Defense, including the notes
thereto, which are incorporated by reference in the accompanying Prospectus.
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
1997 (UNAUDITED)
---------------------
PRO FORMA FOR
ACTUAL THE OFFERING
------- -------------
(IN MILLIONS)
<S> <C> <C>
Notes payable and current portion of long-term
debt............................................. $ 5,657 $ 4,067
Long-term debt
Offered Securities............................... -- 1,600
Other long-term debt............................. 4,406 4,406
------- -------
Total long-term debt.......................... 4,406 6,006
Stockholders' equity.............................. 10,406 10,406
------- -------
Total capitalization........................ $20,469 $20,479
======= =======
</TABLE>
S-6
<PAGE>
RATIO OF NET DEBT TO TOTAL CAPITALIZATION
The following table sets forth the Company's consolidated ratio of net debt
to total capitalization (a) on a pro forma basis as of September 28, 1997
after giving effect to the Hughes Merger as if it had occurred on such date,
but without giving effect to the Offering, and (b) on an historical basis at
September 28, 1997 and at the end of fiscal years 1996, 1995, 1994, 1993 and
1992:
<TABLE>
<CAPTION>
PRO FORMA HISTORICAL
------------- -----------------------------------------------------------------
SEPTEMBER 28, SEPTEMBER 28, DECEMBER 31,
------------- ------------- ------------------------------------------------
1997 1997 1996 1995 1994 1993 1992
------------- ------------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
50.0% 55.7% 43.8% 36.8% 17.9% 14.1% 14.3%
</TABLE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the consolidated ratio of earnings to fixed
charges (a) on a pro forma basis as of September 28, 1997 after giving effect
to the Hughes Merger as if it had occurred on January 1, 1996, but without
giving effect to the Offering, (b) on a pro forma basis as of December 31,
1996 after giving effect to the Hughes Merger as if it had occurred on January
1, 1996, but without giving effect to the Offering, and (c) on an historical
basis at September 28, 1997 and at the end of fiscal years 1996, 1995, 1994,
1993 and 1992:
<TABLE>
<CAPTION>
PRO FORMA HISTORICAL
---------------------------- -----------------------------------------
SEPTEMBER 28, DECEMBER 31, SEPTEMBER 28, DECEMBER 31,
------------- ------------ ------------- ---------------------------
1997 1996 1997 1996 1995 1994 1993 1992
------------- ------------ ------------- ---- ---- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
2.8x 2.7x 4.1x 4.6x 6.0x 12.0x 18.1x 11.9x
</TABLE>
For purposes of computing the ratio of earnings to fixed charges, earnings
consist of net earnings, taxes on income and fixed charges (less capitalized
interest) and fixed charges consist of interest expense, amortization of debt
discount and issuance expense, the portion of rents representative of an
interest factor and capitalized interest.
S-7
<PAGE>
SELECTED SUMMARY UNAUDITED PRO FORMA FINANCIAL DATA
The following tables set forth a summary of the unaudited pro forma
financial data of Raytheon, which data were derived from the Unaudited Pro
Forma Combined Condensed Financial Statements and the notes thereto included
elsewhere in this Prospectus Supplement. The unaudited pro forma operating
data give effect to the TI Acquisition and the Hughes Merger as if each had
occurred on January 1, 1996.
The information below should be read in conjunction with the Unaudited Pro
Forma Combined Condensed Financial Statements and the notes thereto included
elsewhere in this Prospectus Supplement. The unaudited pro forma financial
data are not necessarily indicative of what Raytheon's actual financial
position or results of operations would have been if the transactions had
occurred on the applicable date indicated. Moreover, they are not intended to
be indicative of future results of operations or financial position. See
"Unaudited Pro Forma Combined Condensed Financial Statements."
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRO FORMA COMBINED PRO FORMA COMBINED
RAYTHEON- RAYTHEON-
RAYTHEON TI TI DEFENSE AND
RAYTHEON SYSTEMS HUGHES DEFENSE
-------- ------------------ ------------------
(IN MILLIONS)
<S> <C> <C> <C>
OPERATING DATA:
Net sales(a)................... $12,331 $14,131 $20,514
Operating income............... 1,198 1,377 2,006
Interest expense............... 256 454 730
Net income(a).................. 762 743 917
</TABLE>
FOR THE NINE MONTHS ENDED SEPTEMBER 28, 1997
<TABLE>
<CAPTION>
PRO FORMA COMBINED PRO FORMA
RAYTHEON- RAYTHEON-
RAYTHEON TI TI DEFENSE AND
RAYTHEON SYSTEMS HUGHES DEFENSE
-------- ------------------ -------------- ---
(IN MILLIONS)
<S> <C> <C> <C> <C>
OPERATING DATA:
Net sales(a)................... $9,669 $10,493 $15,650
Operating income............... 1,141 1,213 1,679
Interest expense............... 263 373 580
Net income(a).................. 604 576 706
</TABLE>
- --------
(a) The pro forma net sales and net income data do not include any synergies
which may be realized as a result of the TI Acquisition or the Hughes
Merger.
S-8
<PAGE>
SELECTED SUMMARY FINANCIAL DATA
The following tables present selected financial data for Raytheon, TI
Defense and Hughes Defense. The 1997 data have been derived from the books and
records of each company and are unaudited. The summary financial data for
Raytheon for the nine months ended September 28, 1997 include the financial
results for TI Defense from July 11, 1997. The TI Defense summary financial
data include financial results for the six-month period ending June 29, 1997.
The TI Defense financial results for the period from June 30, 1997 to July 10,
1997 were not material. In the opinion of management, the unaudited
consolidated interim financial data reflect all adjustments (consisting of
only normal recurring items) that are necessary for a fair presentation of the
financial position and results of operations for such periods. The fiscal
year-end financial data have been derived from the audited financial
statements of Raytheon, TI Defense and Hughes Defense incorporated by
reference in the accompanying Prospectus, and should be read in conjunction
with such financial statements and notes thereto.
RAYTHEON
<TABLE>
<CAPTION>
NINE MONTHS FISCAL YEAR ENDED
ENDED DECEMBER 31,
SEPTEMBER 28, -------------------------
1997 1996 1995 1994
------------- ------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C> <C>
OPERATING DATA:
Net sales........................ $ 9,669 $12,331 $11,804 $10,098
Operating income................. 1,141 1,198 1,118 896
Interest expense................. 263 256 197 49
Net income....................... 604 762 793 597
OTHER DATA:
EBITDA (a)....................... $ 1,478 $ 1,607 $ 1,733 $ 1,233
Depreciation and amortization.... 325 369 371 304
Capital expenditures............. 305 406 329 267
NET CASH PROVIDED BY (USED IN):
Operating activities............. $ 294 $ 291 $ 1,175 $ 1,158
Investing activities............. (2,896) (937) (2,323) (343)
Financing activities............. 2,735 575 1,155 (804)
<CAPTION>
AS OF AS OF DECEMBER 31,
SEPTEMBER 28, -------------------------
1997 1996 1995 1994
------------- ------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Net working capital.............. $ 1,209 $ 912 $ 1,585 $ 1,702
Total assets..................... 15,256 11,126 9,841 7,395
Notes payable and current portion
of long-term debt............... 2,175 2,227 1,216 1,033
Long-term debt and capitalized
leases.......................... 4,386 1,501 1,488 25
Stockholders' equity............. 5,015 4,598 4,292 3,928
</TABLE>
- --------
(a) EBITDA represents income before interest, income taxes, depreciation
(including certain amounts allocated to corporate overhead that are
included in general and administrative expenses) and amortization. EBITDA
is not intended to represent cash flow or any other measure of performance
reported in accordance with generally accepted accounting principles. The
Company has included EBITDA as it understands that EBITDA is used by
certain investors as one measure of a company's ability to service debt.
S-9
<PAGE>
TI DEFENSE
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
SIX MONTHS DECEMBER 31,
ENDED JUNE 29, -----------------------
1997 1996 1995 1994
-------------- ------ ------ -------
(IN MILLIONS)
<S> <C> <C> <C> <C>
OPERATING DATA:
Net sales............................. $824 $1,800 $1,739 $1,725
Operating income...................... 87 178 155 157
Interest expense...................... -- -- -- --
Net income............................ 53 109 92 99
OTHER DATA:
EBITDA................................ $130 $ 262 $ 226 $ 241
Depreciation and amortization......... 45 87 77 86
Capital expenditures.................. 16 80 89 56
NET CASH PROVIDED BY (USED IN):
Operating activities.................. $ 90 $ 86 $ 31 $ 249
Investing activities.................. (16) (80) (146) (56)
Financing activities.................. (74) (6) 115 (193)
<CAPTION>
AS OF DECEMBER 31,
AS OF JUNE 29, -----------------------
1997 1996 1995 1994(A)
-------------- ------ ------ -------
(IN MILLIONS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Net working capital................... $183 $ 220 $ 96 --
Total assets.......................... 806 837 737 --
Notes payable and current portion of
long-term debt....................... -- -- -- --
Long-term debt and capitalized leases. -- -- -- --
Net assets............................ 354 384 278 --
</TABLE>
- --------
(a)Not available.
S-10
<PAGE>
HUGHES DEFENSE
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
NINE MONTHS ENDED DECEMBER 31,
SEPTEMBER 30, -----------------------
1997 1996 1995 1994
------------------- ------ ------ -------
(IN MILLIONS)
<S> <C> <C> <C> <C>
OPERATING DATA:
Net sales.................... $5,157 $6,383 $5,922 $5,896
Operating income............. 446 603 587 545
Interest expense............. 72 92 76 65
Net income................... 207 281 319 269
OTHER DATA:
EBITDA....................... $ 648 $ 859 $ 870 $ 833
Depreciation and
amortization................ 192 247 241 266
Capital expenditures......... 96 178 99 174
NET CASH PROVIDED BY (USED IN):
Operating activities......... $ (32) $ 353 $ 333 $ 464
Investing activities......... (220) (168) (560) (83)
Financing activities......... 265 (141) 183 (324)
<CAPTION>
AS OF SEPTEMBER 30, AS OF DECEMBER 31,
------------------- -----------------------
1997 1996 1995 1994(A)
------------------- ------ ------ -------
(IN MILLIONS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Net working capital.......... $1,512 $1,019 $ 920 --
Total assets................. 7,162 7,028 7,026 --
Notes payable and current
portion of long-term debt... 119 94 84 --
Long-term debt and
capitalized leases.......... 32 34 50 --
Parent company's net
investment.................. 5,266 4,823 4,680 --
</TABLE>
- --------
(a) Not available.
S-11
<PAGE>
DESCRIPTION OF THE OFFERED SECURITIES
GENERAL
The Offered Securities will be limited to $1,600,000,000 aggregate principal
amount, consisting of $500,000,000 principal amount of Notes Due 2001,
$450,000,000 principal amount of Notes Due 2005, $300,000,000 principal amount
of Notes Due 2010 and $350,000,000 principal amount of Debentures Due 2018.
The Offered Securities are Senior Debt Securities as described in the
accompanying Prospectus. Each of the Offered Securities will be senior
unsecured obligations of the Company and will rank pari passu with all senior
unsecured debt of the Company and will be senior to all existing and future
subordinated debt of the Company, if any. The Offered Securities will be
issued pursuant to the Senior Indenture (as defined in the accompanying
Prospectus). Interest on the Offered Securities will be payable in United
States dollars at the office or agency of the Company in the Borough of
Manhattan, the City of New York, New York or, at the Company's option, by
check mailed to the address of the registered holder. See "Description of Debt
Securities" in the accompanying Prospectus for additional information
concerning the Offered Securities and the Senior Indenture.
The Notes Due 2001. Each Note Due 2001 will bear interest at 5.95% per
annum, payable semiannually on March 15 and September 15 of each year,
commencing September 15, 1998, to the person in whose name the Note Due 2001
is registered, subject to certain exceptions as provided in the Senior
Indenture (as defined in the accompanying Prospectus), at the close of
business on March 1 or September 1 (each a "Record Date"), as the case may be,
immediately preceding such March 15 or September 15. The Notes Due 2001 will
mature on March 15, 2001. The Notes Due 2001 are not redeemable prior to
maturity and are not subject to any sinking fund provision.
The Notes Due 2005. Each Note Due 2005 will bear interest at 6.30% per
annum, payable semiannually on March 15 and September 15 of each year,
commencing September 15, 1998, to the person in whose name the Note Due 2005
is registered, subject to certain exceptions as provided in the Senior
Indenture, at the close of business on March 1 or September 1 (each a "Record
Date"), as the case may be, immediately preceding such March 15 or September
15. The Notes Due 2005 will mature on March 15, 2005. The Notes Due 2005 are
not redeemable prior to maturity and are not subject to any sinking fund
provision.
The Notes Due 2010. Each Note Due 2010 will bear interest at 6.55% per
annum, payable semiannually on March 15 and September 15 of each year,
commencing September 15, 1998, to the person in whose name the Note Due 2010
is registered, subject to certain exceptions as provided in the Senior
Indenture, at the close of business on March 1 or September 1 (each a "Record
Date"), as the case may be, immediately preceding such March 15 or September
15. The Notes Due 2010 will mature on March 15, 2010 and are not subject to
any sinking fund provision.
The Debentures Due 2018. Each Debenture Due 2018 will bear interest at 6.75%
per annum, payable semiannually on March 15 and September 15 of each year,
commencing September 15, 1998, to the person in whose name the Debenture Due
2018 is registered, subject to certain exceptions as provided in the Senior
Indenture, at the close of business on March 1 or September 1 (each a "Record
Date"), as the case may be, immediately preceding such March 15 or September
15. The Debentures Due 2018 will mature on March 15, 2018 and are not subject
to any sinking fund provision.
OPTIONAL REDEMPTION
The Notes Due 2010 and the Debentures Due 2018 will be redeemable as a whole
at any time or in part from time to time, at the option of the Company, at a
redemption price equal to the greater of (i) 100% of the principal amount of
such Notes or Debentures, as the case may be, and (ii) the sum of the present
values of the remaining scheduled payments of principal and interest thereon
from the redemption date to the applicable maturity date discounted, in each
case, to the redemption date on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Treasury Rate plus, in each case,
12.5 basis points and accrued interest thereon to the date of redemption.
S-12
<PAGE>
"Treasury Rate" means, with respect to any redemption date for the Notes or
Debentures, as the case may be, (i) the yield, under the heading which
represents the average for the immediately preceding week, appearing in the
most recently published statistical release designated "H.15(519)" or any
successor publication which is published weekly by the Board of Governors of
the Federal Reserve System and which establishes yields on actively traded
United States Treasury securities adjusted to constant maturity under the
caption "Treasury Constant Maturities," for the maturity corresponding to the
Comparable Treasury Issue (if no maturity is within three months before or
after the Maturity Date, yields for the two published maturities most closely
corresponding to the Comparable Treasury Issue shall be determined and the
Treasury Rate shall be interpolated or extrapolated from such yields on a
straight line basis, rounding to the nearest month) or (ii) if such release
(or any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semi-annual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date. The Treasury Rate shall be calculated on the third
Business Day preceding the redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable
to the remaining term of the Notes or Debentures, as the case may be, to be
redeemed that would be utilized, at the time of selection and in accordance
with customary financial practice, in pricing new issues of corporate debt
securities of comparable maturity to the remaining term of such Notes or
Debentures, as the case may be. "Independent Investment Banker" means one of
the Reference Treasury Dealers appointed by the Trustee after consultation
with the Company.
"Comparable Treasury Price" means with respect to any redemption date for
the Notes or Debentures, as the case may be, (i) the average of four Reference
Treasury Dealer Quotations for such redemption date, after excluding the
highest and lowest such Reference Treasury Dealer Quotations, or (ii) if the
Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the
average of all such quotations.
"Reference Treasury Dealer" means each of Credit Suisse First Boston
Corporation, Morgan Stanley & Co. Incorporated and two other primary U.S.
Government securities dealers in New York City (each, a "Primary Treasury
Dealer") appointed by the Trustee in consultation with the Company; provided,
however, that if any of the foregoing shall cease to be a Primary Treasury
Dealer, the Company shall substitute therefor another Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third business day preceding such redemption date.
Notice of any redemption will be mailed at least 30 days but no more than 60
days before the redemption date to each holder of Offered Securities to be
redeemed.
Unless the Company defaults in payment of the redemption price, on and after
the redemption date interest will cease to accrue on the Offered Securities or
portions thereof called for redemption.
DEFEASANCE
Under certain circumstances, Raytheon will be deemed to have discharged the
entire indebtedness on all the outstanding Offered Securities by defeasance,
or to be discharged from certain covenants otherwise applicable to the Offered
Securities and described in the accompanying Prospectus under the heading
"Description of Debt Securities--Certain Covenants of the Corporation." See
"Description of Debt Securities--Defeasance and Covenant Defeasance" in the
accompanying Prospectus for a description of the terms of any such defeasance.
Raytheon has made these defeasance provisions applicable to the Offered
Securities.
GLOBAL SECURITIES
The Offered Securities will each initially be represented by Global
Securities (as defined in the accompanying Prospectus) deposited with DTC and
registered in the name of a nominee of DTC, except in certain circumstances.
See "Description of Debt Securities--Global Securities" in the accompanying
Prospectus for a description of the terms of such Global Securities and the
availability of certified Debt Securities.
S-13
<PAGE>
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
NON-U.S. HOLDERS
The following summary describes certain United States federal income tax
consequences under current law that may be relevant to a beneficial owner of
the Offered Securities that is not (i) a citizen or resident of the United
States, (ii) a corporation created or organized under the laws of the United
States or any State thereof or the District of Columbia or (iii) a person
otherwise subject to United States federal income taxation on its worldwide
income (any of the foregoing, a "Non-U.S. Holder"). This summary addresses
only issues concerning Non-U.S. Holders that are initial holders of the
Offered Securities and that will hold the Offered Securities as capital
assets. It does not address the tax considerations applicable to Non-U.S.
Holders if income or gain in respect of the Offered Securities is effectively
connected with the conduct of a trade or business in the United States.
Generally, payments of interest made with respect to the Offered Securities
to a Non-U.S. Holder will not be subject to United States federal income or
withholding tax, provided that (i) the Non-U.S. Holder does not actually or
constructively own 10% or more of the total combined voting power of all
classes of stock of the Company entitled to vote, (ii) the Non-U.S. Holder is
not a controlled foreign corporation for United States tax purposes that is
directly or indirectly related to the Company through stock ownership and
(iii) the Non-U.S. Holder complies with applicable certification requirements.
Any capital gain realized on the sale, exchange, retirement or other
disposition of an Offered Security by a Non-U.S. Holder will not be subject to
United States federal income or withholding taxes unless such Non-U.S. Holder
is an individual who is present in the United States for a period or periods
aggregating 183 days or more in the taxable year of such sale, exchange,
retirement or other disposition and either has a "tax home" (as defined for
United States federal income tax purposes) in the United States or an office
or other fixed place of business in the United States to which the sale or
disposition is attributable.
The Offered Securities will not be includible in the estate of a Non-U.S.
Holder provided the Non-U.S. Holder does not actually or constructively own
10% or more of the total combined voting power of all classes of stock of the
Company entitled to vote.
PURCHASERS OF OFFERED SECURITIES SHOULD CONSULT THEIR OWN TAX ADVISERS WITH
RESPECT TO THE POSSIBLE APPLICABILITY OF UNITED STATES FEDERAL INCOME,
WITHHOLDING AND OTHER TAXES UPON INCOME AND GAIN REALIZED IN RESPECT OF THE
OFFERED SECURITIES.
INFORMATION REPORTING AND BACKUP WITHHOLDING
A holder of the Offered Securities may be subject to information reporting
and backup withholding at a rate of 31% on certain amounts paid to the holder
unless such holder provides proof of an applicable exemption (including a
general exemption for Non-U.S. Holders and for corporations) or correct
taxpayer identification number, and otherwise complies with applicable
requirements of the information reporting and backup withholding rules. Any
amount withheld under the backup withholding rules may be allowed as a refund
or a credit against such holder's United States federal income tax liability,
provided that the required information is furnished to the Internal Revenue
Service.
NEW REGULATIONS
On October 6, 1997, the United States Treasury Department issued new
regulations relating to withholding, backup withholding and information
reporting that, among other things, unify certification procedures and forms
and clarify certain reliance standards. The regulations apply to payments made
after December 31, 1998, subject to certain transitional rules. Prospective
investors are urged to consult their own tax advisors regarding the new
regulations.
S-14
<PAGE>
UNDERWRITING
Under the terms and subject to the conditions in an Underwriting Agreement
dated the date hereof (the "Underwriting Agreement"), the Underwriters named
below (for whom Credit Suisse First Boston Corporation and Morgan Stanley &
Co. Incorporated are acting as joint book runners for the Offered Securities)
have severally agreed to purchase, and the Company has agreed to sell to them,
severally, the respective principal amounts of Offered Securities set forth
opposite their names:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT PRINCIPAL AMOUNT PRINCIPAL AMOUNT PRINCIPAL AMOUNT OF
UNDERWRITER OF NOTES DUE 2001 OF NOTES DUE 2005 OF NOTES DUE 2010 DEBENTURES DUE 2018
----------- ----------------- ----------------- ----------------- -------------------
<S> <C> <C> <C> <C>
Credit Suisse First
Boston Corporation..... $ 97,500,000 $ 87,750,000 $ 58,500,000 $ 68,250,000
Morgan Stanley & Co.
Incorporated........... 97,500,000 87,750,000 58,500,000 68,250,000
Goldman, Sachs & Co. ... 30,000,000 27,000,000 18,000,000 21,000,000
Merrill Lynch, Pierce,
Fenner & Smith
Incorporated... 30,000,000 27,000,000 18,000,000 21,000,000
J.P. Morgan Securities
Inc. .................. 30,000,000 27,000,000 18,000,000 21,000,000
Bear, Stearns & Co.
Inc. .................. 20,000,000 18,000,000 12,000,000 14,000,000
Chase Securities Inc. .. 20,000,000 18,000,000 12,000,000 14,000,000
Lehman Brothers Inc. ... 20,000,000 18,000,000 12,000,000 14,000,000
Salomon Brothers Inc.... 20,000,000 18,000,000 12,000,000 14,000,000
ABN AMRO Incorporated .. 10,000,000 9,000,000 6,000,000 7,000,000
BancAmerica Robertson
Stephens............... 10,000,000 9,000,000 6,000,000 7,000,000
Blaylock & Partners,
L.P.................... 10,000,000 9,000,000 6,000,000 7,000,000
BT Alex Brown
Incorporated........... 10,000,000 9,000,000 6,000,000 7,000,000
CIBC Oppenheimer........ 10,000,000 9,000,000 6,000,000 7,000,000
Citicorp Securities,
Inc. .................. 10,000,000 9,000,000 6,000,000 7,000,000
Commerzbank Capital
Markets Corporation.... 10,000,000 9,000,000 6,000,000 7,000,000
Deutsche Morgan Grenfell
Inc. .................. 10,000,000 9,000,000 6,000,000 7,000,000
First Chicago Capital
Markets, Inc. ......... 10,000,000 9,000,000 6,000,000 7,000,000
Muriel Siebert & Co.,
Inc.................... 10,000,000 9,000,000 6,000,000 7,000,000
SBC Warburg Dillon Read
Inc. .................. 10,000,000 9,000,000 6,000,000 7,000,000
Scotia Capital Markets
(USA) Inc. ............ 10,000,000 9,000,000 6,000,000 7,000,000
UBS Securities LLC...... 10,000,000 9,000,000 6,000,000 7,000,000
Artemis Capital Group,
Inc. .................. 2,500,000 2,250,000 1,500,000 1,750,000
Doley Securities, Inc. . 2,500,000 2,250,000 1,500,000 1,750,000
------------ ------------ ------------ ------------
Total................. $500,000,000 $450,000,000 $300,000,000 $350,000,000
============ ============ ============ ============
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
to pay for and accept delivery of the Offered Securities are subject to the
approval of certain legal matters by their counsel and to certain other
conditions. The Underwriters are obligated to take and pay for all the Offered
Securities if any are taken.
The Underwriters initially propose to offer a portion of the Offered
Securities directly to the public at the public offering price set forth on
the cover page of this Prospectus Supplement and a portion to certain dealers
at a price that represents a concession not in excess of .20% of the principal
amount in the case of the Notes Due 2001, .375% of the principal amount in the
case of the Notes Due 2005, .40% of the principal amount in the case of the
Notes Due 2010 and .50% of the principal amount in the case of the Debentures
Due 2018. Any Underwriter may allow, and such dealers may reallow, a
concession to certain other dealers not in excess of .125% of the principal
amount in the case of the Notes Due 2001, .250% of the principal amount in the
case of the Notes Due 2005, .250% of the principal amount in the case of the
Notes Due 2010 and .250% of the principal amount in the case of the Debentures
Due 2018. After the initial offering of the Offered Securities, the offering
price and other selling terms may from time to time be varied by the
Underwriters.
The Company does not intend to apply for listing of the Offered Securities
on any national securities exchange, but has been advised by the Underwriters
that they presently intend to make a market in the Offered
S-15
<PAGE>
Securities, as permitted by applicable laws and regulations. The Underwriters
are not obligated, however, to make a market in the Offered Securities and any
such market-making may be discontinued at any time at the sole discretion of
the Underwriters. Accordingly, no assurance can be given as to the liquidity
of, or the existence of trading markets for, the Offered Securities.
The Company and the Underwriters have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act of 1933,
as amended.
From time to time, each of the Underwriters and certain of their affiliates
have engaged in transactions with and performed services, including investment
and/or commercial banking services, for Raytheon and certain of its
subsidiaries in the ordinary course of business, and may continue to engage in
such transactions with or perform such services for Raytheon and certain of
its subsidiaries.
The Company will use a portion of the net proceeds from the Offering to
repay indebtedness under the Hughes Defense Facilities, and expects that more
than 10% of the net proceeds will be used to repay indebtedness owed to
affiliates of certain Underwriters under such facilities. See "Recent
Developments" and "Use of Proceeds." Accordingly, the Offering is being made
in compliance with the requirements of Rule 2710(c)(8) of the Conduct Rules of
the National Association of Securities Dealers, Inc.
In order to facilitate the offering of the Offered Securities, the
Underwriters may engage in transactions that stabilize, maintain or otherwise
affect the price of the Offered Securities. Specifically, the Underwriters may
overallot in connection with the offering, creating a short position in the
Offered Securities for their own account. In addition, to cover overallotments
or to stabilize the price of the Offered Securities, the Underwriters may bid
for, and purchase, the Offered Securities in the open market. Finally, the
Underwriters may reclaim selling concessions allowed to an Underwriter or a
dealer for distributing the Offered Securities in the offering, if the
Underwriter repurchases previously distributed Offered Securities in
transactions to cover Underwriter short positions, in stabilization
transactions or otherwise. Any of these activities may stabilize or maintain
the market price of the Offered Securities above independent market levels.
The Underwriters are not required to engage in these activities and may end
any of these activities at any time.
NOTICE TO CANADIAN RESIDENTS
Resale Restrictions. The distribution of the Offered Securities in Canada is
being made only on a private placement basis exempt from the requirement that
Raytheon prepare and file a prospectus with the securities regulatory
authorities in each province where trades of Offered Securities are effected.
Accordingly, any resale of the Offered Securities in Canada must be made in
accordance with applicable securities laws which will vary depending on the
relevant jurisdiction, and which may require resales to be made in accordance
with available statutory exemptions or pursuant to a discretionary exemption
granted by the applicable Canadian securities regulatory authority. Purchasers
who are Canadian residents are advised to seek legal advice prior to any
resale of the Offered Securities.
Representations of Purchasers. Each purchaser of Offered Securities in
Canada who receives a purchase confirmation will be deemed to represent to
Raytheon and the dealer from whom such purchase confirmation is received that
(i) such purchaser is entitled under applicable provincial securities laws to
purchase such Offered Securities without the benefit of a prospectus qualified
under such securities laws; (ii) where required by law, such purchaser is
purchasing as principal and not as agent; and (iii) such purchaser has
reviewed the text above under "Resale Restrictions."
Rights of Action (Ontario Purchasers). The Offered Securities are those of a
foreign issuer and Ontario purchasers will not receive the contractual right
of action prescribed by section 32 of the Regulation under the Securities Act
(Ontario). As a result, Ontario purchasers must rely on other remedies that
may be available, including common law rights of action for damages or
rescission or rights of action under the civil liability provisions of the
U.S. federal securities laws.
S-16
<PAGE>
Enforcement of Legal Rights. All of Raytheon's directors and officers as
well as the experts named herein may be located outside of Canada and, as a
result, it may not be possible for Canadian purchasers to effect service of
process within Canada upon Raytheon or such persons. All or a substantial
portion of the assets of Raytheon and such persons may be located outside of
Canada and, as a result, it may not be possible to satisfy a judgment against
Raytheon or such persons in Canada or to enforce a judgment obtained in
Canadian courts against Raytheon or such persons outside of Canada.
Notice to British Columbia Residents. A purchaser of Offered Securities to
whom the Securities Act (British Columbia) applies is advised that such
purchaser is required to file with the British Columbia Securities Commission
a report within ten days of the sale of any Offered Securities acquired by
such purchaser pursuant to this offering. Such report must be in the form
attached to British Columbia Securities Commission Blanket Order BOR #95/17, a
copy of which may be obtained from Raytheon. Only one such report must be
filed in respect of Offered Securities acquired on the same date and under the
same prospectus exemption.
Taxation and Eligibility For Investment. Canadian purchasers of Offered
Securities should consult their own legal and tax advisors with respect to the
tax consequences of an investment in the Offered Securities in their
particular circumstances and with respect to the eligibility of the Offered
Securities for investment by the purchaser under relevant Canadian
legislation.
S-17
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial statements
have been prepared by Raytheon's management from Raytheon's historical
consolidated financial statements and from the historical financial statements
of TI Defense and Hughes Defense. The unaudited pro forma combined condensed
statement of earnings reflects adjustments as if the TI Acquisition and the
Hughes Merger had occurred on January 1, 1996. The unaudited pro forma
combined condensed balance sheet reflects adjustments as if the Hughes Merger
had occurred on September 28, 1997. The pro forma adjustments described in the
accompanying notes are based upon preliminary estimates and certain
assumptions that Raytheon management believes are reasonable in such
circumstances.
The unaudited pro forma combined condensed financial statements should be
read in conjunction with the historical consolidated financial statements of
Raytheon Company, as predecessor to the Company (including the notes thereto),
and with the historical financial statements of Hughes Defense and TI Defense
(including the related notes thereto), each of which is incorporated by
reference in the accompanying Prospectus.
The unaudited pro forma combined condensed financial statements are not
necessarily indicative of what Raytheon's actual financial position or results
of operations would have been if the TI Acquisition and the Hughes Merger had
occurred on the applicable date indicated. Moreover, they are not intended to
be indicative of future results of operations or financial position. The
unaudited pro forma combined condensed financial statements do not reflect the
cost and revenue synergies associated with such transactions which Raytheon
expects to progressively realize over the next few years, commencing in the
first year of operation.
S-18
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF EARNINGS
FOR THE NINE MONTHS ENDED SEPTEMBER 28, 1997
<TABLE>
<CAPTION>
HISTORICAL
HISTORICAL HISTORICAL PRO FORMA PRO FORMA HUGHES PRO FORMA PRO FORMA
RAYTHEON TI DEFENSE ADJUSTMENTS COMBINED DEFENSE ADJUSTMENTS COMBINED
---------- ---------- ----------- --------- ---------- ----------- ---------
(IN MILLIONS, EXCEPT PER SHARE)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales............... $9,669 $824 $10,493 $5,157 $15,650
------ ---- ----- ------- ------ ---- -------
Cost of sales........... 7,426 638 $ (4)(2a) 8,079 4,272 $(14)(3c) 12,384
(6)(2b) (72)(3d)
35 (2e) 140 (3g)
(10)(2c) (21)(3e)
Amortization of push-
down goodwill.......... 76 (76)(3c) 0
Administration and
selling expenses....... 812 55 867 259 1,126
Research and development
expenses............... 290 44 334 127 461
------ ---- ----- ------- ------ ---- -------
Operating income....... 1,141 87 (15) 1,213 423 43 1,679
------ ---- ----- ------- ------ ---- -------
Interest expense........ 263 263 72 (72)(3i) 263
Interest income......... (24) (24) (24)
Acquisition interest
expense................ 110 (2d) 110 207 (3f) 317
Other (income)/expense.. (12) 2 (10) (10) (20)
------ ---- ----- ------- ------ ---- -------
Income before tax...... 914 85 (125) 874 361 (92) 1,143
------ ---- ----- ------- ------ ---- -------
Federal and foreign
income taxes........... 310 32 (44)(2f) 298 154 (15)(3h) 437
------ ---- ----- ------- ------ ---- -------
Net income............. $ 604 $ 53 $ (81) $ 576 $ 207 $(77) $ 706
====== ==== ===== ======= ====== ==== =======
Earnings per common
share
Outstanding shares..... $ 2.56 $ 2.44 $ 2.08
Fully diluted.......... $ 2.51 $ 2.39 $ 2.05
Average common shares
Outstanding............ 236 236 103 339
Fully diluted.......... 241 241 103 344
</TABLE>
See accompanying notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
S-19
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
HISTORICAL
HISTORICAL HISTORICAL PRO FORMA PRO FORMA HUGHES PRO FORMA PRO FORMA
RAYTHEON TI DEFENSE ADJUSTMENTS COMBINED DEFENSE ADJUSTMENTS COMBINED
---------- ---------- ----------- --------- ---------- ----------- ---------
(IN MILLIONS, EXCEPT PER SHARE)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales............... $12,331 $1,800 $14,131 $6,383 $20,514
Cost of sales........... 9,755 1,415 $ (6)(2a) 11,169 5,216 $ (18)(3c) 16,430
(12)(2b) (95)(3d)
69 (2e) 187 (3g)
(52)(2c) (29)(3e)
Amortization of push-
down goodwill.......... 101 (101)(3c) 0
Administration and
selling expenses 1,021 129 1,150 301 1,451
Research and development
expenses............... 323 78 401 192 593
Special charges......... 34 0 34 0 34
------- ------ ----- ------- ------ ----- -------
Operating income....... 1,198 178 1 1,377 573 56 2,006
------- ------ ----- ------- ------ ----- -------
Interest expense........ 256 256 92 (92)(3i) 256
Interest income......... (102) (102) (102)
Acquisition interest
expense................ 198 (2d) 198 276 (3f) 474
Other (income)/expense.. (40) 3 (37) (9) (46)
------- ------ ----- ------- ------ ----- -------
Income before tax...... 1,084 175 (197) 1,062 490 (128) 1,424
------- ------ ----- ------- ------ ----- -------
Federal and foreign
income taxes........... 322 66 (69)(2f) 319 209 (21)(3h) 507
------- ------ ----- ------- ------ ----- -------
Net income............. $ 762 $ 109 $(128) $ 743 $ 281 $(107) $ 917
======= ====== ===== ======= ====== ===== =======
Earnings per common
share..................
Outstanding shares..... $ 3.21 $ 3.14 $ 2.70
Fully diluted.......... $ 3.16 $ 3.08 $ 2.67
Average common shares
Outstanding............ 237 237 103 340
Fully diluted.......... 241 241 103 344
</TABLE>
See accompanying notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
S-20
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
AS OF SEPTEMBER 28, 1997
<TABLE>
<CAPTION>
HISTORICAL
HISTORICAL HUGHES PRO FORMA PRO FORMA
RAYTHEON DEFENSE ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C>
ASSETS
Current assets
Cash and marketable securities. $ 268 $ 73 $ (73)(3b) $ 268
Accounts receivable............ 954 687 1,641
Contracts in process........... 3,148 1,579 (190)(3b) 4,537
Inventories.................... 1,653 445 2,098
Other.......................... 531 263 794
------- ------ ------ -------
Total current assets......... 6,554 3,047 (263) 9,338
Property, plant and equipment,
net........................... 2,047 1,095 8 (3b) 3,150
Cost in excess of net assets
acquired...................... 5,954 2,892 (2,892)(3b) 13,464
7,510 (3b)
Pension asset.................. 1,075 (3b) 1,075
Other assets................... 701 128 203 (3b) 1,032
------- ------ ------ -------
Total assets................. $15,256 $7,162 $5,641 $28,059
======= ====== ====== =======
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Notes payable and current
portion of long-term debt..... $ 2,175 $ 119 $1,914 (3a) $ 4,208
Advance payments............... 389 310 699
Accounts payable............... 1,265 327 1,592
Other.......................... 1,516 780 543 (3b) 2,839
------- ------ ------ -------
Total current liabilities.... 5,345 1,536 2,457 9,338
Long-term debt and capitalized
leases.......................... 4,386 32 2,130 (3a) 6,548
Other............................ 510 328 859 (3b) 1,697
Stockholders' equity:
Common stock at par............ 236 103 (3a) 339
Additional paid-in capital..... 313 5,358 (3a) 5,671
Retained earnings................ 4,466 5,266 (5,266)(3b) 4,466
------- ------ ------ -------
Total stockholders' equity... 5,015 5,266 195 10,476
------- ------ ------ -------
Total liabilities and
stockholders' equity........ $15,256 $7,162 $5,641 $28,059
======= ====== ====== =======
</TABLE>
See accompanying notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
S-21
<PAGE>
NOTES TO UNAUDITED PRO FORMA
COMBINED CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited pro forma combined condensed statements of
earnings present the historical results of operations of Raytheon, TI Defense
and Hughes Defense for the year ended December 31, 1996 and for the nine
months ended September 28, 1997, with pro forma adjustments as if the TI
Acquisition and the Hughes Merger had taken place on January 1, 1996. The
historical results of operations of Raytheon for the nine months ended
September 28, 1997 include the financial results for TI Defense from July 11,
1997. The historical results of operations of TI Defense include financial
results for the six-month period ending June 29, 1997. The TI Defense
financial results for the period from June 30, 1997 to July 10, 1997 were not
material. The unaudited pro forma combined condensed balance sheet presents
the historical balance sheets of Raytheon and Hughes Defense as of September
28, 1997, with pro forma adjustments as if the Hughes Merger had been
consummated as of September 28, 1997, in a transaction accounted for as a
purchase for financial accounting purposes in accordance with generally
accepted accounting principles.
Certain reclassifications have been made to the historical financial
statements of Raytheon, TI Defense and Hughes Defense to conform to the
unaudited pro forma combined condensed financial statement presentation on a
consistent basis.
2. PRO FORMA ADJUSTMENTS--TI DEFENSE
The following adjustments give pro forma effect to the TI Acquisition (in
millions):
<TABLE>
<C> <S>
(a) Adjustment to eliminate the amortization of intangible assets of TI
Defense which would not have been incurred if the TI Acquisition had
occurred on January 1, 1996.
(b) Adjustment to reflect the effect on 1996 and 1997 results relating to
a net reduction of accumulated contract costs as an allowance for
Raytheon's normal profit on its efforts to complete such contracts,
and other contract valuation adjustments.
(c) Elimination of $32 of non-recurring employee-related costs and $20 of
non-recurring corporate allocations from the parent of TI Defense as
a result of the TI Acquisition for the year ended December 31, 1996
and $10 of non-recurring corporate allocations for the six months
ending June 29, 1997.
(d) Adjustments which represent additional estimated interest expense
resulting from the use of borrowings to finance the TI Acquisition
and incremental interest on Raytheon's pre-TI Acquisition variable
rate borrowings to reflect the change in credit rating as a result of
the TI Acquisition.
(e) The amortization of excess of costs over acquired net assets over an
estimated life of 40 years. Such amortization expense is subject to
possible adjustment resulting from the completion of the valuation
analyses. Raytheon expects that any subsequent adjustment would not
materially affect the combined pro forma results.
(f) The estimated tax effect on the applicable pro forma adjustments.
</TABLE>
S-22
<PAGE>
NOTES TO UNAUDITED PRO FORMA
COMBINED CONDENSED FINANCIAL STATEMENTS--(CONTINUED)
3. PRO FORMA ADJUSTMENTS--HUGHES DEFENSE
The following adjustments give pro forma effect to the Hughes Merger (in
millions):
<TABLE>
<C> <S> <C>
(a) To record the exchange consideration at closing:
Purchase price ($9,500 less acquired debt of $120)......... $9,380
======
(Financing is based on the average market value of Raytheon
Common Stock prior to the closing date of the Hughes
Merger:
Equity--102,634 thousand shares at $53.21 per share totals
$5,461.
Debt--$4,039 less $120 of debt assumed plus acquisition
costs of $125 totals $4,044 to be financed with a
combination of variable rate short-term borrowings of
$1,914 and fixed rate medium- and long-term borrowings of
$2,130 at an average interest rate of 6.37%.)
(b) To adjust the assets and liabilities to their estimated
fair values:
Net assets of Hughes Defense at September 28, 1997......... 5,266
Additional assets to be recorded in the Hughes Merger...... 45
Additional liabilities to be recorded in the Hughes Merger. (94)
Cash not included in the Hughes Merger..................... (73)
Contracts in process valuation adjustments................. (190)
Accrual for future lease cost in excess of fair market
value...................................................... (264)
Provision for the estimated exit costs of integrating
acquired operations........................................ (495)
To include pension assets and reflect fair market value
less the projected benefit obligation..................... 892
To include the liability for post-retirement benefits other
than pensions.............................................. (366)
Deferred tax benefits...................................... 166
Costs in excess of net assets of Hughes Defense............ 7,510
Acquisition costs.......................................... (125)
Elimination of Hughes Defense goodwill..................... (2,892)
------
$9,380
======
</TABLE>
<TABLE>
<C> <S>
(c) Adjustment to eliminate the amortization of intangible assets of
Hughes Defense which would not have been incurred if the Hughes
Merger had occurred on January 1, 1996.
(d) Adjustment to reflect the effect on 1996 and 1997 results relating to
a net reduction of accumulated contract costs as an allowance for
Raytheon's normal profit on its efforts to complete such contracts.
(e) Elimination of $29 of non-recurring corporate allocation from the
parent of Hughes Defense as a result of the Hughes Merger for the
year ended December 31, 1996 and $21 for the nine months ended
September 28, 1997.
(f) Adjustments which represent additional estimated interest expense
resulting from the use of borrowings to finance the Hughes Merger and
incremental interest on Raytheon's pre-Hughes Merger variable rate
borrowings to reflect the change in credit rating as a result of the
Hughes Merger.
</TABLE>
<TABLE>
<C> <S>
(g) The amortization of excess of costs over acquired net assets over an
estimated life of 40 years. Such amortization expense is subject to
possible adjustment resulting from the completion of the valuation
analyses. Raytheon expects that any subsequent adjustment would not
materially affect the combined pro forma results.
</TABLE>
S-23
<PAGE>
NOTES TO UNAUDITED PRO FORMA
COMBINED CONDENSED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<C> <S>
(h) The estimated tax effect on the applicable pro forma adjustments.
(i) Elimination of Hughes Defense interest expense.
</TABLE>
S-24
<PAGE>
PROSPECTUS
RAYTHEON COMPANY
DEBT SECURITIES
PREFERRED STOCK
CLASS B COMMON STOCK
WARRANTS
---------------
Raytheon Company (the "Company" or "Raytheon") may offer from time to time,
in one or more series, (i) unsecured senior debt securities (the "Senior Debt
Securities"), (ii) unsecured subordinated debt securities (the "Subordinated
Debt Securities" and, together with the Senior Debt Securities, the "Debt
Securities"), (iii) warrants to purchase Debt Securities (the "Debt
Warrants"), (iv) shares of serial preferred stock, $0.01 par value per share,
in one or more series ("Preferred Stock"), (v) warrants to purchase shares of
Preferred Stock (the "Preferred Stock Warrants"), (vi) shares of Class B
common stock, $0.01 par value per share ("Class B Common Stock"), or (vii)
warrants to purchase shares of Class B Common Stock (the "Class B Warrants"),
in amounts, at prices and on terms to be determined by market conditions at
the time of offering. The Debt Warrants, Preferred Stock Warrants and Class B
Warrants are referred to herein collectively as the "Securities Warrants." The
Debt Securities, Preferred Stock, Class B Common Stock and Securities Warrants
are referred to herein collectively as the "Offered Securities."
The specific terms of the Offered Securities with respect to which this
Prospectus is being delivered will be set forth in a supplement to this
Prospectus (a "Prospectus Supplement"), together with the terms of the
offering and sale of the Offered Securities, the initial offering price and
the net proceeds to the Company from the sale thereof. The Prospectus
Supplement will include, with regard to the particular Offered Securities, the
following information: (i) in the case of Debt Securities, the specific
designation, aggregate principal amount, ranking, authorized denomination,
maturity, rate (which may be fixed or variable) or method of calculation of
interest and dates for payment thereof, any terms for optional or mandatory
redemption or payment of additional amounts or any sinking fund provisions,
any index or formula for determining the amount of any principal, premium, or
interest fund provisions, the currency or currency unit in which any
principal, premium, or interest is payable, whether the securities are
issuable in registered form or in the form of global securities and any
provisions for the conversion or exchange of such Debt Securities; (ii) in the
case of Preferred Stock, the designation, number of shares, liquidation
preference per share, initial public offering price, dividend rate (or method
of calculation thereof), dates on which dividends shall be payable and dates
from which dividends shall accrue, any redemption or sinking fund provisions,
any conversion or exchange provisions and other rights, preferences and
privileges; (iii) in the case of Class B Common Stock, the number of shares;
(iv) in the case of Securities Warrants, the duration, exercise price and
detachability; and (v) in the case of all Offered Securities, whether such
Offered Securities will be offered separately or as a unit with other Offered
Securities and the public offering price. The Prospectus Supplement also will
contain information, where applicable, about material United States federal
income tax considerations relating to, and any listing on a securities
exchange of, the Offered Securities covered by such Prospectus Supplement.
The Debt Securities of any series may be issued with Securities Warrants.
The Debt Securities may be Senior Debt Securities or Subordinated Debt
Securities. The Senior Debt Securities, when issued, will rank on a parity
with all the unsecured and unsubordinated indebtedness of the Company, and the
Subordinated Debt Securities, when issued, will be subordinated in right of
payment to all obligations of the Company to its other creditors, except
obligations ranking on a parity with or junior to the Subordinated Debt
Securities. See "Description of Debt Securities--Subordination of Subordinated
Debt Securities."
The Company's Class B Common Stock is listed on the New York Stock Exchange
("NYSE"), the Chicago Stock Exchange ("CSE") and the Pacific Exchange ("PE").
Any Class B Common Stock offered hereby will be listed, subject to notice of
issuance, on such exchanges.
The Offered Securities may be sold directly by the Company, through agents
designated from time to time or to or through underwriters or dealers. See
"Plan of Distribution." If any agents of the Company, underwriters or dealers
are involved in the sale of any Offered Securities in respect of which this
Prospectus is being delivered, the names of such agents, underwriters or
dealers and any applicable commissions or discounts and the net proceeds to
the Company will be set forth in a Prospectus Supplement.
The Offered Securities may be issued in one or more series or issuances and
will be limited to $3.0 billion in aggregate public offering price (or its
equivalent, based on the applicable exchange rate, to the extent Debt
Securities are denominated in for one or more foreign currencies or currency
units). The Offered Securities may be sold for U.S. dollars, or any foreign
currency or currencies or currency units, and the principal of, premium, if
any, and any interest on, the Debt Securities may be payable in U.S. dollars,
or any foreign currency or currencies or currency units.
The Offered Securities may be offered separately or as units with other
Offered Securities, in separate series in amounts, at prices and on terms to
be determined at or prior to the time of sale. The sale of other securities
under the Registration Statement of which this Prospectus forms a part or
under a Registration Statement to which this Prospectus relates will reduce
the amount of Offered Securities which may be sold hereunder.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
---------------
The date of this Prospectus is February 13, 1998.
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THE OFFERING OF THE OFFERED SECURITIES MAY
ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE
OF THE OFFERED SECURITIES OR ANY SECURITIES THE PRICES OF WHICH MAY BE USED TO
DETERMINE PAYMENTS ON THE OFFERED SECURITIES. SPECIFICALLY, THE UNDERWRITERS
OR AGENTS SPECIFIED IN THE RELEVANT PROSPECTUS SUPPLEMENT OR PRICING
SUPPLEMENT MAY OVERALLOT IN CONNECTION WITH THE OFFERING, AND MAY BID FOR AND
PURCHASE THE OFFERED SECURITIES OR ANY SECURITIES THE PRICES OF WHICH MAY BE
USED TO DETERMINE PAYMENTS ON THE OFFERED SECURITIES IN THE OPEN MARKET. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "PLAN OF DISTRIBUTION" IN THIS PROSPECTUS
AND "PLAN OF DISTRIBUTION" OR "UNDERWRITING" IN THE RELEVANT PROSPECTUS
SUPPLEMENT.
NO DEALER, SALESMAN, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR THE ACCOMPANYING PROSPECTUS
SUPPLEMENT, AND ANY SUCH OTHER INFORMATION, OR REPRESENTATIONS, IF GIVEN OR
MADE, MUST NOT BE RELIED UPON AS HAVING BEEN SO AUTHORIZED. THE DELIVERY OF
THIS PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT OR ANY SALE MADE
HEREUNDER OR THEREUNDER AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION
INCLUDED OR INCORPORATED BY REFERENCE HEREIN OR THEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO ITS DATE. NEITHER THIS PROSPECTUS NOR THE ACCOMPANYING
PROSPECTUS SUPPLEMENT CONSTITUTES AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY OR THEREBY IN ANY
JURISDICTION WHERE, AND TO ANY PERSON WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION.
----------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations promulgated thereunder, and in accordance therewith files reports,
proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
concerning the Company may be inspected and copies may be obtained (at
prescribed rates) at the Commission's Public Reference Section, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, at the worldwide web site
(http://www.sec.gov) maintained by the Commission and at the Commission's
Regional Offices located at Seven World Trade Center, 13th Floor, New York,
New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. The Company's Class B Common Stock and Class A Common
Stock (as defined below) are listed on the NYSE, the CSE and the PE, where
reports, proxy statements and other information concerning the Company can
also be inspected. The offices of the NYSE are located at 20 Broad Street, New
York, New York 10005.
The Company has filed with the Commission a registration statement on Form
S-3 (together with all amendments and exhibits, the "Registration Statement")
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Offered Securities. As permitted by the rules and regulations
of the Commission, this Prospectus omits certain information contained in the
Registration Statement. For further information with respect to the Company
and the Offered Securities, reference is hereby made to such Registration
Statement, including the exhibits filed as a part thereof. Statements
contained in this Prospectus concerning the provisions of certain documents
filed with, or incorporated by reference in, the Registration Statement are
not necessarily complete, each such statement being qualified in all respects
by such reference. Copies of all or any part of the Registration Statement,
including the documents incorporated by reference therein or exhibits thereto,
may be obtained upon payment of the prescribed rates at the offices of the
Commission set forth above.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company (File No.
1-13699) pursuant to the Exchange Act are incorporated herein by reference:
(a) The Company's Current Reports on Form 8-K dated December 17, 1997 and
January 28, 1998; and
(b) The Company's Registration Statement on Form 8-A dated December 11,
1997 and Form 8-A/A dated December 17, 1997.
The following documents filed with the Commission pursuant to the Exchange
Act by Former Raytheon Company (as defined below, File No. 1-2833) are also
hereby incorporated by reference:
(a) Former Raytheon Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996;
(b) Former Raytheon Company's Quarterly Reports on Form 10-Q for the
periods ended March 30, 1997, June 29, 1997 and September 28, 1997;
(c) Former Raytheon Company's Current Reports on Form 8-K dated January
4, 1997, January 16, 1997, March 14, 1997, July 11, 1997, September 10,
1997, October 7, 1997 (as amended on October 28, 1997) and December 17,
1997; and
(d) Former Raytheon Company's Solicitation Statement/Prospectus on
Schedule 14A dated November 10, 1997.
All documents filed by the Company pursuant to section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Offered Securities shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing such documents. Any statement contained herein or in a
document, all or a portion of which is incorporated or deemed to be
incorporated by reference herein, shall be deemed to be modified or superseded
for purposes of this Prospectus or any Prospectus Supplement to the extent
that a statement contained herein or in any other subsequently filed document
or portion thereof which also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus or any Prospectus Supplement.
The Company will provide without charge to each person, including any
beneficial owner, to whom a Prospectus is delivered, on written or oral
request of such person, a copy of any or all of the documents incorporated by
reference herein (other than exhibits to such documents unless such exhibits
are specifically incorporated by reference into such documents). Such written
requests should be addressed to: Secretary, Raytheon Company, 141 Spring
Street, Lexington, Massachusetts 02173. Telephone requests may be directed to
the Secretary at (781) 862-6600.
Statements made in this Prospectus, or in any Prospectus Supplement relating
to securities registered pursuant to the Registration Statement of which this
Prospectus is a part, that are not statements of historical fact are forward-
looking statements within the meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act. Forward-looking statements are subject to a
number of risks and uncertainties. Important factors that could cause actual
results to differ materially from the Company's expectations ("cautionary
statements") are disclosed in this Prospectus and the documents incorporated
by reference herein, including, without limitation, statements under "Item 1--
Business" of Former Raytheon Company's Annual Report on Form 10-K and under
"Risk Factors" in Former Raytheon Company's Solicitation Statement/Prospectus
dated November 10, 1997.
3
<PAGE>
THE COMPANY
Raytheon is an international, high technology company that operates in the
following principal businesses: defense and commercial electronics,
engineering and construction, and aircraft. Historically, the Company's
principal businesses have included the design, manufacture and servicing of
advanced electronic devices, equipment and systems for government and
commercial use. Raytheon is a major defense contractor in the United States
and internationally.
Raytheon's defense electronics business is conducted through Raytheon
Systems Company, which combines the businesses formerly conducted by Raytheon
Electronics Systems, Raytheon TI Systems and Raytheon E-Systems, as well as
the recently merged defense business of Hughes Electronics Corporation.
Raytheon Systems Company consists of five business segments: Defense Systems;
Sensors and Electronic Systems; Command, Control and Communications (C/3/)
Systems; Intelligence, Information and Aircraft Integration Systems; and
Training and Services. Defense Systems focuses on anti-tactical ballistic
missile systems; air defense; air-to-air, surface-to-air, and air-to-ground
missiles; naval and maritime systems; ship self-defense systems; torpedoes;
strike, interdiction and cruise missiles; and advanced munitions. Sensors and
Electronic Systems focuses on ground, shipboard and airborne fire control and
surveillance systems; primary and secondary air traffic control radars;
ground, space-based, night vision, and reconnaissance sensors; and electronics
warfare and GPS systems. C/3/ Systems focuses on command, control and
communications systems; air traffic control systems; tactical radios;
satellite communication ground terminals; wide area surveillance systems;
advanced transportation systems; and simulators and simulation systems.
Intelligence, Information and Aircraft Integration Systems focuses on
information processing systems; large scale information retrieval, processing
and distribution systems; global broadcast systems; airborne surveillance and
intelligence systems integration; aircraft modification; and head-of-state
aircraft systems. Training and Services focuses on training services and
integrated training programs; technical services; and logistics and lifetime
support.
Raytheon's commercial electronics business consists of Raytheon Marine
Company and Raytheon Microelectronics. These entities produce, among other
things, marine radars and other marine electronics, transmit/receive modules
for satellite communications projects and other electronic components for a
wide range of applications. Raytheon Engineers & Constructors is one of the
largest engineering, construction, and operations and maintenance
organizations in the world. Raytheon Aircraft is a world leader in general
aviation, offering one of the most extensive product lines in the industry.
The address of the principal executive office of the Company is 141 Spring
Street, Lexington, Massachusetts 02173. The telephone number of the Company is
(781) 862-6600.
RECENT DEVELOPMENTS
On July 11, 1997, Raytheon Company, predecessor to the Company by merger
("Former Raytheon Company") consummated the acquisition of the defense systems
and electronics business of Texas Instruments Incorporated ("TI Defense"). TI
Defense, whose businesses are now conducted through Raytheon Systems Company,
is a premier supplier of advanced defense systems, including tactical
missiles, precision-guided weapons, radar, night vision systems and electronic
warfare systems.
On December 17, 1997, Former Raytheon Company completed its merger (the
"Merger") with and into HE Holdings, Inc. ("Hughes Defense"), a Delaware
corporation which consisted of the defense business of Hughes Electronics
Corporation. Immediately following the Merger, the surviving corporation
changed its name to Raytheon Company. The value of the transaction was $9.50
billion, including $4.04 billion in debt which was contributed by Hughes
Defense to certain affiliates of Hughes Electronics Corporation prior to the
Merger, and $5.46 billion in equity in the form of Class A Common Stock
distributed to stockholders of General Motors Corporation ("GM"), the former
parent of Hughes Defense. Hughes Defense, whose businesses are now conducted
through Raytheon Systems Company, is a leading supplier of defense electronics
products and services to the U.S. government, including airborne and ground-
based radar, electro-optical systems, missile and naval systems, and command
and control systems.
4
<PAGE>
USE OF PROCEEDS
Unless otherwise provided in the applicable Prospectus Supplement, the net
proceeds from the sale of the Offered Securities will be used by the Company
(i) to refinance commercial paper borrowings and/or bank borrowings, with
various maturities and bearing interest at various rates, that were incurred
in connection with the Merger, (ii) for other capital expenditures and working
capital requirements and (iii) for other general corporate purposes.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth the consolidated ratio of earnings to
combined fixed charges and preferred stock dividends (a) for Former Raytheon
Company and Hughes Defense on a pro forma basis as of September 28, 1997 after
giving effect to the Merger as if it had occurred on January 1, 1996, (b) for
Former Raytheon Company and Hughes Defense on a pro forma basis as of December
31, 1996 after giving effect to the Merger as if it had occurred on January 1,
1996, and (c) on an historical basis at September 28, 1997 and at the end of
fiscal years 1996, 1995, 1994, 1993 and 1992:
<TABLE>
<CAPTION>
PRO FORMA HISTORICAL
---------------------------------------------------------------------
DECEMBER 31,
SEPTEMBER 28, DECEMBER 31, SEPTEMBER 28, ---------------------------
1997 1996 1997 1996 1995 1994 1993 1992
------------- ------------ ------------- ---- ---- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
2.8x 2.7x 4.1x 4.6x 6.0x 12.0x 18.1x 11.9x
</TABLE>
For purposes of computing the ratio of earnings to fixed charges, earnings
consist of net earnings, taxes on income and fixed charges (less capitalized
interest) and fixed charges consist of interest expense, amortization of debt
discount and issuance expense, the portion of rents representative of an
interest factor and capitalized interest.
DESCRIPTION OF DEBT SECURITIES
The Senior Debt Securities are to be issued under an Indenture, dated as of
July 3, 1995 (the "Senior Indenture"), between the Company and The Bank of New
York, as trustee. The Subordinated Debt Securities are to be issued under a
second Indenture, dated as of July 3, 1995 (the "Subordinated Indenture"),
also between the Company and The Bank of New York, as trustee. A copy of the
Senior Indenture has been filed with the Commission as an exhibit to the
Registration Statement and is incorporated herein by reference. In the event
the Company decides to issue Subordinated Debt Securities, the Company will
file the Subordinated Indenture either by amendment or as an exhibit to an
Exchange Act Report and such indenture shall be incorporated herein by
reference. The Senior Indenture and the Subordinated Indenture are sometimes
referred to collectively as the "Indentures." The Bank of New York is
hereinafter referred to as the "Senior Debt Trustee" when referring to it in
its capacity as trustee under the Senior Indenture, as the "Subordinated Debt
Trustee" when referring to it in its capacity as trustee under the
Subordinated Indenture, and as the "Debt Trustee" when referring to it in its
capacity as trustee under both of the Indentures. The following summaries of
certain provisions of the Senior Debt Securities, the Subordinated Debt
Securities and the Indentures do not purport to be complete and are subject to
and are qualified in their entirety by reference to all the provisions of the
Indenture applicable to a particular series of Debt Securities (the
"Applicable Indenture"), including the definitions therein of certain terms.
Wherever particular Sections, Articles or defined terms of the Applicable
Indenture are referred to, it is intended that such Sections, Articles or
defined terms shall be incorporated herein by reference. Article and Section
references used herein are references to the Applicable Indenture. Capitalized
terms not otherwise defined herein shall have the meaning given in the
Applicable Indenture.
The following sets forth certain general terms and provisions of the Debt
Securities which may be offered hereby. The particular terms of the Debt
Securities offered by any Prospectus Supplement (the "Offered Debt
Securities") will be described in the Prospectus Supplement relating to such
Offered Debt Securities (the "Applicable Prospectus Supplement").
5
<PAGE>
GENERAL
The Indentures do not limit the amount of Debt Securities that may be issued
thereunder and provide that Debt Securities may be issued thereunder from time
to time in one or more series. The Debt Securities will be unsecured
obligations of the Company.
Unless otherwise indicated in the Applicable Prospectus Supplement,
principal of, premium, if any, and interest on the Debt Securities will be
payable, and the transfer of Debt Securities will be registrable, at the
office or agency of the Company in each Place of Payment maintained by the
Company and at any other office or agency maintained by the Company for such
purpose, except that, at the option of the Company, interest may be paid by
mailing a check to the address of the Person entitled thereto as it appears on
the register for the Debt Securities (Sections 301, 305, 307 and 1002). The
Debt Securities will be issued only in fully registered form without coupons
and, unless otherwise indicated in the Applicable Prospectus Supplement, in
denominations of $1,000 or integral multiples thereof (Section 302). No
service charge will be made for any registration of transfer or exchange of
the Debt Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge imposed in connection therewith
(Section 305).
The Applicable Prospectus Supplement will describe the following terms of
the Offered Debt Securities: (i) the title of the Offered Debt Securities;
(ii) whether the Offered Debt Securities are Senior Debt Securities or
Subordinated Debt Securities; (iii) any limit on the aggregate principal
amount of the Offered Debt Securities; (iv) the Person to whom any interest on
the Offered Debt Securities is payable if other than the Person in whose name
any such Offered Debt Securities are registered; (v) the date or dates on
which the principal of the Offered Debt Securities will mature; (vi) the rate
or rates per annum (which may be fixed or variable) at which the Offered Debt
Securities will bear interest (or the manner of calculation thereof), if any,
and the date or dates from which such interest, if any, will accrue; (vii) the
dates on which such interest, if any, on the Offered Debt Securities will be
payable and the Regular Record Dates for such Interest Payment Dates; (viii)
the place or places where the principal of, premium, if any, and any interest
on the Offered Debt Securities shall be payable; (ix) any mandatory or
optional sinking funds or analogous provisions; (x) the date, if any, after
which, and the price or prices at which, the Offered Debt Securities may,
pursuant to any optional or mandatory redemption provisions, be redeemed and
the other detailed terms and provisions of any such optional or mandatory
redemption provision; (xi) the obligation of the Company, if any, to redeem or
repurchase the Offered Debt Securities at the option of the Holder; (xii) if
other than denominations of $1,000 and any integral multiple thereof, the
denominations in which the Offered Debt Securities shall be issuable; (xiii)
if other than the principal amount thereof, the portion of the principal
amount of the Offered Debt Securities that will be payable upon the
declaration of acceleration of the Maturity thereof; (xiv) the currency of
payment of principal of, premium, if any, and any interest on the Offered Debt
Securities and, if other than United States currency, the manner of
determining the equivalent thereof in United States currency for any purpose;
(xv) any index used to determine the amount of payment of principal of, and
any premium and interest on, the Offered Debt Securities; (xvi) if the Offered
Debt Securities will be issuable only in the form of a Global Security, the
Depositary or its nominee with respect to the Offered Debt Securities and the
circumstances under which the Global Security may be registered for transfer
or exchange in the name of a Person other than the Depositary or its nominee;
(xvii) the applicability, if any, of the provisions described under
"Defeasance and Covenant Defeasance"; (xviii) whether the Debt Securities are
convertible into any other securities and the terms and conditions of such
convertibility; (xix) any additional Event of Default, and in the case of any
Offered Debt Securities that are Subordinated Debt Securities, any additional
Event of Default that would result in the acceleration of the maturity
thereof; and (xx) any other terms of the Offered Debt Securities (Section
301).
Both Senior Debt Securities and Subordinated Debt Securities may be issued
as Original Issue Discount Securities to be offered and sold at a substantial
discount below their stated principal amount. "Original Issue Discount
Security" means any Debt Security which provides for an amount less than the
principal amount thereof to be due and payable upon the declaration of
acceleration of the Maturity thereof upon the occurrence of an Event of
Default and the continuation thereof (Section 101).
The Applicable Prospectus Supplement will also describe any material United
States federal income tax consequences or other special considerations
applicable to the series of Debt Securities to which such Prospectus
6
<PAGE>
Supplement relates, including those applicable to (i) Debt Securities with
respect to which payments of principal, premium, if any, or interest are
determined with reference to an index or formula (including changes in prices
of particular securities, currencies, or commodities), (ii) Debt Securities
with respect to which principal, premium, if any, or interest is payable in a
foreign or composite currency, (iii) Original Issue Discount Securities, and
(iv) variable rate Debt Securities that are exchangeable for fixed rate Debt
Securities.
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
Unless otherwise indicated in the Applicable Prospectus Supplement, the
following provisions will apply to the Subordinated Debt Securities.
The payment of the principal of, premium, if any, and interest on the
Subordinated Debt Securities will be subordinated in right of payment to the
prior payment in full of all Senior Indebtedness (as defined below) (Section
1301). Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the
benefit of creditors, marshaling of assets or any bankruptcy, insolvency or
similar proceedings of the Company, the holders of all Senior Indebtedness
will be entitled to receive payment in full of all amounts due or to become
due thereon before the Holders of the Subordinated Debt Securities will be
entitled to receive any payment in respect of the principal of, premium, if
any, or interest on the Subordinated Debt Securities (Section 1302). In the
event of the acceleration of the Maturity of any Subordinated Debt Securities
of any series, the holders of all Senior Indebtedness will be entitled to
receive payment in full of all amounts due or to become due thereon before the
Holders of the Subordinated Debt Securities will be entitled to receive any
payment of the principal of, premium, if any, or interest on the Subordinated
Debt Securities of such series or on account of the purchase or other
acquisition of Subordinated Debt Securities of such series (Section 1303).
Accordingly, in case of such an acceleration, all Senior Indebtedness would
have to be repaid before any payment could be made in respect of the
Subordinated Debt Securities. No payments on account of principal, premium, if
any, or interest in respect of the Subordinated Debt Securities or on account
of the purchase or other acquisition of Subordinated Debt Securities may be
made if there shall have occurred and be continuing a default in any payment
with respect to any Senior Indebtedness, or an Event of Default with respect
to any Senior Indebtedness permitting the holders thereof to accelerate the
maturity thereof, or if any judicial proceeding shall be pending with respect
to any such default (Section 1304).
By reason of such subordination, in the event of the insolvency of the
Company, creditors of the Company who are not holders of Senior Indebtedness
or the Subordinated Debt Securities may recover less, ratably, than holders of
Senior Indebtedness and may recover more, ratably, than Holders of the
Subordinated Debt Securities.
"Senior Indebtedness" is defined in the Subordinated Indenture to mean the
principal of, premium, if any, and interest on (i) all indebtedness of the
Company for money borrowed, other than the Subordinated Debt Securities, and
any other indebtedness of the Company represented by a note, bond, debenture
or other similar evidence of indebtedness (including indebtedness of others
guaranteed by the Company), in each case whether outstanding on the date of
execution of the Subordinated Indenture or thereafter created, incurred or
assumed and (ii) any amendments, renewals, extensions, modifications and
refundings of any such indebtedness, unless in any case in the instrument
creating or evidencing any such indebtedness or pursuant to which it is
outstanding it is provided that such indebtedness is not superior in right of
payment to the Subordinated Debt Securities. For the purposes of this
definition, "indebtedness for money borrowed" is defined as (A) any obligation
of, or any obligation guaranteed by, the Company for the repayment of borrowed
money, whether or not evidenced by bonds, debentures, notes or other written
instruments, (B) any deferred payment obligation of, or any such obligation
guaranteed by, the Company for the payment of the purchase price of property
or assets evidenced by a note or similar instrument, and (C) any obligation
of, or any such obligation guaranteed by, the Company for the payment of rent
or other amounts under a lease of property or assets if such obligation is
required to be classified and accounted for as a capitalized lease on the
balance sheet of the Company under generally accepted accounting principles
(Section 101).
The Subordinated Indenture will not limit the amount of other indebtedness,
including Senior Indebtedness, that may be issued by the Company or any of its
Subsidiaries.
7
<PAGE>
EVENTS OF DEFAULT
The Senior Indenture (with respect to any series of Senior Debt Securities
then Outstanding) and, unless otherwise provided in the Applicable Prospectus
Supplement, the Subordinated Indenture (with respect to any series of
Subordinated Debt Securities then Outstanding), define an Event of Default as
any one of the following events: (i) default in the payment of any interest on
any Debt Security of that series when it becomes due and payable, and
continuance of such default for a period of 30 days (in the case of the
Subordinated Indenture, whether or not payment is prohibited by the
subordination provisions); (ii) default in the payment of the principal of, or
premium, if any, on any Debt Security of that series when it shall become due
and payable either at its Maturity, by declaration as authorized in the
Indentures or otherwise (in the case of the Subordinated Indenture, whether or
not payment is prohibited by the subordination provisions); (iii) failure to
deposit any sinking fund payment when and as due by the terms of a Debt
Security of that series (in the case of the Subordinated Indenture, whether or
not payment is prohibited by the subordination provisions); (iv) failure to
perform any other covenants or agreements of the Company in the Applicable
Indenture (other than covenants or agreements included in the Applicable
Indenture solely for the benefit of a series of Debt Securities thereunder
other than that series) and continuance of such default for a period of 60
days after either the Debt Trustee or the Holders of at least 25% of the
principal amount of the Outstanding Debt Securities of that series have given
written notice in the manner provided for therein specifying such failure as
provided in the Applicable Indenture; (v) certain events in bankruptcy,
insolvency or reorganization of the Company; and (vi) any other Event of
Default provided with respect to Debt Securities of that series (Section 501).
If an Event of Default occurs with respect to Debt Securities of any series,
the Debt Trustee shall give the Holders of Debt Securities of such series
notice of such default, provided, however, that in the case of a default
described in (iv) above, no such notice to Holders shall be given until at
least 30 days after the occurrence thereof (Section 602).
If an Event of Default with respect to the Senior Debt Securities of any
series at the time Outstanding occurs and is continuing, either the Debt
Trustee or the Holders of at least 25% of the aggregate principal amount of
the Outstanding Debt Securities of that series may declare the principal
amount (or, if the Debt Securities of that series are Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms thereof) of all the Senior Debt Securities of that series to be due and
payable immediately. Payment of the principal of the Subordinated Debt
Securities may be accelerated only in the case of certain events of
bankruptcy, insolvency or reorganization of the Company. The Debt Trustee and
the Holders will not be entitled to accelerate the maturity of the
Subordinated Debt Securities upon the occurrence of any of the Events of
Default described above except for those described in clause (v) (i.e.,
certain events in bankruptcy, insolvency or reorganization of the Company).
Accordingly, there is no right of acceleration in the case of a default in the
performance of any other covenant with respect to the Subordinated Debt
Securities, including the payment of interest or principal. At any time after
a declaration of acceleration with respect to Debt Securities of any series
has been made, but before a judgment or decree based on acceleration has been
obtained, the Holders of a majority of the aggregate principal amount of
Outstanding Debt Securities of that series may, under certain circumstances,
rescind and annul such acceleration (Section 502).
The Indentures provide that, subject to the duty of the Debt Trustee during
default to act with the required standard of care, the Debt Trustee will be
under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the Holders, unless such
Holders shall have offered to the Debt Trustee reasonable security or
indemnity (Section 603). Subject to such provisions for the indemnification of
the Debt Trustee and to certain other conditions, the Holders of a majority of
the aggregate principal amount of the Outstanding Debt Securities of any
series will have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Debt Trustee, or exercising any
trust or power conferred on the Debt Trustee, with respect to the Debt
Securities of that series (Section 512).
No Holder of any series of Debt Securities will have any right to institute
any proceeding with respect to the Applicable Indenture or for any remedy
thereunder, unless: (i) such Holder previously has given to the Debt Trustee
under the Applicable Indenture written notice of a continuing Event of Default
with respect to Debt Securities of that series; (ii) the Holders of at least
25% of the aggregate principal amount of the Outstanding
8
<PAGE>
Debt Securities of that series have made written request, and offered
reasonable indemnity, to the Debt Trustee to institute such proceeding as
trustee; (iii) in the 60-day period following receipt of a written notice from
a Holder, the Debt Trustee has not received from the Holders of a majority of
the aggregate principal amount of the Outstanding Debt Securities of that
series a direction inconsistent with such request; and (iv) the Debt Trustee
shall have failed to institute such proceeding within such 60-day period
(Section 507). However, such limitations do not apply to a suit instituted by
a Holder of a Debt Security for enforcement of payment of the principal of and
premium, if any, or interest on such Debt Security on or after the respective
due dates expressed in such Debt Security (Section 508).
The Company is required to furnish to the Debt Trustee annually a statement
as to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance (Section 1007).
Any payment default on any Debt Security regardless of amount, where the
aggregate principal amount of the series of such Debt Security exceeds $50
million, or any other default that causes acceleration of any such Debt
Security, would give rise to a cross-default under the Company's senior credit
facilities. In certain circumstances, payment defaults on Debt Securities may
give rise to cross-defaults under guarantees of the Company related to various
receivables facilities of certain subsidiaries of the Company.
DEFEASANCE AND COVENANT DEFEASANCE
The Indentures provide that, if such provision is made applicable to the
Debt Securities of any series pursuant to Section 301 of the Applicable
Indenture (which will be indicated in the Applicable Prospectus Supplement),
the Company may elect either (i) to defease and be discharged from any and all
obligations in respect of such Debt Securities then outstanding (including, in
the case of Subordinated Debt Securities, the provisions described under
"Subordination of Subordinated Debt Securities" and except for certain
obligations to register the transfer of or exchange of such Debt Securities,
replace stolen, lost or mutilated Debt Securities, maintain paying agencies
and hold monies for payment in trust) ("defeasance") or (ii) to be released
from its obligations with respect to such Debt Securities concerning the
subordination provisions described under "Subordination of Subordinated Debt
Securities" and any other covenants applicable to such Debt Securities which
are determined pursuant to Section 301 of the Applicable Indenture to be
subject to covenant defeasance ("covenant defeasance"), and the occurrence of
an event described in clause (iv) under "Events of Default" above (insofar as
with respect to covenants subject to covenant defeasance) shall no longer be
an Event of Default, in the case of either (i) or (ii) if the Company
deposits, in trust, with the Debt Trustee money or U.S. Government
Obligations, which through the payment of interest thereon and principal
thereof in accordance with their terms will provide money, in an amount
sufficient, without reinvestment, to pay all the principal of, premium, if
any, and interest on such Debt Securities on the dates such payments are due
(which may include one or more redemption dates designated by the Company) and
any mandatory sinking fund or analogous payments thereon in accordance with
the terms of such Debt Securities. Such a trust may only be established if,
among other things, (A) no Event of Default or event which with the giving of
notice or lapse of time, or both, would become an Event of Default under the
Applicable Indenture shall have occurred and be continuing on the date of such
deposit, (B) such deposit will not cause the Debt Trustee to have any
conflicting interest with respect to other securities of the Company and (C)
the Company shall have delivered an Opinion of Counsel to the effect that the
Holders will not recognize income, gain or loss for federal income tax
purposes (and, in the case of legal defeasance only, such Opinion of Counsel
must be based on a ruling of the Internal Revenue Service or other change in
applicable federal income tax law) as a result of such deposit or defeasance
and will be subject to federal income tax in the same manner as if such
defeasance had not occurred.
The Company may exercise its defeasance option with respect to such Debt
Securities notwithstanding its prior exercise of its covenant defeasance
option. If the Company exercises its defeasance option, payment of such Debt
Securities may not be accelerated because of a subsequent Event of Default. If
the Company exercises its covenant defeasance option, payment of such Debt
Securities may not be accelerated by reference to a subsequent breach of any
of the covenants noted under clause (ii) in the preceding paragraph. In the
event the
9
<PAGE>
Company omits to comply with its remaining obligations with respect to such
Debt Securities under the Applicable Indenture after exercising its covenant
defeasance option and such Debt Securities are declared due and payable
because of the subsequent occurrence of any Event of Default, the amount of
money and U.S. Government Obligations on deposit with the Debt Trustee may be
insufficient to pay amounts due on the Debt Securities of such series at the
time of the acceleration resulting from such Event of Default. However, the
Company will remain liable in respect of such payments. (See Article Thirteen
and Article Fourteen of the Senior Indenture and the Subordinated Indenture,
respectively.)
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company and
the Debt Trustee with the consent of the Holders of not less than a majority
of the aggregate principal amount of the Outstanding Debt Securities of all
series issued under the Indenture and affected by the modification or
amendments (voting as a single class); provided, however, that no such
modification or amendment may, without the consent of the Holders of all Debt
Securities affected thereby, among other things, (i) change the stated
Maturity of the principal of, or any installment of principal of or interest
on, any Debt Security; (ii) reduce the principal amount of, or the premium, if
any, or (except as otherwise provided in the Applicable Prospectus Supplement)
interest on, any Debt Security (including in the case of an Original Issue
Discount Debt Security the amount payable upon acceleration of the Maturity
thereof); (iii) change the place or currency of payment of principal of,
premium, if any, or interest on any Debt Security; (iv) impair the right to
institute suit for the enforcement of any payment on any Debt Security on or
after the Stated Maturity thereof (or in the case of redemption, on or after
the Redemption Date); (v) in the case of the Subordinated Indenture, modify
the subordination provisions in a manner adverse to the Holders of the
Subordinated Debt Securities; or (vi) reduce the percentage of the principal
amount of Outstanding Debt Securities of any series, the consent of whose
Holders is required for modification or amendment of the Indenture or for
waiver of compliance with certain provisions of the Indenture or for waiver of
certain defaults (Section 902).
The Holders of a majority of the aggregate principal amount of the Senior
Debt Securities or the Subordinated Debt Securities may, on behalf of all
Holders of the Senior Debt Securities or the Subordinated Debt Securities,
respectively, waive any past default under the Applicable Indenture, except a
default in the payment of principal, premium, if any, or interest or in the
performance of certain covenants (Section 513).
CERTAIN COVENANTS OF THE CORPORATION
Limitation on Liens. The Company may not, nor may it permit any Significant
Subsidiary (as defined below) to, create, incur, assume or permit to exist any
Lien (as defined below) on any property or asset (including any stock or other
securities of any Person, including any Significant Subsidiary), or on any
income or revenues or rights in respect of any thereof, unless the Debt
Securities of any series then or thereafter Outstanding shall be equally and
ratably secured. This restriction does not apply, however, to (i) Liens on
property or assets of the Company and its Subsidiaries existing on the date of
the Indenture, provided that such Liens shall secure only those obligations
which they secure as of the date of the Indenture; (ii) any Lien existing on
any property or asset prior to the acquisition thereof by the Company or any
Subsidiary, provided that (x) such Lien is not created in contemplation of or
in connection with such acquisition and (y) such Lien does not apply to any
other property or assets of the Company or any Subsidiary; (iii) Liens for
taxes not yet due or which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves, to the extent
required by GAAP, have been set aside; (iv) carriers', warehousemen's,
mechanics', materialsmen's, repairmen's or other like Liens arising in the
ordinary course of business and securing obligations that are not due and
payable or which are being contested in good faith by appropriate proceedings
and with respect to which adequate reserves, to the extent required by GAAP,
have been set aside; (v) pledges and deposits made in the ordinary course of
business in compliance with workmen's compensation, unemployment insurance and
other social security laws or regulations; (vi) deposits to secure the
performance of bids, trade contracts (other than for Indebtedness), leases
(other than capital leases), statutory obligations, surety and appeal bonds,
advance payment bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business; (vii) zoning
10
<PAGE>
restrictions, easements, rights-of-way, restrictions on use of real property
and other similar encumbrances incurred in the ordinary course of business
which, in the aggregate, are not substantial in amount and do not materially
detract from the value of the property subject thereto or interfere with the
ordinary conduct of the business of the Company or any of its Subsidiaries;
(viii) Liens upon any property acquired, constructed or improved by the
Company or any Subsidiary which are created or incurred within 360 days of
such acquisition, construction or improvement to secure or provide for the
payment of any part of the purchase price of such property or the cost of such
construction or improvement, including carrying costs (but no other amounts),
provided that any such Lien shall not apply to any other property of the
Company or any Subsidiary; (ix) Liens on the property or assets of any
Subsidiary in favor of the Company; (x) extensions, renewals and replacements
of Liens referred to in paragraphs (i) through (ix) above, provided that any
such extension, renewal or replacement Lien shall be limited to the property
or assets covered by the Lien extended, renewed or replaced and that the
obligations secured by any such extension, renewal or replacement Lien shall
be in an amount not greater than the amount of the obligations secured by the
Lien extended, renewed or replaced; (xi) any Lien, of the type described in
clause (iii) of the definition below of the term "Lien," on securities imposed
pursuant to an agreement entered into for the sale or disposition of such
securities pending the closing of such sale or disposition; provided such sale
or disposition is otherwise permitted hereunder; (xii) Liens arising in
connection with any Permitted Receivables Program (to the extent the sale by
the Company or the applicable Subsidiary of its accounts receivable is deemed
to give rise to a Lien in favor of the purchaser thereof in such accounts
receivable or the proceeds thereof); (xiii) Liens on the capital stock or
assets of any Subsidiary that is not a Significant Subsidiary; and (xiv) Liens
to secure Indebtedness if, immediately after the grant thereof, the aggregate
amount of all Indebtedness secured by Liens that would not be permitted but
for this clause (xiv) does not exceed 15% of the Stockholders' Equity (as
defined below) as shown on the most recent consolidated balance sheet of the
Company filed with the Commission pursuant to the Exchange Act.
Limitation on Sale/Leaseback Transactions. Transactions involving any sale
and leaseback by the Company or any Significant Subsidiary of any Principal
Property (as defined below) are prohibited, unless the Company or any such
Significant Subsidiary, within 120 days after the effective date of the lease,
applies to the retirement of any Funded Debt (as defined below) an amount
equal to the greater of (i) the net proceeds of the sale of the property
leased or (ii) the fair market value of the property leased within 90 days
prior to the effective date of the lease. The amount to be so applied in
respect of any such transaction will be reduced, however, by the principal
amount of any Debt Securities surrendered to the Debt Trustee by the Company
for cancellation and by the principal amount of Funded Debt other than Debt
Securities, voluntarily retired by the Company, within 120 days after the
effective date of the lease, provided that no retirement may be effected by
payment on the final maturity date or pursuant to mandatory sinking fund or
prepayment provisions. This restriction does not apply, however, to the
Company or any Significant Subsidiary: (i) entering into any transaction not
involving a lease with a term of more than three (3) years; (ii) entering into
any transaction to the extent the Lien on any such property subject to such
sale and leaseback would be permitted under the covenant described above under
"Limitation on Liens" or (iii) entering into any transaction for the sale and
leaseback of any property if such lease is entered into within 180 days after
the later of the acquisition, completion of construction or commencement of
operation of such property.
Leveraged Transactions. Except for the limitations on liens and
sale/leaseback transactions referred to above and on consolidations, mergers
or transfers of the Company's assets substantially as an entirety referred to
below, the Indentures and the terms of the Debt Securities do not contain any
covenants or other provisions designed to afford holders of any Debt
Securities protection in the event of a highly leveraged transaction involving
the Company.
Applicability of Covenants. Any series of Securities may provide that either
or both of the covenants described above shall not be applicable to the
Securities of such series (Section 301).
CERTAIN DEFINITIONS
Certain terms are defined in the Indenture and are used in this Prospectus
as follows:
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"Funded Debt" means all Indebtedness that will mature, pursuant to a
mandatory sinking fund or prepayment provision or otherwise, and all
installments of Indebtedness that will fall due, more than one year from the
date of determination. In calculating the maturity of any Indebtedness, there
shall be included the term of any unexercised right of the debtor to renew or
extend such Indebtedness existing at the time of determination.
"GAAP" means generally accepted accounting principles applied on a
consistent basis.
"Holder" means any individual, corporation, partnership, limited liability
company, joint venture, trust, unincorporated organization or government or
any agency or political subdivision thereof in whose name a Debt Security is
registered in the security register for such Securities maintained in
accordance with the terms of the Indenture.
"Indebtedness" of any Person shall mean, as at any date of determination,
all indebtedness (including capitalized lease obligations) of such Person and
its consolidated subsidiaries at such date that would be required to be
included as a liability on a consolidated balance sheet (excluding the
footnotes thereto) of such Person prepared in accordance with GAAP.
"Lien" means, with respect to any asset of any Person, (i) any mortgage,
deed of trust, lien, pledge, encumbrance, charge or security interest in or on
such asset, (ii) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the foregoing)
relating to such asset and (iii) in the case of securities that constitute
assets of such Person, any purchase option, call or similar right of a third
party with respect to such securities.
"Permitted Receivables Program" means any receivables securitization program
pursuant to which the Company or any of the Subsidiaries sells accounts
receivable to any non-Affiliate in a "true sale" transaction; provided,
however, that any related indebtedness incurred to finance the purchase of
such accounts receivable is not includible on the balance sheet (excluding the
footnotes thereto) of the Company or any Subsidiary in accordance with GAAP
and applicable regulations of the Commission.
"Principal Property" means (i) the Company's principal office building and
(ii) any manufacturing plant or principal research facility of the Company or
any Significant Subsidiary which is located within the United States of
America or Canada, except any such principal office building, plant or
facility which the Board of Directors by resolution declares is not of
material importance to the total business conducted by the Company and its
Subsidiaries as an entirety.
"Significant Subsidiary" means, at any time, any Subsidiary that would be a
"Significant Subsidiary" at such time, as such term is defined in Regulation
S-X promulgated by the Commission, as in effect on the date of the Indenture.
"Stockholders' Equity" means, at any date of determination, the
stockholders' equity at such date of the Company and its Subsidiaries, as
determined in accordance with GAAP.
"Subsidiary" means any corporation, partnership, limited liability company,
joint venture, trust or unincorporated organization more than 50% of the
outstanding voting interest of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or
more other Subsidiaries.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company may not consolidate with or merge into any other Person or
transfer or lease its assets substantially as an entirety to any Person unless
any successor or purchaser is a corporation organized under the laws of the
United States of America, any State or the District of Columbia, and any such
successor or purchaser
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expressly assumes the Company's obligations on the Debt Securities by an
indenture supplemental to the Indentures. The Debt Trustee may receive an
Opinion of Counsel as conclusive evidence of compliance with these provisions
(Article Eight).
CONVERSION AND EXCHANGE RIGHTS
The terms, if any, on which Debt Securities of a series may be exchanged for
or converted into shares of Common Stock, Preferred Stock or any other
security, including the conversion price or exchange ratio (or the method of
calculating the same), the conversion or exchange period (or the method of
determining the same), whether conversion or exchange will be mandatory or at
the option of the holder or the Company, provisions for adjustment of the
conversion price or the exchange ratio and provisions affecting conversion or
exchange in the event of the redemption of such Debt Securities, will be set
forth in the Prospectus Supplement relating thereto.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in the form of one or more
Global Securities that will be deposited with a Depositary or its nominee
identified in the Applicable Prospectus Supplement. In such a case, one or
more Global Securities will be issued in a denomination or aggregate
denominations equal to the portion of the aggregate principal amount of
Outstanding Debt Securities of the series to be represented by such Global
Security or Securities. Unless and until it is exchanged in whole or in part
for Debt Securities in definitive registered form, a Global Security may not
be registered for transfer or exchange except as a whole by the Depositary for
such Global Security to a nominee for such Depositary and except in the
circumstances described in the Applicable Prospectus Supplement (Sections 204
and 305).
The Company expects that the following provisions will apply to depositary
arrangements with respect to any portion of a series of Debt Securities to be
represented by a Global Security. Any additional specific terms of the
depositary arrangement will be described in the applicable Prospectus
Supplement.
Upon the issuance of any Global Security, and the deposit of such Global
Security with or on behalf of the Depositary for such Global Security, the
Depositary will credit, on its book-entry registration and transfer system,
the respective principal amounts of the Debt Securities represented by such
Global Security to the accounts of institutions ("Participants") that have
accounts with the Depositary or its nominee. The accounts to be credited will
be designated by the underwriters or agents engaging in the distribution of
such Debt Securities or by the Company, if such Debt Securities are offered
and sold directly by the Company. Ownership of beneficial interests in a
Global Security will be limited to Participants or persons that may hold
interest through Participants. Ownership of beneficial interests by
Participants in such Global Security will be shown on, and the transfer of
such beneficial interests will be effected only through, records maintained by
the Depositary for such Global Security or by its nominee. Ownership of
beneficial interests in such Global Security by persons that hold through
Participants will be shown on, and the transfer of such beneficial interests
within such Participants will be effected only through, records maintained by
such Participants. The laws of some jurisdictions may require that certain
purchasers of securities take physical delivery of such securities in
certificated form. The foregoing limitations and such laws may impair the
ability to transfer beneficial interests in such Global Securities.
So long as the Depositary for a Global Security or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
Indentures. Unless otherwise specified in the applicable Prospectus Supplement
and except as specified below, owners of beneficial interests in such Global
Security will not be entitled to have Debt Securities of the series
represented by such Global Security registered in their names, will not
receive or be entitled to receive physical delivery of Debt Securities of such
series in certificated form and will not be considered the holders thereof for
any purposes under the Indentures. Accordingly, each person owning a
beneficial interest in such Global Security must rely on the procedures of the
Depositary and, if such person is not a Participant, on the procedures of the
Participant through which such person owns their interest, to exercise any
rights of a holder under the Indentures.
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The Depositary may grant proxies and otherwise authorize Participants to
give or take any request, demand, authorization, direction, notice, consent,
waiver or other action which a holder is entitled to give or take under the
Indentures. The Company understands that, under existing industry practices,
if the Company requests any action of holders or any owner of a beneficial
interest in such Global Security desires to give any notice or take any action
a holder is entitled to give or take under the Indentures, the Depositary
would authorize the Participants to give such notice or take such action, and
Participants would authorize beneficial owners owning through such
Participants to give such notice or take such action or would otherwise act
upon the instructions of beneficial owners owning through them.
Unless otherwise specified in the applicable Prospectus Supplement, payments
with respect to principal, premium, if any, and interest on Debt Securities
represented by a Global Security registered in the name of a Depositary or its
nominee will be made by the Company to such Depositary or its nominee, as the
case may be, as the registered owner of such Global Security.
The Company expects that the Depositary for any Debt Securities represented
by a Global Security, upon receipt of any payment of principal, premium or
interest, will credit Participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Global Security as shown on the records of such Depositary. The
Company also expects that payments by Participants to owners of beneficial
interests in such Global Security held through such Participants will be
governed by standing instructions and customary practices, as is now the case
with the securities held for the accounts of customers registered in "street
names," and will be the responsibility of such Participants. None of the
Company, the Trustee or any agent of the Company or the Trustee shall have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial interests in a Global Security, or for
maintaining, supervising or reviewing any records relating to such beneficial
interests (Section 308).
Unless otherwise specified in the applicable Prospectus Supplement, a Global
Security of any series will be exchangeable for certificated Debt Securities
of the same series only if (i) the Depositary for such Global Securities
notifies the Company that it is unwilling or unable to continue as Depositary
or such Depositary ceases to be a clearing agency registered under the
Exchange Act (if so required by applicable law or regulation) and, in either
case, a successor Depositary is not appointed by the Company within 90 days
after the Company receives such notice or becomes aware of such ineligibility,
(ii) the Company in its sole discretion determines that such Global Securities
shall be exchangeable for certificated Debt Securities or (iii) there shall
have occurred and be continuing an Event of Default under the Indenture with
respect to the Debt Securities of such series. Upon any such exchange, owners
of beneficial interests in such Global Security or Securities will be entitled
to physical delivery of individual Debt Securities in certificated form of
like tenor and terms equal in principal amount to such beneficial interests,
and to have such Debt Securities in certificated form registered in the names
of the beneficial owners, which names are expected to be provided by such
Depositary's relevant Participants (as identified by such Depositary) to the
Trustee.
The following is based on information furnished to the Company:
In the event that the Depositary Trust Company ("DTC") acts as Depositary
for the Global Securities of any series, such Global Securities will be
issued as fully registered securities registered in the name of Cede & Co.
(DTC's partnership nominee). One fully registered Global Security will be
issued with respect to each $200 million (or such other amount as shall be
permitted by DTC from time to time) of principal amount of the Debt
Securities of a series, and an additional certificate will be issued with
respect to any remaining principal amount of such series.
DTC is a limited purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC holds securities that its Participants deposit
with DTC. DTC also facilitates the settlement among Participants of
securities
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transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in Participants'
accounts, thereby eliminating the need for physical movement of securities
certificates. Direct Participants include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other
organizations ("Direct Participants"). DTC is owned by a number of its
Direct Participants and by the New York Stock Exchange, Inc., the American
Stock Exchange, Inc. and the National Association of Securities Dealers,
Inc. Access to the DTC system is also available to others, such as
securities brokers and dealers and banks and trust companies that clear
through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants"). The rules
applicable to DTC and its Participants are on file with the Commission.
To facilitate subsequent transfers, the Debt Securities are registered in
the name of DTC's nominee, Cede & Co. The deposit of the Debt Securities
with DTC and their registration in the name of Cede & Co. will effect no
change in beneficial ownership. DTC has no knowledge of the actual
beneficial owners of the Debt Securities; DTC's records reflect only the
identity of the Direct Participants to whose accounts Debt Securities are
credited, which may or may not be the beneficial owners. The Participants
remain responsible for keeping account of their holdings on behalf of their
customers.
Delivery of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by
Direct Participants and Indirect Participants to beneficial owners of Debt
Securities is governed by arrangements among them, subject to any statutory
or regulatory requirements as may be in effect from time to time.
Neither DTC nor Cede & Co. consents or votes with respect to the Debt
Securities. Under its usual procedures, DTC mails a proxy (an "Omnibus
Proxy") to the issuer as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those
Direct Participants to whose accounts the Debt Securities are credited on
the record date (identified on a list attached to the Omnibus Proxy).
If applicable, redemption notices shall be sent to Cede & Co. If less
than all of the Debt Securities of a series represented by Global
Securities are being redeemed, DTC's practice is to determine by lot the
amount of the interest of each Direct Participant in such issue to be
redeemed.
To the extent that any Debt Securities provide for repayment or
repurchase at the option of the holders thereof, a beneficial owner shall
give notice of any option to elect to have its interest in the Global
Security repaid by the Company, through its Participant, to the Trustee,
and shall effect delivery of such interest in a Global Security by causing
the Direct Participant to transfer the Direct Participant's interest in the
Global Security or Securities representing such interest, on DTC's records,
to the Trustee. The requirement for physical delivery of Debt Securities in
connection with a demand for repayment or repurchase will be deemed
satisfied when the ownership rights in the Global Security or Securities
representing such Debt Securities are transferred by Direct Participants on
DTC's records.
DTC may discontinue providing its services as securities depositary with
respect to the Debt Securities at any time. Under such circumstances, in
the event that a successor securities depositary is not appointed, Debt
Security certificates are required to be printed and delivered as described
above.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depositary). In that
event, Debt Security certificates will be printed and delivered as
described above.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that the Company believes to be
reliable, but the Company takes no responsibility for the accuracy thereof.
CONCERNING THE DEBT TRUSTEE
The Bank of New York is Debt Trustee under the Indentures. The Debt Trustee
performs services for the Company in the ordinary course of business.
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DESCRIPTION OF PREFERRED STOCK
The following description of the terms of the Preferred Stock sets forth
general terms and provisions of the Preferred Stock to which a Prospectus
Supplement may relate. Certain other terms of any series of the Preferred
Stock offered by a Prospectus Supplement will be described in such Prospectus
Supplement and the Certificate of Designation (as defined below) for such
Preferred Stock. The description of certain provisions of the Preferred Stock
set forth below does not purport to be complete and is subject to and
qualified in its entirety by reference to the terms set forth in any such
Prospectus Supplement, the Company's Amended and Restated Certificate of
Incorporation, as amended to date (the "Amended and Restated Certificate of
Incorporation"), and the certificate of designation (a "Certificate of
Designation") relating to each series of the Preferred Stock which will be
filed with the Commission and incorporated by reference in the Registration
Statement of which this Prospectus is a part at or prior to the time of
issuance of such series of the Preferred Stock.
GENERAL
The authorized capital stock of the Company consists of 1,650,000,000 shares
of stock, of which 1,450,000,000 shares are shares of Common Stock, $0.01 par
value per share (the "Common Stock"), and of which 200,000,000 shares are
shares of Preferred Stock, $0.01 par value per share. No shares of Preferred
Stock are currently outstanding. The Board has previously authorized the
issuance of up to 4,000,000 shares of Series A Junior Participating Preferred
Stock, $0.01 par value per share (the "Series A Preferred Stock"). See
"Description of Common Stock--Stockholder Rights Plan."
The Board of Directors (the "Board") has been authorized, subject to certain
limitations set forth in the Amended and Restated Certificate of
Incorporation, to provide by resolution from time to time for the issuance of
shares of Preferred Stock in series and, by filing a Certificate of
Designation pursuant to the Delaware General Corporation Law (the "DGCL"), to
establish from time to time the number of shares to be included in each such
series, and to fix the designation, powers, privileges, preferences and rights
of the shares of each such series and the qualifications, limitations and
restrictions thereof. The authority of the Board with respect to each series
includes, but is not limited to, the right to:
(i) fix the designation of the series;
(ii) fix the number of shares of the series, which number the Board may
thereafter increase or decrease (subject to certain limitations);
(iii) determine whether dividends, if any, shall be cumulative or
noncumulative, and, in the case of shares of any series having cumulative
dividend rights, the date or dates or method of determining the date or
dates from which dividends on the shares of such series shall be
cumulative;
(iv) determine the rate of any dividends (or the method of determining
such dividends) payable to the holders of the shares of such series, any
conditions upon which such dividends shall be paid and the date or dates or
the method for determining the date or dates upon which such dividends
shall be payable;
(v) determine the price or prices (or the method of determining such
price or prices), the form of payment (which may be cash, property or
rights, including securities of the same or another corporation or other
entity), the period within which and the terms and conditions upon which
the shares of such series may be redeemed, in whole or in part, at the
option of the Company or at the option of the holder or holders thereof or
upon the happening of a specified event or events, if any;
(vi) determine the obligation, if any, of the Company to purchase or
redeem shares of such series pursuant to a sinking fund or otherwise and
the price or prices, the form of payment, the period within which and the
terms and conditions upon which the shares of such series shall be redeemed
or purchased, in whole or in part, pursuant to such obligation;
(vii) determine the amount payable out of the assets of the Company to
the holders of shares of the series in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Company;
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(viii) determine provisions, if any, for the conversion or exchange of
the shares of such series, at any time or times at the option of the holder
or holders thereof or the Company or upon the happening of a specified
event or events, into shares of any other class or classes or any other
series of the same or any other class or classes of stock, or any other
security, of the Company, or any other corporation or other entity, and the
price or prices or rate or rates of conversion or exchange and any
adjustments applicable thereto, and all other terms and conditions upon
which such conversion or exchange may be made;
(ix) determine the restrictions on the issuance of shares of the same
series or of any other class or series, if any; and
(x) determine the voting rights, if any, of the holders of shares of the
series.
The Preferred Stock will, upon issuance and payment therefor, be fully paid
and nonassessable and will have no preemptive rights. The rights of the
holders of each series of the Preferred Stock will be subordinate to those of
the Company's general creditors.
In the event that the Company issues any Preferred Stock pursuant to a
Prospectus Supplement, unless otherwise noted in such Prospectus Supplement,
State Street Bank and Trust Company of Boston, Massachusetts ("State Street")
will be the registrar and transfer agent for such Preferred Stock.
HUGHES SEPARATION AGREEMENT
Pursuant to the Hughes Spin-Off Separation Agreement, dated as of December
17, 1997, by and between the Company and GM (the "Hughes Separation
Agreement"), the Company has agreed that, for a period of two years from
December 17, 1997 it will not issue any class or series of capital stock,
other than Class B Common Stock eligible to vote generally in the election of
directors, unless prior to such issuance GM has determined, in its sole and
absolute discretion, which discretion must be exercised in good faith solely
to preserve the tax-free status of the spin-offs of Hughes Defense and Hughes
Network Systems, Inc. and the Merger, that such transaction would not
jeopardize the tax-free status of the spin-offs or the Merger.
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DESCRIPTION OF COMMON STOCK
INTRODUCTION
The Company is authorized to issue up to 1,450,000,000 shares of Common
Stock, which shares of Common Stock are divided into two classes consisting of
450,000,000 shares of Class A common stock, $0.01 par value per share ("Class
A Common Stock") and 1,000,000,000 shares of Class B Common Stock.
The following description of Raytheon's Common Stock is a summary and does
not purport to be complete. Reference is also made to the more detailed
provisions of, and such description is qualified in its entirety by reference
to, the Amended and Restated Certificate of Incorporation and the Amended and
Restated By-Laws, copies of which have been filed with the SEC and are
incorporated herein by reference.
In addition, the Hughes Separation Agreement limits the ability of the
Raytheon Board to take certain actions which affect the Common Stock. See
"Description of Preferred Stock--Hughes Separation Agreement."
COMMON STOCK
With respect to all matters other than the election and removal of
directors, holders of Class A Common Stock ("Class A Common Stockholders") and
holders of Class B Common Stock ("Class B Common Stockholders") will each be
entitled to a single vote per share and the approval of any such matter will
require the approval of both classes of Common Stock, each voting as a
separate class, as well as the approval of the holders of any class or series
of Preferred Stock which may be entitled to vote thereon.
With respect to the election or removal of directors only, (i) Class B
Common Stockholders will be entitled to one vote for each share of Class B
Common Stock they own, which votes shall represent in the aggregate 19.9% of
the total voting power of all holders of Common Stock entitled to vote
thereon, and (ii) Class A Common Stockholders will be entitled to such number
of votes for each share of Class A Common Stock they own as shall be necessary
to entitle the Class A Common Stockholders to vote, in the aggregate, 80.1% of
the total voting power of all holders of Common Stock entitled to vote
thereon. The Board will determine the number of votes for each share of Class
A Common Stock outstanding promptly following the fixing of a record date for
each annual or special meeting of stockholders at which directors are to be
elected or a vote with respect to removal of directors is to be taken. Except
as may be provided in connection with any Preferred Stock or as may otherwise
be required by law or the Amended and Restated Certificate of Incorporation,
the Common Stock will be the only capital stock of the Company entitled to
vote in the election and removal of directors and other matters presented to
the stockholders of the Company from time to time. A plurality of votes cast
shall elect directors. The Common Stock will not have cumulative voting
rights.
Subject to the prior rights of holders of Preferred Stock, if any, and
subject to any other provisions of the Amended and Restated Certificate of
Incorporation and of applicable law, Class A Common Stockholders and Class B
Common Stockholders are entitled to receive such dividends and other
distributions as may be lawfully declared from time to time by the Board. The
Class A Common Stockholders and Class B Common Stockholders will be entitled
to receive the same amount per share of any such dividends and other
distributions, except that Raytheon may declare a dividend or other
distribution of shares of Class A Common Stock to Class A Common Stockholders
and shares of Class B Common Stock to Class B Common Stockholders so long as,
immediately following such dividend or other distribution, the number of
shares of Class A Common Stock and Class B Common Stock then outstanding bears
the same relationship to each other as immediately prior to such dividend or
other distribution.
In the case of any split, subdivision, combination or reclassification of
either the Class A Common Stock or the Class B Common Stock, shares of the
other class will also be split, subdivided, combined or reclassified so that
the number of shares of Class A Common Stock and Class B Common Stock
outstanding immediately following such split, subdivision, combination or
reclassification will bear the same relationship to each other as immediately
prior to such split, subdivision, combination or reclassification.
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Upon any liquidation, dissolution or winding up of the Company, whether
voluntary or involuntary, Class A Common Stockholders and Class B Common
Stockholders will be entitled to receive such assets and funds of the Company
as are available for distribution to stockholders in proportion to the number
of shares held by them, respectively, without regard to class, after there
shall have been paid or set apart for payment the full amounts necessary to
satisfy any creditors and any preferential or participating rights to which
the holders of each outstanding series of Preferred Stock, if any, are
entitled by the express terms of such series. In the event of any corporate
merger, consolidation, purchase or acquisition of property or stock, or other
reorganization in which any consideration is to be received by Class A Common
Stockholders or Class B Common Stockholders, the holders of each class will
receive the same type and amount of consideration on a per share basis.
The Company may not, directly or indirectly, redeem, purchase, repurchase or
otherwise acquire for consideration any shares of Common Stock unless such
action is (i) effected ratably in accordance with the number of outstanding
shares of Class A Common Stock and Class B Common Stock, (ii) for
consideration of the same type and amount as to shares of Class A Common Stock
and shares of Class B Common Stock and (iii) not in any other way prejudicial
to the rights of the holders of one class of Common Stock in favor of the
other class of Common Stock. In the case of an offer to purchase shares of
Common Stock made by the Company to all holders of Common Stock, the Company
will purchase shares of Common Stock ratably in accordance with the number of
shares of each class of Common Stock tendered thereunder.
The outstanding shares of Common Stock, upon issuance and payment therefor,
are fully paid and nonassessable and do not have any preemptive, subscription
or conversion rights. Additional shares of authorized Common Stock may be
issued, as authorized by the Board from time to time, without stockholder
approval, except as may be required by applicable stock exchange requirements.
Except as indicated above, the rights of Class A Common Stockholders and
Class B Common Stockholders are in all respects and for all purposes and in
all circumstances identical, and the Company will not in any other manner,
directly or indirectly, take any other action or in any other fashion agree
to, facilitate, condone or support any transaction in which Class A Common
Stockholders and Class B Common Stockholders are subject to discriminatory or
unequal treatment.
CERTAIN PROVISIONS OF THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
AND AMENDED AND RESTATED BY-LAWS
Advance Notice of Nominations. The Amended and Restated By-Laws contain
provisions requiring that advance notice be delivered to the Company of any
business to be brought by a stockholder before an annual meeting of
stockholders and providing for certain procedures to be followed by
stockholders in nominating persons for election to the Board. To be timely,
the stockholder must give written notice to the Secretary of the Company not
later than the close of business on the 90th calendar day nor earlier than the
120th calendar day prior to the first anniversary of the preceding year's
annual meeting. In the event that the date of the annual meeting is more than
30 calendar before or more than 60 calendar days after such anniversary date,
notice by the stockholder to be timely must be delivered to the Secretary of
the Company not earlier than the close of business on the 120th calendar day
prior to such annual meeting and not later than the close of business on the
later of the 90th calendar day prior to such annual meeting or the 10th
calendar day following the calendar day on which public announcement of the
date of such meeting is first made by the Company. In the event that the
number of directors to be elected to the Board is increased and there is no
public announcement by the Company naming all of the nominees for director or
specifying the size of the increased Board at least 100 calendar days prior to
the first anniversary of the preceding year's annual meeting, a stockholder's
notice will also be considered timely (but only with respect to nominees for
any new positions created by such increase) if it is delivered to the
Secretary not later than the close of business on the 10th calendar day
following the day on which public announcement is first made by the Company.
The notice must set forth, among other things, specific information regarding
such stockholder and such business or director nominee, as described in the
Amended and Restated By-Laws. For the annual meeting of stockholders in 1998,
the first anniversary of the previous year's meeting shall be deemed to be May
31, 1998.
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Classification of Directors. The Amended and Restated Certificate of
Incorporation provides that, except as may be provided by the Amended and
Restated Certificate of Incorporation or in the resolution or resolutions
providing for the issuance of any series of Preferred Stock, the number of
directors shall be fixed from time to time by a resolution adopted by a
majority of the Board, which number shall not be fewer than three, and
provides for a classified board of directors, consisting of three classes as
nearly equal in size as possible. Each class holds office until the third
succeeding annual stockholders' meeting following the election of such class,
except that the initial terms of the three classes expire in 1998, 1999 and
2000, respectively. Subject to the rights of any class or series of stock
having a preference over the Common Stock, a director of the Company may be
removed only for cause by the affirmative vote of the holders of shares of
Common Stock, voting together as a single class in accordance with their
respective percentages of total voting power. See "--Common Stock."
No Action by Written Consent; Special Meetings. The Amended and Restated
Certificate of Incorporation provides that stockholders may not act by written
consent in lieu of a meeting. Special meetings of the stockholders may be
called by the Chairman of the Board or by the Board pursuant to a resolution
stating the purpose or purposes thereof approved by a majority of the total
number of directors the Company would have if there were no vacancies), but
may not be called by stockholders. No business other than that stated in the
notice shall be transacted at any special meeting. Under the Amended and
Restated By-laws, in the event the Company calls a special meeting for the
purpose of electing one or more directors to the Board, any stockholder may
nominate a person or persons (as the case may be), for election to such
position(s) as specified in the notice of special meeting if notice by the
stockholder is delivered to the Secretary of the Company not earlier than the
close of business on the 120th calendar day prior to such special meeting and
not later than the close of business on the later of the 90th calendar day
prior to such special meeting or the 10th calendar day following the calendar
day on which public announcement of the date of such meeting and the nominees
proposed by the Board to be elected at such meeting is first made by the
Company.
Limitation on Directors' Liability. The Amended and Restated Certificate of
Incorporation provides, as authorized by Section 102(b)(7) of the DGCL, that a
director of the Company will not be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent such exemption or limitation is prohibited under the DGCL
as it currently exists or as it may be amended in the future.
The inclusion of this provision in the Amended and Restated Certificate of
Incorporation may have the effect of reducing the likelihood of derivative
litigation against directors, and may discourage or deter stockholders or
management from bringing a lawsuit against directors for breach of their duty
of care, even though such an action, if successful, might otherwise have
benefited the Company and its stockholders.
STOCKHOLDER RIGHTS PLAN
In connection with the Merger, the Board adopted the Rights Agreement, dated
as of December 15, 1997, by and between Hughes Defense and State Street, as
Rights Agent (the "Rights Agreement"). Prior to the effective date of the
Merger, the Board declared a dividend of one Right for each share of the Class
A Common Stock and the Class B Common Stock to the holders of record thereof
as of the effective date of the Merger.
The following description, which summarizes the material provisions of the
Rights Agreement, does not purport to be complete and is qualified in its
entirety by reference to, the Rights Agreement.
The Rights trade automatically with shares of Common Stock and become
exercisable only under certain circumstances as described below. The Rights
are designed to protect the interests of the Company and its stockholders
against coercive takeover tactics. The purpose of the Rights is to encourage
potential acquirers to negotiate with the Company's Board of Directors prior
to attempting a takeover and to provide the Board with
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leverage in negotiating on behalf of all stockholders the terms of any
proposed takeover. The Rights may have certain anti-takeover effects. The
Rights should not, however, interfere with any merger or other business
combination approved by the Board.
The Rights (i) will not be exercisable until the Rights' Distribution Date
(as defined below) and (ii) will expire on December 15, 2007 (the "Final
Expiration Date"), unless the Final Expiration Date is extended or unless the
Rights are earlier redeemed or exchanged by Raytheon, in each case, as
described below.
Until a Right is exercised, the holder of a Right, as such, will have no
rights as a stockholder of the Company including, without limitation, the
right to vote or receive dividends. Upon becoming exercisable, each Right will
entitle the holder thereof to purchase from the Company one one-hundredth of a
share of Series A Preferred Stock at a purchase price of $250 per Right (the
"Exercise Price"), subject to adjustment, on the terms as set forth in the
Rights Agreement. In general, the "Distribution Date" will occur, and the
Rights will become exercisable, upon the earlier of (i) 10 days following a
public announcement that a person or group of affiliated or associated persons
(an "Acquiring Person") has acquired beneficial ownership of 15% or more of
(a) the outstanding shares of Class A Common Stock, (b) the outstanding shares
of Class B Common Stock, or (c) the aggregate voting power in the election of
directors (each, a "Triggering Holding") or (ii) 10 business days (or a later
date determined by the Board prior to any person or group becoming an
Acquiring Person) following the commencement of, or announcement of an
intention to make, a tender offer or exchange offer the consummation of which
would result in the beneficial ownership by a person or group of a Triggering
Holding.
In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which rights become void upon
acquisition of a Triggering Holding), will thereafter have the right to
receive, upon exercise thereof at the then-current Exercise Price, that number
of shares of Class B Common Stock having a market value of two times the
Exercise Price of the Right. In the event that, at any time on or after the
date that any person has become an Acquiring Person, Raytheon is acquired in a
merger or other business combination transaction or 50% or more of
consolidated assets or earning power are sold, each holder of a Right will
thereafter have the right to receive, upon the exercise thereof at the then-
current Exercise Price, that number of shares of common stock of the acquiring
company which at the time of such transaction will have a market value of two
times the Exercise Price of the Right. At any time after any person or group
of affiliated or associated persons becomes an Acquiring Person and prior to
the acquisition by such person or group of 50% or more of the outstanding
shares of Common Stock, the Board may exchange the Rights (other than Rights
owned by such person or group which will have become void), in whole or in
part, at an exchange ratio of one share of Class B Common Stock, or one one-
hundredth of a share of Series A Junior Participating Preferred Stock, per
Right (subject to adjustment).
At any time prior to the acquisition of a Triggering Holding of Raytheon
Common Stock, the Board may redeem the Rights in whole, but not in part, at a
price of $.01 per Right (the "Redemption Price"). The redemption of the Rights
may be made effective at such time, on such basis and with such conditions as
the Board, in its sole discretion, may establish. Immediately upon any
redemption of the Rights, the right to exercise the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption
Price.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
Raytheon is subject to Section 203 of the DGCL. Generally, Section 203
prohibits a publicly held Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years
after the time such stockholder became an interested stockholder, unless (i)
prior to such time, the board of directors of the corporation approved either
the business combination or the transaction which resulted in the stockholder
becoming an interested stockholder, (ii) upon consummation of the transaction
which resulted in the stockholder becoming an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced or (iii) at or
subsequent to such time, the business combination is approved by the board of
directors and authorized by the affirmative vote of at least
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66 2/3% of the outstanding voting stock that is not owned by the interested
stockholder. For purposes of Section 203 of the DGCL, "business combination"
includes, among other things, (i) any merger or consolidation of the
corporation with the interested stockholder, (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition, except proportionately as a
stockholder of such corporation, to or with the interested stockholder of
assets of the corporation having an aggregate market value equal to 10% or
more of either the aggregate market value of all the assets of the corporation
or the aggregate market value of all the outstanding stock of the corporation,
(iii) certain transactions resulting in the issuance or transfer by the
corporation of stock of the corporation to the interested stockholder, (iv)
certain transactions involving the corporation which have the effect of
increasing the proportionate share of the stock of any class or series of the
corporation which is owned by the interested stockholder or (v) certain
transactions in which the interested stockholder receives financial benefits
provided by the corporation. An "interested stockholder" generally is any
person (other than the corporation and any direct or indirect majority-owned
subsidiary of the corporation) that (x) owns 15% or more of the outstanding
voting stock of the corporation, (y) is an affiliate or associate of the
corporation and was the owner of 15% or more of the outstanding voting stock
of the corporation at any time within the three-year period prior to the date
on which it is sought to be determined whether such person is an interested
stockholder or (z) is an affiliate or associate of any such person described
in (x) or (y).
STOCK EXCHANGE LISTING
Both the Class A Common Stock and the Class B Common Stock are listed on the
NYSE, CSE and PE. The trading symbols for the Class A Common Stock and Class B
Common Stock on these exchanges are "RTNA" and "RTNB," respectively.
TRANSFER AGENT
State Street Bank and Trust Company is the Transfer Agent for the Common
Stock and the Rights Agent for the Rights.
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DESCRIPTION OF SECURITIES WARRANTS
The Company may issue Securities Warrants for the purchase of Debt
Securities, Preferred Stock or Class B Common Stock. Securities Warrants may
be issued independently or together with Debt Securities or shares of
Preferred Stock or Class B Common Stock offered by any Prospectus Supplement
and may be attached to or separate from such Debt Securities or shares of
Preferred Stock or Class B Common Stock. Each series of Securities Warrants
will be issued under a separate warrant agreement (a "Securities Warrant
Agreement") to be entered into between the Company and State Street Bank and
Trust Company of Boston, Massachusetts or another bank or trust company, as
warrant agent (the "Securities Warrant Agent"), all as set forth in the
Prospectus Supplement relating to the particular issue of offered Securities
Warrants. The Securities Warrant Agent will act solely as an agent of the
Company in connection with the Securities Warrants and will not assume any
obligation or relationship of agency or trust for or with any holders of
Securities Warrants or beneficial owners of Securities Warrants. Copies of the
forms of Securities Warrant Agreements, including the forms of Securities
Warrant Certificates representing the Securities Warrants, are filed as
exhibits to the Registration Statement of which this Prospectus is a part. The
following summary of certain provisions of the Securities Warrants does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, the provisions of the Securities Warrant Agreements.
The Prospectus Supplement relating to the particular issue of Securities
Warrants offered thereby will set forth the terms of such Securities Warrants,
including, where applicable: (i) the designation, aggregate principal amount,
currencies, denominations and terms of the series of Debt Securities
purchasable upon exercise of Securities Warrants to purchase Debt Securities
and the price at which such Debt Securities may be purchased upon such
exercise; (ii) the designation, number, stated value and terms (including,
without limitation, liquidation, dividend, conversion and voting rights) of
the series of Preferred Stock purchasable upon exercise of Securities Warrants
to purchase Preferred Stock and the price at which such number of shares of
Preferred Stock of such series may be purchased upon such exercise; (iii) the
number of shares of Class B Common Stock purchasable upon the exercise of
Securities Warrants to purchase Class B Common Stock and the price at which
such number of shares of Class B Common Stock may be purchased upon such
exercise; (iv) the date on which the right to exercise such Securities
Warrants shall commence and the date (the "Expiration Date") on which such
right shall expire; (v) U.S. federal income tax consequences applicable to
such Securities Warrants; and (vi) any other terms of such Securities
Warrants. Securities Warrants for the purchase of Preferred Stock and Common
Stock will be offered and exercisable for U.S. dollars only. Securities
Warrants will be issued in registered form only. The exercise price for
Securities Warrants will be subject to adjustment in accordance with the
Applicable Prospectus Supplement.
Each Securities Warrant will entitle the holder thereof to purchase such
principal amount of Debt Securities or such number of shares of Preferred
Stock or Class B Common Stock, as the case may be, at such exercise price as
shall in each case be set forth in, or calculable from, the Prospectus
Supplement relating to the offered Securities Warrants, which exercise price
may be subject to adjustment upon the occurrence of certain events as set
forth in such Prospectus Supplement. After the close of business on the
Expiration Date (or such later date to which such Expiration Date may be
extended by the Company), unexercised Securities Warrants will become void.
The place or places where, and the manner in which, Securities Warrants may be
exercised shall be specified in the Prospectus Supplement relating to such
Securities Warrants.
Prior to the exercise of any Securities Warrants to purchase Debt
Securities, holders of such Securities Warrants will not have any of the
rights of holders of the Debt Securities purchasable upon such exercise,
including the right to receive payments of principal of, premium, if any, or
interest on the Debt Securities purchasable upon such exercise or to enforce
covenants in the Applicable Indenture. Prior to the exercise of any Securities
Warrants to purchase Preferred Stock or Class B Common Stock, holders of such
Securities Warrants will not have any rights of holders of the Preferred Stock
or Class B Common Stock purchasable upon such exercise, including the right to
receive payments of dividends, if any, on the Preferred Stock or Class B
Common Stock purchasable upon such exercise or to exercise any applicable
right to vote.
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PLAN OF DISTRIBUTION
The Company may sell the Offered Securities in or outside the United States
through underwriters or dealers, directly to one or more purchasers, through
agents or a combination of any such method of sale. The Prospectus Supplement
with respect to the Offered Securities will set forth the terms of the
offering of the Offered Securities, including the name or names of any
underwriters, dealers or agents, the purchase price of the Offered Securities
and the proceeds to the Company from such sale, any delayed delivery
arrangements, any underwriting discounts and other items constituting
underwriters' compensation, the initial public offering price, any discounts
or concessions allowed or re-allowed or paid to dealers, and any securities
exchanges on which the Offered Securities may be listed.
If underwriters are used in the sale, the Offered Securities will be
acquired by the underwriters or dealers for their own account and may be
resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. The Offered Securities may be offered to the public
either through underwriting syndicates represented by one or more managing
underwriters or directly by one or more firms acting as underwriters. The
underwriter or underwriters with respect to a particular underwritten offering
of Offered Securities will be named in the Prospectus Supplement relating to
such offering, and if an underwriting syndicate is used, the managing
underwriter or underwriters will be set forth on the cover of such Prospectus
Supplement. Unless otherwise set forth in the Prospectus Supplement relating
thereto, the obligations of the underwriters or agents to purchase the Offered
Securities will be subject to conditions precedent, and the underwriters will
be obligated to purchase all the Offered Securities if any are purchased. The
initial public offering price and any discounts or concessions allowed or re-
allowed or paid to dealers may be changed from time to time.
If dealers are used in the sale of Offered Securities with respect to which
this Prospectus is delivered, the Company will sell such Offered Securities to
the dealers as principals. The dealers may then resell such Offered Securities
to the public at varying prices to be determined by such dealers at the time
of resale. The names of the dealers and the terms of the transaction will be
set forth in the Prospectus Supplement relating thereto.
Offered Securities may be sold directly by the Company or through agents
designated by the Company from time to time at fixed prices, which may be
changed, or at varying prices determined at the time of sale. Any agent
involved in the offer or sale of the Offered Securities with respect to which
this Prospectus is delivered will be named, and any commissions payable by the
Company to such agent will be set forth, in the Prospectus Supplement relating
thereto. Unless otherwise indicated in the Prospectus Supplement, any such
agent will be acting on a best efforts basis for the period of its
appointment.
Offered Securities may be sold directly by the Company to institutional
investors or others, who may be deemed to be underwriters within the meaning
of the Securities Act with respect to any resale thereof. The terms of any
such sales will be described in the Applicable Prospectus Supplement.
In connection with the sale of the Offered Securities, underwriters or
agents may receive compensation from the Company or from purchasers of Offered
Securities for whom they may act as agents in the form of discounts,
concessions or commissions. Underwriters, agents and dealers participating in
the distribution of the Offered Securities may be deemed to be underwriters,
and any discounts or commissions received by them from the Company and any
profit on the resale of the Offered Securities by them may be deemed to be
underwriting discounts or commissions under the Securities Act.
If so indicated in the Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers from certain types of
institutions to purchase Offered Securities from the Company at the public
offering price set forth in the Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in
the future. Such contracts will be subject only to those conditions set forth
in the Prospectus Supplement, and the Prospectus Supplement will set forth the
commission payable for solicitation of such contracts.
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Some or all of the Offered Securities may be new issues of securities with
no established trading market. Any underwriters to whom Offered Securities are
sold by the Company for public offering and sale may make a market in such
Offered Securities, but such underwriters will not be obligated to do so and
may discontinue any market making at any time without notice. No assurance can
be given as to the liquidity of or the trading markets for any Offered
Securities.
In order to facilitate the offering of the Offered Securities, any
underwriters or agents, as the case may be, involved in the offering of such
Offered Securities may engage in transactions that stabilize, maintain or
otherwise affect the price of the Offered Securities or any other securities
the prices of which may be used to determine payments on such Offered
Securities. Specifically, the underwriters or agents, as the case may be, may
overallot in connection with the offering, creating a short position in such
Offered Securities for their own account. In addition, to cover overallotments
or to stabilize the price of such Offered Securities or any such other
securities, the underwriters or agents, as the case may be, may bid for, and
purchase, such Offered Securities or any such other securities in the open
market. Finally, in any offering of such Offered Securities through a
syndicate of underwriters, the underwriting syndicate may reclaim selling
concessions allowed to an underwriter or a dealer for distributing such
Offered Securities in the offering if the syndicate repurchases previously
distributed Offered Securities in transactions to cover syndicate short
positions, in stabilization transactions or otherwise. Any of these activities
may stabilize or maintain the market price of the Offered Securities above
independent market levels. The underwriters or agents, as the case may be, are
not required to engage in these activities, and may end any of these
activities at any time.
Agents, dealers and underwriters may be entitled under agreements entered
into with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments that such agents, dealers, or
underwriters may be required to make with respect thereto.
Certain of the underwriters, dealers or agents and their affiliates may be
customers of, engage in transactions with and perform services for the Company
in the ordinary course of business.
VALIDITY OF OFFERED SECURITIES
The validity of the Offered Securities will be passed upon for the Company
by Christoph L. Hoffmann, Esq., Executive Vice President Law and Corporate
Administration and Secretary of the Company, and for any underwriters by
Cravath, Swaine & Moore of New York City. As of the date of this Prospectus,
Christoph L. Hoffmann, Esq. holds 32,977 shares of Class B Common Stock and
options to acquire 99,587 shares of Class B Common Stock of the Company.
EXPERTS
The consolidated balance sheets of Former Raytheon Company as of December
31, 1996 and 1995 and the related statements of income, stockholders' equity
and cash flows for each of the three years in the period ended December 31,
1996 and the related financial statement schedule, incorporated by reference
in this Prospectus, have been incorporated herein in reliance on the reports
of Coopers & Lybrand L.L.P., independent accountants, given on the authority
of that firm as experts in accounting and auditing.
The financial statements of TI Defense as of December 31, 1996 and 1995 and
for the three years ended December 31, 1996, incorporated by reference in this
Prospectus, have been incorporated herein in reliance on the reports of Ernst
& Young LLP, independent auditors, given on the authority of that firm as
experts in accounting and auditing.
The financial statements of Hughes Defense as of December 31, 1996 and 1995
and for each of the three years in the period ended December 31, 1996,
incorporated by reference in this Prospectus, have been incorporated herein in
reliance on the reports of Deloitte & Touche LLP, independent auditors, given
on the authority of that firm as experts in accounting and auditing.
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