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EXHIBIT 99.1
C3I [PHOTO]
[PHOTO] Aircraft
Electronic Systems Integration Systems
[PHOTO] [PHOTO]
[PHOTO] Raytheon
Technical Services
Raytheon
Lehman Industrial Conference
[PHOTO] [PHOTO] Raytheon Commercial
Raytheon Systems Limited Raytheon Aircraft Electronics
[PHOTO]
December 1, 2000
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Raytheon
Disclosure Regarding Forward-Looking Statements
Certain statements made in this presentation contain forward-looking statements,
within the meaning of the Private Securities Litigation Reform Act, regarding
the company's future plans, objectives and expected performance. Specifically,
statements that are not historical facts, including statements accompanied by
words such as "believe," "expect," "anticipate," "estimate," "intend," or
"plan," are intended to identify forward-looking statements and convey the
uncertainty of future events or outcomes.
The company cautions readers that any such forward-looking statements are based
on assumptions that the company believes are reasonable, but are subject to a
wide-range of risks, and there is no assurance that actual results may not
differ materially. Information regarding the factors that could cause actual
results to differ from projected results can be found in the company's reports
filed with the SEC, including Raytheon's most recent Forms 10-K and 10-Q.
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Raytheon
Major Strategic Initiatives
1. Significantly increase focus on
Focus on cash and productivity
Fundamentals
2. Drive a culture of performance and
accountability
3. Manage the business to generate
Strengthen the cash flow
balance sheet
4. Monetize poorly-positioned
businesses
5. Grow businesses faster than their
Achieve real markets
growth
6. Exploit potential of the commercial
electronics businesses
Initiatives for improved shareholder value
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Raytheon
Progress to Date
o Seeing results from Raytheon Six Sigma
o Improving our basic processes
o Meeting our financial management goals
o Dealing with portfolio issues
o Building strong backlog for the future
Focus and execution producing tangible results
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Raytheon
Focus on Fundamentals
Raytheon Six Sigma
o Trained 448 experts with another 136 in training
o Qualified 620 specialists with another 4,300 on the way
o Started 830 projects with 315 already completed
o Potential `00 benefits:
- $50+ million in operating income
- $75+ million in cash flow
Raytheon Six Sigma is driving productivity
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Raytheon
Focus on Fundamentals
Supply Chain Management
o $7.1 billion annual spend
o $100 million through reverse auction process:
Reverse Auctions: Historic Spend
Relocation $58 M
International Freight $ 7 M 15 - 20% Expected
Savings
Industrial Gas $ 6 M
Property & Maintenance Svcs. $29 M
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o Targeting $200+ million through additional channels with potential
20-25% savings
Unlocking the power of enterprise leverage
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Raytheon
Focus on Fundamentals
Driving a New Culture
o 40% of top 250 people new to job within the last year
o Reduced 1-2 layers of management
o New senior executives:
- Finance, Human Resources
- Manufacturing, Supply Chain
o Launched extensive learning initiatives with RLI
Lean, agile culture to drive future results
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Raytheon
Focus on Fundamentals
Improving Basic Processes
o Integrated Product Development System
o Earned Value Management System
o ECAC disciplines
o Investment in systems and tools
Process discipline contributes to reliability
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Raytheon
EVMS Program Analysis
Behind Schedule and Underspent Ahead of Schedule and Underspent
C
P Target Area
I
Behind Schedule and Overspent Ahead of Schedule and Overspent
(SPI)
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Raytheon
Strengthen the Balance Sheet
Increased Focus on Cash
o Improved DFAS processing time by 3 days $ 75 million
o Increased use of electronic billing process enhancements $ 25 million
o Greater use of milestone payments $150 million
o Benefit from Paid Cost Rule change $ 60 million
Over 5,000 people will be trained in
cash and balance sheet awareness this year
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Raytheon
Strengthen the Balance Sheet
Financial Management Initiatives
o Monetize non-core businesses to reduce debt:
- expected divestiture proceeds $400+ million in `00
- additional opportunities exist for $250+ million
o Reduce off-balance sheet debt:
- down $1.2 billion through September
- finding alternative financing for RAC customers
Improving credit quality and financial flexibility
remains a top priority
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Raytheon
Achieve Real Growth
DoD Procurement + R&D Outlays
[LINE GRAPH] 4% CAGR
`00-'04
* Raytheon Company estimates relative to FY `99 Actual and expected FY `01
budget
Outlays, our best "proxy" for revenues, showing
modest growth
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Raytheon
Achieve Real Growth
Building a Strong Backlog
o Up 14% year-over-year through September
o Significant contributors over past 18 months:
- THAAD - ASTOR
- EKV - Horizon
- Javelin - Antarctica
- Classified - NRO
o Average backlog life now extended to over 3 years
Ensuring our base for future revenue streams
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Raytheon
Achieve Real Growth
Top `01 DoD Modernization Programs
5-Year
DoD Raytheon Bookings
Program Participation Potential
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BMD SM-3 LEAP, EKV $2-5 B
CVN-77 Multi-Function Radar, Volume Search 1-3 B
F-22 Core Integrated Processor 2-4 B
DDG-51 Electronics Integration, Tomahawk 1-3 B
F/A-18 E/F Radar, EW, AMRAAM 1-3 B
C-17 -- none -- 0
NSSN Command & Control, Torpedoes 1-2 B
V-22 Airborne EO Systems 1-2 B
LPD-17 Surface Ship System Integration 1-2 B
JSF Integrated Radar, EO Targeting, EW 1-2 B
Raytheon plays in 9 of DoD's top 10 programs
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Raytheon
Achieve Real Growth
Raytheon's Role in Missile Defense
o National Missile Defense
- Providing EKV, X-Band and Early Warning Radars
- Development and testing continue, despite delay in deployment
[PHOTO]
Up to $5 billion
total potential
o Theater Missile Defense
- Major player in all aspects of TMD
- FY `01 budget at full funding, with some plus ups
Raytheon will play a major role in a key strategic program
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Raytheon
Achieve Real Growth
Raytheon's Role in JSF Electronics
[GRAPHIC]
Potential
Processor
Distributed IR Raytheon
System
Targeting FLIR
Common RF System Integrator
Electronic Warfare
Radar Supplier
Could
mean up to
$30 billion
over the
long term
% of Aircraft
Flyaway Cost
Wide-ranging capabilities = Larger role
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Raytheon
Achieve Real Growth
Raytheon's Role in Command & Control
Cooperative Engagement Capability
o Transmit information gathered from shipboard sensors to aircraft and other
ships
o 26 prototype systems have been delivered to U.S. Navy
o 156 production units planned
o Potential for other U.S. services and international naval applications
[PHOTO]
$3 billion potential
over 10 years
Proven capability to expand the vision of the fleet
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Raytheon
Leveraging Defense Technologies
in Commercial Markets
o IR sensors and imagery
o Optical components
o Wireless communications
o Information assurance and security
[PHOTO]
[PHOTO]
[PHOTO]
Opportunities to create significant shareholder value
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Raytheon
Raytheon Aircraft Company
Market
o Continued strength in general aviation
o Some weakness in commuter market
[PHOTO]
Competitive Position/Performance
o Well regarded product/brand
o Modernizing its product line with composite technology
o Balance of products and services
o Production cost issues being closely monitored
o Premier I certification delay
Significant cash flow returns from
new product introductions
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Raytheon
Premier I Certification Progress
Flight Test Summary
[LINE GRAPH]
Certification now 95% complete as we work through
tire burst and rudder centering issues
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Raytheon
Our Goals for Year 2000
Earnings per Share $1.40 - 1.50
Net debt at year-end $9.2 B
Off balance sheet financing Sell $0.5B
Operating income and Sequential
cash flow improvement
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Raytheon
Risks and Opportunities
Risks
o International bookings
o Cost issues:
- BBJ
- RAC
o 1900D market outlook
o Premier I delay
o RE&C retained contracts
Opportunities
o Productivity initiatives flowing to bottom line
o Cash management efforts:
- Collection practice improvements
- Timing on international collections
- Real process productivity gains
o Divestitures
Working to maintain the balance
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Raytheon
A Preliminary View of 2001
o Top line growth in line with markets:
- Defense markets @ 2-4%
- Commercial markets @ 8+%
- General aviation market @ 0-2%
o EPS of $1.55 - 1.70
- Stabilized defense margins
- Improving commercial margins
- No increase in international mix
- No material change in interest expense
o Improvement in operating cash flow
- Minimal restructuring spending
- Raytheon Six Sigma focuses on the cash cycle
- Modest proceeds from non-core divestitures
Improving fundamentals produce better financial results
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Raytheon
Lehman Industrial Conference
December 1, 2000
