Raytheon Reports First Quarter EPS From Continuing Operations of $0.28; Income From Continuing Operations Up 21 Percent

Apr 18, 2001, 01:00 ET from Raytheon Company

    LEXINGTON, Mass., April 18 /PRNewswire/ -- Raytheon Company
 (NYSE:   RTNA, RTNB) today reported sales of $4.0 billion for the first quarter
 of 2001, a slight decline from $4.2 billion in sales in the first quarter a
 year ago. Income from continuing operations was $97 million, or $0.28 per
 diluted share, compared with $80 million, or $0.24 per diluted share, in last
 year's first quarter. Backlog at the end of the quarter was $25.9 billion, up
 $1.4 billion over the course of the last year.
     Sales were down due to the impact of divestitures and a decline in
 aircraft shipments. Stronger profits in the company's defense electronics
 businesses pushed income from continuing operations up 21 percent from last
 year.  Cash outflow from operations was $573 million in the quarter, compared
 with $520 million a year ago.  Excluding the effects of discontinued
 operations, cash outflow from Raytheon's core businesses was $530 million, a
 significant improvement from $706 million in the first quarter of 2000.  Cash
 flow at the company is usually negative in the first calendar quarter.  Net
 debt at the end of the quarter was $9.6 billion, compared with $10.0 billion
 at the end of the first quarter 2000.
     "The improvement in earnings and operating cash flow from continuing
 operations year-over-year is the latest demonstration that we're making real
 progress in transforming the company," said Raytheon's Chairman and Chief
 Executive Officer Daniel P. Burnham. "The performance within defense
 electronics was particularly strong, contributing to higher margins relative
 to both last year and to our plan."
     Including the impact of discontinued operations the company posted a net
 loss in the first quarter of $124 million, or $0.36 per diluted share, versus
 a net loss of $181 million, or $0.54 per diluted share, in the first quarter
 of 2000.
 
     Electronic Systems
     Electronic Systems (ES) reported first quarter sales of  $1.9 billion, up
 slightly compared with last year, after adjusting for the fourth quarter 2000
 divestiture of the optical systems business.  Operating income was $234
 million, up 28 percent from $183 million in the first quarter of 2000,
 continuing the margin improvement that began in 2000.  ES had backlog of $11.7
 billion at the end of the quarter.
     During the quarter, ES was awarded a $119 million contract from the U.S.
 Navy for Standard Missile 2 production.  The business also had a successful
 flight test of a Standard Missile 3 (SM-3) as part of the Navy's Theater Wide
 Ballistic Missile Defense program.  SM-3 is designed to intercept an incoming
 theater ballistic missile outside the earth's atmosphere.
 
     Command, Control, Communication and Information Systems
     Command, Control, Communication and Information Systems (C3I) had first
 quarter sales of $855 million, up 4 percent after adjusting for the February
 2000 divestiture of the flight simulation business. Operating income in the
 quarter was $84 million, up 22 percent from $69 million last year.  The
 increase was driven by lower business development expenses and higher contract
 margins.  C3I had backlog of $5.3 billion at the end of the quarter.
     During the quarter, C3I announced that its Standard Terminal Automation
 Replacement System (STARS) is ready for test and deployment, and that plans to
 produce and field the full STARS are on schedule.  STARS, the next generation
 of air traffic control systems, is the largest and one of the most critical
 pieces of the Federal Aviation Administration's (FAA) attempt to modernize the
 National Airspace System for the 21st century.
 
     Technical Services
     Technical Services (TS) reported sales of $479 million for the first
 quarter, up 20 percent after adjusting for the February 2000 divestiture of
 the flight simulation business. Operating income was $37 million, up 37
 percent from $27 million in the first quarter of 2000.  The business had
 backlog of $2.0 billion at the end of the quarter.
     During the quarter, TS was selected to provide information technology
 services to NASA's Langley Research Center under the U.S. General Services
 Administration's Federal Technology Service Millennia contract.  The task
 order is valued at $183 million and includes a one year base period and seven
 one year options.
 
     Aircraft Integration Systems
     Aircraft Integration Systems (AIS) had sales of $264 million for the
 quarter, compared with $298 million a year ago.   Operating income in the
 quarter was $13 million, off slightly from $15 million in the first quarter of
 2000.  The decrease in sales was due primarily to lower bookings in 2000 and
 delays in new 2001 programs.  AIS had backlog of $2.0 billion at the end of
 the quarter.
 
     Commercial Electronics
     Commercial Electronics reported sales of $121 million for the quarter,
 compared with $174 million in the first quarter last year.  The decrease in
 sales is due to the divestiture of the Recreational Marine business during the
 first quarter of 2001, combined with a favorable settlement on a commercial
 training contract during the first quarter of 2000.  The business posted an
 operating loss of $6 million for the quarter, compared with operating income
 of $20 million a year ago.   The decrease in income was driven by the
 favorable settlement in commercial training last year, approximately $6
 million in new technology investments, and lower volume at the RF Components
 unit, primarily due to reduced  industry-wide demand for cellular handset
 components.
 
     Raytheon Aircraft Company
     Raytheon Aircraft Company (RAC) reported sales of $637 million, compared
 with $815 million for the first quarter of 2000.  RAC had a first quarter
 operating loss of $4 million, compared with operating income of $30 million in
 the first quarter of 2000.  RAC shipped 92 aircraft in the quarter, compared
 with 137 a year ago.  Operating income was down primarily due to lower volume
 and a contract cost adjustment on a fixed price T-6A military trainer option
 (Lot 8) that was exercised earlier than the company had expected.  Lot 8 is
 the last outstanding T-6A fixed-price purchase option.  The business had
 backlog of  $4.3 billion at the end of the quarter.
     On March 23, RAC's Premier I entry-level business jet won FAA
 certification.  RAC expects to deliver 36 of the jets this year and has orders
 for more than 300 of the $5.3 million jets.
     Raytheon has agreed to divest a majority stake in Raytheon Aerospace
 Company, a subsidiary of RAC, to Veritas Capital Inc. Raytheon will receive
 $153 million in cash at closing, which is expected in the second quarter of
 2001.  In addition to the cash, Raytheon will retain $47 million in
 receivables and $70 million in preferred and common equity in the Mississippi-
 based aviation support and logistics business.  The impact of the divestiture
 on net debt is expected to be approximately $200 million this year.
     As previously announced, RAC plans a workforce reduction in administrative
 and managerial staff in its Kansas operations.  The action is a precautionary
 move to help the business stay ahead of a downturn in the economy.
 
     Discontinued Operations
     The company recorded a first quarter charge to discontinued operations of
 $325 million pretax, or $0.61 per diluted share, which reflects the company's
 current best estimate, based on information provided by Washington Group
 International (WGI), of the cost to complete two Massachusetts construction
 projects on which WGI defaulted and Raytheon has performance guarantees.  As
 previously announced, Raytheon expects consolidated operating cash flow to be
 affected by the full amount of the charge over the next four to six quarters.
 The company's outlook for earnings from continuing operations is not affected
 by the charge.  The total first quarter loss from discontinued operations was
 $221 million after-tax, or $0.64 per diluted share.
 
     With headquarters in Lexington, Mass., Raytheon Company is a global
 technology leader in defense, government and commercial electronics, and
 business and special mission aircraft.
 
     Forward-Looking Statements
     Certain statements made in this release contain forward-looking statements
 within the meaning of the Private Securities Litigation Reform Act of 1995
 regarding the company's future plans, objectives, and expected performance.
 Specifically, statements that are not historical facts, including statements
 accompanied by words such as "believe," "expect," "estimate," "intend," or
 "plan" are intended to identify forward-looking statements and convey the
 uncertainty of future events or outcomes.  The company cautions readers that
 any such forward-looking statements are based on assumptions that the company
 believes are reasonable, but are subject to a wide range of risks, and actual
 results may differ materially.  Important factors that could cause actual
 results to differ include, but are not limited to: differences in anticipated
 and actual program results; risks inherent with large long-term fixed price
 contracts, particularly the ability to contain cost growth; the ultimate
 resolution of contingencies and legal matters; the ability to realize
 anticipated cost efficiencies; timely development and certification of new
 aircraft; the effect of market conditions, particularly in relation to the
 general aviation and commuter aircraft markets; the impact on recourse
 obligations of RAC due to changes in the collateral values of financed
 aircraft, particularly commuter aircraft; the ability to finance ongoing
 operations at attractive rates; government customers' budgetary constraints;
 government import and export policies; termination of government contracts;
 financial and governmental risks related to international transactions; delays
 and uncertainties regarding the timing of the award of international programs;
 the integration of acquisitions; the impact of competitive products and
 pricing; and risks associated with the continuing project obligations and
 retained assets and liabilities of Raytheon Engineers & Constructors,
 including the final determination by the company of the required expenditures
 to complete the two Massachusetts construction projects, the confirmation of
 the actual physical progress completed at the time of WGI's abandonment of
 those projects, the impacts associated with the re-mobilization of the
 projects and WGI's compliance with its contractual obligations and cooperation
 with Duke Fluor Daniel, the contractor hired by Raytheon to complete the two
 projects, in Duke Fluor Daniel's assumption of the construction activities,
 among other things. Further information regarding the factors that could cause
 actual results to differ materially from projected results can be found in the
 company's reports filed with the Securities and Exchange Commission, including
 "Item 1-Business" in the company's Annual Report on Form 10-K for the year
 ended December 31, 2000.
 
     Conference Call on First Quarter 2001 Results
     There will be a live webcast of Raytheon's earnings teleconference on
 www.raytheon.com beginning at 9 a.m. ET on April 19 to review the company's
 first quarter results. Financial analysts may participate in the call and the
 question and answer session that follows the review. A Real Audio player or
 Windows Media(TM) player is required to access the webcast.
 
     A replay of the conference will be run from Noon ET April 19 through Noon
 ET April 23. The replay number is 800-633-8284 for U.S. callers and
 858-812-6440 for international callers.  The reservation number for the replay
 is 18526505.
 
     Attachment A
 
     Raytheon Company
     Financial Information
     First Quarter 2001
 
     (In millions, except per share amounts)              Three Months Ended
                                                         01-Apr-01  02-Apr-00
 
     Net sales                                              $3,968     $4,231
 
     Cost of sales                                           3,232      3,481
     Administrative and selling expenses                       294        311
     Research and development expenses                         126        123
 
     Total operating expenses                                3,652      3,915
 
     Operating income                                          316        316
 
     Interest expense, net                                     180        180
     Other income, net                                         (30)        (5)
 
     Non-operating expense, net                                150        175
 
     Income from continuing operations
      before taxes                                             166        141
 
     Federal and foreign income taxes                           69         61
 
     Income from continuing operations                          97         80
 
     Discontinued operations
       Loss from discontinued operations,
        net of tax                                               -        (70)
       Loss on disposal of discontinued
        operations, net of tax                                (221)      (191)
                                                              (221)      (261)
 
     Net loss                                                $(124)     $(181)
 
     Earnings per share from continuing operations
       Basic                                                 $0.29      $0.24
       Diluted                                               $0.28      $0.24
 
     Loss per share from discontinued operations
       Basic                                                $(0.65)    $(0.77)
       Diluted                                              $(0.64)    $(0.77)
 
     Loss per share
       Basic                                                $(0.36)    $(0.54)
       Diluted                                              $(0.36)    $(0.54)
 
     Average shares outstanding
       Basic                                                 340.0      338.3
       Diluted                                               345.1      338.7
 
 
     Attachment B
 
     Raytheon Company
     Segment Information
     First Quarter 2001
 
     (In millions)
 
                                                             Operating Income
                          Net Sales       Operating Income     As a Percent
                                                                of Sales
                     Three Months Ended  Three Months Ended  Three Months Ended
                    01-Apr-01 02-Apr-00 01-Apr-01 02-Apr-00 01-Apr-01 02-Apr-00
 
     Electronic
      Systems          $1,864     $1,878   $ 234    $ 183     12.6%     9.7%
     Command, Control,
      Communication
      and Information
      Systems             855        846      84       69      9.8%     8.2%
     Technical Services   479        421      37       27      7.7%     6.4%
     Aircraft
      Integration
      Systems             264        298      13       15      4.9%     5.0%
     Commercial
      Electronics         121        174     (6)       20     -5.0%    11.5%
     Aircraft             637        815     (4)       30     -0.6%     3.7%
     Corporate and
      Eliminations      (252)      (201)    (42)     (28)
 
     Total             $3,968     $4,231   $ 316    $ 316      8.0%     7.5%
 
     Note: Corporate and Eliminations includes certain company-wide activities
 that have not been attributed to a particular segment and intercompany
 eliminations.
 
 
     Attachment C
 
     Raytheon Company
     Other Information
     First Quarter 2001
 
     (In millions, except total employees and aircraft shipments)
 
                                                             Backlog
                                                      01-Apr-01    02-Apr-00
 
     Electronic Systems                               $11,738        $10,953
     Command, Control, Communication
      and Information Systems                           5,305          4,764
     Technical Services                                 2,006          1,913
     Aircraft Integration Systems                       2,048          2,262
     Commercial Electronics                               488            505
     Aircraft                                           4,280          4,143
 
                                                      $25,865        $24,540
 
     U.S. government backlog included above           $17,099        $15,512
 
 
                                                             Total Employees
                                                     01-Apr-01       02-Apr-00
 
     Total employees                                   92,300         94,200
 
 
                                                    Aircraft Shipments (Units)
                                                          Three Months Ended
                                                    01-Apr-01        02-Apr-00
 
     Hawker                                                13             15
     Beechjet (Commercial)                                  8             13
     King Air                                              29             50
     1900D Commuter                                         3             12
     Pistons                                               28             40
     T-6A                                                   9              7
     Special Mission                                        2              -
       Total aircraft shipments                            92            137
 
 
 
     Attachment D
 
     Raytheon Company
     Preliminary Financial Information
     First Quarter 2001
 
     (In millions)
 
     Balance sheets
                                             01-Apr-01   31-Dec-00   02-Apr-00
     Assets
     Cash and cash equivalents                   $483        $871        $181
     Accounts receivable                          447         505         834
     Contracts in process                       3,951       4,061       4,448
     Inventories                                2,218       1,908       1,935
     Deferred federal and foreign income
      taxes                                       533         476         430
     Prepaid expenses and other current
      assets                                      156         178         232
     Net assets from discontinued
      operations                                    -          14         127
       Total current assets                     7,788       8,013       8,187
 
     Property, plant and equipment, net         2,498       2,491       2,451
     Goodwill, net                             13,182      13,281      13,562
     Other assets, net                          3,059       2,992       2,802
         Total assets                         $26,527     $26,777     $27,002
 
     Liabilities and Stockholders' Equity
     Notes payable and current portion of
      long-term debt                           $1,185        $877      $1,109
     Advance payments, less contracts in
      process                                     941       1,135         993
     Accounts payable                             969       1,099       1,114
     Accrued salaries and wages                   545         549         575
     Other accrued expenses                     1,029       1,205       1,582
     Net liabilities from discontinued
      operations                                  281           -           -
       Total current liabilities                4,950       4,865       5,373
 
     Accrued retiree benefits and other
      long-term liabilities                     1,271       1,262       1,348
     Deferred federal and foreign income
      taxes                                       748         773         507
     Long-term debt                             8,858       9,054       9,042
     Stockholders' equity                      10,700      10,823      10,732
         Total liabilities and
          stockholders' equity                $26,527     $26,777     $27,002
 
 
     Debt-to-capital ratio
                                             01-Apr-01   31-Dec-00   02-Apr-00
 
     Debt                                     $10,043      $9,931     $10,151
     Capital                                   20,743      20,754      20,883
       Debt-to-capital ratio                    48.4%       47.9%       48.6%
 
 
     Attachment E
 
     Raytheon Company
     Preliminary Cash Flow Information
     First Quarter 2001
 
     (In millions)
 
     Cash flow information
                                                         Three Months Ended
                                                       01-Apr-01   02-Apr-00
 
     Income from continuing operations                  $97                $80
     Depreciation                                        72                 67
     Amortization                                       105                104
     Working capital                                   (702)              (713)
     Capital spending                                  (103)              (113)
     Internal use software spending                     (35)               (31)
     Discontinued operations                            (43)               186
     Other                                               36               (100)
        Subtotal - operating cash flow                 (573)              (520)
 
     Net activity in financing receivables               28                  4
     Divestitures                                       111                160
     Dividends                                          (68)               (68)
     Other                                                2                 (7)
           Change in net debt                         $(500)             $(431)
 
     Restructuring amounts included in
        operating cash flow above                       $16                $88
 
 
     Segment operating cash flow
      information
                                                        Three Months Ended
                                                     01-Apr-01        02-Apr-00
 
     Electronic Systems                                 $77               $(44)
     Command, Control, Communication
        and Information Systems                        (158)              (150)
     Technical Services                                 (29)               (38)
     Aircraft Integration Systems                      (112)                15
     Commercial Electronics                             (12)                56
     Aircraft                                          (242)              (341)
     Discontinued operations                            (43)               186
     Other                                              (54)              (204)
                                                      $(573)             $(520)
 
     Contact:
     David Polk
     781.860.2386
 
 

SOURCE Raytheon Company
    LEXINGTON, Mass., April 18 /PRNewswire/ -- Raytheon Company
 (NYSE:   RTNA, RTNB) today reported sales of $4.0 billion for the first quarter
 of 2001, a slight decline from $4.2 billion in sales in the first quarter a
 year ago. Income from continuing operations was $97 million, or $0.28 per
 diluted share, compared with $80 million, or $0.24 per diluted share, in last
 year's first quarter. Backlog at the end of the quarter was $25.9 billion, up
 $1.4 billion over the course of the last year.
     Sales were down due to the impact of divestitures and a decline in
 aircraft shipments. Stronger profits in the company's defense electronics
 businesses pushed income from continuing operations up 21 percent from last
 year.  Cash outflow from operations was $573 million in the quarter, compared
 with $520 million a year ago.  Excluding the effects of discontinued
 operations, cash outflow from Raytheon's core businesses was $530 million, a
 significant improvement from $706 million in the first quarter of 2000.  Cash
 flow at the company is usually negative in the first calendar quarter.  Net
 debt at the end of the quarter was $9.6 billion, compared with $10.0 billion
 at the end of the first quarter 2000.
     "The improvement in earnings and operating cash flow from continuing
 operations year-over-year is the latest demonstration that we're making real
 progress in transforming the company," said Raytheon's Chairman and Chief
 Executive Officer Daniel P. Burnham. "The performance within defense
 electronics was particularly strong, contributing to higher margins relative
 to both last year and to our plan."
     Including the impact of discontinued operations the company posted a net
 loss in the first quarter of $124 million, or $0.36 per diluted share, versus
 a net loss of $181 million, or $0.54 per diluted share, in the first quarter
 of 2000.
 
     Electronic Systems
     Electronic Systems (ES) reported first quarter sales of  $1.9 billion, up
 slightly compared with last year, after adjusting for the fourth quarter 2000
 divestiture of the optical systems business.  Operating income was $234
 million, up 28 percent from $183 million in the first quarter of 2000,
 continuing the margin improvement that began in 2000.  ES had backlog of $11.7
 billion at the end of the quarter.
     During the quarter, ES was awarded a $119 million contract from the U.S.
 Navy for Standard Missile 2 production.  The business also had a successful
 flight test of a Standard Missile 3 (SM-3) as part of the Navy's Theater Wide
 Ballistic Missile Defense program.  SM-3 is designed to intercept an incoming
 theater ballistic missile outside the earth's atmosphere.
 
     Command, Control, Communication and Information Systems
     Command, Control, Communication and Information Systems (C3I) had first
 quarter sales of $855 million, up 4 percent after adjusting for the February
 2000 divestiture of the flight simulation business. Operating income in the
 quarter was $84 million, up 22 percent from $69 million last year.  The
 increase was driven by lower business development expenses and higher contract
 margins.  C3I had backlog of $5.3 billion at the end of the quarter.
     During the quarter, C3I announced that its Standard Terminal Automation
 Replacement System (STARS) is ready for test and deployment, and that plans to
 produce and field the full STARS are on schedule.  STARS, the next generation
 of air traffic control systems, is the largest and one of the most critical
 pieces of the Federal Aviation Administration's (FAA) attempt to modernize the
 National Airspace System for the 21st century.
 
     Technical Services
     Technical Services (TS) reported sales of $479 million for the first
 quarter, up 20 percent after adjusting for the February 2000 divestiture of
 the flight simulation business. Operating income was $37 million, up 37
 percent from $27 million in the first quarter of 2000.  The business had
 backlog of $2.0 billion at the end of the quarter.
     During the quarter, TS was selected to provide information technology
 services to NASA's Langley Research Center under the U.S. General Services
 Administration's Federal Technology Service Millennia contract.  The task
 order is valued at $183 million and includes a one year base period and seven
 one year options.
 
     Aircraft Integration Systems
     Aircraft Integration Systems (AIS) had sales of $264 million for the
 quarter, compared with $298 million a year ago.   Operating income in the
 quarter was $13 million, off slightly from $15 million in the first quarter of
 2000.  The decrease in sales was due primarily to lower bookings in 2000 and
 delays in new 2001 programs.  AIS had backlog of $2.0 billion at the end of
 the quarter.
 
     Commercial Electronics
     Commercial Electronics reported sales of $121 million for the quarter,
 compared with $174 million in the first quarter last year.  The decrease in
 sales is due to the divestiture of the Recreational Marine business during the
 first quarter of 2001, combined with a favorable settlement on a commercial
 training contract during the first quarter of 2000.  The business posted an
 operating loss of $6 million for the quarter, compared with operating income
 of $20 million a year ago.   The decrease in income was driven by the
 favorable settlement in commercial training last year, approximately $6
 million in new technology investments, and lower volume at the RF Components
 unit, primarily due to reduced  industry-wide demand for cellular handset
 components.
 
     Raytheon Aircraft Company
     Raytheon Aircraft Company (RAC) reported sales of $637 million, compared
 with $815 million for the first quarter of 2000.  RAC had a first quarter
 operating loss of $4 million, compared with operating income of $30 million in
 the first quarter of 2000.  RAC shipped 92 aircraft in the quarter, compared
 with 137 a year ago.  Operating income was down primarily due to lower volume
 and a contract cost adjustment on a fixed price T-6A military trainer option
 (Lot 8) that was exercised earlier than the company had expected.  Lot 8 is
 the last outstanding T-6A fixed-price purchase option.  The business had
 backlog of  $4.3 billion at the end of the quarter.
     On March 23, RAC's Premier I entry-level business jet won FAA
 certification.  RAC expects to deliver 36 of the jets this year and has orders
 for more than 300 of the $5.3 million jets.
     Raytheon has agreed to divest a majority stake in Raytheon Aerospace
 Company, a subsidiary of RAC, to Veritas Capital Inc. Raytheon will receive
 $153 million in cash at closing, which is expected in the second quarter of
 2001.  In addition to the cash, Raytheon will retain $47 million in
 receivables and $70 million in preferred and common equity in the Mississippi-
 based aviation support and logistics business.  The impact of the divestiture
 on net debt is expected to be approximately $200 million this year.
     As previously announced, RAC plans a workforce reduction in administrative
 and managerial staff in its Kansas operations.  The action is a precautionary
 move to help the business stay ahead of a downturn in the economy.
 
     Discontinued Operations
     The company recorded a first quarter charge to discontinued operations of
 $325 million pretax, or $0.61 per diluted share, which reflects the company's
 current best estimate, based on information provided by Washington Group
 International (WGI), of the cost to complete two Massachusetts construction
 projects on which WGI defaulted and Raytheon has performance guarantees.  As
 previously announced, Raytheon expects consolidated operating cash flow to be
 affected by the full amount of the charge over the next four to six quarters.
 The company's outlook for earnings from continuing operations is not affected
 by the charge.  The total first quarter loss from discontinued operations was
 $221 million after-tax, or $0.64 per diluted share.
 
     With headquarters in Lexington, Mass., Raytheon Company is a global
 technology leader in defense, government and commercial electronics, and
 business and special mission aircraft.
 
     Forward-Looking Statements
     Certain statements made in this release contain forward-looking statements
 within the meaning of the Private Securities Litigation Reform Act of 1995
 regarding the company's future plans, objectives, and expected performance.
 Specifically, statements that are not historical facts, including statements
 accompanied by words such as "believe," "expect," "estimate," "intend," or
 "plan" are intended to identify forward-looking statements and convey the
 uncertainty of future events or outcomes.  The company cautions readers that
 any such forward-looking statements are based on assumptions that the company
 believes are reasonable, but are subject to a wide range of risks, and actual
 results may differ materially.  Important factors that could cause actual
 results to differ include, but are not limited to: differences in anticipated
 and actual program results; risks inherent with large long-term fixed price
 contracts, particularly the ability to contain cost growth; the ultimate
 resolution of contingencies and legal matters; the ability to realize
 anticipated cost efficiencies; timely development and certification of new
 aircraft; the effect of market conditions, particularly in relation to the
 general aviation and commuter aircraft markets; the impact on recourse
 obligations of RAC due to changes in the collateral values of financed
 aircraft, particularly commuter aircraft; the ability to finance ongoing
 operations at attractive rates; government customers' budgetary constraints;
 government import and export policies; termination of government contracts;
 financial and governmental risks related to international transactions; delays
 and uncertainties regarding the timing of the award of international programs;
 the integration of acquisitions; the impact of competitive products and
 pricing; and risks associated with the continuing project obligations and
 retained assets and liabilities of Raytheon Engineers & Constructors,
 including the final determination by the company of the required expenditures
 to complete the two Massachusetts construction projects, the confirmation of
 the actual physical progress completed at the time of WGI's abandonment of
 those projects, the impacts associated with the re-mobilization of the
 projects and WGI's compliance with its contractual obligations and cooperation
 with Duke Fluor Daniel, the contractor hired by Raytheon to complete the two
 projects, in Duke Fluor Daniel's assumption of the construction activities,
 among other things. Further information regarding the factors that could cause
 actual results to differ materially from projected results can be found in the
 company's reports filed with the Securities and Exchange Commission, including
 "Item 1-Business" in the company's Annual Report on Form 10-K for the year
 ended December 31, 2000.
 
     Conference Call on First Quarter 2001 Results
     There will be a live webcast of Raytheon's earnings teleconference on
 www.raytheon.com beginning at 9 a.m. ET on April 19 to review the company's
 first quarter results. Financial analysts may participate in the call and the
 question and answer session that follows the review. A Real Audio player or
 Windows Media(TM) player is required to access the webcast.
 
     A replay of the conference will be run from Noon ET April 19 through Noon
 ET April 23. The replay number is 800-633-8284 for U.S. callers and
 858-812-6440 for international callers.  The reservation number for the replay
 is 18526505.
 
     Attachment A
 
     Raytheon Company
     Financial Information
     First Quarter 2001
 
     (In millions, except per share amounts)              Three Months Ended
                                                         01-Apr-01  02-Apr-00
 
     Net sales                                              $3,968     $4,231
 
     Cost of sales                                           3,232      3,481
     Administrative and selling expenses                       294        311
     Research and development expenses                         126        123
 
     Total operating expenses                                3,652      3,915
 
     Operating income                                          316        316
 
     Interest expense, net                                     180        180
     Other income, net                                         (30)        (5)
 
     Non-operating expense, net                                150        175
 
     Income from continuing operations
      before taxes                                             166        141
 
     Federal and foreign income taxes                           69         61
 
     Income from continuing operations                          97         80
 
     Discontinued operations
       Loss from discontinued operations,
        net of tax                                               -        (70)
       Loss on disposal of discontinued
        operations, net of tax                                (221)      (191)
                                                              (221)      (261)
 
     Net loss                                                $(124)     $(181)
 
     Earnings per share from continuing operations
       Basic                                                 $0.29      $0.24
       Diluted                                               $0.28      $0.24
 
     Loss per share from discontinued operations
       Basic                                                $(0.65)    $(0.77)
       Diluted                                              $(0.64)    $(0.77)
 
     Loss per share
       Basic                                                $(0.36)    $(0.54)
       Diluted                                              $(0.36)    $(0.54)
 
     Average shares outstanding
       Basic                                                 340.0      338.3
       Diluted                                               345.1      338.7
 
 
     Attachment B
 
     Raytheon Company
     Segment Information
     First Quarter 2001
 
     (In millions)
 
                                                             Operating Income
                          Net Sales       Operating Income     As a Percent
                                                                of Sales
                     Three Months Ended  Three Months Ended  Three Months Ended
                    01-Apr-01 02-Apr-00 01-Apr-01 02-Apr-00 01-Apr-01 02-Apr-00
 
     Electronic
      Systems          $1,864     $1,878   $ 234    $ 183     12.6%     9.7%
     Command, Control,
      Communication
      and Information
      Systems             855        846      84       69      9.8%     8.2%
     Technical Services   479        421      37       27      7.7%     6.4%
     Aircraft
      Integration
      Systems             264        298      13       15      4.9%     5.0%
     Commercial
      Electronics         121        174     (6)       20     -5.0%    11.5%
     Aircraft             637        815     (4)       30     -0.6%     3.7%
     Corporate and
      Eliminations      (252)      (201)    (42)     (28)
 
     Total             $3,968     $4,231   $ 316    $ 316      8.0%     7.5%
 
     Note: Corporate and Eliminations includes certain company-wide activities
 that have not been attributed to a particular segment and intercompany
 eliminations.
 
 
     Attachment C
 
     Raytheon Company
     Other Information
     First Quarter 2001
 
     (In millions, except total employees and aircraft shipments)
 
                                                             Backlog
                                                      01-Apr-01    02-Apr-00
 
     Electronic Systems                               $11,738        $10,953
     Command, Control, Communication
      and Information Systems                           5,305          4,764
     Technical Services                                 2,006          1,913
     Aircraft Integration Systems                       2,048          2,262
     Commercial Electronics                               488            505
     Aircraft                                           4,280          4,143
 
                                                      $25,865        $24,540
 
     U.S. government backlog included above           $17,099        $15,512
 
 
                                                             Total Employees
                                                     01-Apr-01       02-Apr-00
 
     Total employees                                   92,300         94,200
 
 
                                                    Aircraft Shipments (Units)
                                                          Three Months Ended
                                                    01-Apr-01        02-Apr-00
 
     Hawker                                                13             15
     Beechjet (Commercial)                                  8             13
     King Air                                              29             50
     1900D Commuter                                         3             12
     Pistons                                               28             40
     T-6A                                                   9              7
     Special Mission                                        2              -
       Total aircraft shipments                            92            137
 
 
 
     Attachment D
 
     Raytheon Company
     Preliminary Financial Information
     First Quarter 2001
 
     (In millions)
 
     Balance sheets
                                             01-Apr-01   31-Dec-00   02-Apr-00
     Assets
     Cash and cash equivalents                   $483        $871        $181
     Accounts receivable                          447         505         834
     Contracts in process                       3,951       4,061       4,448
     Inventories                                2,218       1,908       1,935
     Deferred federal and foreign income
      taxes                                       533         476         430
     Prepaid expenses and other current
      assets                                      156         178         232
     Net assets from discontinued
      operations                                    -          14         127
       Total current assets                     7,788       8,013       8,187
 
     Property, plant and equipment, net         2,498       2,491       2,451
     Goodwill, net                             13,182      13,281      13,562
     Other assets, net                          3,059       2,992       2,802
         Total assets                         $26,527     $26,777     $27,002
 
     Liabilities and Stockholders' Equity
     Notes payable and current portion of
      long-term debt                           $1,185        $877      $1,109
     Advance payments, less contracts in
      process                                     941       1,135         993
     Accounts payable                             969       1,099       1,114
     Accrued salaries and wages                   545         549         575
     Other accrued expenses                     1,029       1,205       1,582
     Net liabilities from discontinued
      operations                                  281           -           -
       Total current liabilities                4,950       4,865       5,373
 
     Accrued retiree benefits and other
      long-term liabilities                     1,271       1,262       1,348
     Deferred federal and foreign income
      taxes                                       748         773         507
     Long-term debt                             8,858       9,054       9,042
     Stockholders' equity                      10,700      10,823      10,732
         Total liabilities and
          stockholders' equity                $26,527     $26,777     $27,002
 
 
     Debt-to-capital ratio
                                             01-Apr-01   31-Dec-00   02-Apr-00
 
     Debt                                     $10,043      $9,931     $10,151
     Capital                                   20,743      20,754      20,883
       Debt-to-capital ratio                    48.4%       47.9%       48.6%
 
 
     Attachment E
 
     Raytheon Company
     Preliminary Cash Flow Information
     First Quarter 2001
 
     (In millions)
 
     Cash flow information
                                                         Three Months Ended
                                                       01-Apr-01   02-Apr-00
 
     Income from continuing operations                  $97                $80
     Depreciation                                        72                 67
     Amortization                                       105                104
     Working capital                                   (702)              (713)
     Capital spending                                  (103)              (113)
     Internal use software spending                     (35)               (31)
     Discontinued operations                            (43)               186
     Other                                               36               (100)
        Subtotal - operating cash flow                 (573)              (520)
 
     Net activity in financing receivables               28                  4
     Divestitures                                       111                160
     Dividends                                          (68)               (68)
     Other                                                2                 (7)
           Change in net debt                         $(500)             $(431)
 
     Restructuring amounts included in
        operating cash flow above                       $16                $88
 
 
     Segment operating cash flow
      information
                                                        Three Months Ended
                                                     01-Apr-01        02-Apr-00
 
     Electronic Systems                                 $77               $(44)
     Command, Control, Communication
        and Information Systems                        (158)              (150)
     Technical Services                                 (29)               (38)
     Aircraft Integration Systems                      (112)                15
     Commercial Electronics                             (12)                56
     Aircraft                                          (242)              (341)
     Discontinued operations                            (43)               186
     Other                                              (54)              (204)
                                                      $(573)             $(520)
 
     Contact:
     David Polk
     781.860.2386
 
 SOURCE  Raytheon Company