Raytheon's highlights for 1996.

LEXINGTON, Mass.--(BUSINESS WIRE)--Jan. 20, 1997--

Raytheon Engineers & Constructors

--Raytheon Engineers & Constructors, one of the largest engineering, construction, operations and maintenance firms in the world, reported record backlog and sales for the year. Although sales were higher than 1995 due primarily to increased engineering and construction effort, income was down due to the delay of higher margin international turnkey projects combined with the effects of strike-related losses at Cedarapids. --Raytheon Engineers & Constructors ended the year with a backlog of $3.6 billion, a 59 percent increase compared with the backlog at the end of 1995.

Infrastructure

--Raytheon Engineers & Constructors' largest new contract in 1996 came from the infrastructure marketplace, for a light rail project in northern New Jersey. The award, valued at approximately $840 million to Raytheon, calls for a Raytheon-led consortium to design and construct a 9.5 mile light rail line between Bayonne and Hoboken in northern New Jersey's Hudson and Bergen counties by the turn of the century, then operate and maintain the system for the next 15 years. --In foods, Raytheon completed an accelerated relocation of a Nabisco facility, resulting in the project's being honored by a leading food industry trade publication.

Acquisitions

--In 1996, Raytheon became a major player in the design and construction of pulp and paper mills in the U.S. with the acquisition of various assets of Rust International, Inc., of Birmingham, Alabama. The acquisition also increases Raytheon's engineering and construction presence in the Southeastern United States and in market segments including specialty chemicals, metals, foods, pharmaceuticals, manufacturing and operations and maintenance. --Raytheon reached agreement in 1996 to acquire assets of Isbill Associates, Inc., an airport design firm based in Denver, Colorado. The firm augments Raytheon's existing capabilities in airport design and construction to help Raytheon further penetrate this market in the United States and internationally.

Power industry

--Raytheon remained a major global player in the power marketplace in 1996. Work began on two new projects in the People's Republic of China: a $200 million contract from Mitsubishi Heavy Industries, Ltd., to provide engineering, procurement and support services for a coal-fired power plant to be located in the city of Zhuhai in Guangdong Province; and a $78 million contract for a 100-megawatt coal-fired power plant at Tangshan near Beijing. --Raytheon continued work on the 1,200 megawatt PP9 power plant in the Kingdom of Saudi Arabia. The value of the company's work on that project is more than $330 million. --The company completed work on the Panda Brandywine cogeneration facility, a 230-megawatt combined-cycle power plant located in Prince Georges County, Maryland. Raytheon's work was valued at more than $120 million.

Metals and mining

--In metals and mining, Raytheon received awards valued at $270 million for coke plant projects in the United States and India. Scope of work includes services for both coke facilities and associated cogeneration boilers that will produce energy from waste heat. --Raytheon continued construction of BHP Coated Steel Corporation's grassroots steel finishing plant in Kalama, Washington. Raytheon is providing complete engineering, procurement and construction services for the plant under a contract valued at more than $100 million. --Raytheon completed Acme Steel Company's new steel mill in Riverdale, Illinois. The facility is the first in the steel industry to combine integrated steel technology with mini-mill technology and has reduced the time it takes Acme to process molten steel into a coil from 10 days to 90 minutes. Raytheon's effort was valued at more than $360 million.

Process industry

--Raytheon received a $129 million turnkey contract from Slovnaft a.s. for a refinery upgrade in Bratislava, Slovakia. Raytheon will provide detailed engineering, procurement, construction and start-up services for the project, which will increase the high-grade gasoline production of the refinery. --Raytheon was awarded turnkey contracts to provide engineering, procurement, construction and start-up services for a grassroots cumene facility and for the expansion of an existing phenol unit for Caprolactam Leuna GmbH's (CAPROLEUNA) at Leuna, Germany. --Raytheon Engineers & Constructors was selected by Corning Inc. to Switchcraft

-- Raytheon's Switchcraft operation, celebrating its 50th year in business, introduced surface mount power jacks for phones and battery charging applications, expanded its product line of weathertight connectors, and remained a leading supplier of components to original equipment manufacturers for applications including medical electronics, broadcast studios, guitars, mixing consoles, microphones and aviation headsets.

Seiscor Technologies

-- Raytheon's Seiscor Technologies prepared to introduce a new family of telephone and digital data transmission equipment in the People's Republic of China. The new technology will also be used to enhance Seiscor's product line in the United States.

Semiconductor operation

-- Raytheon's Semiconductor operation achieved a leading position in the Pentium(R) Pro DC-DC converter market. Semiconductor's new PC-to- TV products were well received in the marketplace.

Microelectronics

-- Originally chartered to provide advanced integrated circuits for defense applications, Raytheon's Microelectronics operation has now successfully expanded into commercial markets, establishing a position as a leading commercial supplier of RF and microwave gallium arsenide components. -- Raytheon is leveraging its leading edge technology in Monolithic Microwave Integrated Circuit (MMIC) technology for fast-growing markets in wireless communications. -- The supplier of gallium arsenide MMIC transmit/receive modules for the IRIDIUM(R) satellite antenna system, Raytheon has broadened its role on the IRIDIUM program to work with Motorola not only on the satellite portion of the system, but also on the development and supply of power amplifiers and receive modules for the Individual Subscriber Units (ISU) handsets. -- Raytheon, which provides S-Band transmit modules and L-Band receive modules for the satellite-based antenna for Space Systems/Loral's Globalstar communications satellite program, was also awarded a contract from Qualcomm of San Diego, Calif., to develop low-noise and power amplifier components for the Globalstar handsets. -- During the year, Raytheon introduced the Raylink(TM) wireless local area network PCMCIA card with gallium arsenide MMIC chips. The Raylink PC card extends the range of conventional wired ethernet networks by enabling PC users mobile access without the need for a wire connection to a fixed wall jack location.

RAYTHEON E-SYSTEMS Acquisition of Chrysler Technologies businesses

-- During the year, Raytheon acquired the aircraft modification and defense electronics businesses of Chrysler Technologies for $455 million in cash. These operations are now part of Raytheon E-Systems. The two Chrysler Technologies operations complement Raytheon E-Systems existing programs, technologies and customers.

Intelligence, reconnaissance and surveillance

-- Raytheon was selected during the year to provide a state-of-the-art airborne reconnaissance system to the Republic of Korea. The system will use reconnaissance equipment developed and integrated by Raytheon E-Systems and will be installed on four Hawker 800XP jet aircraft made by Raytheon Aircraft. Four additional Hawker 800XP aircraft will also be purchased by the Republic of Korea for related purposes. As part of the contract, Raytheon E-Systems will also provide the Republic of Korea with a support facility. The total value to Raytheon could exceed $250 million over the life of the program. -- In a U.S. Air Force program, Raytheon E-Systems was awarded a contract for a new generation of reconnaissance/intelligence ground systems products and services to provide strategic and tactical commanders with battlefield, theater and strategic reconnaissance information. The total program has a potential value over its life of $450 million, and will be allocated to Raytheon E-Systems and Lockheed Martin Tactical Systems in a dual contract structure under which each will compete for individual task orders. -- In 1996, Raytheon E-Systems successfully completed tests on the launch and recover portion of the $164 million Tier II Plus "Global Hawk" High Altitude Endurance Unmanned Aerial Vehicle program.

High-performance computing

-- A pioneer in the application of advanced high performance supercomputer systems, Raytheon E-Systems was awarded a contract valued at approximately $170 million to develop and maintain a major shared resource center at the U.S. Army Research Laboratory at Aberdeen Proving Ground in Maryland. The total contract, which spans eight years, encompasses a suite of computers, software, development tools, training and user support. When completed, the Army Research Laboratory system will be one of the single largest compute engines in the world.

Custom aircraft systems and modification programs

-- The U.S. Navy's Sustained Readiness Program, which will extend the life of the P-3 airframe into the 21st century, moved forward in 1996. The first P-3 maritime patrol aircraft is undergoing refurbishment at Raytheon E-Systems. The contract is valued in excess of $200 million for an expected quantity of 58 aircraft. Options under the current contract could bring the total to 90 aircraft. Internationally, Raytheon E-Systems, in alliance with Australian team members, will perform a significant mission and avionics system P-3 upgrade under the Sea Sentinel program for the Royal Australian Air Force. The program is valued at more than $400 million and will upgrade 18 aircraft.

C4I 

-- In September 1996, the U.S. Navy granted initial operational capability certification to the Cooperative Engagement Capability (CEC) system, following successful live missile firings and testing to demonstrate CEC performance. This certification paves the way during 1997 for the delivery, installation and test of improved CEC systems, called the Common Equipment Set. Raytheon E-Systems is the prime contractor for the development and pre-production phases of the CEC program, which has a current contract value of nearly $450 million. -- In an award that draws on Raytheon E-Systems capabilities as both a systems integrator and a premier provider of technical services, Raytheon won the Global Command and Control System maintenance and technical support contract from the Defense Information Systems Agency. The total program value is approximately $193 million, including a one-year base period and four one-year options. -- Raytheon E-Systems was awarded a contract to provide depot logistics support for U.S. government Command and Control Switching Systems. The five-year contract is valued at $228 million. -- The U.S. Navy awarded Raytheon E-Systems a $31 million contract option for the E-6B command post modification, which will be carried out by a former Chrysler Technologies Airborne Systems operation.

Electronic warfare

-- In airborne countermeasures, Raytheon E-Systems received contracts valued at $83 million for decoy programs, including a $41 million production contract for the AN/ALE-50 towed decoy system. Options to this AN/ALE-50 contract could increase potential value to $493 million. -- The U.S. Air Force awarded contracts totaling $28 million to upgrade and improve the AN/ALQ-184 electronic countermeasures pod, bringing total value of that program since its inception to more than $1.2 billion.

Technology diversification and conversion

-- Raytheon E-Systems has entered the commercial marketplace with satellite imagery applications based on precision technologies previously developed for military use. A strategic initiative in this area is Space Imaging EOSAT, a joint venture of Raytheon E-Systems, Lockheed Martin, Mitsubishi, Ltd. (Japan), Van Der Hurst, Ltd. (Singapore) and Lotley Public Company, Ltd. (Bangkok). Space Imaging EOSAT currently sells earth information from a constellation of satellites including the Indian IRS-1C, which provides five-meter imagery. The joint venture plans to launch an orbiting satellite in 1997 to yield images with a resolution of one meter. -- A new passport and identification system, developed by Raytheon E-Systems, was formally inaugurated August 30, 1996, in Buenos Aires by the President of Argentina. -- The U.S. Department of Education awarded Raytheon E-Systems a contract to service student loans issued under the William D. Ford Direct Loan Program. The contract is valued at several hundred million dollars including a base year and six one-year options. Raytheon E-Systems will provide program management, software development and maintenance, data center operations and loan servicing functions. -- Raytheon E-Systems, as a major subcontractor to Universities Space Research Association, will participate in a National Aeronautics and Space Administration contract to develop and operate a stratospheric observatory for infrared astronomy that will probe the mysteries of the universe. The Raytheon E-Systems contribution has a value of approximately $100 million, covering a five-year development period and the first five years of operation. The contract calls for the modification of a Boeing 747SP aircraft to house a 2.5 meter diameter (eight feet) infrared telescope and associated mission control systems. -- Raytheon E-Systems entered the commercial wireless communications market with the precision Spectrum Products(TM) series of smart antennas and geolocation systems. The product line gives cellular providers the ability to increase cellular call capacity, improve network efficiency, and provide better geolocation-enhanced services. -- Raytheon E-Systems was awarded additional contracts to provide communications and fleet management systems for Broward County Transit in Ft. Lauderdale, Fla., the Mass Transit Administration of Maryland in Baltimore, and the New York City Mass Transit Authority.

RAYTHEON ELECTRONIC SYSTEMS Missile and air defense

-- The U.S. Army is investing $75 million of research and development funds for an improved Patriot missile seeker designed to counter advanced cruise missiles. -- The U.S. Army Missile Command awarded Raytheon Electronic Systems a contract for more than $111 million to manufacture Hawk Phase III hardware kits for the government of the Kingdom of Saudi Arabia. -- At year end, Raytheon signed a letter contract with the U.S. Army Missile Command valued at $206 million for eight Hawk fire units for Egypt. The units are being provided to Egypt by the U.S. government as Excess Defense Articles. -- MEADS, Inc. -- a team consisting of a joint venture between Raytheon and Hughes Aircraft Company called H&R Company, along with DASA and Siemens of Germany, and Alenia of Italy -- was awarded an $80 million contract for the project definition-validation phase of the Medium Extended Air Defense System (MEADS). It was one of two teams chosen in the downselect for this program. -- The H & R Company was one of three contractors selected by the U.S. Army Space and Strategic Defense Command for a concept development contract for a new Aerostat program. When deployed, the system will place advanced radar sensor systems on unmanned, lighter-than-air aerostats tethered high above the battlefield. -- Raytheon Electronic Systems rolled out a user operational ground-based radar for testing at Kwajalein Island in the Pacific. A previously-built user operational radar and a demonstration-validation radar are at White Sands, N.M., participating in ongoing tests of the Theater High Altitude Area Defense System.

Air-to-air and strike systems

-- In early 1996, the U.S. Air Force awarded Raytheon Electronic Systems a contract valued at more than $174 million to manufacture 623 missiles, plus associated spare parts, under the Advanced Medium Range Air-to-Air Missile (AMRAAM) program. This was the 10th production award for AMRAAM and included missiles for the U.S. Air Force, Navy and allied countries. -- Progress was made during the year on the U.S. Army's Enhanced Fiber Optic Guided Missile (EFOGM) demonstration program -- for which Raytheon received an initial contract in 1994 and a follow-on contract in 1995. Under the contracts, valued at more than $91 million, Raytheon will design, build and test the system. It will provide a non-line-of-sight precision standoff weapon against armor and helicopters during day, night and adverse weather conditions.

Naval systems

-- Raytheon Electronic Systems received an award valued at $47 million from the Standard Missile Company for work on the Standard-2 Block IV missile. The Standard Missile Company, established by Raytheon and Hughes in 1995, received funding to commence low-rate, initial production of the missile. -- Raytheon was awarded a $41.4 million contract for engineering and development of the MK 30, Mod 2 anti-submarine warfare target training system. -- A Lockheed Martin-Raytheon-Northrop Grumman team was selected by the U.S. Navy to design, develop, integrate and test the New Attack Submarine's command, control, communications and intelligence subsystem for sonar and combat control. Raytheon will be responsible for the combat control subsystem. -- The U.S. Navy and the Defense Advanced Research Projects Agency (DARPA) selected a team of Raytheon, Bath Iron Works and Science Applications International Corporation to compete to build a new Arsenal Ship for cruise missiles, theater ballistic defense missiles and strike missiles. -- Raytheon received a $41.5 million contract from the U.S. Navy for system upgrades to the Submarine Combat Control System CCS MK-2.

Military satellite communications

-- The U.S. Army awarded Raytheon an initial contract in early 1996 to provide satellite communication terminals and associated parts and services for the Department of Defense's Milstar program. The initial $31.6 million contract calls for Raytheon to begin the low rate initial production of a Secure Mobile Anti-jam Reliable Tactical Terminal (SMART-T) system. The potential value of the contract, including four production options and spare parts, is $212.8 million. -- The U.S. Army selected Raytheon to provide similar transportable tactical satellite communication terminals, to be mounted on HMMWV "Humvee" vehicles and to operate with commercial and military satellites. The program is called the Tri-Band Tactical Terminal for HMMWV Variant (T3(H)). -- The U.S. Navy competitively selected Raytheon Electronic Systems to provide high data rate, multi-band satellite communication terminals for submarines.

Technology diversification and conversion

During 1996, Raytheon Electronic Systems (RES) won two major U.S. air traffic control competitions, with a potential value of approximately $1.6 billion. The two U.S. programs are the Standard Terminal Automation Replacement Systems (STARS) and the Digital Airport Surveillance Radar (DASR). Both will play critical roles in modernizing air traffic control in the United States to meet the needs of the 21st century. -- The STARS system will modernize and upgrade approximately 370 Terminal Automation Systems for the Federal Aviation Administration (FAA) and Department of Defense. Boston's Logan Airport and Eglin Air Force Base in Florida will receive the first systems in the United States, scheduled to be operational in December 1998. Total program implementation will take place over a 10-year period. The program potential is approximately $1 billion. -- The Digital Airport Surveillance Radar program is a critical element of the DoD and FAA air traffic modernization program to maintain a terminal area surveillance network into the 21st century. The contract calls for up to 213 radars and will extend through 2007. The total potential contract is $619.9 million. -- Raytheon Electronic Systems achieved a milestone in March 1996 with the operational commissioning of the new air traffic control center near Oslo, Norway. Raytheon was selected by Oslo Lufthavn A.S. to supply integrated controller workstations for tower and ramp operations for Norway's new Gardermoen Airport, located north of Oslo. -- The Cyprus Telecommunications Authority awarded Raytheon Electronic Systems a contract in August to provide a monopulse secondary surveillance radar for Lara, near Paphos, in the southwestern region of Cyprus. -- Raytheon Electronic Systems was awarded a contract from the Estonian Air Navigation Services to supply a monopulse secondary surveillance radar (MSSR) for Tallinn, Estonia's capitol city, and an additional contract to supply an MSSR system for Martna, in the southwest of Estonia. -- The Government of Jamaica signed an agreement with Raytheon Electronic Systems (RES) to modernize the air traffic control systems at the Kingston/Norman Manley International Airport. -- RES's subsidiary, Raytheon Canada, also received a contract for two HF surface wave radars in Newfoundland to detect ships and aircraft out to 250 nautical miles. -- Raytheon's Terminal Doppler Weather Radar (TDWR) for Hong Kong's new Chek Lap Kok airport successfully completed a software factory acceptance test for the Hong Kong specific software. The contract is Raytheon's first international order for the TDWR, which is designed to detect hazardous weather, including wind shear, in and around airports. The FAA has procured 47 of the systems for installation at major airports throughout the United States. -- Raytheon completed construction of the 400-foot long Personal Rapid Transit (PRT) test track at its Marlborough, Mass., facility. The engineering model PRT vehicle is currently operational on the track. The system is being tested under a variety of conditions including heat, snow, rain and ice. A full demonstration of the system, including the operation of up to three vehicles on the track, is expected to be under way in 1997.

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