Raytheon Co. (E-Systems)

P> Total Contracts $353,606,000

Corporate Headquarters: Lexington, Mass.


From Amana appliances to Patriot missiles, Raytheon Co. embodies Wall Street's dream of a diversified company. So when Raytheon Chairman Dennis Picard offered $2.3 billion for the secretive E-Systems Inc., which does most of its business in the classified, intelligence world, investment analysts frowned. Too much money, they said.But Picard now has the last laugh. Raytheon reached $11.7 billion in 1995 -- the highest in the company's history -- as compared to $10 billion in 1994. Net income rose to $795 million, up from $597 million in 1994.

And Raytheon's financial future looks just as bright. The company ended 1995 with a $10.5 billion backlog of orders, an increase of 31 percent from 1994's $8 billion backlog. The government portion of Raytheon's total backlog was $5 billion, up from $3.6 billion in 1994. The increase in government orders comes primarily from the acquisition of E-Systems, the successful Dallas-based intelligence, reconnaissance and surveillance company.

E-Systems brings a strong government and defense electronics operation with complementary skills and programs and a backlog of work that has proven budget ax-proof.

E-Systems contracts include programs to extend the life of 99 Navy P-3C maritime patrol aircraft; a $440 million multiyear deal with the Royal Australian Air Force to upgrade 18 P-3C aircraft and provide training, ground processing and logistics support; and an Advanced Research Projects Agency initiative to develop an unmanned aerial vehicle capable of 24-hour, high-altitude surveillance and reconnaissance.

Other government projects include the development of electronic components for what will become the largest ionospheric research project in the world, and an $18 million contract to refurbish two Joint Service Imagery Processing Systems for the Air Force Electronic Systems Center.

E-Systems also was awarded an additional $25 million to continue work on the Navy's Cooperative Engagement Capability program. The CEC system networks information from every ship in a battle group to extend defense parameters and vastly improve reaction time. The total contract exceeds $420 million.

In the non-defense arena, E-Systems completed a series of flight tests last year with the Federal Aviation Administration and NASA, which demonstrated that global positioning technology, coupled with advanced tracking technology, meets the stringent accuracy and safety requirements for landing in zero visibility conditions. The demonstration could result in contracts to replace the present-day instrument landing systems used in aircraft worldwide.

E-Systems also delivered a National Student Loan Data System, serving and tracking more than 28 million students, 8,000 schools, and 40 state agencies. This helped provide the Department of Education track some 70 million loans.

Despite Raytheon's diversified portfolio, defense still plays a huge role. The Air Force and Navy selected Raytheon Aircraft to build the next-generation Joint Primary Aircraft Training System. A major win for Raytheon, JPATS is expected to cost $7 billion during the next 20 years. The company hopes to generate international sales from JPATS work.

The Air Force also awarded Raytheon a $106 million contract for 82 AN/ALQ-184 electronic countermeasure pods, training and support equipment for Taiwan's F-16 aircraft. The award enables Raytheon to sell the system to other international customers.

Meanwhile, Raytheon's received two orders totaling $227 million last year for its Patriot missile. A $123 million contract to produce 16 Patriot Advance Capability-3 radar upgrade kits was awarded by the Army Missile Command and the Ballistic Missile Defense Organization. A $104 million contract for engineering services in support of Patriot air defense system inventories through 1997 also was awarded by the Army Missile Command.

Though not as exciting as Patriot missiles, appliance sales were up last year, as 17 of Raytheon Appliances' products were rated "Best Buys" by the nation's leading consumer magazines.

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