LEXINGTON, Mass., Aug. 28 /PRNewswire/ -- A report issued last evening by
a court appointed examiner supports Raytheon Company's (NYSE: RTN) position
that Washington Group International's (WGI) financial setbacks resulted from
WGI management's inability to manage a large and complex acquisition that more
than doubled its size.
"Washington Group and its advisers must take full responsibility for WGI's
capital structure and the way it chose to structure the transaction," said
Neal Minahan, senior vice president and general counsel of Raytheon.
"Raytheon is not at fault. It's time for Washington Group to take
responsibility for its own mistakes."
The examiner's report states that this was a huge acquisition for WGI.
The combination of its new management team and the new market segments in
which WGI had little experience led to dramatic errors, including the
cancellation of necessary liquidity, the inability to integrate multiple
management information and accounting systems, and the decision to abandon the
Sithe projects. Management's inexperience also led to an inability to execute
immediately post-closing, which worsened the liquidity picture for 2001.
The examiner's report also confirms Raytheon's view that the RE&C sale
terms represented the result of exhaustive due diligence by WGI and its
advisers and hard and long negotiations between sophisticated parties. WGI and
its advisers were well aware of the significant challenges and rewards that
the RE&C acquisition represented to WGI, but WGI simply failed to execute.
WGI, its officers, directors and advisers, which included Credit Suisse First
Boston, Arthur Anderson, Bain & Company, and Batchelder & Company, engaged in
an extensive due diligence process that extended from September 1999 to July
2000. As a result of this process, WGI, its officers, directors and advisers
completely understood the financial statements and financial condition of the
engineering and construction business it was purchasing, and indeed
renegotiated more favorable terms in the agreement as a result of that
awareness.
Other factors responsible for WGI's business difficulties that were not
covered by the examiner's report include WGI's failure to generate new
business, control costs and effectively manage its financial affairs.
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
This news release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act concerning the company's
financial results, future plans, objectives and expected performance.
Specifically, statements in this release 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 actual results may differ
materially. Important factors that could cause actual results to differ
include, but are not limited to: the ultimate resolution of contingencies and
legal matters; the ultimate resolution of WGI's bankruptcy proceedings and
related matters; differences in anticipated and actual program results; and
risks inherent with large long-term fixed price contracts, particularly the
ability to contain cost growth. Further information regarding the factors that
could cause actual results to differ materially from projected results can be
found in the company's most recent filings with the Securities and Exchange
Commission, including Raytheon's Form 10-K for the year ended December 31,
2000 and Form 10-Q for the quarter ended July 1, 2001.
Contact:
David Polk
781.860.2386 or
617.470.3204
SOURCE Raytheon Company
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Related links:
http://www.raytheon.com
CONTACT:
David Polk of Raytheon, +1-781-860-2386 or
+1-617-470-3204
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