WALTHAM, Mass., Dec. 21, 2006 /PRNewswire-FirstCall/ -- Raytheon
Company (NYSE: RTN) announced today that it has signed a definitive
agreement to sell its wholly owned subsidiary Raytheon Aircraft Company
(RAC) to Hawker Beechcraft Corporation, a new company formed by GS Capital
Partners, an affiliate of Goldman Sachs, and Onex Partners. The Company
also announced that, subject to the closing of this transaction, its Board
of Directors has approved further debt reduction and an increase in the
Company's stock repurchase authorization.
    "The sale of Raytheon Aircraft Company further demonstrates our
commitment to deliver on the company's strategy of focusing on our core
Government and Defense business and providing the best technology,
solutions and Mission Support to our global customers," said William H.
Swanson, Raytheon's Chairman and CEO.
    The Company will sell RAC for approximately $3.3 billion and expects
net after-tax proceeds to be approximately $2.5 billion.
    The transaction includes Raytheon Aircraft facilities and other assets
in Wichita and Salina, Kansas; Little Rock, Arkansas; Dallas, Texas; as
well as its Fixed Based Operations (FBO) network across the United States,
United Kingdom and Mexico.
    The sale, which is subject to customary conditions and regulatory
approvals, is expected to close in the first half of 2007.
    Raytheon announced in July 2006 that it was reviewing strategic
alternatives for Raytheon Aircraft Company, a world leading manufacturer of
business and special-mission aircraft, providing a wide variety of aviation
products and services for businesses, governments and individuals. RAC has
more than 8,500 employees and has approximately 100 authorized service
centers worldwide.
    Subject to the closing of this transaction, the Raytheon Board of
Directors has authorized the repurchase of up to an additional $750 million
of the Company's outstanding common stock, commencing in 2007. Also,
subject to the closing of the RAC sale, the Board of Directors has
authorized the early retirement of approximately $1.0 billion of the
Company's outstanding debentures. This is in addition to the $685 million
of scheduled debt maturities in 2007.
    Raytheon will now report RAC as a discontinued operation, and has
updated the Company's 2006 financial outlook. The Company has also updated
its 2007 outlook to reflect the anticipated closing of this transaction,
which is expected during the first half of 2007.
    The transaction does not include Raytheon's ownership in either Flight
Options, LLC or Raytheon Airline Aviation Services LLC, both of which are
reported in the "Other" segment of the Company's financial statements.
    Outlook


    2006 Financial Outlook                         Current       Prior *

    Bookings ($B)                                 21.5 - 22.5    23.0 - 24.0
    Net Sales ($B)                                20.0 - 20.5    23.1 - 23.6
    FAS/CAS Pension Expense ($M)                      362            378
    Interest Expense, net ($M)                     200 - 210      200 - 210
    Diluted Shares                                 449 - 451      449 - 451
    EPS from Cont. Ops. ($)                       2.35 - 2.45    2.70 - 2.80

    Net Debt ($B)                                  1.9 - 2.2      2.0 - 2.2
    Operating Cash Flow from Continuing
     Operations ($B)                               2.1 - 2.4      2.3 - 2.5
    Total Operating Cash Flow ($B)                 2.3 - 2.6      2.3 - 2.5
    ROIC (%)                                       8.4 - 8.8 (1)  8.4 - 8.8

    (1) ROIC has been calculated using the Company's new ROIC definition as
        detailed in Attachment A, which excludes the net investment in RAC.

    * As of October 26, 2006



    2007 Financial Outlook                        Current           Prior *

    Bookings ($B)                               21.0 - 22.0        24.5 - 25.5

    Net Sales ($B)
       Government and Defense                   22.2 - 22.7        22.2 - 22.7
       Eliminations of Intercompany Sales          (1.7)              (1.7)
       Government and Defense after Elims       20.5 - 21.0        20.5 - 21.0

       Raytheon Aircraft                             -                 3.3
       Other                                        0.8                0.8
       Total Company                            21.3 - 21.8        24.6 - 25.1

    EPS from Cont. Ops. ($)                     2.75 - 2.90 (1)    2.95 - 3.05

    Operating Cash Flow from Continuing
     Operations ($B)                             1.6 - 1.8          1.7 - 1.9

    ROIC (%)                                     8.8 - 9.3 (1)(2)   9.0 - 9.4

    (1) Current includes a charge of approximately $0.10 per share ($45M after
        tax) associated with early retirement of debt.
    (2) ROIC has been calculated using the Company's new ROIC definition as
        detailed in Attachment A, which excludes the net investment in RAC.

    Note: Current 2007 is subject to closing of the RAC transaction, which is
          expected to close in the first half of 2007.

    * As of October 26, 2006
    Charts containing additional information on the Company's 2006 and 2007
guidance are available on the Company's website at http://www.raytheon.com. See
Attachment A for information regarding the Company's new definition of
ROIC, a non-GAAP financial measure, and its calculation and use of such
measure.
    In connection with the transaction, Credit Suisse Securities (USA) LLC
acted as the financial advisor and Kirkland & Ellis LLP acted as legal
counsel to Raytheon.
    The Company will host a conference call and audio webcast today,
December 21, 2006 at 10:30 a.m. EST to discuss the transaction. The event
and slides will be accessible through Raytheon's website at
http://www.raytheon.com.
    About Raytheon
    Raytheon Company is an industry leader in defense and government
electronics, space, information technology, technical services, and
business and special mission aircraft. With headquarters in Waltham, Mass.,
Raytheon employs 80,000 people worldwide.
    About GS Capital Partners
    Founded in 1869, Goldman Sachs is one of the oldest and largest
investment banking firms. Goldman Sachs is also a global leader in private
corporate equity and mezzanine investing. Established in 1991, the GS
Capital Partners Funds are part of the firm's Principal Investment Area in
the Merchant Banking Division. Goldman Sachs' Principal Investment Area has
formed 12 investment vehicles aggregating $35 billion of capital to date.
    About Onex
    Onex is a diversified company with annual consolidated revenues of
approximately C$20 billion and consolidated assets of approximately C$20
billion. Onex is one of Canada's largest companies with global operations
in service, manufacturing and technology industries. Onex shares trade on
the Toronto Stock Exchange under the stock symbol OCX.
    Disclosure Regarding Forward-looking Statements
    This release and the attachments contain forward-looking statements,
including information regarding the anticipated sale of Raytheon Aircraft
Company, future share and debenture repurchases and the Company's other
potential uses of the proceeds from the RAC transaction, and the Company's
2006 and 2007 financial outlook, future plans, objectives, business
prospects and anticipated financial performance. These forward-looking
statements are not statements of historical facts and represent only the
Company's current expectations regarding such matters. These statements
inherently involve a wide range of known and unknown risks and
uncertainties. The Company's actual actions and results could differ
materially from what is expressed or implied by these statements. Specific
factors that could cause such a difference include, but are not limited to:
the risks associated with the satisfaction of the closing conditions to the
RAC transaction; risks associated with the Company's U.S. government sales,
including changes or shifts in defense spending, uncertain funding of
programs, potential termination of contracts, and difficulties in contract
performance; the ability to procure new contracts; the risks of conducting
business in foreign countries; the ability to comply with extensive
governmental regulation, including import and export policies and
procurement, aircraft manufacturing and other regulations; the impact of
competition; the ability to develop products and technologies; the risk of
cost overruns, particularly for the Company's fixed-price contracts;
dependence on component availability, subcontractor performance and key
suppliers; risks of a negative government audit; the use of accounting
estimates in the Company's financial statements; the potential impairment
of the Company's goodwill; risks associated with the general aviation,
commuter and fractional ownership aircraft markets; accidents involving the
Company's aircraft; the outcome of contingencies and litigation matters,
including government investigations; the ability to recruit and retain
qualified personnel; risks associated with acquisitions, joint ventures and
other business arrangements; the impact of changes in the Company's credit
ratings; risks associated with the potential disruption to RAC's business
during the period prior to the closing of the transaction; and other
factors as may be detailed from time to time in the Company's public
announcements and Securities and Exchange Commission filings. In addition,
these statements do not give effect to the potential impact of any
acquisitions, divestitures or business combinations that may be announced
or closed after the date hereof. The Company undertakes no obligation to
make any revisions to the forward- looking statements contained in this
release and the attachments or to update them to reflect events or
circumstances occurring after the date of this release.
    Conference Call:
    The dial-in number for today's 10:30 a.m. EST conference call will be
(866) 800 - 8651. The conference call will also be audiocast on the
Internet at http://www.raytheon.com. Individuals may listen to the call and
download charts that will be used during the call. These charts will be
available for printing prior to the call.
    Interested parties are urged to check the website ahead of time to
ensure their computers are configured for the audio stream. Instructions
for obtaining the free required downloadable software are posted on the
site.
    Attachment A

    Raytheon Company
    Non-GAAP Financial Measures

    Return on Invested Capital

    (In millions)                                  Outlook        Outlook
                                                    2006           2007

    Income from Continuing Operations
    Net Interest Expense, after-tax*              Combined       Combined
    Lease Expense, after-tax*

       Return                                  $1,270-$1,315   $1,330-$1,390

    Net Debt **
    Equity                                        Combined        Combined
    Lease expense x 8, plus Financial Guarantees
    Less net investment in Discontinued Operations

    Invested Capital from Continuing
     Operations***                            $15,200-$15,020  $15,175-$14,975

    ROIC                                        8.4% - 8.8%      8.8% - 9.3%

    *   Effective Tax Rate                           33.9%           34.4%
    **  Net debt is defined as total debt less cash and cash equivalents and
        is calculated using a 2 point average
    *** Calculated using a 2 point average
    In anticipation of the sale of Raytheon Aircraft Company and the impact
of such transaction on our ROIC, as previously defined, we have changed the
definition of ROIC, particularly the calculation of invested capital to
exclude our net investment in Discontinued Operations. We believe that the
new ROIC definition provides investors with an accurate measure of the
Company's operating performance. We define Return on Invested Capital
(ROIC) as income from continuing operations plus after-tax net interest
expense plus one-third of operating lease expense after-tax (estimate of
interest portion of operating lease expense) divided by average invested
capital after capitalizing operating leases (operating lease expense times
a multiplier of 8) and adding financial guarantees less net investment in
Discontinued Operations. ROIC is not a measure of financial performance
under generally accepted accounting principles (GAAP) and may not be
defined and calculated by other companies in the same manner. ROIC should
be considered supplemental to and not a substitute for financial
information prepared in accordance with GAAP. The Company uses ROIC as a
measure of the efficiency and effectiveness of it's use of capital, and as
an element of management compensation. Current outlook does not include the
impact of FAS 158, Employers' Accounting for Defined Benefit Pension and
Other Post Retirement Plans.
     Media Contact:                    Investor Relations Contact:
     Mac Jeffery                       Greg Smith
     781-522-5111                      781-522-5141

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