Raytheon

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Raytheon Company
Type Public (NYSE: RTN)
Founded Cambridge, Massachusetts (1922)
Headquarters Waltham, Massachusetts
Key people William H. Swanson, Chairman and CEO
Industry Defense
Products Conglomerate
Revenue Image:green up.png$20.3 billion USD (2006) [2]
Employees 80,000
Website www.raytheon.com

Raytheon Company (NYSE: RTN) is a major United States military contractor based in Waltham, Massachusetts. The company has 80,000 employees worldwide, and annual revenues of approximately US$ 20 billion. More than 90 percent of Raytheon's revenues are obtained from defense contracts, and as of 2005 it is the fifth largest military contractor in the world.[1]

Contents

[edit] History

Early Raytheon Tube Box
Early Raytheon Tube Box

Two former college roommates Laurence K. Marshall and Vannevar Bush, along with scientist Charles G. Smith, founded the American Appliance Company in Cambridge, Massachusetts in 1922. The company's first product was a Helium rectifier which was based on Smith's earlier astronomical research of the star Zeta Puppis [2] . The tube was called the Raytheon ("light of the gods") and used in a battery eliminator, a type of radio-receiver power supply that plugged into the power grid in place of large batteries. The company changed its name to Raytheon in 1925, and by the 1930s it had grown to become one of the larger vacuum tube manufacturing companies.

In World War II Raytheon manufactured magnetron tubes for use in radar sets, and then complete radar systems. (In 1945 Raytheon's Percy Spencer invented the microwave oven by discovering that the magnetron could also cook food.) In 1948 Raytheon began to manufacture guided missiles. During the post-war years Raytheon also made radio and television transmitters and related equipment for the commercial market in the U.S., and got into the educational publishing business with the acquisition of D.C. Heath. In the 1950s Raytheon got into manufacturing transistors, including the very popular CK722, priced and marketed to hobbyists.

Raytheon acquired Beech Aircraft in 1980; in 1993 the company also purchased British Aerospace's business jet product line. These two entities were merged in 1994 to become Raytheon Aircraft Company.

In the mid-1990's, Raytheon purchased the defense businesses of E-Systems and Texas Instruments. In 1997 Raytheon also acquired the defense business of Hughes Aircraft Company from Hughes Electronics Corporation which was a subsidiary to General Motors, which included a number of product lines previously purchased by Hughes including the former General Dynamics missile business, the defense portion of Delco Electronics, and Magnavox Electronic Systems. These acquisitions/mergers added many important capabilities to Raytheon's portfolio.

[edit] Company structure

[edit] Businesses

Raytheon is currently composed of seven major businesses:

Raytheon’s globally capable businesses are supported by several dedicated international operations including: Raytheon Australia; Raytheon Canada Limited; operations in Japan; Raytheon Microelectronics, Spain; Raytheon System Limited in the UK; and ThalesRaytheonSystems, France.

[edit] Strategic Business Areas

In recent years, Raytheon has expanded into some emerging, highly competitive fields while redefining some of its core business activities. Raytheon has identified four strategic business areas where it is focusing its expertise and resources including:

  • Homeland Security
  • Missile Defense
  • Precision Engagement
  • Intelligence, Surveillance, Reconnaissance

[edit] Corporate governance

William H. Swanson is the Chairman and CEO. Other members of the board of directors of Raytheon are: Barbara Barrett, Vernon Clark, Ferdinand Colloredo-Mansfeld, John Deutch, Thomas Everhart, Frederic Poses, Warren Rudman, Michael Ruettgers, Ronald Skates, William Spivey, and Linda Stuntz.

[edit] Products

[edit] Radars & Sensors

Raytheon is a leading developer and manufacturer of radars (including AESAs), electro-optical sensors, and other advanced electronics systems for airborne, naval and ground based military applications. Examples include:

[edit] Satellite Sensors

Raytheon, often in conjunction with Boeing, Lockheed Martin or Northrop Grumman, is also heavily involved in the satellite sensor business. Much of its Space and Airborne Systems division in El Segundo, CA is devoted to this, a business it inherited from Hughes. Examples of programs include:

  • The Space Tracking and Surveillance System (STSS), being developed for Ballistic Missile Defense. Raytheon is building the sensor payload.

Additionally, the El Segundo site is the company center of excellence for the development and production of laser products.

  • Raytheon company’s Navy Multiband Terminal (NMT) is the first advanced, next-generation satellite communications (SATCOM) system to successfully log on to and communicate with the U.S. government's Milstar SATCOM system using low and medium data rate waveforms.

The system provides naval commanders and sailors with greater data capacity, as well as improved protection against enemy intercept and jamming.

[edit] Communications

  • Raytheon’s Universal Control System (UCS) is an unmanned aerial system (UAS) "cockpit" that revolutionizes operator awareness and efficiency, while providing the ability to control multiple unmanned aircraft, and reduce potential accidents.
  • The company also makes several software radio and digital communication systems for military applications such as Cooperative Engagement Capability (CEC), is participating in Navy-Marine Corps Intranet (NMCI), ECHELON and the Joint Tactical Terminal (JTT) programs.

[edit] Radioactive Materials Detection System

As part of the company’s growing homeland security business and strategic focus, Raytheon has teamed with other contractors to develop an Advance Spectroscopic Portal (ASP) to allow border officials to peer into vehicles and containers to identify radioactive materials.[3]

[edit] Semiconductors

Raytheon also manufactures semiconductors for the electronics industry. In the late 20th century it produced a wide range of integrated circuits and other components, but as of 2003 its semiconductor business specializes in gallium arsenide (GaAs) components for radio communications. It is also making efforts to develop gallium nitride (GaN) components for next-generation radars and radios.

[edit] Missile Defense Systems

In the framework of Ground-Based Midcourse Defense, Raytheon develops a Ground-Based Interceptor (GBI) which includes a booster missile and a kinetic Exoatmospheric Kill Vehicle (EKV), along with several key radar components, such as the Sea-Based X-Band Radar (SBX) and the Upgraded Early Warning Radars (UEWR).

[edit] Missiles

Raytheon is a leading developer of missiles and related missile defense systems. Examples include:

[edit] Hi-Tech Simulators

Raytheon also produces and runs the ABACUS (Advanced BAttlefield CompUter Simulation) or Higher Formation Trainer (HFT) for training HQ's from small specialist units up to corps level.

[edit] Business Aircraft

Raytheon Aircraft Company produces several corporate jets under the Beechcraft and Hawker brand names. Raytheon currently manufactures only 2 military aircraft, the T-6 Texan II, and the T-1 Jayhawk, both are training aircraft for the Air Force. The civil aircraft line is being renamed as Hawker Beechcraft and sold to Onex Corporation.

[edit] News and Significant Events

[edit] Disputed claims about the Patriot missile

During the 1991 Gulf War, Raytheon received widespread publicity in the United States in connection with its manufacture of the Patriot Missile (MIM-104 Patriot). The Patriot Missile is an anti-aircraft missile which was upgraded to have some capability against ballistic missiles. The Patriot had allegedly intercepted Scud Missiles launched by Iraq in its defense against the U.S. led invasion. When President George H. W. Bush traveled to Raytheon's Patriot manufacturing plant in Andover, Massachusetts during the Gulf War, he declared, the ""Patriot is 41 for 42: 42 Scuds engaged, 41 intercepted!"[4] After the Gulf War had concluded, the staff of the House Government Operations Subcommittee on Legislation and National Security reported, "The Patriot missile system was not the spectacular success in the Persian Gulf War that the American public was led to believe. There is little evidence to prove that the Patriot hit more than a few Scud missiles launched by Iraq during the Gulf War, and there are some doubts about even these engagements. The public and the Congress were misled by definitive statements of success issued by administration and Raytheon representatives during and after the war."[5]

[edit] Contract Disputes

In the early 90's Raytheon was involved in contract disputes with the United States Government. In October of 1994, Raytheon paid $4 million to settle a U.S. government claim that it inflated a defense contract for antimissile radar. The PAVE PAWS system was designed to detect incoming submarine-launched ballistic missiles. PAVE PAWS stands for Precision Acquisition Vehicle Entry Phased Array Warning System. The government claimed in a federal lawsuit that Raytheon inflated a contract to upgrade two of four PAVE PAWS sites by proposing to hire higher-skilled employees than were necessary for the job.

On October 14, 1993, Raytheon paid $3.7 million to settle allegations that it misled the U.S. Defense Department by overstating the labor costs involved in manufacturing Patriot missiles. "The recovery of this money is yet another warning to contractors that the Truth in Negotiations Act's information disclosure requirements will be strictly and sternly enforced," Frank Hunger, assistant attorney general, said in a statement.

[edit] AGES Lawsuit

In 1996 a corporation called AGES Group filed suit against Raytheon in federal court in Alabama over a $450 million contract to service C-12 Huron and U-21 military aircraft.[6] The Boston Herald reported that AGES alleged that the security firm Wackenhut Corporation, hired by Raytheon, used video and audio surveillance to spy on a consulting firm hired by AGES to help it prepare its bid. AGES also alleged that stolen confidential pricing documents were turned over to Raytheon. Both Raytheon and AGES had been vying for the contract, which Raytheon had held for decades but which AGES won in 1996. On May 12, 1999, Reuters reported that Raytheon would pay $3 million to AGES Group and purchase $13 million worth of AGES aircraft parts to settle AGES lawsuit. The settlement was exceptional in that the parties agreed that judgment would be entered against Raytheon, legally establishing the validity of AGES' allegations.

[edit] Securities Litigation

In October of 1999, Raytheon was the subject of a number of securities class action lawsuits alleging it had issued a series of materially false and misleading statements including overstating the company's 1997 and 1998 revenues, concealing cost overruns and inflating its financial results. The suits were brought in response to a massive drop in value of Raytheon's common stock as traded on the New York Stock Exchange. On Tuesday, October 12, 1999, Raytheon shares were trading at about 45% below the level at which they had been traded on October 11, 1999. The plunge in stock prices was triggered by a Wall Street Journal report that Raytheon was over cost or behind schedule on more than a dozen fixed-price defense contracts. This crash represented a loss of about $8 billion in market value in a single day. On May 13, 2004 Raytheon reported that it had reached a preliminary agreement to pay $410 million in cash and securities to settle a class-action lawsuit alleging it misled investors by not disclosing difficulties on various Pentagon and construction projects five years before.

[edit] September 11, 2001

Four Raytheon employees traveling on company business died in the terrorist attacks on September 11, 2001:

American Airlines Flight 11
  • Peter Gay, 54, VP of Electronic Systems on special assignment at the El Segundo, CA division office.
  • Kenneth Waldie, 46, Senior Quality Control for Electronic Systems.
  • David Kovalcin, 42, Senior Mechanical Engineer for Electronic Systems.
American Airlines Flight 77
  • Stanley Hall, 68, Director of Electronic warfare program management.

[edit] Unwritten Rules

On April 24, 2006 in a statement released by Raytheon, CEO Swanson admitted to plagiarism in claiming authorship for his booklet, "Swanson's Unwritten Rules of Management," after a report by The New York Times.[7] On May 2, 2006, Raytheon withdrew distribution of the book.[8] The following day, the company's board of directors announced that "In response to this matter, the Board has decided not to raise Mr. Swanson's salary above its 2005 level, and will reduce the amount of restricted stock for which he is eligible in the coming year by 20 percent." [9]

[edit] NBC News accuses Army of favoritism

As of September 2006, an NBC News report of the Army's award of an anti-RPG system raised questions about favoritism toward the defense contractor. [10] Since its inception, the report has garnered much criticism. Major General Sorenson, deputy army secretary for acquisition, disputed the NBC report in detail. The top Democrat on the Tactical Air and Land Forces Subcommittee, Neil Abercrombie of Hawaii as well as panel chair Curt Weldon of Pennsylvania strongly criticized NBC for what they saw as shoddy reporting. [11] The panel has asked the General Accounting Office to investigate.

[edit] Voluntary stock delisting

On October 27, 2006 Raytheon announced plans to voluntarily delist its common stock from the NYSE Arca Inc. (formerly known as the Pacific Exchange) and the Chicago Stock Exchange. Reasons citied were the administrative and regulatory burdens placed by the listings.[12]

[edit] Corporate Stewardship

[edit] Math and science education

  • In November 2005 Raytheon launched MathMovesU, an educational initiative intended to make math and science interesting and accessible for young people, funded by $1 million in annual grants. [13]
  • Raytheon has taken a leading role in promoting math and science education to develop future engineers. In 2004 the company announced a $850,000 grant to Tuskegee University. [14]
  • Raytheon is also a leading sponsor of the FIRST Robotics Program, both on the national and local scale.

[edit] Philanthropy

  • Raytheon employees contributed $8 million to the United Way in 2000. [15]
  • In November 2006, Raytheon Integrated Defense Systems (IDS) was honored by Special Olympics Massachusetts (SOMA) for its continued support of the organization through funding and support of more than 700 volunteers in 2006. [16]

[edit] Workplace Diversity

  • In 2005, Raytheon became the first aerospace and defense giant to add gender identity to its equal employment policy, protecting its transgender and transsexual employees. [17]
  • On Oct. 26, 2006, Raytheon was recognized by U.S. Secretary of Labor Elaine L. Chao as a recipient of the 2006 New Freedom Initiative (NFI) Award for the company’s commitment to recruit, train, hire and promote individuals with disabilities.

[edit] References

  1. ^ Defense News Top 100. Defense News Research (2005). Retrieved on 2006-04-04.
  2. ^ Otto J. Scott, The Creative Ordeal, (New York, Atheneum, 1974),16-32
  3. ^ Raytheon targets nuclear smuggling: Firm sees profit in homeland security. BostonGlobe (2006). Retrieved on 2006-11-07.
  4. ^ Bush, George H.W. (1991). Remarks to Raytheon Missile Systems Plant Employees in Andover, Massachusetts. The George Bush Presidential Library. Retrieved on 2006-04-05.
  5. ^ Report 102-1086. Activities of the House Committee on Governmental Operations, One Hundred Second Congress First and Second Sessions (1991-1992). Retrieved on 2006-04-05.
  6. ^ Krupa, Gregg. "Raytheon Unit Settles Industrial-Spying Allegations", Boston Globe, 1999-05-13. Retrieved on 2006-04-05.
  7. ^ Raytheon Chairman & CEO Comments Regarding 'Unwritten Rules'. Raytheon News Release. Retrieved on 2006-05-02.
  8. ^ "Raytheon halts distribution of controversial booklet by CEO", AP/Boston.com, 2006-05-02. Retrieved on 2006-05-02.
  9. ^ Statement of Board of Directors of Raytheon Company. Raytheon News Release. Retrieved on 2006-05-03.
  10. ^ MSNBC article. Did the Army favor Raytheon in anti-RPG bid?. Retrieved on 2006-09-07.
  11. ^ U.S. Army defends Raytheon contract amid storm. Retrieved on 2006-11-21.
  12. ^ Raytheon to Delist Voluntarily from NYSE Arca, Inc. and the Chicago Stock Exchange. PRNewswire (2006). Retrieved on 2006-10-27.
  13. ^ Raytheon (November 11, 2005). Raytheon Takes on New Assignment: Helping Kids Make the Grade in Math and Science. Press release.
  14. ^ Raytheon (September 14, 2004). Raytheon Announces $850K Grant to Tuskegee University. Press release.
  15. ^ Raytheon (July 24, 2000). Raytheon and its Employees Contribute $8 Million to the United Way. Press release.
  16. ^ Raytheon (November 1, 2006). ACCT=149999&TICK=RTN&STORY=/www/story/11-01-2006/0004464411&EDATE=Nov+1,+2006 Raytheon Honored at Special Olympics Gala. Press release.
  17. ^ Raytheon (2005). [1]. Human Rights Campaign.

[edit] See also

[edit] External links


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