Raytheon Purchases Defense Systems & Electronics Business Of Texas Instruments

Acquisition Substantially Strengthens Raytheon's Leadership in Defense Electronics

(January 06, 1997) -- Raytheon Company (NYSE:RTN) and Texas Instruments Incorporated (NYSE:TXN) announced today that their boards of directors have approved a definitive agreement for Raytheon to purchase the assets of Texas Instruments' defense operations for $2.95 billion in cash.

This strategic acquisition will increase Raytheon's total annualized revenues to approximately $15 billion, and strengthens Raytheon's leadership in defense electronics while enhancing its position for continued growth in a consolidating industry. The transaction is expected to be non-dilutive to Raytheon's earnings per share in 1997 and to provide increasingly positive contributions to earnings per share thereafter. The transaction is subject to Hart-Scott-Rodino antitrust review and is expected to close in the second quarter of this year.

Dennis J. Picard, Raytheon chairman and chief executive officer, commented, "We have consistently said that we will remain a top-tier player in the defense industry. We are buying a growing, world-class business that competes successfully in several key defense electronics markets where Raytheon is not a significant participant. Our combined operations are highly complementary, making for a powerful extension of our defense electronics business. We have long admired the Texas Instruments Defense Systems & Electronics team, and we welcome them to the Raytheon family."

"The acquisition of Texas Instruments' defense business opens new defense markets worldwide and brings our annualized defense electronics sales to $8 billion and our current defense electronics backlog to $9.3 billion," Picard said.

"This is a great move for everyone," said Thomas J. Engibous, president and chief executive officer of Texas Instruments. "Raytheon gets tremendous technology and employees who are among the finest in the defense industry. Employees gain the career opportunities associated with a larger defense company. And Texas Instruments strengthens its focus on digital solutions for the networked society." David W. Welp, who will serve as president of what will become Raytheon TI Systems, a Raytheon Company subsidiary, will report directly to Mr. Picard. Welp commented, "We are pleased to be joining the Raytheon family. The natural synergies between our businesses will enable both of us to offer customers a far broader array of technologies and products than either of us could offer alone. The outlook and the possibilities are exciting, and we're eager to start work together."

Texas Instruments Defense Systems & Electronics Group, headquartered in Lewisville, Texas, is expected to have 1996 revenues of approximately $1.8 billion. Texas Instruments is a premier supplier of advanced defense systems, including precision-guided weapons, anti-radiation and strike missiles, airborne radar, night vision systems and electronic warfare systems. The Defense Systems & Electronics Group has approximately 12,000 employees, based largely in Texas.

Texas Instruments Defense Systems & Electronics Group brings to Raytheon leadership positions in a number of major programs. In precision-guided munitions, Texas Instruments is a leader in the Paveway laser-guided weapon program. Texas Instruments' Joint Stand-Off Weapon (JSOW) is a U.S. Navy/U.S. Air Force system for attacking high-value ground targets. The Javelin program is an anti-tank system for the U.S. Army. Texas Instruments is a leader in Long Range Precision Strike programs, such as the High-Speed Anti-Radiation Missile (HARM). HARM and Paveway constituted 65 percent of air-delivered weapons used by Coalition Forces in Operation Desert Storm.

Texas Instruments' outstanding credentials in airborne radar are evident by its strong positions in P-3 and S-3 ocean surveillance, F-22 airborne radars, and the LANTIRN terrain-following radar. Texas Instruments is also among the world leaders in electro-optics, particularly with its Forward-Looking InfraRed (FLIR) sensors, deployed on platforms such as the M-1 Tank, Bradley Fighting Vehicle, F-117 "Stealth" fighter and the F-18 Hornet. Despite the steep decline in the U.S. defense procurement over recent years, the armed services continue to prioritize airborne and ground systems that extend capabilities at night and in adverse weather.

Raytheon Electronics Systems (RES) has long been a leader in air-to-air and ship-defense missiles, with AMRAAM, Sidewinder, Standard Missile and Sparrow, as well as missile defense systems, such as Patriot and Hawk. RES has a major presence in ground-based and shipboard radars, military communications systems, and naval combat control, sonar and minehunting systems. At the forefront of systems integration for defense customers, Raytheon E-Systems businesses include reconnaissance and surveillance, command, control and communications, specialized aircraft modification, and counter measures.

Additionally, Raytheon Aircraft Company (RAC) provides aircraft training systems to the military. RAC won the 1995 competition for the multi-billion dollar, next-generation Joint Primary Aircraft Training System (JPATS) trainer for the U.S. Air Force and U.S. Navy. Raytheon Engineers & Constructors (RE&C) through its Raytheon Service Company, is one of the nation's leading government technical contractors, providing operations and maintenance services for many U.S. defense systems.

Raytheon competes in a variety of commercial businesses, as well. RE&C is one of the largest engineering, construction, and operations and maintenance organizations in the world. Its markets include: fossil-fuel and nuclear power; petroleum and gas; polymers and chemicals; pharmaceuticals and biotechnology; metals, mining and light industry; food and consumer products, and pulp and paper, among others. Raytheon Aircraft is the world leader in general aviation, offering the most extensive product line in the industry. Raytheon Appliances markets some of the finest brand names in appliances, including Amana refrigerators, microwave ovens, cooking surfaces and washers and dryers as well as Speed Queen, Huebsch and UniMac commercial laundry equipment.

Raytheon Company, headquartered in Lexington, Massachusetts, is a $12 billion international, high-technology company with approximately 75,000 employees worldwide operating in four businesses: commercial and defense electronics, engineering and construction, aircraft and major ppliances.