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Raytheon Aircraft Company

In August 1993, Raytheon Company acquired Raytheon Corporate Jets, producers of the mid-sized Hawker jet line, from British Aerospace. In mid-September of 1994, Beech Aircraft and Raytheon Corporate Jets merged to form Raytheon Aircraft. The company formed RAC in 1994 through the combination of Beech Aircraft and Raytheon Corporate Jets, and the wholly-owned Raytheon subsidiary has been reported as a separate segment in all of the company's public filings since that time. RAC manufactures, markets, and services business jets, turboprops, and piston-powered aircraft for the world's commercial, fractional ownership, and military aircraft markets. Due to the cyclical nature of these markets, RAC often experienced fluctuating results.

At the end of 1994, U.S. Air Force exercised the sixth option for 32 T-1A Jayhawks worth $127 million, bringing the total order to 180 aircraft worth $755 million. On June 22, 1995, the Beech MkII is chosen as the U.S. Air Force and U.S. Navy's next-generation primary trainer aircraft in a highly competitive selection process. The multibillion-dollar program calls for the production of more than 700 aircraft. The joint services would soon name the aircraft the T-6A Texan II.

In September 1995, Raytheon Aircraft introduced its all-new light jet, the Raytheon Premier I, which utilizes the latest technologies in design and construction to provide outstanding comfort, performance, and value. Also in September 1995, the first Hawker 800XP (Extended Performance) is delivered to a customer. The Hawker 800XP represents the first upgrade of the Hawker line since its acquisition by Raytheon Company. In April 1996, the 3,000th Beech Bonanza A36 rolls off the production line. The 5,000th King Air is delivered in June 1996.

Raytheon Aircraft introduced the company's all-new, super mid-sized jet, the Hawker Horizon, during the National Business Aircraft Association convention in November 1996. In June 1997, Raytheon Aircraft announces the formation of Raytheon Travel Air, an aircraft fractional ownership company featuring the Hawker 800XP, the Beechjet 400A, and the King Air B200. In spring of 1997, the company marks 50 years of continuous production of the popular single-engine Bonanza series. In the summer of 1997, the company delivers the 180th and final T-1 Jayhawk pilot trainer to the U.S. Air Force.

In 1997, Raytheon completed two multi-billion dollar defense acquisitions in an effort to streamline its operations and solidify its position as one of the nation's largest military contractors. These acquisitions led to a doubling of Raytheon's long-term debt load (increasing it to over $8 billion) and a substantial lowering of Raytheon's credit rating. In an effort to reduce the burden of its debt expense on earnings and cash flows, Raytheon began to divest many of its "non-core" commercial units, using the cash generated by these sales to pay down debt it incurred as a result of its defense acquisitions. RAC was ultimately targeted for divestiture as part of this plan.

In July 1998, the first production T-6A Texan II makes its maiden flight. Four other production aircraft would join the first to conduct flight tests in preparation for first delivery in 1999. On December 22, 1998 - exactly 53 years to the day from the first flight of the famed Beech Bonanza - the new Raytheon Premier I takes to the skies for the first time. The new entry-level business jet flew a successful 62-minute debut, paving the way for certification efforts in 1999. The new Raytheon Premier I entry-level business jet completes more than 700 flight hours toward certification, and validates all critical performance numbers.

On March 23, 2001, Raytheon Aircraft celebrated the Federal Aviation Administration certification of the new Premier I business jet. The Premier I is the first certified business jet with a composite fuselage, the first clean-sheet business jet certified by Raytheon Aircraft, and the first new airplane certified by Raytheon Aircraft in more than a decade.

In an April 17, 2001, ceremony Raytheon Aircraft officially rolled out the second of its composite fuselage business jets . The super mid-size Hawker Horizon has transcontinental range and seating for up to 13. On June 22, 2001, the innovative Premier I achieved an important milestone when first delivery was enthusiastically received by Troy Eaden. On Aug. 11, 2001, the new super mid-size business jet, the Hawker Horizon, conducts its maiden flight. The composite-fuselage jet flew a 2 ½-hour mission from Wichita's Beech Field that tested the aircraft's flying qualities, engine operation, low-speed handling and climb performance. The aircraft flew to 10,500 feet and operated at speeds up to 225 knots.

At NBAA 2002, Raytheon Aircraft announced the return of the Hawker and Beechcraft brands. Both known worldwide for their high performance, reliability, and large, comfortable cabins the brands represent corporate-flown aircraft (Hawkers) and those certified for single-pilot flight (Beechcraft).

In January 2003 Raytheon was again probed on accounting byt the Securities and Exchange Comission. The SEC investigation focused on how Raytheon recognized revenue in its aircraft subsidiary from 1997 to 2001. The unit was the focus of another SEC inquiry in 2000 on a similar issue, but that investigation was closed without action. Raytheon restated earnings for the fourth quarter of 1999 in light of revised SEC rules on when revenue from the sale of an aircraft could be recognized. The firm was struggling to unload billions in debt after a string of acquisitions. Raytheon's defense business continued to grow, while its commercial units had been a drag on earnings.

On May 6, 2003, Raytheon Aircraft introduced the Hawker 400XP at the 2003 European Business Aviation Conference and Exhibition. This new Hawker is a critical step in the company's overall strategy to create distinct branding references for customers. The aircraft was formerly known as the Beechjet 400A. On Oct. 7, 2003, Raytheon Aircraft introduced the Collins Pro Line 21 avionics suites for the Beechcraft King Air 350 and B200. The cockpit upgrades marked a long line of product enhancements for the King Air line, which will celebrate its 40th anniversary in 2004. On Jan. 20, 2004, Raytheon Aircraft celebrates the 40th anniversary of the first flight of the Beechcraft King Air. The original Beechcraft King Air Model 90 lifted off from Beech Field in Wichita on this date, and flew on to become most successful business aircraft of all time. The King Air family today remains a highly versatile aircraft line.

On May 25, 2004, the 100th Premier I was delivered to a business in Virginia, marking the beginning of a long production run for the speedy and roomy business jet. On July 27, 2004, Raytheon Aircraft Company announced a fully integrated glass cockpit with Garmin G1000 avionics into the Beechcraft Bonanza and Beechcraft Baron, adding even more quality and value to these legendary single and twin piston aircraft models. New paint schemes and logos are announced in April 2005, and the aircraft are formally renamed to Beechcraft Bonanza G36 and the Beechcraft Baron G58. The Hellenic Air Force uses T-6A's from its 45-strong fleet to conduct air patrols, protecting the skies over the 2004 Summer Olympics held in Greece.

On December 23, 2004, the FAA granted the Hawker Horizon a provisional type certificate following more than 1800 hours of developmental and certification flight. The Hawker Horizon, which utilizes the latest in composite technology and construction techniques, enters the market with the best overall performance in its class and long range capabilities of 3,400 nautical miles.

On January 18, 2005, the T-6B upgraded primary training aircraft began the first leg of its world tour. The tour included flight demonstrations in Europe, the Middle East and Asia on display at the Air Show Down Under in Avalon, Australia, the Paris Air Show in France and the Royal International Air Tattoo at RAF Fairford in the U.K. On January 24, 2005, the 6,000th Beechcraft King Air is delivered with the same quality and performance that has been built into every Beechcraft product since 1932. Over 40 years, more than 20 version of commercial and special mission King Airs have been produced. On March 8, 2005, the 300th T-6A primary trainer is delivered to the U.S. Air Force, marking substantial progress on the Joint Primary Aircraft Training System program contract that calls for the delivery of 800 aircraft through 2017.

On March 16, 2005, Raytheon Aircraft Company reached a tentative agreement with NetJets, to purchase up to 50 Hawker Horizons for its expanding fractional market fleet, confirming the quality and performance of the most technically-advanced super-midsize business jet on the market. On May 18, 2005, at EBACE, the Hawker 800XPi, an improved version of the Hawker 800XP, that features avionics upgrades, a new cabin management system, and a standard 5-year warranty on the airframe, engines, and avionics, is unveiled at the European show. The new Premier IA is also announced and features a totally redesigned interior, avionics enhancements, as well as several other system improvements, further evolving the industry-leading Premier I.

On June 13, 2005, during the Paris Air Show, Raytheon Aircraft Company announced the Beechcraft King Air 350ER, an extended range special mission aircraft that provides a one-company solution by combining expertise from two of Raytheon's other businesses, Space & Airborne Systems and Technical Services Company. On July 25th, at Oshkosh, Raytheon Aircraft Company unveiled the new Beechcraft King Air C90GT, an evolution of the popular Beechcraft King Air C90B. The upgraded Beechcraft King Air C90GT delivers a 25-knot increase in max cruise speed and up to 50% reductions in the time needed to reach optimum cruise altitude.

On October 25, 2005 Raytheon Aircraft Company certified the new Beechcraft Premier IA. Featuring a redesigned interior, upgraded avionics, and a 5-year warranty, the composite fuselage aircraft is the largest, single-pilot jet in the world. On November 3, 2005 Raytheon Aircraft Company announced certification of the Beechcraft Bonanza G36, with the first fully integrated avionics system in a piston-engine aircraft. Proven, year after year, the airplane's solid, unmistakable feel combined with the Garmin G1000 avionics system and GFC 700 autopilot, provides incredible safety and situational awareness. On November 8, 2005 at NBAA, Raytheon Aircraft Company introduced the Hawker 850XP, the newest aircraft in the Hawker family, utilizing winglets designed by RAC. The aircraft is an evolution of the highly successful Hawker 800XPi. On November 8, 2005, Raytheon Aircraft Company announced that its super-midsize Horizon business jet would transition to the Hawker family nomenclature as the Hawker 4000.

On December 2, 2005, Netjets, Inc. signed a contract for the purchase of 50 Hawker 4000 supermidsize aircraft for their global fractional fleet. Combined with a 10-year guaranteed maintenance program, the total value of the contracts exceed $1 billion, making it the largest single commercial order in the history of Raytheon Aircraft Company. Deliveries to commence in 2007 and continue through 2013. On December 15, 2005, Raytheon Aircraft Company announced certification of the Beechcraft Baron G58, the first piston-twin with a fully integrated avionics system. On December 15, 2005, the T-1A Advanced Military Trainer aircraft reached the one million flight hour mark with the U.S. Government. On December 20, 2005, Raytheon Aircraft Company obtained certification for the King Air C90GT. The upgraded King Air added new PT6A-135 Pratt & Whitney engines increasing the airplane's max cruise by 26 knots, reduced the time to reach its certified ceiling by 50 percent and decreased take off distances.

On January 12, 2006, Raytheon Aircraft Company was awarded a $1.1 Billion supply chain contract from the U.S. Air Force for the Joint Primary Aircraft Training System (JPATS). On March 2, 2006, the mid-size Hawker 850XP, the next generation in a continuing line of successful Hawker 800-series aircraft with RAC-developed winglets, achieved certification. On April 4, 2006, Raytheon Aircraft Company delivered the 300th T-6A primary trainer to the U.S. military. On June 1, 2006, Raytheon Aircraft Company completed function and reliability testing on the Hawker 4000 super-midsize aircraft.

On July 18, 2006, Raytheon Aircraft Company unveiled the Beechcraft AT-6 Joint Airborne Weapons System, a multi-mission, multi-role version of the highly successful T-6A/B designed for the surveillance, reconnaissance, close air support, global war on terrorism, homeland security and training operations for the twenty-first century.

On October 3, 2006, at a ceremony in Little Rock, Ark., Raytheon Aircraft Company broke ground on a $16.3-million, 112,000-square-foot facility expansion to support completions of the Hawker 4000. A new 54,000-square foot hangar bay is part of the expansion as well as extensions of back portions of existing buildings to provide additional woodshop, upholstery, sheet metal and storage space. On October 16, 2006, Raytheon Aircraft Company announces the introduction of two new Hawker models, the Hawker 900XP and Hawker 750. RAC also delivers the 500th King Air 350 in a special ceremony at the NBAA Convention. On October 25, 2006, at a ceremony in Little Rock, RAC delivers the 800th Hawker 800 to America's Collectible Network. On October 27, 2006, Raytheon Aircraft Company announces an NBAA order tally for 112 aircraft worth nearly $1 billion. On November 21, 2006, the Hawker 4000 is certified. The most advanced super-midsize jet in the world today; it has the features of a much larger airplane in a super-midsize body with technology that leads the industry in almost every respect. With an intelligent balance of speed, range and payload, through advanced integrated systems and a composite fuselage, the Hawker 4000 is truly a breakthrough aircraft.

The year 2007 marked the 75th anniversary of Beechcraft. The occasion was marked by celebrations throughout the year including an Open House in Wichita. The American Bonanza Society conjointly held their annual convention at Beech Field flying in nearly 350 Bonanza and Barons to celebrate. The year 2007 also marked the 60th anniversary of the venerable Beechcraft Bonanza. Over 40 versions of the Bonanza have been produced during this period and it is the only aircraft to remain in continuous production for this length of time.

On 28 June 2006 Securities and Exchange Commission (the "Commission" or "SEC") instituted settled enforcement proceedings against Raytheon Company (Raytheon), its former Chairman and CEO, Daniel P. Burnham (Burnham), and the former Deputy CFO and Controller of Raytheon Aircraft Company (RAC), Aldo R. Servello (Servello). Between 1997 and 2001, Raytheon Company and certain members of its senior management made false and misleading disclosures and used improper accounting practices that operated as a fraud by masking the declining results and deteriorating business of Raytheon Aircraft Company ("RAC") and inaccurately reporting the company's operating results on both a segmented and consolidated basis. In addition, between 1997 and 2001, Raytheon failed to fully and accurately disclose known risks, trends, uncertainties, and other information concerning the deteriorating state of RAC's commuter aircraft business and the negative impact this decline was having on asset values associated with RAC's line of nineteen-seat, turboprop aircraft (the "commuters" or the "1900s") and, thus, on the company's (including RAC's) results of operations.

Raytheon, Burnham, and Servello consented to the entry of a final judgment in a related civil action filed in the U.S. District Court for the District of Columbia for the purposes of awarding civil monetary penalties and disgorgement. As part of the settlement, Raytheon consented to pay a penalty of $12 million and $1 in disgorgement. Burnham and Servello agreed to pay disgorgement of certain past bonus amounts, pre-judgment interest, and penalties in the total amounts of $1,238,344 and $34,628, respectively.

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.

Raytheon decided to explore strategic alternatives for Raytheon Aircraft, a provider of business and special mission aircraft, because, among other reasons, it did not address core Raytheon markets and had limited synergies with Raytheon's government and defense businesses. Raytheon felt that it was an opportune time to explore a Raytheon Aircraft transaction because Raytheon believed that Raytheon Aircraft would be an attractive business given its improving financial and operating performance in recent years and the continued strength of the general aviation market. Raytheon believed that the sale of Raytheon Aircraft will enable Raytheon to focus on our core markets and provide us with additional capital for implementing our business strategies while strengthening Raytheon's balance sheet and providing Raytheon with additional financial flexibility.

On Dec. 21, 2006 Raytheon announced that it had 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 Company sold RAC for approximately $3.3 billion and expected net after-tax proceeds to be approximately $2.5 billion.

On March 26, 2007, Raytheon Aircraft Company became Hawker Beechcraft Corporation, a company formed by GS Capital Partners, and Onex Partners, beginning the next great chapter of two of aviation's most enduring brands.