<PAGE>
1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A- No.1
/X/ Annual Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended December 31, 1997.
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from............... to
..............
Commission File Number 1-13699
RAYTHEON COMPANY
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 95-1778500
(State or Other Jurisdiction of
Incorporation or Organization) (I.R.S. Employer Identification No.)
141 SPRING STREET, LEXINGTON, MASSACHUSETTS 02173
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (781) 862-6600
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange
on Which Registered
Class A Common Stock, $.01 par value New York Stock Exchange
Class B Common Stock, $.01 par value Chicago Stock Exchange
Series A Junior Participating Preferred Pacific Exchange
Stock purchase rights
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes .X. No ...
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
<PAGE>
2
The aggregate market value of the voting stock held by non-affiliates of the
Registrant, as of February 22, 1998, was approximately $18,648,013,310. For
purposes of this disclosure, non-affiliates are deemed to be all persons other
than members of the Board of Directors of the Registrant.
Number of shares of Common Stock outstanding as of February 22, 1998:
338,811,777, consisting of 102,630,503 shares of Class A Common Stock and
236,181,274 shares of Class B Common Stock.
Documents incorporated by reference and made a part of this Form 10-K:
Portions of Raytheon's Annual Report to Stockholders Part I, Part II, Part IV
for the fiscal year ended December 31, 1997
Portions of the Proxy Statement for Raytheon's Part III 1998 Annual Meeting
which will be filed with the Commission within 120 days after the close of
Raytheon's fiscal year
The sole purpose of this Form 10-K/A is to file Annual Reports for the
Registrant's various savings and investment plans.
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has caused this amendment to be signed on its behalf
by the undersigned, thereunto duly authorized.
RAYTHEON COMPANY (REGISTRANT)
By: /s/ Thomas D. Hyde
Thomas D. Hyde
Senior Vice President and
General Counsel
Date: June 30, 1998
<PAGE>
1
Exhibit Index
Exhibit No. Description of Documents
99.1 Annual Report for the Raytheon Savings and Investment Plan.
99.1a Consent of Independent Accountants
99.1b Raytheon Savings and Investment Plan, heretofore filed as an
exhibit to the Company's S-8 Registration Statement No. 333-56117
on June 5, 1998, is hereby incorporated by reference.
99.2 Annual Report for the Raytheon Savings and Investment Plan for
Specified Hourly Payroll Employees.
99.2a Consent of Independent Accountants
99.2b Raytheon Savings and Investment Plan for Specified Hourly Payroll
Employees, heretofore filed as an exhibit to the Company's S-8
Registration Statement No. 333-56117 on June 5, 1998, is hereby
incorporated by reference.
99.3 Annual Report for the Raytheon Employee Savings and Investment Plan.
99.3a Consent of Independent Accountants
99.3b Raytheon Employee Savings and Investment Plan, heretofore filed as an
exhibit to the Company's S-8 Registration Statement No. 333-56117 on
June 5, 1998, is hereby incorporated by reference.
99.4 Annual Report for the Raytheon Savings and Investment Plan for
Puerto Rico Based Employees.
99.4a Consent of Independent Accountants
99.4b Raytheon Savings and Investment Plan for Puerto Rico Based Employees,
heretofore filed as an exhibit to the Company's S-8 Registration
Statement No. 333-56117 on June 5, 1998, is hereby incorporated by
reference.
99.5 Annual Report for the E-Systems, Inc. Employee Savings Plan.
99.5a Consent of Independent Accountants
99.5b E-Systems, Inc. Employee Savings Plan, heretofore filed as an
exhibit to the Company's S-8 Registration Statement No. 333-56117
on June 5, 1998, is hereby incorporated by reference.
99.6 Annual Report for the Raytheon TI Systems Savings Plan.
99.6a Consent of Independent Accountants
99.6b Raytheon TI Systems Savings Plan, heretofore filed as an exhibit to
the Company's S-8 Registration Statement No. 333-56117 on June 5,
1998, is hereby incorporated by reference.
<PAGE>
2
99.7 Annual Report for the Raytheon Salaried Savings and Investment Plan.
99.7a Consent of Independent Accountants
99.7b Raytheon Salaried Savings and Investment Plan, heretofore filed as an
exhibit to the Company's S-8 Registration Statement No. 333-56117 on
June 5, 1998, is hereby incorporated by reference.
99.8 Annual Report for the Raytheon California Hourly Savings and
Investment Plan.
99.8a Consent of Independent Accountants
99.8b Raytheon California Hourly Savings and Investment Plan, heretofore
filed as an exhibit to the Company's S-8 Registration Statement No.
333-56117 on June 5, 1998, is hereby incorporated by reference.
99.9 Annual Report for the Raytheon Tucson Bargaining Savings and
Investment Plan.
99.9a Consent of Independent Accountants
99.9b Raytheon Tucson Bargaining Savings and Investment Plan, heretofore
filed as an exhibit to the Company's S-8 Registration Statement No.
333-56117 on June 5, 1998, is hereby incorporated by reference.
99.10 Annual Report for the Raytheon Savings and Investment Plan (10014).
99.10a Consent of Independent Accountants
99.10b Raytheon Savings and Investment Plan (10014), heretofore filed as
an exhibit to the Company's S-8 Registration Statement No. 333-56117
on June 5, 1998, is hereby incorporated by reference.
<PAGE>
1
EXHIBIT 99.1
RAYTHEON SAVINGS AND INVESTMENT PLAN
FINANCIAL STATEMENTS
TO ACCOMPANY 1997 FORM 5500
ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN
UNDER ERISA OF 1974
FOR THE YEAR ENDED DECEMBER 31, 1997
The supplemental schedules required to accompany the Plan's Form 5500
are not required since the Plan's assets are held in a Master Trust.
Accordingly, detailed financial information, including the supplemental
schedules, must be filed separately with the Department of Labor by the plan
administrator.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Raytheon Company:
We have audited the accompanying statements of net assets available
for plan benefits of the Raytheon Savings and Investment Plan (the "Plan") as of
December 31, 1997 and 1996, and the related statement of changes in net assets
available for plan benefits for the year ended December 31, 1997. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for plan benefits of
the Plan as of December 31, 1997 and 1996, and the changes in net assets
available for plan benefits for the year ended December 31, 1997 in conformity
with generally accepted accounting principles.
Coopers & Lybrand LLP
Boston, Massachusetts
May 29, 1998
<PAGE>
2
RAYTHEON SAVINGS AND INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
as of December 31, 1997 and 1996
1997 1996
Assets:
Master trust investments:
At contract value (Notes B, E and H) $ 772,455,041 $ 772,729,672
At fair value (Notes B, F and H) 1,887,852,039 1,476,625,144
-------------- --------------
2,660,307,080 2,249,354,816
-------------- --------------
Receivables:
Accrued investment income
and other receivables 3,765,409 931,039
Cash and cash equivalents 18,482,006 21,398,335
-------------- --------------
Total assets 2,682,554,495 2,271,684,190
-------------- --------------
Liabilities:
Payable for outstanding purchases 3,213,981 1,488,542
Accrued expenses and other payables 1,766,653 954,240
-------------- --------------
Total liabilities 4,980,634 2,442,782
-------------- --------------
Net assets available for plan benefits $2,677,573,861 $2,269,241,408
============== ==============
The accompanying notes are an integral part of the financial statements.
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3
RAYTHEON SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS
for the year ended December 31, 1997
Additions to net assets attributable to:
Investment income (Notes B, E, and H):
Net appreciation of investments $ 266,296,571
Interest 60,810,967
Dividends 65,037,158
--------------
392,144,696
--------------
Contributions and deferrals:
Employee deferrals 139,052,540
Employer contributions 41,031,026
Transfers (Note G) 2,012,446
--------------
182,096,012
--------------
Total additions 574,240,708
--------------
Deductions from net assets attributable to:
Distributions to participants 165,263,589
Administrative expenses 644,666
Total deductions 165,908,255
--------------
Increase in net assets 408,332,453
Net assets available for plan benefits,
beginning of year 2,269,241,408
--------------
Net assets available for plan benefits,
end of year $2,677,573,861
==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
4
A. Description of Plan:
General
The following description of the Raytheon Savings and Investment Plan
(the "Plan") provides only general information. Participants should refer to the
plan document for a complete description of the Plan's provisions. The Plan is a
defined contribution plan covering certain employees of Raytheon Company (the
"Company"). To participate in the Plan, eligible employees must have three
months of service and may enter the Plan only on the first day of each month.
The purpose of the Plan is to provide participants with a tax-effective means of
meeting both short- and long-term investment objectives. The Plan is intended to
be a "qualified cash or deferred arrangement" under Sections 401(a) and 401(k)
of the Internal Revenue Code (the "Code"). The Plan is subject to the provisions
of the Employee Retirement Income Security Act of 1974 (ERISA).
The Plan's investments are held in the Raytheon Company Master Trust
for Defined Contribution Plans ("Master Trust") with the assets of other defined
contribution plans of the Company and subsidiaries. The trustee of the Master
Trust maintains a separate account reflecting the equitable share in the Trust
of each plan.
Investment income and administrative expenses relating to the Master
Trust are allocated to the individual plans based upon average monthly balances
invested by each plan.
Contributions and Deferrals
Eligible employees are allowed to defer to the Plan up to 17% of their
salaries. The Company contributes amounts equal to 50% of each participant's
deferral, up to a maximum of 3% of the participant's salary. As of December 31,
1997, the annual employee deferral for a participant cannot exceed $9,500.
Rollover contributions from other qualified plans are accepted by the Plan.
Participants may invest their deferrals in increments of 1% in any combination
of seven funds: (a) a Fixed Income Fund under which assets are invested
primarily in contracts providing for fixed rates of interest for specified
periods of time, (b) an Equity Fund which invests in shares of a mutual fund
which consists primarily of income-producing equity securities, (c) a Raytheon
Common Stock Fund which invests in shares of Raytheon Company Class B common
stock, (d) a Stock Index Fund which invests in a commingled pool consisting
primarily of equity securities and is designed to track the S&P 500 Index, (e) a
Balanced Fund which invests in shares of a mutual fund which consists primarily
of equity securities, bonds and money market instruments, (f) the Magellan Fund,
a growth fund which invests primarily in equities of companies of all types and
sizes, and (g) the Blue Chip Fund, a growth fund which invests primarily in
equities of well known and established companies. Dividends and distributions
from investments of the Raytheon Common Stock Fund, the Equity Fund, the Stock
Index Fund, the Balanced Fund, the Magellan Fund and the Blue Chip Fund are
reinvested in their respective funds; stock dividends, stock splits and similar
changes are also reflected in the funds.
<PAGE>
5
Participant Accounts
Each participant's account is credited with the participant's
deferral, the Company's contribution and an allocation of plan earnings. Plan
earnings are allocated based on account balances by fund.
Vesting
Participants are immediately vested in their voluntary deferrals plus
actual earnings thereon. Vesting requirements for employer contributions plus
earnings thereon may vary depending upon when an employee became eligible to
participate in the Plan. Vesting generally occurs upon the earliest of the
completion of five years of service or three years of plan participation or upon
retirement, death, disability, or attainment of normal retirement age.
Forfeitures of the nonvested portions of terminated participants' accounts are
used to reduce required contributions of the Company.
Distributions to Participants
A participant may withdraw all or a portion of deferrals, employer
contributions and related earnings upon attainment of age 59 1/2. For reasons of
financial hardship, as defined in the Plan document, a participant may withdraw
all or a portion of deferrals. On termination of employment, a participant will
receive a lump-sum distribution unless the vested account is valued in excess of
$3,500 and the participant elects to defer distribution. A retiree or a
beneficiary of a deceased participant may defer the distribution until January
of the year following attainment of age 65.
Loans to Participants
A participant may borrow against a portion of the balance in the
participant's account, subject to certain restrictions. The maximum amount of a
loan is the lesser of one-half of the participant's vested account balance or
$50,000. The minimum loan which may be granted is $500. The interest rate
applied is equal to the prime rate published in the Wall Street Journal on the
first business day in June and December of each year. Loans must be repaid over
a period of up to 5 years by means of payroll deductions. In certain cases,
the repayment period may be extended up to 15 years. Interest paid to the Plan
on loans to participants is credited to the borrower's account in the investment
fund to which repayments are made.
Administrative Expenses
Substantially all expenses of administering the Plan are paid by the
plan participants.
B. Summary of Significant Accounting Policies:
The accompanying financial statements are prepared on the accrual
basis of accounting.
<PAGE>
6
The Plan's investment contracts are fully benefit-responsive and are
therefore included in the financial statements at their contract value, defined
as net contributions and deferrals plus interest earned on the underlying
investments at contracted rates. Because the investment contracts are fully
benefit-responsive, contract values approximate fair value. Investments in
mutual funds and the commingled pool are valued at the closing net asset value
reported on the last business day of the year. Investments in securities (common
stocks) traded on a national securities exchange are valued at the last reported
sales price on the last business day of the year. Cash equivalents are
short-term money market instruments and are valued at cost which approximates
fair value.
Security transactions are recorded on trade date. Except for its
investment contracts (Note E), the Plan's investments are held by
bank-administered trust funds. Payables for outstanding security transactions
represent trades which have occurred but have not yet settled.
The Plan presents in the statement of changes in net assets the net
appreciation (depreciation) in the fair value of its investments which consists
of the realized gains or losses and the unrealized appreciation (depreciation)
on those investments.
Dividend income is recorded on the ex-dividend date. Income from other
investments is recorded as earned on an accrual basis.
Benefits are recorded when paid.
Certain items in the 1996 financial statements have been reclassified
to conform to the 1997 presentation.
The preparation of the financial statements in conformity with
generally accepted accounting principles requires the plan administrator to make
significant estimates and assumptions that affect the reported amounts of net
assets and liabilities available for benefits at the date of the financial
statements and the changes in net assets available for benefits during the
reporting period and, when applicable, disclosures of contingent assets and
liabilities at the date of the financial statements. Actual results could differ
from the estimates included in the financial statements.
The Plan provides for various investment options in any combination of
stocks, bonds, fixed income securities, mutual funds and other investment
securities. Investment securities are exposed to various risks, such as interest
rate, market and credit risk. Due to the level of risk associated with certain
investment securities and the level of uncertainty related to changes in the
value of investment securities, it is at least reasonably possible that changes
in risks in the near term would materially affect participants' account balances
and the amounts reported in the statement of net assets available for plan
benefits and the statement of changes in net assets available for plan benefits.
C. Federal Income Tax Status:
The Plan obtained its latest determination letter in July 1995, in
which the Internal Revenue Service stated that the Plan, as submitted, was in
compliance with the applicable requirements of the Internal Revenue Code. The
Plan has been amended since receiving the determination letter. However, the
Plan administrator and the Plan's legal counsel believe that the Plan is
currently designed and being operated in compliance with the applicable
requirements of the Internal Revenue Code. Therefore, no provision for income
taxes has been included in the Plan's financial statements.
<PAGE>
7
D. Plan Termination:
Although it has not expressed any intention to do so, the Company
reserves the right under the Plan at any time or times to discontinue its
contributions and to terminate the Plan subject to the provisions of ERISA. In
the event of Plan termination, after payment of all expenses and proportional
adjustment of accounts to reflect such expenses, fund losses or profits and
reallocations, each participant shall be entitled to receive any amounts then
credited to his or her account.
E. Investment Contracts:
The Plan invests in collateralized fixed income investment portfolios
(with no expiration date), three of which are managed by insurance companies and
one of which is managed by an investment management firm. The credited interest
rates are adjusted semiannually to reflect the experienced and anticipated
yields to be earned on such investments, based on their book value. The
annualized average yield and credited interest rates were as follows:
Annualized
Average Credited
Yield Interest Rate
For year ended December 31, 1997:
Bankers Trust (WBS 92-485) 6.95% 6.95%
Metropolitan Life Insurance Company (GIC GA-12908) 6.86% 6.86%
Metropolitan Life Insurance Company (GIC GA-13659) 6.43% 6.43%
Prudential Asset Management Company (GIC 917163-001) 6.99% 6.99%
For the year ended December 31, 1996:
Bankers Trust (WBS 92-485) 6.87% 6.95%
Metropolitan Life Insurance Company (GIC GA-12908) 6.77% 6.86%
Metropolitan Life Insurance Company (GIC GA-13659) 6.36% 6.43%
Prudential Asset Management Company (GIC 917163-001) 6.89% 6.99%
The contract values are subject to limitations in certain situations
including large workforce reductions and plan termination.
In the financial statements, the two Metropolitan Life Insurance
Company contracts are recorded as one investment option.
F. Related Party Transactions:
In accordance with the provisions of the Plan, Fidelity Management
Trust Company (the "Trustee") acts as the Plan's agent for purchases and sales
of shares of Raytheon Company Class B common stock. These transactions are
performed on the Master Trust level. For the Master Trust, purchases amounted to
$200,689,057 and $158,515,882 and sales amounted to $102,165,608 and $38,523,792
for the years ended December 31, 1997 and 1996, respectively.
G. Transfers:
Transfers include transfers of participant accounts, individually
and/or in groups, between the Raytheon Savings and Investment Plan and all other
plans included in the Raytheon Company Master Trust for those participants
and/or groups of participants who changed plans during the year. Transfers also
include transfers of participant accounts, individually and/or in groups,
between the Raytheon Savings and Investment Plan and similar savings plans of
other companies for those participants who changed companies during the year.
<PAGE>
8
H. Fund Data:
The following is a summary of net assets available for plan benefits
by fund as of December 31, 1997:
<TABLE>
<CAPTION>
Raytheon
Fixed Common Stock Balanced Magellan
Income Fund Equity Fund Stock Fund Index Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust* $288,500,627
Prudential Insurance
Company of America* 178,944,318
Metropolitan Life
Insurance Company* 305,010,096
At fair value:
Fidelity Equity
Income Fund* $702,811,931
Raytheon Company
Common Stock* $378,088,027
BT Pyramid Equity
Index Fund* $410,284,635
Fidelity Balanced Fund $99,624,204
Fidelity Magellan Fund $73,972,306
Fidelity Blue Chip Fund
Loans receivable from
participants
------------ ------------ ------------ ------------ ----------- -----------
Total investments 772,455,041 702,811,931 378,088,027 410,284,635 99,624,204 73,972,306
------------ ------------ ------------ ------------ ----------- -----------
Receivables:
Accrued investment income
and other receivables 2,782,739 982,670
Cash and cash equivalents 7,610,141 6,842,320 4,029,545
------------ ------------ ------------ ------------ ----------- -----------
Total assets 780,065,182 702,811,931 387,713,086 415,296,850 99,624,204 73,972,306
------------ ------------ ------------ ------------ ----------- -----------
Liabilities:
Payable for outstanding
purchases 3,213,981
Accrued expenses and
other payables 750,673 1,015,980
------------ ------------ ------------ ------------ ----------- -----------
Total liabilities 3,964,654 1,015,980
------------ ------------ ------------ ------------ ----------- -----------
Net assets available for
plan benefits $780,065,182 $702,811,931 $383,748,432 $414,280,870 $99,624,204 $73,972,306
============ ============ ============ ============ =========== ===========
*Represents more than 5% of net
assets available for plan benefits
<PAGE>
9
<CAPTION>
Blue Chip
Fund Loan Fund Total
<S> <C> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust* $288,500,627
Prudential Insurance
Company of America* 178,944,318
Metropolitan Life
Insurance Company* 305,010,096
At fair value:
Fidelity Equity
Income Fund* 702,811,931
Raytheon Company
Common Stock* 378,088,027
BT Pyramid Equity
Index Fund* 410,284,635
Fidelity Balanced Fund 99,624,204
Fidelity Magellan Fund 73,972,306
Fidelity Blue Chip Fund $104,583,449 104,583,449
Loans receivable from
participants $118,487,487 118,487,487
------------ ------------ --------------
Total investments 104,583,449 118,487,487 2,660,307,080
------------ ------------ --------------
Receivables:
Accrued investment income
and other receivables 3,765,409
Cash and cash equivalents 18,482,006
------------ ------------ --------------
Total assets 104,583,449 118,487,487 2,682,554,495
------------ ------------ --------------
Liabilities:
Payable for outstanding
purchases 3,213,981
Accrued expenses and
other payables 1,766,653
------------ ------------ --------------
Total liabilities 4,980,634
------------ ------------ --------------
Net assets available for
plan benefits $104,583,449 $118,487,487 $2,677,573,861
============ ============ ==============
*Represents more than 5% of net
assets available for plan benefits
</TABLE>
<PAGE>
10
H. Fund Data, continued:
The following is a summary of net assets available for plan benefits
by fund as of December 31, 1996:
<TABLE>
<CAPTION>
Raytheon
Fixed Common Stock Balanced Magellan
Income Fund Equity Fund Stock Fund Index Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust* $291,452,605
Prudential Insurance
Company of America* 180,698,171
Metropolitan Life
Insurance Company* 300,578,896
At fair value:
Fidelity Equity
Income Fund* $528,486,753
Raytheon Company
Common Stock* $372,372,739
BT Pyramid Equity
Index Fund* $279,051,705
Fidelity Balanced Fund $76,235,541
Fidelity Magellan Fund $44,824,995
Fidelity Blue Chip Fund
Loans receivable from
participants*
------------ ------------ ------------ ------------ ----------- -----------
Total investments 772,729,672 528,486,753 372,372,739 279,051,705 76,235,541 44,824,995
------------ ------------ ------------ ------------ ----------- -----------
Receivables:
Accrued investment income
and other receivables 548,433 382,606
Cash and cash equivalents 12,555,817 5,629,300 3,213,218
------------ ------------ ------------ ------------ ----------- -----------
Total assets 785,285,489 528,486,753 378,550,472 282,647,529 76,235,541 44,824,995
------------ ------------ ------------ ------------ ----------- -----------
Liabilities:
Payable for outstanding purchases 1,488,542
Accrued expenses and other payables 520,203 434,037
------------ ------------ ------------ ------------ ----------- -----------
Total liabilities 2,008,745 434,037
------------ ------------ ------------ ------------ ----------- -----------
Net assets available for
plan benefits $785,285,489 $528,486,753 $376,541,727 $282,213,492 $76,235,541 $44,824,995
============ ============ ============ ============ =========== ===========
*Represents more than 5% of net assets
available for plan benefits
<PAGE>
11
Blue Chip
Fund Loan Fund Total
<S> <C> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust* $291,452,605
Prudential Insurance
Company of America* 180,698,171
Metropolitan Life
Insurance Company* 300,578,896
At fair value:
Fidelity Equity
Income Fund* 528,486,753
Raytheon Company
Common Stock* 372,372,739
BT Pyramid Equity
Index Fund* 279,051,705
Fidelity Balanced Fund 76,235,541
Fidelity Magellan Fund 44,824,995
Fidelity Blue Chip Fund $61,559,093 61,559,093
Loans receivable from
participants* $114,094,318 114,094,318
----------- ------------ --------------
Total investments 61,559,093 114,094,318 2,249,354,816
----------- ------------ --------------
Receivables:
Accrued investment income
and other receivables 931,039
Cash and cash equivalents 21,398,335
----------- ------------ --------------
Total assets 61,559,093 114,094,318 2,271,684,190
----------- ------------ --------------
Liabilities:
Payable for outstanding purchases 1,488,542
Accrued expenses and other payables 954,240
----------- ------------ --------------
Total liabilities 2,442,782
----------- ------------ --------------
Net assets available for
plan benefits $61,559,093 $114,094,318 $2,269,241,408
=========== ============ ==============
*Represents more than 5% of net assets
available for plan benefits
</TABLE>
<PAGE>
12
H. Fund Data, continued:
The following is a summary of net assets available for plan benefits
by fund as of December 31, 1997:
<TABLE>
<CAPTION>
Raytheon
Fixed Common Stock Balanced Magellan
Income Fund Equity Fund Stock Fund Index Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributable to:
Investment income:
Net appreciation of investments $120,948,030 $20,461,839 $ 96,741,885 $ 6,060,528 $ 8,101,648
Interest $ 52,083,232 339,719 263,648
Dividends 38,332,138 5,635,976 11,796,445 4,345,938
------------ ------------ ----------- ------------ ----------- -----------
52,083,232 159,280,168 26,437,534 97,005,533 17,856,973 12,447,586
------------ ------------ ----------- ------------ ----------- -----------
Contributions and deferrals:
Employee deferrals 37,374,193 31,354,470 23,142,038 23,100,455 6,820,556 7,325,877
Employer contributions 11,021,000 9,475,138 6,973,904 6,738,271 2,031,306 2,141,751
Transfers 416,725 217,088 486,144 313,180 33,797 43,026
------------ ------------ ----------- ------------ ----------- -----------
48,811,918 41,046,696 30,602,086 30,151,906 8,885,659 9,510,654
------------ ------------ ----------- ------------ ----------- -----------
Total additions 100,895,150 200,326,864 57,039,620 127,157,439 26,742,632 21,958,240
------------ ------------ ----------- ------------ ----------- -----------
Deductions from net assets
attributable to:
Distributions to participants 78,215,945 33,061,517 19,458,406 18,864,751 5,234,076 2,700,029
Administrative expenses 218,539 168,459 106,090 95,457 23,552 13,897
------------ ------------ ----------- ------------ ----------- -----------
Total deductions 78,434,484 33,229,976 19,564,496 18,960,208 5,257,628 2,713,926
------------ ------------ ----------- ------------ ----------- -----------
Interfund transfers (27,680,973) 7,228,290 (30,268,419) 23,870,147 1,903,659 9,902,997
------------ ------------ ----------- ------------ ----------- -----------
Increase (decrease) in net assets (5,220,307) 174,325,178 7,206,705 132,067,378 23,388,663 29,147,311
Net assets available for plan
benefits, beginning of year 785,285,489 528,486,753 376,541,727 282,213,492 76,235,541 44,824,995
------------ ------------ ------------ ------------ ----------- -----------
Net assets available for plan
benefits, end of year $780,065,182 $702,811,931 $383,748,432 $414,280,870 $99,624,204 $73,972,306
============ ============ ============ ============ =========== ===========
<PAGE>
13
Blue Chip
Fund Loan Fund Total
<S> <C> <C> <C>
Additions to net assets
attributable to:
Investment income:
Net appreciation of investments $ 13,982,641 $266,296,571
Interest $ 8,124,368 60,810,967
Dividends 4,926,661 65,037,158
----------- ------------ ------------
18,909,302 8,124,368 392,144,696
----------- ------------ ------------
Contributions and deferrals:
Employee deferrals 9,651,786 283,165 139,052,540
Employer contributions 2,649,656 41,031,026
Transfers 49,778 452,708 2,012,446
----------- ------------ ------------
12,351,220 735,873 182,096,012
----------- ------------ ------------
Total additions 31,260,522 8,860,241 574,240,708
----------- ------------ ------------
Deductions from net assets
attributable to:
Distributions to participants 3,102,399 4,626,466 165,263,589
Administrative expenses 18,672 644,666
----------- ------------ ------------
Total deductions 3,121,071 4,626,466 165,908,255
----------- ------------ ------------
Interfund transfers 14,884,905 159,394 --
----------- ------------ ------------
Increase (decrease) in net assets 43,024,356 4,393,169 408,332,453
Net assets available for plan
benefits, beginning of year 61,559,093 114,094,318 2,269,241,408
------------ ------------ --------------
Net assets available for plan
benefits, end of year $104,583,449 $118,487,487 $2,677,573,861
============ ============ ==============
</TABLE>
<PAGE>
14
I. Master Trust:
All plan investments are included under the Master Trust. At December
31, 1997, assets of the Plan represented 76.2% of the total assets under the
Master Trust. This has decreased from 80.2% at December 31, 1996. The following
is a summary of net assets available for plan benefits by fund under the Master
Trust as of December 31, 1997:
<TABLE>
<CAPTION>
Fixed Raytheon Stock
Income Equity Common Index Balanced Magellan Blue Chip
Fund Fund Stock Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $351,035,073
Prudential Insurance
Company of America* 217,731,699
Metropolitan Life
Insurance Company* 371,123,080
At fair value:
Fidelity Equity
Income Fund* $782,799,011
Raytheon Company
Common Stock* $745,980,294
BT Pyramid Equity
Index Fund* $484,781,406
Fidelity Balance Fund $117,556,481
Fidelity Magellan Fund $91,863,155
Fidelity Blue Chip Fund $136,586,123
Templeton Foreign I Fund
Fidelity Investment
Grade Bond Fund
Fidelity Retirement
Money Market Fund
Loans receivable from
participants
------------ ------------ ------------ ------------ ------------ ----------- ------------
Total investments 939,889,852 782,799,011 745,980,294 484,781,406 117,556,481 91,863,155 136,586,123
------------ ------------ ------------ ------------ ------------ ----------- ------------
Receivables:
Employer contribution
Accrued Investment income
and other receivables 5,489,592 1,161,112
Cash and cash equivalents 9,232,100 13,498,051 4,761,268
------------ ------------ ------------ ------------ ------------ ----------- ------------
Total assets 949,121,952 782,799,011 764,967,937 490,703,786 117,556,481 91,863,155 136,586,123
------------ ------------ ------------ ------------ ------------ ----------- ------------
Liabilities:
Payables for outstanding
purchases 6,340,318
Accrued expenses and
other payables 1,480,875 1,200,471
------------ ------------ ------------ ------------ ------------ ----------- ------------
Total liabilities 7,821,193 1,200,471
------------ ------------ ------------ ------------ ------------ ----------- ------------
Net assets available for
plan benefits $949,121,952 $782,799,011 $757,146,744 $489,503,315 $117,556,481 $91,863,155 $136,586,123
============ ============ ============ ============ ============ =========== ============
Percentage of Master Trust that 82.2% 89.8% 50.7% 84.6% 84.7% 80.5% 76.6%
are plan assets of the Raytheon
Savings and Investment Plan.
*Represents more than 5% of net assets available for plan benefits.
N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund, and
Retirement Money Market Fund are not available for the Raytheon
Savings and Investment Plan.
<PAGE>
15
Templeton Investment Retirement
Foreign I Grade Money Loan
Fund Bond Fund Market Fund Fund Total
<S> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $ 351,035,073
Prudential Insurance
Company of America* 217,731,699
Metropolitan Life
Insurance Company* 371,123,080
At fair value:
Fidelity Equity
Income Fund* 782,799,011
Raytheon Company
Common Stock* 745,980,294
BT Pyramid Equity
Index Fund* 484,781,406
Fidelity Balance Fund 117,556,481
Fidelity Magellan Fund 91,863,155
Fidelity Blue Chip Fund 136,586,123
Templeton Foreign I Fund $5,471,176 5,471,176
Fidelity Investment
grade Bond Fund $1,548,125 1,548,125
Fidelity Retirement
Money Market Fund $12,186,085 12,186,085
Loans receivable from
participants $166,395,767 166,395,767
---------- ---------- ----------- ------------ --------------
Total investments 5,471,176 1,548,125 12,186,085 166,395,767 3,485,057,475
---------- ---------- ----------- ------------ --------------
Receivables:
Employer contribution 4,015,100 4,015,100
Accrued investment income
and other receivables 6,650,704
Cash and cash equivalents 27,491,419
---------- ---------- ----------- ------------ --------------
Total assets 5,471,176 1,548,125 16,201,185 166,395,767 3,523,214,698
---------- ---------- ----------- ------------ --------------
Liabilities:
Payables for outstanding
purchases 6,340,318
Accrued expenses and
other payables 2,681,346
---------- ---------- ----------- ------------ --------------
Total liabilities 9,021,664
---------- ---------- ----------- ------------ --------------
Net assets available for
plan benefits $5,471,176 $1,548,125 $16,201,185 $166,395,767 $3,514,193,034
========== ========== =========== ============ ==============
Percentage of Master Trust that are N/A N/A N/A 71.2% 76.2%
plan assets of the Raytheon Savings
and Investment Plan
*Represents more than 5% of net assets available for plan benefits
N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund, and
Retirement Money Market Fund are not available for the Raytheon
Savings and Investment Plan.
</TABLE>
<PAGE>
16
I. Master Trust, continued:
The following is a summary of net assets available for plan benefits
by fund under the Master Trust as of December 31, 1996:
<TABLE>
<CAPTION>
Fixed Raytheon Stock
Income Equity Common Index Balanced Magellan
Fund Fund Stock Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $339,670,440
Prudential Insurance
Company of America* 210,594,065
Metropolitan Life
Insurance Company* 350,310,646
At fair value:
Fidelity Equity
Income Fund * $578,166,630
Raytheon Company
Common Stock* $671,136,043
BT Pyramid Equity
Index Fund* $307,555,916
Fidelity Balance Fund $83,265,065
Fidelity Magellan Fund $50,454,961
Fidelity Blue Chip Fund
Loans receivable from
participants*
------------ ------------ ------------ ------------ ----------- -----------
Total investments 900,575,151 578,166,630 671,136,043 307,555,916 83,265,065 50,454,961
------------ ------------ ------------ ------------ ----------- -----------
Receivables:
Accrued investment income 39,737 13,686
Cash and cash equivalents 14,633,134 10,145,818 3,541,437
------------ ------------ ------------ ------------ ----------- -----------
Total assets 915,208,285 578,166,630 681,321,598 311,111,039 83,265,065 50,454,961
------------ ------------ ------------ ------------ ----------- -----------
Liabilities:
Payables for outstanding
purchases 2,682,835
------------ ------------ ------------ ------------ ----------- -----------
Total liabilities 2,682,835
------------ ------------ ------------ ------------ ----------- -----------
Net assets available for
plan benefits $915,208,285 $578,166,630 $678,638,763 $311,111,039 $83,265,065 $50,454,961
============ ============ ============ ============ =========== ===========
Percentage of Master Trust that are 85.8% 91.4% 55.5% 90.7% 91.6% 88.8%
plan assets of the Raytheon Savings
and Investment Plan.
*Represents more than 5% of net assets available for plan benefits.
<PAGE>
17
Blue Chip Loan
Fund Fund Total
<S> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $339,670,440
Prudential Insurance
Company of America* 210,594,065
Metropolitan Life
Insurance Company* 350,310,646
At fair value:
Fidelity Equity
Income Fund * 578,166,630
Raytheon Company
Common Stock* 671,136,043
BT Pyramid Equity
Index Fund* 307,555,916
Fidelity Balance Fund 83,265,065
Fidelity Magellan Fund 50,454,961
Fidelity Blue Chip Fund $67,866,240 67,866,240
Loans receivable from
participants* $144,824,714 144,824,714
----------- ------------ --------------
Total investments 67,866,240 144,824,714 2,803,844,720
----------- ------------ --------------
Receivables:
Accrued investment income 53,423
Cash and cash equivalents 28,320,389
----------- ------------ --------------
Total assets 67,866,240 144,824,714 2,832,218,532
----------- ------------ --------------
Liabilities:
Payables for outstanding
purchases 2,682,835
----------- ------------ --------------
Total liabilities 2,682,835
----------- ------------ --------------
Net assets available for
plan benefits $67,866,240 $144,824,714 $2,829,535,697
=========== ============ ==============
Percentage of Master Trust that are 90.7% 78.8% 80.2%
plan assets of the Raytheon Savings
and Investment Plan
*Represents more than 5% of net assets available for plan benefits
</TABLE>
<PAGE>
18
I. Master Trust, continued:
The following is a summary of investment income by fund under the
Master Trust for the year ended December 31, 1997:
<TABLE>
<CAPTION>
Fixed Raytheon
Income Common Stock Balanced Magellan Blue Chip
Fund Equity Fund Stock Fund Index Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Net appreciation (depreciation)
of assets $ (191,924) $132,974,182 $30,715,963 $109,162,707 $ 6,388,316 $ 9,026,047 $15,474,118
Interest 62,319,073 673,934 312,511
Dividends 42,443,971 11,118,152 13,680,351 5,217,835 6,302,875
----------- ------------ ----------- ------------ ----------- ----------- -----------
Total investment income/(loss) $62,127,149 $175,418,153 $42,508,049 $109,475,218 $20,068,667 $14,243,882 $21,776,993
=========== ============ =========== ============ =========== =========== ===========
<PAGE>
19
Templeton Investment Retirement
Foreign I Grade Money Loan
Fund Bond Fund Market Fund Fund Total
<S> <C> <C> <C> <C> <C>
Investment income:
Net appreciation (depreciation)
of assets $(826,396) $22,581 $302,745,594
Interest $10,848,204 74,153,722
Dividends 549,717 36,337 $266,835 79,616,073
--------- ------- ------- ----------- ------------
Total investment income/(loss) $(276,679) $58,918 $266,835 $10,848,204 $456,515,389
========= ======= ======== =========== ============
</TABLE>
<PAGE>
1
EXHIBIT 99.1a
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Raytheon Company
We consent to the incorporation by reference in the Registration
Statement of Raytheon Company on Form S-8 (File No. 333-56117) of our report
dated May 29, 1998 on our audits of the financial statements of the Raytheon
Savings and Investment Plan as of December 31, 1997 and 1996 and for the year
ended December 31, 1997, which report is included in this annual report on Form
10-K/A.
Coopers & Lybrand LLP
Boston, Massachusetts
June 29, 1998
<PAGE>
1
EXHIBIT 99.2
RAYTHEON SAVINGS AND INVESTMENT PLAN
FOR SPECIFIED HOURLY PAYROLL EMPLOYEES
FINANCIAL STATEMENTS
TO ACCOMPANY 1997 FORM 5500
ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN
UNDER ERISA OF 1974
FOR THE YEAR ENDED DECEMBER 31, 1997
The supplemental schedules required to accompany the Plan's Form 5500
are not required since the Plan's assets are held in a Master Trust.
Accordingly, detailed financial information, including the supplemental
schedules, must be filed separately with the Department of Labor by the plan
administrator.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Raytheon Company:
We have audited the accompanying statements of net assets available
for plan benefits of the Raytheon Savings and Investment Plan for Specified
Hourly Payroll Employees (the "Plan") as of December 31, 1997 and 1996, and the
related statement of changes in net assets available for plan benefits for the
year ended December 31, 1997. These financial statements are the responsibility
of the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for plan benefits of
the Plan as of December 31, 1997 and 1996, and the changes in net assets
available for plan benefits for the year ended December 31, 1997 in conformity
with generally accepted accounting principles.
Coopers & Lybrand LLP
Boston, Massachusetts
May 29, 1998
<PAGE>
2
RAYTHEON SAVINGS AND INVESTMENT PLAN
FOR SPECIFIED HOURLY PAYROLL EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
as of December 31, 1997 and 1996
1997 1996
Assets:
Master trust investments:
At contract value (Notes B, E and H) $118,688,832 $114,483,156
At fair value (Notes B, F and H) 210,894,210 167,294,559
------------ ------------
329,583,042 281,777,715
------------ ------------
Receivables:
Accrued investment income
and other receivables 536,061 120,280
Cash and cash equivalents 2,639,423 3,030,913
------------ ------------
Total assets 332,758,526 284,928,908
------------ ------------
Liabilities:
Payable for outstanding purchases 512,188 233,567
Accrued expenses and other payables 215,365 120,450
------------ ------------
Total liabilities 727,553 354,017
------------ ------------
Net assets available for plan benefits $332,030,973 $284,574,891
============ ============
The accompanying notes are an integral part of the financial statements.
<PAGE>
3
RAYTHEON SAVINGS AND INVESTMENT PLAN
FOR SPECIFIED HOURLY PAYROLL EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
for the year ended December 31, 1997
Additions to net assets attributable to:
Investment income (Notes B, E and H):
Net appreciation of investments $24,128,490
Interest 9,928,559
Dividends 5,734,138
------------
39,791,187
------------
Contributions and deferrals:
Employee deferrals 22,972,877
Employer contributions 7,537,344
Transfers (Note G) 316,293
------------
30,826,514
------------
Total additions 70,617,701
------------
Deductions from net assets attributable to:
Distributions to participants 22,400,103
Administrative expenses 77,846
Transfers (Note G) 683,670
------------
Total deductions 23,161,619
------------
Increase in net assets 47,456,082
Net assets available for
plan benefits, beginning of year 284,574,891
------------
Net assets available for
plan benefits, end of year $332,030,973
============
The accompanying notes are an integral part of the financial statements.
<PAGE>
4
A. Description of Plan:
General
The following description of the Raytheon Savings and Investment Plan
for Specified Hourly Payroll Employees (the "Plan") provides only general
information. Participants should refer to the plan document for a complete
description of the Plan's provisions. The Plan is a defined contribution plan
covering certain hourly payroll employees of Raytheon Company (the "Company")
who are employed in units represented by specified labor unions. To participate
in the Plan, eligible employees must have three months of service and may enter
the Plan only on the first day of each month. The purpose of the Plan is to
provide participants with a tax-effective means of meeting both short- and
long-term investment objectives. The Plan is intended to be a "qualified cash or
deferred arrangement" under Sections 401(a) and 401(k) of the Internal Revenue
Code (the "Code"). The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA).
The Plan's investments are held in the Raytheon Company Master Trust
for Defined Contribution Plans "Master Trust" with the assets of other defined
contribution plans of Raytheon Company and subsidiaries. The trustee of the
Master Trust maintains a separate account reflecting the equitable share in the
Trust of each plan.
Investment income and administrative expenses relating to the Master
Trust are allocated to the individual plans based upon average monthly balances
invested by each plan.
Contributions and Deferrals
Eligible employees are allowed to defer to the Plan up to 17% of their
salaries. The Company contributes amounts equal to 50% of each participant's
deferral, up to a maximum of 3% of the participant's salary. As of December 31,
1997, the annual employee deferral for a participant cannot exceed $9,500.
Rollover contributions from other qualified plans are accepted by the Plan.
Participants may invest their deferrals in increments of 1% in any combination
of seven funds: (a) a Fixed Income Fund under which assets are invested
primarily in contracts providing for fixed rates of interest for specified
periods of time, (b) an Equity Fund which invests in shares of a mutual fund
which consists primarily of income-producing equity securities, (c) a Raytheon
Common Stock Fund which invests in shares of Raytheon Company Class B common
stock, (d) a Stock Index Fund which invests in a commingled pool consisting
primarily of equity securities and is designed to track the S&P 500 Index, (e) a
Balanced Fund which invests in shares of a mutual fund which consists primarily
of equity securities, bonds and money market instruments, (f) the Magellan Fund,
a growth fund which invests primarily in equities of companies of all types and
sizes, and (g) the Blue Chip Fund, a growth fund which invests primarily in
equities of well known and established companies. Dividends and distributions
from investments of the Equity Fund, the Raytheon Common Stock Fund, the Stock
Index Fund, the Balanced Fund, the Magellan Fund and the Blue Chip Fund are
reinvested in their respective funds; stock dividends, stock splits and similar
changes are also reflected in the funds.
<PAGE>
5
Participant Accounts
Each participant's account is credited with the participant's
deferral, the Company's contribution and an allocation of plan earnings. Plan
earnings are allocated based on account balances by fund.
Vesting
Participants are immediately vested in their voluntary deferrals plus
actual earnings thereon. Vesting requirements for employer contributions plus
earnings thereon may vary depending upon when an employee became eligible to
participate in the Plan. Vesting generally occurs upon the earliest of the
completion of five years of service or upon three years of participation or upon
retirement, death, disability, or attainment of normal retirement age.
Forfeitures of the nonvested portions of terminated participants' accounts are
used to reduce required contributions of the Company.
Distributions to Participants
A participant may withdraw all or a portion of deferrals, employer
contributions and related earnings upon attainment of age 59-1/2. For reasons of
financial hardship, as defined in the Plan document, a participant may withdraw
all or a portion of deferrals. On termination of employment, a participant will
receive a lump-sum distribution unless the vested account is valued in excess of
$3,500 and the participant elects to defer distribution. A retiree or a
beneficiary of a deceased participant may defer the distribution until January
of the year following attainment of age 65.
Loans to Participants
A participant may borrow against a portion of the balance in the
participant's account, subject to certain restrictions. The maximum amount of a
loan is the lesser of one-half of the participant's vested account balance or
$50,000. The minimum loan which may be granted is $500. The interest rate
applied is equal to the prime rate published in the Wall Street Journal on the
first business day in June and December of each year. Loans must be repaid over
a period of up to 5 years by means payroll deductions. In certain cases, the
repayment period may be extended up to 15 years. Interest paid to the Plan on
loans to participants is credited to the borrower's account in the investment
fund to which repayments are made.
Administrative Expenses
Substantially all expenses of administering the Plan are paid by the
plan participants.
B. Summary of Significant Accounting Policies:
The accompanying financial statements are prepared on the accrual
basis of accounting.
<PAGE>
6
The Plan's investment contracts are fully benefit-responsive and are
therefore included in the financial statements at their contract value, defined
as net contributions and deferrals plus interest earned on the underlying
investments at contracted rates. Because the investment contracts are fully
benefit-responsive, contract values approximate fair value. Investments in
mutual funds and the commingled pool are valued at the closing net asset value
reported on the last business day of the year. Investments in securities (common
stocks) traded on a national securities exchange are valued at the last reported
sales price on the last business day of the year. Cash equivalents are
short-term money market instruments and are valued at cost which approximates
fair value.
Security transactions are recorded on trade date. Except for its
investment contracts (Note E), the Plan's investments are held by
bank-administered trust funds. Payables for outstanding security transactions
represent trades which have occurred but have not yet settled.
The Plan presents in the statement of changes in net assets the net
appreciation (depreciation) in the fair value of its investments which consists
of the realized gains or losses and the unrealized appreciation (depreciation)
on those investments.
Dividend income is recorded on the ex-dividend date. Income from other
investments is recorded as earned on an accrual basis.
Benefits are recorded when paid.
Certain items in the 1996 financial statements have been reclassified
to conform to the 1997 presentation.
The preparation of the financial statements in conformity with
generally accepted accounting principles requires the Plan administrator to make
significant estimates and assumptions that affect the reported amounts of net
assets and liabilities available for benefits at the date of the financial
statements and the changes in net assets available for benefits during the
reporting period and, when applicable, disclosures of contingent assets and
liabilities at the date of the financial statements. Actual results could differ
from the estimates included in the financial statements.
The Plan provides for various investment options in any combination of
stocks, bonds, fixed income securities, mutual funds and other investment
securities. Investment securities are exposed to various risks, such as interest
rate, market and credit risk. Due to the level of risk associated with certain
investment securities and the level of uncertainty related to changes in the
value of investment securities, it is at least reasonably possible that changes
in risks in the near term would materially affect participants' account balances
and the amounts reported in the statement of net assets available for plan
benefits and the statement of changes in net assets available for plan benefits.
<PAGE>
7
C. Federal Income Tax Status:
The Plan obtained its latest determination letter in June 1995, in
which the Internal Revenue Service stated that the Plan, as submitted, was in
compliance with the applicable requirements of the Internal Revenue Code. The
Plan has been amended since receiving the determination letter. However, the
Plan administrator and the Plan's legal counsel believe that the Plan is
currently designed and being operated in compliance with the applicable
requirements of the Internal Revenue Code. Therefore, no provision for income
taxes has been included in the Plan's financial statements.
D. Plan Termination:
Although it has not expressed any intention to do so, the Company
reserves the right under the Plan at any time or times to discontinue its
contributions and to terminate the Plan subject to the provisions of ERISA. In
the event of plan termination, after payment of all expenses and proportional
adjustment of accounts to reflect such expenses, fund losses or profits, and
reallocations, each participant shall be entitled to receive any amounts then
credited to his or her account.
E. Investment Contracts:
The Plan invests in collateralized fixed income investment portfolios
(with no expiration date), three of which are managed by insurance companies and
one of which is managed by an investment management firm. The credited interest
rates are adjusted semiannually to reflect the experienced and anticipated
yields to be earned on such investments, based on their book value. The
annualized average yield and credited interest rates were as follows:
Annualized
Average Credited
Yield Interest Rate
For the year ended December 31, 1997:
Bankers Trust (WBS 92-485) 6.95% 6.95%
Metropolitan Life Insurance Company (GIC GA-12908) 6.86% 6.86%
Metropolitan Life Insurance Company (GIC GA-13659) 6.43% 6.43%
Prudential Asset Management Company (GIC 917163-001) 6.99% 6.99%
For the year ended December 31, 1996:
Bankers Trust (WBS 92-485) 6.87% 6.95%
Metropolitan Life Insurance Company (GIC GA-12908) 6.77% 6.86%
Metropolitan Life Insurance Company (GIC GA-13659) 6.36% 6.43%
Prudential Asset Management Company (GIC 917163-001) 6.89% 6.99%
The contract values are subject to limitations in certain situations
including large workforce reductions and plan termination.
In the financial statements, the two Metropolitan Life Insurance
Company contracts are recorded as one investment option.
<PAGE>
8
F. Related Party Transactions:
In accordance with the provisions of the Plan, Fidelity Management
Trust Company (the "Trustee") acts as the Plan's agent for purchases and sales
of shares of Raytheon Company Class B common stock. These transactions are
performed on the Master Trust level. For the Master Trust, purchases amounted to
$200,689,057 and $158,515,882 and sales amounted to $102,165,608 and $38,523,792
for the years ended December 31, 1997 and 1996 respectively.
G. Transfers:
Transfers include transfers of participant accounts, individually
and/or in groups, between the Raytheon Savings and Investment Plan for Specified
Hourly Payroll Employees and other plans included in the Raytheon Company Master
Trust for those participants and/or groups of participants who changed plans
during the year. Transfers also include transfers of participant accounts,
individually and/or in groups, between the Raytheon Savings and Investment Plan
for Specified Hourly Payroll Employees and similar savings plans of other
companies for those participants who changed companies during the year.
<PAGE>
9
H. Fund Data:
The following is a summary of net assets available for plan benefits
by fund as of December 31, 1997:
<TABLE>
<CAPTION>
Fixed Raytheon Stock
Income Equity Common Index Balanced Magellan
Fund Fund Stock Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust* $ 44,328,538
Prudential Insurance
Company of America* 27,495,053
Metropolitan Life
Insurance Company* 46,865,241
At fair value:
Fidelity Equity
Income Fund* $60,433,311
Raytheon Company
Common Stock* $60,253,020
BT Pyramid Equity
Index Fund* $38,661,267
Fidelity Balanced Fund $6,955,322
Fidelity Magellan Fund $6,462,497
Fidelity Blue Chip Fund
Loans receivable from
participants*
------------ ----------- ----------- ----------- ---------- ----------
Total investments 118,688,832 60,433,311 60,253,020 38,661,267 6,955,322 6,462,497
------------ ----------- ----------- ----------- ---------- ----------
Receivables:
Accrued investment income
and other receivables 443,463 92,598
Cash and cash equivalents 1,169,309 1,090,409 379,705
------------ ----------- ----------- ----------- ---------- ----------
Total assets 119,858,141 60,433,311 61,786,892 39,133,570 6,955,322 6,462,497
------------ ----------- ----------- ----------- ---------- ----------
Liabilities:
Payable for security purchases 512,188
Accrued expenses and other
payables 119,629 95,736
------------ ----------- ----------- ----------- ---------- ----------
Total liabilities 631,817 95,736
------------ ----------- ----------- ----------- ---------- ----------
Net assets available for
plan benefits $119,858,141 $60,433,311 $61,155,075 $39,037,834 $6,955,322 $6,462,497
============ =========== =========== =========== ========== ==========
*Represents more than 5% of net assets available for plan benefits
<PAGE>
10
Blue Chip Loan
Fund Fund Total
<S> <C> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust* $ 44,328,538
Prudential Insurance
Company of America* 27,495,053
Metropolitan Life
Insurance Company* 46,865,241
At fair value:
Fidelity Equity
Income Fund* 60,433,311
Raytheon Company
Common Stock* 60,253,020
BT Pyramid Equity
Index Fund* 38,661,267
Fidelity Balanced Fund 6,955,322
Fidelity Magellan Fund 6,462,497
Fidelity Blue Chip Fund $7,967,742 7,967,742
Loans receivable from
participants* $30,161,051 30,161,051
---------- ----------- ------------
Total investments 7,967,742 30,161,051 329,583,042
---------- ----------- ------------
Receivables:
Accrued investment income
and other receivables 536,061
Cash and cash equivalents 2,639,423
---------- ----------- ------------
Total assets 7,967,742 30,161,051 332,758,526
---------- ----------- ------------
Liabilities:
Payable for security purchases 512,188
Accrued expenses and other
payables 215,365
---------- ----------- ------------
Total liabilities 727,553
---------- ----------- ------------
Net assets available for
plan benefits $7,967,742 $30,161,051 $332,030,973
========== =========== ============
*Represents more than 5% of net assets available for plan benefits
</TABLE>
<PAGE>
11
H. Fund Data, continued:
The following is a summary of net assets available for plan benefits
by fund as of December 31, 1996:
<TABLE>
<CAPTION>
Fixed Raytheon Stock
Income Equity Common Index Balanced Magellan
Fund Fund Stock Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust* $ 43,177,931
Prudential Insurance
Company of America* 26,771,195
Metropolitan Life
Insurance Company* 44,534,030
At fair value:
Fidelity Equity
Income Fund* $ 43,658,303
Raytheon Company
Common Stock* $58,428,943
BT Pyramid Equity
Index Fund* $24,961,318
Fidelity Balanced Fund $4,954,118
Fidelity Magellan Fund $3,449,226
Fidelity Blue Chip Fund
Loans receivable from
participants*
------------ ----------- ----------- ----------- ---------- ----------
Total investments 114,483,156 43,658,303 58,428,943 24,961,318 4,954,118 3,449,226
------------ ----------- ----------- ----------- ---------- ----------
Receivables:
Accrued investment income
and other receivables 86,055 34,225
Cash and cash equivalents 1,860,197 883,292 287,424
------------ ----------- ----------- ----------- ---------- ----------
Total assets 116,343,353 43,658,303 59,398,290 25,282,967 4,954,118 3,449,226
------------ ----------- ----------- ----------- ---------- ----------
Liabilities:
Payable for security purchases 233,567
Accrued expenses and other
payables 81,625 38,825
------------ ----------- ----------- ----------- ---------- ----------
Total liabilities 315,192 38,825
------------ ----------- ----------- ----------- ---------- ----------
Net assets available for plan
benefits $116,343,353 $43,658,303 $59,083,098 $25,244,142 $4,954,118 $3,449,226
============ =========== =========== =========== ========== ==========
*Represents more than 5% of net assets available for plan benefits
<PAGE>
12
Blue Chip Loan
Fund Fund Total
<S> <C> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust* $ 43,177,931
Prudential Insurance
Company of America* 26,771,195
Metropolitan Life
Insurance Company* 44,534,030
At fair value:
Fidelity Equity
Income Fund* 43,658,303
Raytheon Company
Common Stock* 58,428,943
BT Pyramid Equity
Index Fund* 24,961,318
Fidelity Balanced Fund 4,954,118
Fidelity Magellan Fund 3,449,226
Fidelity Blue Chip Fund $3,856,512 3,856,512
Loans receivable from
participants* $27,986,139 27,986,139
---------- ----------- ------------
Total investments 3,856,512 27,986,139 281,777,715
---------- ----------- ------------
Receivables:
Accrued investment income
and other receivables 120,280
Cash and cash equivalents 3,030,913
---------- ----------- ------------
Total assets 3,856,512 27,986,139 284,928,908
---------- ----------- ------------
Liabilities:
Payable for security purchases 233,567
Accrued expenses and other
payables 120,450
---------- ----------- ------------
Total liabilities 354,017
---------- ----------- ------------
Net assets available for plan
benefits $3,856,512 $27,986,139 $284,574,891
========== =========== ============
*Represents more than 5% of net assets available for plan benefits
</TABLE>
<PAGE>
13
H. Fund Data, continued:
The following is a summary of changes in net assets available for plan
benefits by fund for the year ended December 31, 1997:
<TABLE>
<CAPTION>
Fixed Raytheon Stock
Income Equity Common Index Balanced Magellan
Fund Fund Stock Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributable to:
Investment income:
Net appreciation of investments $10,239,734 $ 2,967,135 $ 9,026,757 $ 403,216 $ 594,940
Interest $ 7,851,164 54,192 24,903
Dividends 3,278,728 898,130 810,267 369,647
------------ ----------- ----------- ----------- ---------- ----------
7,851,164 13,518,462 3,919,457 9,051,660 1,213,483 964,587
------------ ----------- ----------- ----------- ---------- ----------
Contributions and deferrals:
Employee deferrals 9,368,379 3,598,647 5,088,392 2,747,610 605,549 700,927
Employer contributions 3,326,160 1,109,758 1,624,848 830,490 185,207 209,348
Transfers 46,161 82,365
------------ ----------- ----------- ----------- ---------- ----------
12,694,539 4,708,405 6,713,240 3,578,100 836,917 992,640
------------ ----------- ----------- ----------- ---------- ----------
Total additions 20,545,703 18,226,867 10,632,697 12,629,760 2,050,400 1,957,227
------------ ----------- ----------- ----------- ---------- ----------
Deductions from net assets
attributable to:
Distributions to participants 11,616,989 2,869,930 3,322,970 2,081,750 363,234 193,308
Administrative expenses 32,938 14,292 15,351 11,261 1,586 1,108
Transfers 400,342 95,582 31,320 156,426
------------ ----------- ----------- ----------- ---------- ----------
Total deductions 12,050,269 2,979,804 3,369,641 2,249,437 364,820 194,416
------------ ----------- ----------- ----------- ---------- ----------
Interfund transfers (4,980,646) 1,527,945 (5,191,079) 3,413,369 315,624 1,250,460
------------ ----------- ----------- ----------- ---------- ----------
Increase in net assets 3,514,788 16,775,008 2,071,977 13,793,692 2,001,204 3,013,271
Net assets available for plan
benefits, beginning of year 116,343,353 43,658,303 59,083,098 25,244,142 4,954,118 3,449,226
------------ ----------- ----------- ----------- ---------- ----------
Net assets available for plan
benefits, end of year $119,858,141 $60,433,311 $61,155,075 $39,037,834 $6,955,322 $6,462,497
============ =========== =========== =========== ========== ==========
<PAGE>
14
Blue Chip Loan
Fund Fund Total
<S> <C> <C> <C>
attributable to:
Investment income:
Net appreciation of investments $ 896,708 $ 24,128,490
Interest $1,998,300 9,928,559
Dividends 377,366 5,734,138
---------- ----------- ------------
1,274,074 1,998,300 39,791,187
---------- ----------- ------------
Contributions and deferrals:
Employee deferrals 863,373 22,972,877
Employer contributions 251,533 7,537,344
Transfers 42,247 145,520 316,293
---------- ----------- ------------
1,157,153 145,520 30,826,514
---------- ----------- ------------
Total additions 2,431,227 2,143,820 70,617,701
---------- ----------- ------------
Deductions from net assets
attributable to:
Distributions to participants 236,246 1,715,676 22,400,103
Administrative expenses 1,310 77,846
Transfers 683,670
---------- ----------- ------------
Total deductions 237,556 1,715,676 23,161,619
---------- ----------- ------------
Interfund transfers 1,917,559 1,746,768 --
---------- ----------- ------------
Increase in net assets 4,111,230 2,174,912 47,456,082
Net assets available for plan
benefits, beginning of year 3,856,512 27,986,139 284,574,891
---------- ----------- ------------
Net assets available for plan
benefits, end of year $7,967,742 $30,161,051 $332,030,973
========== =========== ============
</TABLE>
<PAGE>
15
I. Master Trust:
All plan investments are included under the Master Trust. At December
31, 1997, assets of the Plan represented 9.4% of the total assets under the
Master Trust. This has decreased from 10.1% at December 31, 1996. The following
is a summary of net assets available for plan benefits by fund under the Master
Trust as of December 31, 1997:
<TABLE>
<CAPTION>
Fixed Raytheon Stock
Income Equity Common Index Balanced Magellan Blue Chip
Fund Fund Stock Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $351,035,073
Prudential Insurance
Company of America* 217,731,699
Metropolitan Life
Insurance Company* 371,123,080
At fair value:
Fidelity Equity
Income Fund* $782,799,011
Raytheon Company
Common Stock* $745,980,294
BT Pyramid Equity
Index Fund* $484,781,406
Fidelity Balance Fund $117,556,481
Fidelity Magellan Fund $91,863,155
Fidelity Blue Chip Fund $136,586,123
Templeton Foreign I Fund
Fidelity Investment
Grade Bond Fund
Fidelity Retirement
Money Market Fund
Loans receivable from
participants
------------ ------------ ------------ ------------ ------------ ----------- ------------
Total investments 939,889,852 782,799,011 745,980,294 484,781,406 117,556,481 91,863,155 136,586,123
------------ ------------ ------------ ------------ ------------ ----------- ------------
Receivables:
Employer contribution
Accrued investment income
and other receivables 5,489,592 1,161,112
Cash and cash equivalents 9,232,100 13,498,051 4,761,268
------------ ------------ ------------ ------------ ------------ ----------- -----------
Total assets 949,121,952 782,799,011 764,967,937 490,703,786 117,556,481 91,863,155 136,586,123
------------ ------------ ------------ ------------ ------------ ----------- ------------
Liabilities:
Payables for outstanding
purchases 6,340,318
Accrued expenses and
other payables 1,480,875 1,200,471
------------ ------------ ------------ ------------ ------------ ----------- ------------
Total liabilities 7,821,193 1,200,471
------------ ------------ ------------ ------------ ------------ ----------- ------------
Net assets available for
plan benefits $949,121,952 $782,799,011 $757,146,744 $489,503,315 $117,556,481 $91,863,155 $136,586,123
============ ============ ============ ============ ============ =========== ============
Percentage of Master Trust that 12.6% 7.7% 8.1% 8.0% 5.9% 7.0% 5.8%
are plan assets of the Raytheon
Savings and Investment Plan for
Specified Hourly Payroll Employees.
*Represents more than 5% of net assets available for plan benefits.
N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund, and
Retirement Money Market Fund are not available for the Raytheon
Savings and Investment Plan for Specified Hourly Payroll Employees.
<PAGE>
16
Templeton Investment Retirement
Foreign I Grade Money Loan
Fund Bond Fund Market Fund Fund Total
<S> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $ 351,035,073
Prudential Insurance
Company of America* 217,731,699
Metropolitan Life
Insurance Company* 371,123,080
At fair value:
Fidelity Equity
Income Fund* 782,799,011
Raytheon Company
Common Stock* 745,980,294
BT Pyramid Equity
Index Fund* 484,781,406
Fidelity Balance Fund 117,556,481
Fidelity Magellan Fund 91,863,155
Fidelity Blue Chip Fund 136,586,123
Templeton Foreign I Fund $5,471,176 5,471,176
Fidelity Investment
Grade Bond Fund $1,548,125 1,548,125
Fidelity Retirement
Money Market Fund $12,186,085 12,186,085
Loans receivable from
participants $166,395,767 166,395,767
---------- ---------- ----------- ------------ --------------
Total investments 5,471,176 1,548,125 12,186,085 166,395,767 3,485,057,475
---------- ---------- ----------- ------------ --------------
Receivables:
Employer contribution 4,015,100 4,015,100
Accrued investment income
and other receivables 6,650,704
Cash and cash equivalents 27,491,419
---------- ---------- ----------- ------------ --------------
Total assets 5,471,176 1,548,125 16,201,185 166,395,767 3,523,214,698
---------- ---------- ----------- ------------ --------------
Liabilities:
Payables for outstanding
purchases 6,340,318
Accrued expenses and
other payables 2,681,346
---------- ---------- ----------- ------------ --------------
Total liabilities 9,021,664
---------- ---------- ----------- ------------ --------------
Net assets available for
plan benefits $5,471,176 $1,548,125 $16,201,185 $166,395,767 $3,514,193,034
========== ========== =========== ============ ==============
Percentage of Master Trust that are N/A N/A N/A 18.1% 9.4%
plan assets of the Raytheon Savings
and Investment Plan for Specified
Hourly Payroll Employees
*Represents more than 5% of net assets available for plan benefits
N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund, and
Retirement Money Market Fund are not available for the Raytheon
Savings and Investment Plan for Specified Hourly Payroll Employees.
</TABLE>
<PAGE>
17
I. Master Trust, continued:
The following is a summary of net assets available for plan benefits
by fund under the Master Trust as of December 31, 1996:
<TABLE>
<CAPTION>
Fixed Raytheon Stock
Income Equity Common Index Balanced Magellan
Fund Fund Stock Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $339,670,440
Prudential Insurance
Company of America* 210,594,065
Metropolitan Life
Insurance Company* 350,310,646
At fair value:
Fidelity Equity
Income Fund * $578,166,630
Raytheon Company
Common Stock* $671,136,043
BT Pyramid Equity
Index Fund* $307,555,916
Fidelity Balance Fund $83,265,065
Fidelity Magellan Fund $50,454,961
Fidelity Blue Chip Fund
Loans receivable from
participants*
------------ ------------ ------------ ------------ ----------- -----------
Total investments 900,575,151 578,166,630 671,136,043 307,555,916 83,265,065 50,454,961
------------ ------------ ------------ ------------ ----------- -----------
Receivables:
Accrued investment income 39,737 13,686
Cash and cash equivalents 14,633,134 10,145,818 3,541,437
------------ ------------ ------------ ------------ ----------- -----------
Total assets 915,208,285 578,166,630 681,321,598 311,111,039 83,265,065 50,454,961
------------ ------------ ------------ ------------ ----------- -----------
Liabilities:
Payables for outstanding
purchases 2,682,835
------------ ------------ ------------ ------------ ----------- -----------
Total liabilities 2,682,835
------------ ------------ ------------ ------------ ----------- -----------
Net assets available for
plan benefits $915,208,285 $578,166,630 $678,638,763 $311,111,039 $83,265,065 $50,454,961
============ ============ ============ ============ =========== ===========
Percentage of Master Trust that are 12.7% 7.6% 8.7% 8.1% 6.0% 6.8%
plan assets of the Raytheon Saving
and Investment Plan for Specified
Hourly Payroll Employees
*Represents more than 5% of net assets available for plan benefits
<PAGE>
18
Blue Chip Loan
Fund Fund Total
<S> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $339,670,440
Prudential Insurance
Company of America* 210,594,065
Metropolitan Life
Insurance Company* 350,310,646
At fair value:
Fidelity Equity
Income Fund * 578,166,630
Raytheon Company
Common Stock* 671,136,043
BT Pyramid Equity
Index Fund* 307,555,416
Fidelity Balance Fund 83,265,065
Fidelity Magellan Fund 50,454,961
Fidelity Blue Chip Fund $67,866,240 67,866,240
Loans receivable from
participants* $144,824,714 144,824,714
----------- ------------ --------------
Total investments 67,866,240 144,824,714 2,803,844,720
----------- ------------ --------------
Receivables:
Accrued investment income 53,423
Cash and cash equivalents 28,320,389
----------- ------------ --------------
Total assets 67,866,240 144,824,714 2,832,218,532
----------- ------------ --------------
Liabilities:
Payables for outstanding
purchases 2,682,835
----------- ------------ --------------
Total liabilities 2,682,835
----------- ------------ --------------
Net assets available for
plan benefits $67,866,240 $144,824,714 $2,829,535,697
=========== ============ ==============
Percentage of Master Trust that are 5.7% 19.3% 10.1%
plan assets of the Raytheon Savings
and Investment Plan for Specified
Hourly Payroll Employees.
*Represents more than 5% of net assets available for plan benefits.
</TABLE>
<PAGE>
19
I. Master Trust, continued:
The following is a summary of investment income by fund under the
Master Trust for the year ended December 31, 1997:
<TABLE>
<CAPTION>
Fixed Raytheon
Income Common Stock Balanced Magellan Blue Chip
Fund Equity Fund Stock Fund Index Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Net appreciation (depreciation)
of assets $ (191,924) $132,974,182 $30,715,963 $109,162,707 $ 6,388,316 $ 9,026,047 $15,474,118
Interest 62,319,073 673,934 312,511
Dividends 42,443,971 11,118,152 13,680,351 5,217,835 6,302,875
----------- ------------ ----------- ------------ ----------- ----------- -----------
Total investment income/(loss) $62,127,149 $175,418,153 $42,508,049 $109,475,218 $20,068,667 $14,243,882 $21,776,993
=========== ============ =========== ============ =========== =========== ===========
<PAGE>
19
Templeton Investment Retirement
Foreign I Grade Money Loan
Fund Bond Fund Market Fund Fund Total
<S> <C> <C> <C> <C> <C>
Investment income:
Net appreciation (depreciation)
of assets $(826,396) $22,581 $302,745,594
Interest $10,848,204 74,153,722
Dividends 549,717 36,337 $266,835 79,616,073
--------- ------- ------- ----------- ------------
Total investment income/(loss) $(276,679) $58,918 $266,835 $10,848,204 $456,515,389
========= ======= ======== =========== ============
</TABLE>
<PAGE>
1
EXHIBIT 99.2a
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Raytheon Company
We consent to the incorporation by reference in the Registration
Statement of Raytheon Company on Form S-8 (File No. 333-56117) of our report
dated May 29, 1998 on our audits of the financial statements of the Raytheon
Savings and Investment Plan for Specified Hourly Payroll Employees as of
December 31, 1997 and 1996 and for the year ended December 31, 1997, which
report is included in this annual report on Form 10-K/A.
Coopers & Lybrand LLP
Boston, Massachusetts
June 29, 1998
<PAGE>
1
EXHIBIT 99.3
RAYTHEON EMPLOYEE SAVINGS AND INVESTMENT PLAN
FINANCIAL STATEMENTS TO ACCOMPANY 1997 FORM 5500
ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN UNDER ERISA OF 1974
FOR THE YEAR ENDED DECEMBER 31, 1997
The supplemental schedules required to accompany the Plan's Form 5500
are not required since the Plan's assets are held in a Master Trust.
Accordingly, detailed financial information, including the supplemental
schedules, must be filed separately with the Department of Labor by the plan
administrator.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Raytheon Company:
We have audited the accompanying statements of net assets available
for plan benefits of the Raytheon Employee Savings and Investment Plan (the
"Plan") as of December 31, 1997 and 1996, and the related statement of changes
in net assets available for plan benefits for the year ended December 31, 1997.
These financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for plan benefits of
the Plan as of December 31, 1997 and 1996, and the changes in net assets
available for plan benefits for the year ended December 31, 1997 in conformity
with generally accepted accounting principles.
Coopers & Lybrand LLP
Boston, Massachusetts
May 29, 1998
<PAGE>
2
RAYTHEON EMPLOYEE SAVINGS AND INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
as of December 31, 1997 and 1996
1997 1996
Assets:
Master trust investments:
At contract value (Notes B, E and H) $20,126,493 $12,229,251
At fair value (Notes B, F and H) 41,496,932 24,989,334
----------- -----------
61,623,425 37,218,585
----------- -----------
Receivables:
Accrued investment income and
other receivables 79,759 15,071
Cash and cash equivalents 422,687 345,294
----------- -----------
Total assets 62,125,871 37,578,950
----------- -----------
Liabilities:
Payable for outstanding purchases 72,220 29,112
Accrued expenses and other payables 34,682 15,104
----------- -----------
Total liabilities 106,902 44,216
----------- -----------
Net assets available for plan benefits $62,018,969 $37,534,734
=========== ===========
The accompanying notes are an integral part of the financial statements.
<PAGE>
3
RAYTHEON EMPLOYEE SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS
for the year ended December 31, 1997
Additions to net assets attributable to:
Investment income (Notes B, E and H):
Net appreciation of investments $ 4,772,686
Interest 1,613,198
Dividends 1,412,484
-----------
7,798,368
-----------
Contributions and deferrals:
Employee deferrals 18,694,367
Employer contributions 5,135,516
Transfers (Note G) 120,755
-----------
23,950,638
-----------
Total additions 31,749,006
-----------
Deductions from net assets attributable to:
Distributions to participants 5,963,118
Administrative expenses 12,997
Transfers (Note G) 1,288,656
-----------
Total deductions 7,264,771
-----------
Increase in net assets 24,484,235
Net assets available for plan benefits,
beginning of year 37,534,734
-----------
Net assets available for plan benefits,
end of year $62,018,969
===========
The accompanying notes are an integral part of the financial statements.
<PAGE>
4
A. Description of Plan:
General
The following description of the Raytheon Employee Savings and
Investment Plan (the "Plan"), provides only general information. Participants
should refer to the plan document for a complete description of the Plan's
provisions. The Plan is a defined contribution plan and covers the employees of
the Raytheon Support Services Company, the Raytheon Aerospace Support Service
Company, and the Range Systems Engineer Support Company, wholly-owned
subsidiaries of Raytheon Company (the "Company"). To participate in the Plan,
eligible employees must have three months of service and may enter the Plan only
on the first day of each month. The purpose of the Plan is to provide
participants with a tax-effective means of meeting both short- and long-term
investment objectives. The Plan is intended to be a "qualified cash or deferred
arrangement" under Sections 401(a) and 401(k) of the Internal Revenue Code (the
"Code"). The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
The Plan's investments are held in the Raytheon Company Master Trust
for Defined Contribution Plans ("Master Trust") with the assets of other defined
contribution plans of Raytheon Company and subsidiaries. The trustee of the
Master Trust maintains a separate account reflecting the equitable share in the
Trust of each plan.
Investment income and administrative expenses relating to the Master
Trust are allocated to the individual plan based upon average monthly balances
invested by each plan.
Contributions and Deferrals
Eligible employees are allowed to defer to the Plan up to 17% of their
salaries. In 1995, the Company began to make qualified nonelective contributions
(QNECs) to certain accounts based on specific employee agreements. In 1996,
matching contributions under a specific agreement were made for certain
employees. As of December 31, 1997, the annual employee deferral for a
participant cannot exceed $9,500. Rollover contributions from other qualified
plans are accepted by the Plan. Participants may invest their deferrals in
increments of 1% in any combination of seven funds: (a) a Fixed Income Fund
under which assets are invested primarily in contracts providing for fixed rates
of interest for specified periods of time, (b) an Equity Fund which invests in
shares of a mutual fund which consists primarily of income-producing equity
securities, (c) a Raytheon Common Stock Fund which invests in shares of Raytheon
Company Class B common stock, (d) a Stock Index Fund which invests in a
commingled pool consisting primarily of equity securities and is designed to
track the S&P 500 Index, (e) a Balanced Fund which invests in shares of a mutual
fund which consists primarily of equity securities, bonds and money market
instruments, (f) the Magellan Fund, a growth fund which invests primarily in
equities of companies of all types and sizes, and (g) the Blue Chip Fund, a
growth fund which invests primarily in equities of well known and established
companies. Dividends and distributions from investments of the Equity Fund, the
Raytheon Common Stock Fund, the Stock Index Fund, the Balanced Fund, the
Magellan Fund and the Blue Chip Fund are reinvested in their respective funds;
stock dividends, stock splits and similar changes are also reflected in the
funds. <PAGE>
5
Participant Accounts
Each participant's account is credited with the participant's
deferral, any applicable employer contributions (QNECs or matching
contributions) and an allocation of plan earnings. Plan earnings are allocated
based on account balances by fund.
Vesting
Participants are immediately vested in their voluntary deferrals and
employer contributions plus actual earnings thereon.
Distributions to Participants
A participant may withdraw all or a portion of deferrals, employer
contributions and related earnings upon attainment of age 59 1/2. For reasons of
financial hardship, as defined in the Plan document, a participant may withdraw
all or a portion of deferrals. On termination of employment, a participant will
receive a lump-sum distribution unless the vested account is valued in excess of
$3,500 and the participant elects to defer distribution. A retiree or a
beneficiary of a deceased participant may defer the distribution until January
of the year following attainment of age 65.
Loans to Participants
A participant may borrow against a portion of the balance in the
participant's account, subject to certain restrictions. The maximum amount of a
loan is the lesser of one-half of the participant's account balance or $50,000.
The minimum loan which may be granted is $500. The interest rate applied is
equal to the prime rate published in the Wall Street Journal on the first
business day in June and December of each year. Loans must be repaid over a
period of up to 5 years by means of payroll deductions. In certain cases, the
repayment period may be extended up to 15 years. Interest paid to the Plan on
loans to participants is credited to the borrower's account in the investment
fund to which repayments are made.
Administrative Expenses
Substantially all expenses of administering the Plan are paid by the
plan participants.
B. Summary of Significant Accounting Policies:
The accompanying financial statements are prepared on the accrual
basis of accounting.
The Plan's investment contracts are fully benefit-responsive and are
therefore included in the financial statements at their contract value, defined
as net employee contributions plus interest earned on the underlying investments
at contracted rates. Because the investment contracts are fully
benefit-responsive, contract values approximate fair value. Investments in
mutual funds and the commingled pool are valued at the closing net asset value
reported on the last business day of the year. Investments in securities (common
stocks) traded on a national securities exchange are valued at the last reported
sales price on the last business day of the year. Cash equivalents are
short-term money market instruments and are valued at cost which approximates
fair value.
<PAGE>
6
Security transactions are recorded on trade date. Except for its
investment contracts (Note E), the Plan's investments are held by
bank-administered trust funds. Payables for outstanding security transactions
represent trades which have occurred but have not yet settled.
The Plan presents in the statement of changes in net assets the net
appreciation (depreciation) in the fair value of its investments which consists
of the realized gains or losses and the unrealized appreciation (depreciation)
on those investments.
Dividend income is recorded on the ex-dividend date. Income from other
investments is recorded as earned on an accrual basis.
Benefits are recorded when paid.
Certain items in the 1996 financial statements have been reclassified
to conform to the 1997 presentation.
The preparation of the financial statements in conformity with
generally accepted accounting principles requires the Plan administrator to make
significant estimates and assumptions that affect the reported amounts of net
assets and liabilities available for benefits at the date of the financial
statements and the changes in net assets available for benefits during the
reporting period and, when applicable, disclosures of contingent assets and
liabilities at the date of the financial statements. Actual results could differ
from the estimates included in the financial statements.
The Plan provides for various investment options in any combination of
stocks, bonds, fixed income securities, mutual funds and other investment
securities. Investment securities are exposed to various risks, such as interest
rate, market and credit risk. Due to the level of risk associated with certain
investment securities and the level of uncertainty related to changes in the
value of investment securities, it is at least reasonably possible that changes
in risks in the near term would materially affect participants' account balances
and the amounts reported in the statement of net assets available for plan
benefits and the statement of changes in net assets available for plan benefits.
C. Federal Income Tax Status:
The Plan obtained its latest determination letter in June 1995, in
which the Internal Revenue Service stated that the Plan, as submitted, was in
compliance with the applicable requirements of the Internal Revenue Code. The
Plan has been amended since receiving the determination letter. However, the
Plan administrator and the Plan's legal counsel believe that the Plan is
currently designed and being operated in compliance with the applicable
requirements of the Internal Revenue Code. Therefore, no provision for income
taxes has been included in the Plan's financial statements.
<PAGE>
7
D. Plan Termination:
Although it has not expressed any intention to do so, the Company
reserves the right under the Plan at any time or times to discontinue its
contributions and to terminate the Plan subject to the provisions of ERISA. In
the event of plan termination, after payment of all expenses and proportional
adjustment of accounts to reflect such expenses, fund losses or profits, and
reallocations, each participant shall be entitled to receive any amounts then
credited to his or her account.
E. Investment Contracts:
The Plan invests in collateralized fixed income investment portfolios
(with no expiration date), three of which are managed by insurance companies and
one of which is managed by an investment management firm. The credited interest
rates are adjusted semiannually to reflect the experienced and anticipated
yields to be earned on such investments, based on their book value. The
annualized average yield and credited interest rates were as follows:
Annualized
Average Credited
Yield Interest Rate
For the year ended December 31, 1997:
Bankers Trust (WBS 92-485) 6.95% 6.95%
Metropolitan Life Insurance Company (GIC GA-12908) 6.86% 6.86%
Metropolitan Life Insurance Company (GIC GA-13659) 6.43% 6.43%
Prudential Asset Management Company (GIC 917163-001) 6.99% 6.99%
For the year ended December 31, 1996:
Bankers Trust (WBS 92-485) 6.87% 6.95%
Metropolitan Life Insurance Company (GIC GA-12908) 6.77% 6.86%
Metropolitan Life Insurance Company (GIC GA-13659) 6.36% 6.43%
Prudential Asset Management Company (GIC 917163-001) 6.89% 6.99%
The contract values are subject to limitations in certain situations
including large workforce reductions and plan termination.
In the financial statements, the two Metropolitan Life Insurance
Company contracts are recorded as one investment option.
F. Related Party Transactions:
In accordance with the provisions of the Plan, Fidelity Management
Trust Co. (the "Trustee") acts as the Plan's agent for purchases and sales of
shares of Raytheon Company Class B common stock. These transactions are
performed on the Master Trust level, For the Master Trust, purchases amounted to
$200,689,057 and $158,515,882 and sales amounted to $102,165,608 and $38,523,792
for the years ended December 31, 1997 and 1996, respectively.
G. Transfers:
Transfers include transfers of participant accounts, individually
and/or in groups, between the Plan and all other plans included in the Raytheon
Company Master Trust for those participants and/or groups of participants who
changed plans during the year. Transfers also include transfers of participant
accounts, individually and/or in groups, between the Plan and similar savings
plans of other companies for those participants who changed companies during the
year.
<PAGE>
8
H. Fund Data:
The following is a summary of net assets available for plan benefits
by fund as of December 31, 1997:
<TABLE>
<CAPTION>
Raytheon
Fixed Equity Common Stock Balanced Magellan
Income Fund Fund Stock Fund Index Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust* $ 7,516,950
Prudential Insurance
Company of America* 4,662,435
Metropolitan Life
Insurance Company* 7,947,108
At fair value:
Fidelity Equity Income Fund* $9,742,698
Raytheon Company Common Stock* $ 8,495,820
BT Pyramid Equity Index Fund* $ 7,213,874
Fidelity Balanced Fund $2,923,744
Fidelity Magellan Fund* $3,910,859
Fidelity Blue Chip Fund*
Loans receivable from participants*
----------- ---------- ----------- ----------- ---------- ----------
Total investments 20,126,493 9,742,698 8,495,820 7,213,874 2,923,744 3,910,859
----------- ---------- ----------- ----------- ---------- ----------
Receivables:
Accrued investment income
and other receivables 62,529 17,230
Cash and cash equivalents 198,284 153,750 70,653
----------- ---------- ----------- ----------- ---------- ----------
Total assets 20,324,777 9,742,698 8,712,099 7,301,757 2,923,744 3,910,859
----------- ---------- ----------- ----------- ---------- ----------
Liabilities:
Payable for outstanding purchases 72,220
Accrued expenses and other
payables 16,868 17,814
----------- ---------- ----------- ----------- ---------- ----------
Total liabilities 89,088 17,814
----------- ---------- ----------- ----------- ---------- ----------
Net assets available for plan
benefits $20,324,777 $9,742,698 $8,623,011 $7,283,943 $2,923,744 $3,910,859
=========== ========== ========== ========== ========== ==========
*Represents more than 5% of net assets available for plan benefits
<PAGE>
9
Blue Chip
Fund Loan Fund Total
<S> <C> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust* $ 7,516,950
Prudential Insurance
Company of America* 4,662,435
Metropolitan Life
Insurance Company* 7,947,108
At fair value:
Fidelity Equity Income Fund* 9,742,698
Raytheon Company Common Stock* 8,495,820
BT Pyramid Equity Index Fund* 7,213,874
Fidelity Balanced Fund 2,923,744
Fidelity Magellan Fund* 3,910,859
Fidelity Blue Chip Fund* $4,599,412 4,599,412
Loans receivable from participants* $4,610,525 4,610,525
----------- ----------- ------------
Total investments 4,599,412 4,610,525 61,623,425
----------- ----------- ------------
Receivables:
Accrued investment income
and other receivables 79,759
Cash and cash equivalents 422,687
----------- ---------- ------------
Total assets 4,599,412 4,610,525 62,125,871
----------- ---------- ------------
Liabilities:
Payable for outstanding purchases 72,220
Accrued expenses and other
payables 34,682
----------- ---------- ------------
Total liabilities 106,902
----------- ---------- ------------
Net assets available for plan
benefits $4,599,412 $4,610,525 $62,018,969
=========== ========== ============
*Represents more than 5% of net assets available for plan benefits
</TABLE>
<PAGE>
10
H. Fund Data:
The following is a summary of net assets available for plan benefits
by fund as of December 31, 1996:
<TABLE>
<CAPTION>
Raytheon
Fixed Equity Common Stock Balanced Magellan
Income Fund Fund Stock Fund Index Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust* $ 4,612,540
Prudential Insurance
Company of America* 2,859,737
Metropolitan Life
Insurance Company* 4,756,974
At fair value:
Fidelity Equity Income Fund* $5,454,189
Raytheon Company Common Stock* $7,282,577
BT Pyramid Equity Index Fund* $3,169,184
Fidelity Balanced Fund* $1,978,807
Fidelity Magellan Fund* $2,053,270
Fidelity Blue Chip Fund*
Loans receivable from participants*
----------- ---------- ----------- ----------- ---------- ----------
Total investments 12,229,251 5,454,189 7,282,577 3,169,184 1,978,807 2,053,270
----------- ---------- ----------- ----------- ---------- ----------
Receivables:
Accrued investment income
and other receivables 10,726 4,345
Cash and cash equivalents 198,709 110,093 36,492
----------- ---------- ----------- ----------- ---------- ----------
Total assets 12,427,960 5,454,189 7,403,396 3,210,021 1,978,807 2,053,270
----------- ---------- ----------- ----------- ---------- ----------
Liabilities:
Payable for outstanding purchases 29,112
Accrued expenses and other
payables 10,174 4,930
----------- ---------- ----------- ----------- ---------- ----------
Total liabilities 39,286 4,930
----------- ---------- ----------- ----------- ---------- ----------
Net assets available for plan
benefits $12,427,960 $5,454,189 $7,364,110 $3,205,091 $1,978,807 $2,053,270
=========== ========== ========== ========== ========== ==========
*Represents more than 5% of net assets available for plan benefits
<PAGE>
11
Blue Chip
Fund Loan Fund Total
<S> <C> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust* $ 4,612,540
Prudential Insurance
Company of America* 2,859,737
Metropolitan Life
Insurance Company* 4,756,974
At fair value:
Fidelity Equity Income Fund* 5,454,189
Raytheon Company Common Stock* 7,282,577
BT Pyramid Equity Index Fund* 3,169,184
Fidelity Balanced Fund* 1,978,807
Fidelity Magellan Fund* 2,053,270
Fidelity Blue Chip Fund* $2,340,883 2,340,883
Loans receivable from participants* $2,710,424 2,710,424
----------- ----------- ------------
Total investments 2,340,883 2,710,424 37,218,585
----------- ----------- ------------
Receivables:
Accrued investment income
and other receivables 15,071
Cash and cash equivalents 345,294
---------- ---------- ------------
Total assets 2,340,883 2,710,424 37,578,950
---------- ---------- ------------
Liabilities:
Payable for outstanding purchases 29,112
Accrued expenses and other
payables 15,104
---------- ---------- ------------
Total liabilities 44,216
---------- ---------- ------------
Net assets available for plan
benefits $2,340,883 $2,710,424 $37,534,734
========== ========== ============
*Represents more than 5% of net assets available for plan benefits
</TABLE>
<PAGE>
12
<TABLE>
<CAPTION>
H. Fund Data, continued:
The following is a summary of changes in net assets available for plan
benefits by fund for the year ended December 31, 1997:
Fixed Raytheon Stock
Income Equity Common Index Balanced Magellan
Fund Fund Stock Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributable to:
Investment income:
Net appreciation of
investments $1,535,491 $ 544,487 $1,521,421 $ 181,174 $ 420,464
Interest $ 1,350,882 7,698 4,699
Dividends 499,994 126,638 345,201 225,651
----------- ----------- ---------- ---------- ---------- ----------
1,350,882 2,035,485 678,823 1,526,120 526,375 646,115
----------- ----------- ---------- ---------- ---------- ----------
Contributions and deferrals:
Employee deferrals 11,593,204 1,521,772 2,054,602 1,119,603 540,048 832,939
Employer contributions 3,042,770 386,957 662,465 319,985 120,312 266,595
Transfers
----------- ----------- ---------- ---------- ---------- ----------
14,635,974 1,908,729 2,717,067 1,439,588 660,360 1,099,534
----------- ----------- ---------- ---------- ---------- ----------
Total additions 15,986,856 3,944,214 3,395,890 2,965,708 1,186,735 1,745,649
----------- ----------- ---------- ---------- ---------- ----------
Deductions from net assets
attributable to:
Distributions to participants 3,001,605 627,971 730,222 307,056 212,666 358,805
Administrative expenses 5,105 2,078 2,323 1,413 673 644
Transfers 232,613 136,068 460,056 155,495 84,763 127,636
----------- ---------- ---------- ---------- ---------- ----------
Total deductions 3,239,323 766,117 1,192,601 463,964 298,102 487,085
----------- ---------- ---------- ---------- ---------- ----------
Interfund transfers (4,850,716) 1,110,412 (944,388) 1,577,108 56,304 599,025
----------- ---------- ---------- ---------- ---------- ----------
Increase in net assets 7,896,817 4,288,509 1,258,901 4,078,852 944,937 1,857,589
Net assets available for plan
benefits, end of year 12,427,960 5,454,189 7,364,110 3,205,091 1,978,807 2,053,270
----------- ---------- ---------- ---------- ---------- ----------
Net assets available for plan
benefits, end of year $20,324,777 $9,742,698 $8,623,011 $7,283,943 $2,923,744 $3,910,859
=========== ========== ========== ========== ========== ==========
<PAGE>
13
Blue Chip Loan
Fund Fund Total
<S> <C> <C> <C>
Additions to net assets
attributable to:
Investment income:
Net appreciation of
investments $ 569,649 $ 4,772,686
Interest $ 249,919 1,613,198
Dividends 215,000 1,412,484
---------- ---------- -----------
784,649 249,919 7,798,368
---------- ---------- -----------
Contributions and deferrals:
Employee deferrals 995,486 36,713 18,694,367
Employer contributions 336,432 5,135,516
Transfers 120,755 120,755
---------- ---------- -----------
1,331,918 157,468 23,950,638
---------- ---------- -----------
Total additions 2,116,567 407,387 31,749,006
---------- ---------- -----------
Deductions from net assets
attributable to:
Distributions to participants 261,871 462,922 5,963,118
Administrative expenses 761 12,997
Transfers 92,025 1,288,656
---------- ---------- -----------
Total deductions 354,657 462,922 7,264,771
---------- ---------- -----------
Interfund transfers 496,619 1,955,636 --
---------- ---------- -----------
Increase in net assets 2,258,529 1,900,101 24,484,235
Net assets available for plan
benefits, beginning of year 2,340,883 2,710,424 37,534,734
---------- ---------- -----------
Net assets available for plan
benefits, end of year $4,599,412 $4,610,525 $62,018,969
========== ========== ===========
</TABLE>
<PAGE>
14
J. Master Trust:
All plan investments are included under the Master Trust. At December
31, 1997, assets of the Plan represented 1.8% of the total assets under the
Master Trust. This has increased from 1.3% at December 31, 1996. The following
is a summary of net assets available for plan benefits by fund under the Master
Trust as of December 31, 1997:
<TABLE>
<CAPTION>
Fixed Raytheon Stock
Income Equity Common Index Balanced Magellan Blue Chip
Fund Fund Stock Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $351,035,073
Prudential Insurance
Company of America* 217,731,699
Metropolitan Life
Insurance Company* 371,123,080
At fair value:
Fidelity Equity
Income Fund* $782,799,011
Raytheon Company
Common Stock* $745,980,294
BT Pyramid Equity
Index Fund* $484,781,406
Fidelity Balance Fund $117,556,481
Fidelity Magellan Fund $91,863,155
Fidelity Blue Chip Fund $136,586,123
Templeton Foreign I Fund
Fidelity Investment
Grade Bond Fund
Fidelity Retirement
Money Market Fund
Loans receivable from
participants
------------ ------------ ------------ ------------ ------------ ----------- ------------
Total investments 939,889,852 782,799,011 745,980,294 484,781,406 117,556,481 91,863,155 136,586,123
------------ ------------ ------------ ------------ ------------ ----------- ------------
Receivables:
Employer contribution
Accrued investment income
and other receivables 5,489,592 1,161,112
Cash and cash equivalents 9,232,100 13,498,051 4,761,268
------------ ------------ ------------ ------------ ------------ ----------- ------------
Total assets 949,121,952 782,799,011 764,967,937 490,703,786 117,556,481 91,863,155 136,586,123
------------ ------------ ------------ ------------ ------------ ----------- -----------
Liabilities:
Payables for outstanding
purchases 6,340,318
Accrued expenses and
other payables 1,480,875 1,200,471
------------ ------------ ------------ ------------ ------------ ----------- ------------
Total liabilities 7,821,193 1,200,471
------------ ------------ ------------ ------------ ------------ ----------- ------------
Net assets available for
plan benefits $949,121,952 $782,799,011 $757,146,744 $489,503,315 $117,556,481 $91,863,155 $136,586,123
============ ============ ============ ============ ============ =========== ============
Percentage of Master Trust that
are plan assets of the Raytheon
Employee Savings and Investment
Plan 2.1% 1.2% 1.1% 1.5% 2.5% 4.3% 3.4%
*Represents more than 5% of net assets available for plan benefits.
N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund, and
Retirement Money Market Fund are not available for the Raytheon
Employee Savings and Investment Plan.
<PAGE>
15
Templeton Investment Retirement
Foreign I Grade Money Loan
Fund Bond Fund Market Fund Fund Total
<S> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $ 351,035,073
Prudential Insurance
Company of America* 217,731,699
Metropolitan Life
Insurance Company* 371,123,080
At fair value:
Fidelity Equity
Income Fund* 782,799,011
Raytheon Company
Common Stock* 745,980,294
BT Pyramid Equity
Index Fund* 484,781,406
Fidelity Balanced Fund 117,556,481
Fidelity Magellan Fund 91,863,155
Fidelity Blue Chip Fund 136,586,123
Templeton Foreign I Fund $5,471,176 5,471,176
Fidelity Investment
Grade Bond Fund $1,548,125 1,548,125
Fidelity Retirement
Money Market Fund $12,186,085 12,186,085
Loans receivable from
participants $166,395,767 166,395,767
---------- ---------- ----------- ------------ --------------
Total investments 5,471,176 1,548,125 12,186,085 166,395,767 3,485,057,475
---------- ---------- ----------- ------------ --------------
Receivables:
Employer contribution 4,015,100 4,015,100
Accrued investment income
and other receivables 6,650,704
Cash and cash equivalents 27,491,419
---------- ---------- ----------- ------------ --------------
Total assets 5,471,176 1,548,125 16,201,185 166,395,767 3,523,214,698
---------- ---------- ----------- ------------ --------------
Liabilities:
Payables for outstanding
purchases 6,340,318
Accrued expenses and
other payables 2,681,346
---------- ---------- ----------- ------------ --------------
Total liabilities 9,021,664
---------- ---------- ----------- ------------ --------------
Net assets available for
plan benefits $5,471,176 $1,548,125 $16,201,185 $166,395,767 $3,514,193,034
========== ========== =========== ============ ==============
Percentage of Master Trust that are N/A N/A N/A 2.8% 1.8%
plan assets of the Raytheon Employee
Savings and Investment Plan
*Represents more than 5% of net assets available for plan benefits
N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund, and
Retirement Money Market Fund are not available for the Raytheon
Employee Savings and Investment Plan.
</TABLE>
<PAGE>
16
I. Master Trust, continued:
The following is a summary of net assets available for plan benefits
by fund under the Master Trust as of December 31, 1996:
<TABLE>
<CAPTION>
Fixed Raytheon Stock
Income Equity Common Index Balanced Magellan
Fund Fund Stock Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $339,670,440
Prudential Insurance
Company of America* 210,594,065
Metropolitan Life
Insurance Company* 350,310,646
At fair value:
Fidelity Equity
Income Fund * $578,166,630
Raytheon Company
Common Stock* $671,136,043
BT Pyramid Equity
Index Fund* $307,555,916
Fidelity Balanced Fund $83,265,065
Fidelity Magellan Fund $50,454,961
Fidelity Blue Chip Fund
Loans receivable from
participants*
------------ ------------ ------------ ------------ ----------- -----------
Total investments 900,575,151 578,166,630 671,136,043 307,555,916 83,265,065 50,454,961
------------ ------------ ------------ ------------ ----------- -----------
Receivables:
Accrued investment income 39,737 13,686
Cash and cash equivalents 14,633,134 10,145,818 3,541,437
------------ ------------ ------------ ------------ ----------- -----------
Total assets 915,208,285 578,166,630 681,321,598 311,111,039 83,265,065 50,454,961
------------ ------------ ------------ ------------ ----------- -----------
Liabilities:
Payables for outstanding
purchases 2,682,835
------------ ------------ ------------ ------------ ----------- -----------
Total liabilities 2,682,835
------------ ------------ ------------ ------------ ----------- -----------
Net assets available for
plan benefits $915,208,285 $578,166,630 $678,638,763 $311,111,039 $83,265,065 $50,454,961
============ ============ ============ ============ =========== ===========
Percentage of Master Trust that are 1.4% 0.9% 1.1% 1.0% 2.4% 4.1%
plan assets of the Raytheon Employee
Savings and Investment Plan
*Represents more than 5% of net assets available for plan benefits
<PAGE>
17
Blue Chip Loan
Fund Fund Total
<S> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $339,670,440
Prudential Insurance
Company of America* 210,594,065
Metropolitan Life
Insurance Company* 350,310,646
At fair value:
Fidelity Equity
Income Fund * 578,166,630
Raytheon Company
Common Stock* 671,136,043
BT Pyramid Equity
Index Fund* 307,555,916
Fidelity Balanced Fund 83,265,065
Fidelity Magellan Fund 50,454,961
Fidelity Blue Chip Fund $67,866,240 67,866,240
Loans receivable from
participants* $144,824,714 144,824,714
----------- ------------ --------------
Total investments 67,866,240 144,824,714 2,803,844,720
----------- ------------ --------------
Receivables:
Accrued investment income 53,423
Cash and cash equivalents 28,320,389
----------- ------------ --------------
Total assets 67,866,240 144,824,714 2,832,218,532
----------- ------------ --------------
Liabilities:
Payables for outstanding
purchases 2,682,835
----------- ------------ --------------
Total liabilities 2,682,835
----------- ------------ --------------
Net assets available for
plan benefits $67,866,240 $144,824,714 $2,829,535,697
=========== ============ ==============
Percentage of Master Trust that are 3.4% 1.9% 1.3%
plan assets of the Raytheon Employees
Savings and Investment Plan
*Represents more than 5% of net assets available for plan benefits
</TABLE>
<PAGE>
17
I. Master Trust, continued:
The following is a summary of investment income by fund under the
Master Trust for the year ended December 31, 1997:
<TABLE>
<CAPTION>
Fixed Raytheon
Income Common Stock Balanced Magellan Blue Chip
Fund Equity Fund Stock Fund Index Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Net appreciation (depreciation)
of assets $ (191,924) $132,974,182 $30,715,963 $109,162,707 $ 6,388,316 $ 9,026,047 $15,474,118
Interest 62,319,073 673,934 312,511
Dividends 42,443,971 11,118,152 13,680,351 5,217,835 6,302,875
----------- ------------ ----------- ------------ ----------- ----------- -----------
Total investment income/(loss) $62,127,149 $175,418,153 $42,508,049 $109,475,218 $20,068,667 $14,243,882 $21,776,993
=========== ============ =========== ============ =========== =========== ===========
<PAGE>
17
Templeton Investment Retirement
Foreign I Grade Money Loan
Fund Bond Fund Market Fund Fund Total
<S> <C> <C> <C> <C> <C>
Investment income:
Net appreciation (depreciation)
of assets $(826,396) $22,581 $302,745,594
Interest $10,848,204 74,153,722
Dividends 549,717 36,337 $266,835 79,616,073
--------- ------- ------- ----------- ------------
Total investment income/(loss) $(276,679) $58,918 $266,835 $10,848,204 $456,515,389
========= ======= ======== =========== ============
</TABLE>
<PAGE>
1
EXHIBIT 99.3a
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Raytheon Company
We consent to the incorporation by reference in the Registration
Statement of Raytheon Company on Form S-8 (File No. 333-56117) of our report
dated May 29, 1998 on our audits of the financial statements of the Raytheon
Employee Savings and Investment Plan as of December 31, 1997 and 1996 and for
the year ended December 31, 1997, which report is included in this annual
report on Form 10-K/A.
Coopers & Lybrand LLP
Boston, Massachusetts
June 29, 1998
<PAGE>
1
EXHIBIT 99.4
RAYTHEON SAVINGS AND INVESTMENT PLAN
FOR PUERTO RICO BASED EMPLOYEES
FINANCIAL STATEMENTS TO ACCOMPANY 1997 FORM 5500
ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN
UNDER ERISA OF 1974
FOR THE YEAR ENDED DECEMBER 31, 1997
The supplemental schedules required to accompany the Plan's Form 5500
are not required since the Plan's assets are held in a Master Trust.
Accordingly, detailed financial information, including the supplemental
schedules, must be filed separately with the Department of Labor by the plan
administrator.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Raytheon Catalytic, Inc.:
We have audited the accompanying statements of net assets available
for plan benefits of the Raytheon Savings and Investment Plan for Puerto Rico
Based Employees (the "Plan") as of December 31, 1997 and 1996, and the related
statement of changes in net assets available for plan benefits for the year
ended December 31, 1997. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for plan benefits of
the Plan as of December 31, 1997 and 1996, and the changes in net assets
available for plan benefits for the year ended December 31, 1997 in conformity
with generally accepted accounting principles.
Coopers & Lybrand LLP
Boston, Massachusetts
May 29, 1998
<PAGE>
2
RAYTHEON SAVINGS AND INVESTMENT PLAN
FOR PUERTO RICO BASED EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
as of December 31, 1997 and 1996
1997 1996
Assets:
Master trust investments:
At contract value (Notes B, E and I) $ 77,879 $ 45,344
At fair value (Notes B, F and I) 700,111 334,722
-------- --------
777,990 380,066
-------- --------
Receivables:
Accrued investment income and other receivables 1,775 275
Cash and cash equivalents 5,598 3,444
-------- --------
Total assets 785,363 383,785
-------- --------
Liabilities:
Payable for security purchases 1,723 571
Accrued expenses and other payables 696 273
-------- --------
Total liabilities 2,419 844
-------- --------
Net assets available for plan benefits $782,944 $382,941
======== ========
The accompanying notes are an integral part of the financial statements.
<PAGE>
3
RAYTHEON SAVINGS AND INVESTMENT PLAN
FOR PUERTO RICO BASED EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS
for the year ended December 31, 1997
Additions to net assets attributable to:
Investment income (Notes B, E and I):
Net appreciation of investments $ 63,424
Interest 7,980
Dividends 19,357
--------
90,761
--------
Contributions and deferrals:
Employee deferrals 215,430
Employer contributions 73,622
Transfers (Note H) 50,664
--------
339,716
--------
Total additions 430,477
--------
Deductions from net assets attributable to:
Distributions to participants 25,812
Administrative expenses 132
Transfers (Note H) 4,530
--------
Total deductions 30,474
--------
Increase in net assets 400,003
Net assets available for plan benefits,
beginning of year 382,941
--------
Net assets available for plan benefits,
end of year $782,944
========
The accompanying notes are an integral part of the financial statements.
<PAGE>
4
A. Description of Plan:
General
The following description of the Raytheon Savings and Investment Plan
for Puerto Rico Based Employees (the "Plan") provides only general information.
Participants should refer to the plan document for a complete description of the
Plan's provisions. The Plan is a defined contribution plan covering certain
Puerto Rico based employees of Raytheon Catalytic, Inc., a wholly-owned
subsidiary of Raytheon Company (the "Company"). To participate in the Plan,
eligible employees must have three months of service and may enter the Plan only
on the first pay date of each month. The purpose of the Plan is to provide
participants with a tax-effective means of meeting both short- and long-term
investment objectives. The Plan, effective as of January 1, 1995, is intended to
comply with all the requirements for a "qualified profit sharing plan" under the
Revenue Code of Puerto Rico (the "Code"). The Plan is subject to the provisions
of the Employee Retirement Income Security Act of 1974 (ERISA).
All of the Plan's investments are held in the Raytheon Company Master
Trust for Defined Contribution Plans ("Master Trust") with the assets of other
defined contribution plans of Raytheon Company and subsidiaries. The trustee of
the Master Trust maintains a separate account reflecting the equitable share in
the Trust of each plan.
Investment income and administrative expenses relating to the Master
Trust are allocated to the individual plans based upon average monthly balances
invested by each plan.
Contributions and Deferrals
Eligible employees are allowed to defer to the Plan up to 15% of their
salaries. The Company contributes amounts equal to 50% of each participant's
deferral, up to a maximum of 3% of the participant's salary. As of December 31,
1997, the annual employee deferral for a participant cannot exceed $7,000.
Rollover contributions from other qualified plans subject to the Code are
accepted by the Plan. Participants may invest their deferrals in increments of
1% in any combination of seven funds: (a) a Fixed Income Fund under which assets
are invested primarily in contracts providing for fixed rates of interest for
specified periods of time, (b) an Equity Fund which invests in shares of a
mutual fund which consists primarily of income-producing equity securities, (c)
a Raytheon Common Stock Fund which invests in shares of Raytheon Company Class B
common stock, (d) a Stock Index Fund which invests in a commingled pool
consisting primarily of equity securities and is designed to track the S&P 500
Index, (e) a Balanced Fund which invests in shares of a mutual fund which
consists primarily of equity securities, bonds and money market instruments, (f)
the Magellan Fund, a growth fund which invests primarily in equities of
companies of all types and sizes, and (g) the Blue Chip Fund, a growth fund
which invests primarily in equities of well known and established companies.
Dividends and distributions from investments of the Equity Fund, the Raytheon
Common Stock Fund, the Stock Index Fund, the Balanced Fund, the Magellan Fund
and the Blue Chip Fund are reinvested in their respective funds; stock
dividends, stock splits and similar changes are also reflected in the funds.
<PAGE>
5
Participant Accounts
Each participant's account is credited with the participant's
deferral, the Company's contributions and an allocation of plan earnings. Plan
earnings are allocated based on account balances by fund.
Vesting
Participants are immediately vested in their voluntary deferrals plus
actual earnings thereon. Vesting requirements for employer contributions plus
earnings thereon may vary depending upon when an employee became eligible to
participate in the Plan. Vesting generally occurs upon the earliest of the
completion of five years of service or three years of plan participation or upon
retirement, death, disability, or attainment of retirement age. Forfeitures of
the nonvested portions of terminated participants' accounts are used to reduce
required contributions of the Company.
Distributions to Participants
A participant may withdraw all or a portion of deferrals, employer
contributions and related earnings upon attainment of age 59-1/2. For reasons of
financial hardship, as defined in the Plan document, a participant may withdraw
all or a portion of deferrals. On termination of employment, a participant will
receive a lump-sum distribution unless the vested account is valued in excess of
$3,500 and the participant elects to defer distribution. A retiree or a
beneficiary of a deceased participant may defer the distribution until January
of the year following attainment of age 65.
Loans to Participants
A participant may borrow against a portion of the balance in the
participant's account, subject to certain restrictions. The maximum amount of a
loan is one-half of the participant's account balance. The minimum loan which
may be granted is $500. The interest rate applied is equal to the prime rate
published in the Wall Street Journal on the first business day in June and
December of each year. Loans must be repaid over a period of up to five years by
means of payroll deductions. In certain cases, the repayment period may be
extended up to 15 years. Interest paid to the Plan on loans to participants is
credited to the borrower's account in the investment fund to which repayments
are made.
Administrative Expenses
Substantially all expenses of administering the Plan are paid by the
plan participants.
B. Summary of Significant Accounting Policies:
The accompanying financial statements are prepared on the accrual
basis of accounting.
<PAGE>
6
The Plan's investment contracts are fully benefit-responsive and are
therefore included in the financial statements at their contract value, defined
as net contributions and deferrals plus interest earned on the underlying
investments at contracted rates. Because the investment contracts are fully
benefit-responsive, contract values approximate fair value. Investments in
mutual funds and the commingled pool are valued at the closing net asset value
reported on the last business day of the year. Investments in securities (common
stocks) traded on a national securities exchange are valued at the last reported
sales price on the last business day of the year. Cash equivalents are
short-term money market instruments and are valued at cost which approximates
fair value.
Security transactions are recorded on trade date. Except for its
investment contracts (Note E), the Plan's investments are held by
bank-administered trust funds. Payables for outstanding security transactions
represent trades which have occurred but have not yet settled.
The Plan presents in the statement of changes in net assets the net
appreciation (depreciation) in the fair value of its investments which consists
of the realized gains or losses and the unrealized appreciation (depreciation)
on those investments.
Dividend income is recorded on the ex-dividend date. Income from other
investments is recorded as earned on an accrual basis.
Benefits are recorded when paid.
Certain items in the 1996 financial statements have been reclassified
to conform to the 1997 presentation.
The preparation of the financial statements in conformity with
generally accepted accounting principles requires the plan administrator to make
significant estimates and assumptions that affect the reported amounts of net
assets and liabilities available for benefits at the date of the financial
statements and the changes in net assets available for benefits during the
reporting period and, when applicable, disclosures of contingent assets and
liabilities at the date of the financial statements. Actual results could differ
from the estimates included in the financial statements.
The Plan provides for various investment options in any combination of
stocks, bonds, fixed income securities, mutual funds and other investment
securities. Investment securities are exposed to various risks, such as interest
rate, market and credit risk. Due to the level of risk associated with certain
investment securities and the level of uncertainty related to changes in the
value of investment securities, it is at least reasonably possible that changes
in risks in the near term would materially affect participants' account balances
and the amounts reported in the statement of net assets available for plan
benefits and the statement of changes in net assets available for plan benefits.
<PAGE>
7
C. Tax Status:
The Plan obtained its latest determination letter in August 1996 in
which the Treasury department of the Commonwealth of Puerto Rico stated that the
Plan, as submitted, was in compliance with the applicable requirements of the
Puerto Rico Income Tax Act of 1954, as amended. Since receiving the
determination letter, the plan has been amended. The Plan administrator and the
Plan's legal counsel believe that the Plan is designed and being operated in
compliance with the applicable requirements of the aforementioned Act.
Therefore, no provision for income taxes has been included in the Plan's
financial statements.
D. Plan Termination:
Although it has not expressed any intention to do so, the Company
reserves the right under the Plan at any time or times to discontinue its
contributions and to terminate the Plan subject to the provisions of ERISA. In
the event of plan termination, after payment of all expenses and proportional
adjustment of accounts to reflect such expenses, fund losses or profits, and
reallocations, each participant shall be entitled to receive any amounts then
credited to his or her account.
E. Investment Contracts:
The Plan invests in collateralized fixed income investment portfolios
(with no expiration date), three of which are managed by insurance companies and
one of which is managed by an investment management firm. The credited interest
rates are adjusted semiannually to reflect the experienced and anticipated
yields to be earned on such investments, based on their book value. The
annualized average yield and credited interest rates were as follows:
Annualized
Average Credited
Yield Interest
Rate
For the year ended December 31, 1997:
Bankers Trust (WBS 92-485) 6.95% 6.95%
Metropolitan Life Insurance Company (GIC GA-12908) 6.86% 6.86%
Metropolitan Life Insurance Company (GIC GA-13659) 6.43% 6.43%
Prudential Asset Management Company (GIC 917163-001) 6.99% 6.99%
For the year ended December 31, 1996:
Bankers Trust (WBS 92-485) 6.87% 6.95%
Metropolitan Life Insurance Company (GIC GA-12908) 6.77% 6.86%
Metropolitan Life Insurance Company (GIC GA-13659) 6.36% 6.43%
Prudential Asset Management Company (GIC 917163-001) 6.89% 6.99%
The contract values are subject to limitations in certain situations
including large workforce reductions and plan termination.
In the financial statements, the two Metropolitan Life Insurance
Company contracts are recorded as one investment option.
<PAGE>
8
F. Related Party Transactions:
In accordance with the provisions of the Plan, Fidelity Management
Trust Company (the "Trustee") acts as the Plan's agent for purchases and sales
of shares of Raytheon Company Class B common stock. These transactions are
performed on the Master Trust level. For the Master Trust, purchases amounted to
$200,689,057 and $158,515,882 and sales amounted to $102,165,608 and $38,523,792
for the years ended December 31, 1997 and 1996, respectively.
G. Plan Amendment:
In 1996, the Plan was amended to require all withdrawals from the Plan
to be in cash.
H. Transfers:
Transfers include transfers of participant accounts, individually
and/or in groups, between the Raytheon Savings and Investment Plan for Puerto
Rico Based Employees and all other plans included in the Raytheon Company Master
Trust for those participants and/or groups of participants who changed plans
during the year. Transfers also include transfers of participant accounts,
individually and/or in groups, between the Raytheon Saving and Investment Plan
for Puerto Rico Based Employees and similar savings plans of other companies for
those participants who changed companies during the year.
<PAGE>
9
I. Fund Data:
The following is a summary of net assets available for plan benefits by
fund as of December 31, 1997:
<TABLE>
<CAPTION>
Raytheon Blue
Income Equity Stock Index Balanced Magellan Chip Loan
Fund Fund Fund Fund Fund Fund Fund Fund Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust $29,087 $ 29,087
Prudential Insurance
Company of America 18,041 18,041
Metropolitan Life
Insurance Company 30,751 30,751
At fair value:
Fidelity Equity Income* $214,116 214,116
Raytheon Company Common Stock* $202,655 202,655
BT Pyramid Equity Index Fund* $118,530 118,530
Fidelity Balanced Fund $32,784 32,784
Fidelity Magellan Fund* $40,215 40,215
Fidelity Blue Chip Fund $35,416 35,416
Loans receivable from
participants* $56,395 56,395
------- -------- -------- -------- ------- ------- ------- ------- --------
Total investments 77,879 214,116 202,655 118,530 32,784 40,215 35,416 56,395 777,990
------- -------- -------- -------- ------- ------- ------- ------- --------
Receivables:
Accrued investment income
and other receivables 1,491 284 1,775
Cash and cash equivalents 767 3,667 1,164 5,598
------- -------- -------- -------- ------- ------- ------- ------- --------
Total assets 78,646 214,116 207,813 119,978 32,784 40,215 35,416 56,395 785,363
------- -------- -------- -------- ------- ------- ------- ------- --------
Liabilities:
Payable for security purchases 1,723 1,723
Accrued expenses and other
payables 402 294 696
------- -------- -------- -------- ------- ------- ------- ------- --------
Total liabilities 2,125 294 2,419
------- -------- -------- -------- ------- ------- ------- ------- --------
Net assets available for
plan benefits $78,646 $214,116 $205,688 $119,684 $32,784 $40,215 $35,416 $56,395 $782,944
======= ======== ======== ======== ======= ======= ======= ======= ========
*Represents more than 5% of net assets available for plan benefits
</TABLE>
<PAGE>
10
<TABLE>
<CAPTION>
I. Fund Data, continued:
The following is a summary of net assets available for plan benefits by
fund as of December 31, 1996: Raytheon Blue
Income Equity Stock Index Balanced Magellan Chip Loan
Fund Fund Fund Fund Fund Fund Fund Fund Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust $17,103 $ 17,103
Prudential Insurance
Company of America 10,603 10,603
Metropolitan Life
Insurance Company 17,638 17,638
At fair value:
Fidelity Equity Income* $ 85,935 85,935
Raytheon Company Common Stock* $142,804 142,804
BT Pyramid Equity Index Fund* $ 47,618 47,618
Fidelity Balanced Fund $ 8,896 8,896
Fidelity Magellan Fund* $ 9,640 9,640
Fidelity Blue Chip Fund $ 5,996 5,996
Loans receivable from
participants* $33,833 33,833
------- -------- -------- -------- ------- ------- ------- ------- --------
Total investments 45,344 85,935 142,804 47,618 8,896 9,640 5,996 33,833 380,066
------- -------- -------- -------- ------- ------- ------- ------- --------
Receivables:
Accrued investment income
and other receivables 210 65 275
Cash and cash equivalents 737 2,159 548 3,444
------- -------- -------- -------- ------- ------- ------- ------- --------
Total assets 46,081 85,935 145,173 48,231 8,896 9,640 5,996 33,833 383,785
------- -------- -------- -------- ------- ------- ------- ------- --------
Liabilities:
Payable for security purchases 571 571
Accrued expenses and other
payables 199 74 273
------- -------- -------- -------- ------- ------- ------- ------- --------
Total liabilities 770 74 844
------- -------- -------- -------- ------- ------- ------- ------- --------
Net assets available for
plan benefits $46,081 $ 85,935 $144,403 $ 48,157 $ 8,896 $ 9,640 $ 5,996 $33,833 $382,941
======= ======== ======== ======== ======= ======= ======= ======= ========
*Represents more than 5% of net assets available for plan benefits
</TABLE>
<PAGE>
11
I. Fund Data, continued:
The following is a summary of changes in net assets available for plan
benefits by fund for the year ended December 31, 1997:
<TABLE>
<CAPTION>
Fixed Raytheon Stock
Income Equity Common Index Balanced Magellan Blue Chip Loan
Fund Fund Stock Fund Fund Fund Fund Fund Fund Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributable to:
Investment income:
Net appreciation of investments $ 24,283 $ 9,108 $ 24,294 $ 507 $ 2,851 $ 2,381 $ 63,424
Interest $ 5,711 186 78 $ 2,005 7,980
Dividends 10,093 3,021 2,714 2,203 1,326 19,357
------- -------- ------- ------- ------- ------- ------- ------- --------
5,711 34,376 12,315 24,372 3,221 5,054 3,707 2,005 90,761
------- -------- ------- ------- ------- ------- ------- ------- --------
Contributions and deferrals:
Employee deferrals 25,253 41,088 63,606 30,948 14,395 18,826 21,314 215,430
Employer contributions 14,351 13,052 22,235 11,330 1,926 5,992 4,736 73,622
Transfers 8,590 10,154 4,805 2,245 $24,870 50,664
------- -------- ------- ------- ------- ------- ------- ------- --------
39,604 62,730 95,995 42,278 21,126 27,063 26,050 24,870 339,716
------- -------- ------- ------- ------- ------- ------- ------- --------
Total additions 45,315 97,106 108,310 66,650 24,347 32,117 29,757 26,875 430,477
------- -------- ------- ------- ------- ------- ------- ------- --------
Deductions from net assets
attributable to:
Distributions to participants 8,441 931 4,135 200 (583) 688 12,000 25,812
Administrative expenses 16 35 46 22 4 5 4 132
Transfers 683 3,847 4,530
------- -------- ------- ------- ------- ------- ------- ------- --------
Total deductions 9,140 966 4,181 4,069 (579) 693 4 12,000 30,474
Interfund transfers (3,610) 32,041 (42,844) 8,946 (1,038) (849) (333) 7,687 --
Increase in net assets 32,565 128,181 61,285 71,527 23,888 30,575 29,420 22,562 400,003
Net assets available for plan
benefits, beginning of year 46,081 85,935 144,403 48,157 8,896 9,640 5,996 33,833 382,941
Net assets available for plan
benefits, end of year $78,646 $214,116 $205,688 $119,684 $32,784 $40,215 $35,416 $56,395 $782,944
======= ======== ======== ======== ======= ======= ======= ======= ========
</TABLE>
<PAGE>
12
J. Master Trust:
All plan investments are included under the Master Trust. At December
31, 1997 and 1996, assets of the Plan represented less than 1% of the total
assets under the Master Trust. The following is a summary of net assets
available for plan benefits by fund under the Master Trust as of December 31,
1997:
<TABLE>
<CAPTION>
Fixed Raytheon Stock
Income Equity Common Index Balanced Magellan Blue Chip
Fund Fund Stock Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $351,035,073
Prudential Insurance
Company of America* 217,731,699
Metropolitan Life
Insurance Company* 371,123,080
At fair value:
Fidelity Equity
Income Fund* $782,799,011
Common Stock* $745,980,294
Index Fund* $484,781,406
Fidelity Balanced Fund $117,556,481
Fidelity Magellan Fund $91,863,155
Fidelity Blue Chip Fund $136,586,123
Templeton Foreign I Fund
Fidelity Investment
Grade Bond Fund
Fidelity Retirement
Money Market Fund
participants
------------ ------------ ------------ ------------ ------------ ----------- ------------
Total investments 939,889,852 782,799,011 745,980,294 484,781,406 117,556,481 91,863,155 136,586,123
------------ ------------ ------------ ------------ ------------ ----------- ------------
Receivables:
Employer contribution
Accrued investment income
and other receivables 5,489,592 1,161,112
Cash and cash equivalents 9,232,100 13,498,051 4,761,268
Total assets 949,121,952 782,799,011 764,967,937 490,703,786 117,556,481 91,863,155 136,586,123
------------ ------------ ------------ ------------ ------------ ----------- ------------
Liabilities:
Payables for outstanding
purchases 6,340,318
Accrued expenses and
other payables 1,480,875 1,200,471
------------ ------------ ------------ ------------ ------------ ----------- ------------
Total liabilities 7,821,193 1,200,471
Net assets available for
plan benefits $949,121,952 $782,799,011 $757,146,744 $489,503,315 $117,556,481 $91,863,155 $136,586,123
============ ============ ============ ============ ============ =========== ============
Percentage of Master Trust that ^ ^ ^ ^ ^ ^ ^
are plan assets of the Raytheon
Savings and Investment Plan for
Puerto Rico Based Employees
*Represents more than 5% of net assets available for plan benefits
^Represents less than 1% of plan assets under the Master Trust
N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund, and
Retirement Money Market Fund are not available for the Raytheon
Savings and Investment Plan for Puerto Rico Based Employees.
<PAGE>
13
Templeton Investment Retirement
Foreign I Grade Money Loan
Fund Bond Fund Market Fund Fund Total
<S> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $ 351,035,073
Prudential Insurance
Company of America* 217,731,699
Metropolitan Life
Insurance Company* 371,123,080
At fair value:
Fidelity Equity
Income Fund* 782,799,011
Raytheon Company
Common Stock* 745,980,294
BT Pyramid Equity
Index Fund* 484,781,406
Fidelity Balanced Fund 117,556,481
Fidelity Magellan Fund 91,863,155
Fidelity Blue Chip Fund 136,586,123
Templeton Foreign I Fund $5,471,176 5,471,176
Fidelity Investment
Grade Bond Fund $1,548,125 1,548,125
Fidelity Retirement
Money Market Fund $12,186,085 12,186,085
Loans receivable from
participants $166,395,767 166,395,767
---------- ---------- ----------- ------------ --------------
Total investments 5,471,176 1,548,125 12,186,085 166,395,767 3,485,057,475
---------- ---------- ----------- ------------ --------------
Receivables:
Employer contribution 4,015,100 4,015,100
Accrued Investment income
and other receivables 6,650,704
Cash and cash equivalents 27,491,419
---------- ---------- ----------- ------------ --------------
Total assets 5,471,176 1,548,125 16,201,185 166,395,767 3,523,214,698
---------- ---------- ----------- ------------ --------------
Liabilities:
Payables for outstanding
purchases 6,340,318
Accrued expenses and
other payables 2,681,346
---------- ---------- ----------- ------------ --------------
Total liabilities 9,021,664
---------- ---------- ----------- ------------ --------------
Net assets available for
plan benefits $5,471,176 $1,548,125 $16,201,185 $166,395,767 $3,514,193,034
========== ========== =========== ============ ==============
Percentage of Master Trust that are N/A N/A N/A ^ ^
plan assets of the Raytheon Savings
and Investment Plan for Puerto Rico
Based Employees
*Represents more than 5% of net assets available for plan benefits
^Represents less than 1% of plan assets under the Master Trust
N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund, and
Retirement Money Market Fund are not available for the Raytheon
Savings and Investment Plan for Puerto Rico Based Employees.
</TABLE>
<PAGE>
14
J. Master Trust, continued:
The following is a summary of net assets available for plan benefits by
fund under the Master Trust as of December 31, 1996:
<TABLE>
<CAPTION>
Fixed Raytheon Stock
Income Equity Common Index Balanced Magellan
Fund Fund Stock Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $339,670,440
Prudential Insurance
Company of America* 210,594,065
Metropolitan Life
Insurance Company* 350,310,646
At fair value:
Fidelity Equity
Income Fund* $578,166,630
Raytheon Company
Common Stock* $671,136,043
BT Pyramid Equity
Index Fund* $307,555,916
Fidelity Balanced Fund $83,265,065
Fidelity Magellan Fund $50,454,961
Fidelity Blue Chip Fund
Loans receivable from
participants*
------------ ------------ ------------ ------------ ----------- -----------
Total investments 900,575,151 578,166,630 671,136,043 307,555,916 83,265,065 50,454,961
------------ ------------ ------------ ------------ ----------- -----------
Receivables:
Accrued investment income 39,737 13,686
Cash and cash equivalents 14,633,134 10,145,818 3,541,437
------------ ------------ ------------ ------------ ----------- -----------
Total assets 915,208,285 578,166,630 681,321,598 311,111,039 83,265,065 50,454,961
------------ ------------ ------------ ------------ ----------- -----------
Liabilities:
Payables for outstanding
purchases 2,682,835
------------ ------------ ------------ ------------ ----------- -----------
Total liabilities 2,682,835
------------ ------------ ------------ ------------ ----------- -----------
Net assets available for
plan benefits $915,208,285 $578,166,630 $678,638,763 $311,111,039 $83,265,065 $50,454,961
Percentage of Master Trust that are ^ ^ ^ ^ ^ ^
plan assets of the Raytheon Savings
and Investment Plan for Puerto Rico
Based Employees
*Represents more than 5% of net assets available for plan benefits
^Represents less than 1% of plan assets under the Master Trust
<PAGE>
15
Blue Chip Loan
Fund Fund Total
<S> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $339,670,440
Prudential Insurance
Company of America* 210,594,065
Metropolitan Life
Insurance Company* 350,310,646
At fair value:
Fidelity Equity
Income Fund* 578,166,630
Raytheon Company
Common Stock* 671,136,043
BT Pyramid Equity
Index Fund* 307,555,916
Fidelity Balance Fund 83,265,065
Fidelity Magellan Fund 50,454,961
Fidelity Blue Chip Fund $67,866,240 67,866,240
Loans receivable from
participants* $144,824,714 144,824,714
----------- ------------ --------------
Total investments 67,866,240 144,824,714 2,803,844,720
----------- ------------ --------------
Receivables:
Accrued Investment income 53,423
Cash and cash equivalents 28,320,389
----------- ------------ --------------
Total assets 67,866,240 144,824,714 2,832,218,532
----------- ------------ --------------
Liabilities:
Payables for outstanding
purchases 2,682,835
----------- ------------ --------------
Total liabilities 2,682,835
----------- ------------ --------------
Net assets available for
plan benefits $67,866,240 $144,824,714 $2,829,535,697
=========== ============ ==============
Percentage of Master Trust that are ^ ^ ^
plan assets of the Raytheon Savings
and Investment Plan for Puerto Rico
Based Employees
*Represents more than 5% of net assets available for plan benefits
^Represents less than 1% of plan assets under the Master Trust
</TABLE>
<PAGE>
16
J. Master Trust, continued:
The following is a summary of investment income by fund under the
Master Trust for the year ended December 31, 1997:
<TABLE>
<CAPTION>
Fixed Raytheon
Income Common Stock Balanced Magellan Blue Chip
Fund Equity Fund Stock Fund Index Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Net appreciation (depreciation)
of assets $ (191,924) $132,974,182 $30,715,963 $109,162,707 $ 6,388,316 $ 9,026,047 $15,474,118
Interest 62,319,073 673,934 312,511
Dividends 42,443,971 11,118,152 13,680,351 5,217,835 6,302,875
----------- ------------ ----------- ------------ ----------- ----------- -----------
Total investment income/(loss) $62,127,149 $175,418,153 $42,508,049 $109,475,218 $20,068,667 $14,243,882 $21,776,993
=========== ============ =========== ============ =========== =========== ===========
<PAGE>
17
Templeton Investment Retirement
Foreign I Grade Money Loan
Fund Bond Fund Market Fund Fund Total
<S> <C> <C> <C> <C> <C>
Investment income:
Net appreciation (depreciation)
of assets $(826,396) $22,581 $302,745,594
Interest $10,848,204 74,153,722
Dividends 549,717 36,337 $266,835 79,616,073
--------- ------- ------- ----------- ------------
Total investment income/(loss) $(276,679) $58,918 $266,835 $10,848,204 $456,515,389
========= ======= ======== =========== ============
</TABLE>
<PAGE>
1
EXHIBIT 99.4a
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Raytheon Company
We consent to the incorporation by reference in the Registration
Statement of Raytheon Company on Form S-8 (File No. 333-56117) of our report
dated May 29, 1998 on our audits of the financial statements of the Raytheon
Savings and Investment Plan for Puerto Rico Based Employees as of December 31,
1997 and 1996 and for the year ended December 31, 1997, which report is included
in this annual report on Form 10-K/A.
Coopers & Lybrand LLP
Boston, Massachusetts
June 29, 1998
<PAGE>
1
EXHIBIT 99.5
E-SYSTEMS, INC. EMPLOYEE SAVINGS PLAN
FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
WITH REPORT OF INDEPENDENT ACCOUNTANTS
for the years ended December 31, 1997 and 1996
Report of Independent Accountants
Employee Savings Plan Administrative Committee
E-Systems, Inc. Employee Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of the E-Systems, Inc. Employee Savings Plan (the "Plan") as of December 31,
1997 and 1996, and the related statements of changes in net assets available for
benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1997 and 1996, and the changes in the net assets available for
benefits for the years then ended in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of assets held for investment purposes as of December 31, 1997, and reportable
transactions for the year then ended are presented for purposes of complying
with the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974, and are
not a required part of the basic financial statements. The supplemental
schedules have been subjected to the auditing procedures applied in our audit of
the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
Dallas, Texas
June 8, 1998
<PAGE>
2
E-SYSTEMS, INC. EMPLOYEE SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 1997 and 1996
ASSETS 1997 1996
Investments--at fair value:
Mutual funds $613,860,560 $471,394,300
Collective investment fund 61,180,556 56,821,945
Raytheon common stock fund 35,787,508 33,545,329
Participant loans 22,992,597 22,858,010
------------ ------------
Total investments at fair value 733,821,221 584,619,584
------------ ------------
Receivables:
Contributions due from employees 2,135,509 1,293,228
Contribution due from employer 9,520,806 8,599,589
------------ ------------
11,656,315 9,892,817
------------ ------------
Net assets available for benefits $745,477,536 $594,512,401
============ ============
The accompanying notes are an integral part of the financial statements.
<PAGE>
3
E-SYSTEMS, INC. EMPLOYEE SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS
AVAILABLE FOR BENEFITS
for the years ended December 31, 1997 and 1996
1997 1996
Additions:
Dividend income $ 54,412,625 $ 27,722,560
Interest income 14,947,020 13,563,141
Employee contributions 44,956,931 38,892,568
Employer contributions 17,568,486 15,587,178
Transfer to/from other qualified plans 21,789,278 8,134,901
Other receipts 537,578 186,148
------------ ------------
Total additions 154,211,918 104,086,496
------------ ------------
Deductions:
Administrative and other expenses 219,897 197,893
Benefits paid to participants 43,412,766 44,538,255
------------ ------------
Total deductions 43,632,663 44,736,148
------------ ------------
Net appreciation of investments 40,385,880 34,607,559
------------ ------------
Net increase 150,965,135 93,957,907
Net assets available for benefits
at beginning of year 594,512,401 500,554,494
------------ ------------
Net assets available for benefits
at end of year $745,477,536 $594,512,401
============ ============
The accompanying notes are an integral part of the financial statements.
<PAGE>
4
E-SYSTEMS, INC. EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. General Description:
The E-Systems, Inc. Employee Savings Plan (the "Plan"), is a defined
contribution plan sponsored by Raytheon E-Systems, Inc. ("E-Systems" or the
"Company"), a wholly-owned subsidiary of Raytheon Company, which became
effective January 1, 1995. Employees are immediately eligible to participate in
the Plan. The Plan provides an individual account for each participant. Amounts
disbursed to participants or transfers between funds are based solely upon
amounts contributed to each participant's account adjusted to reflect any
withdrawals and distributions, investment earnings attributable to such fund
balances and appreciation or depreciation of the market value of the fund. The
Plan is subject to the provisions of the Employee Retirement Income Security Act
of 1974 ("ERISA"). The following description of the Plan is provided for general
information purposes only. A detailed description of the Plan is contained in
the Plan document.
Employer Contributions
The Company matches 50% of the first 3% of employee contributions to
the Plan for the Plan year through the 401(k) Tax-Advantaged Capital
Accumulation Plan ("T-CAP") Company Matching account.
The Plan also provides for Regular Discretionary Contributions
("E-CAP") up to 1-1/2% of the lesser of (1) base rate of pay, or (2) W-2 pay
plus elected reductions. To be eligible for this contribution, the participant
must be an active employee on December 31.
Certain Company subsidiaries may make Optional Employer Contributions.
If employed by one of these subsidiaries on December 31, the participant
receives an allocation equal to a certain percentage, determined by the Board of
Directors, of the lesser of (1) base rate of pay, or (2) W-2 pay plus elected
reductions.
Employee Contributions
Participants in the Plan may contribute up to 18% of their annual base
rate of pay on a pre-tax basis. Base rate of pay excludes such items as shift
differential, quarterly wage adjustments, commissions, unused sick pay,
severance pay, allowances, awards, lump sum payments, and per diem payments. The
Internal Revenue Service ("IRS") imposed limitation on employee contributions
was $9,500 for 1997 and 1996. Internal Revenue Code ("IRC") Section 415
establishes limitations on employee and employer contributions. Any
contributions exceeding these limitations are refunded to the participants in
accordance with the Plan document.
Vesting Rights
Participants are immediately 100% vested in their account balances
derived from Company contributions, employee contributions and any amounts
rolled over to the Plan from another eligible plan.
Plan Trustee
The Plan's trustee is Vanguard Fiduciary Trust Company. The trustee
holds the funds for the Plan and is responsible for managing the Plan's
investment assets, executing all investment transactions and recording approved
transactions.
<PAGE>
5
Participant Investment Programs
Employee contributions are invested by the trustee as directed by
participants and can be invested in any combination of the funds listed below.
Company matching contributions, and other discretionary contributions, if any,
may be invested in a different combination of funds than the pre-tax
contributions. If a separate election for the Company contributions is not made
by the participant, these contributions are then invested in the same fund or
funds selected by the participant for their pre-tax contributions.
Participants had the option of investing their contributions in any of
the following funds:
The Vanguard Retirement Savings Trust: investments seek the highest
level of current income consistent with safety and stability of principal by
investing primarily in contracts issued by life insurance companies, investment
contracts issued by domestic commercial banks or United States branches of
foreign banks, and other similar types of fixed-principal investments. The Trust
may also hold no more than 15% of its assets in short-term obligations, money
market funds, or federally insured deposits.
The Vanguard/Morgan Growth Fund: investments consist primarily of
common stocks of corporations with either established growth patterns, emerging
growth potential, or cyclical growth patterns.
The Vanguard/Windsor Fund: investments consist of a portfolio of
common stocks, the objective of which is primarily long-term growth and
secondly, current income through dividends.
The Vanguard Money Market Reserves Prime Portfolio: investments
consist of high-quality money market instruments that mature in one year or
less.
The Vanguard Short-Term Corporate Bond Portfolio: investments consist
of investment grade bonds with maturities from less than one to four years,
including United States Treasury and agency obligations, the objective of which
is primarily to conserve principal and secondly, to maximize current income.
The Vanguard Index Trust 500 Portfolio: investments consist of a
portfolio of stocks designed to match the performance of Standard & Poor's 500
Corporate Stock Price Index.
The Vanguard/Wellesley Income Fund: investments consist of about 60%
in fixed-income securities and 40% in common stocks. The Fund objective is
primarily current income through dividends, and secondly, moderate capital
growth.
The Vanguard International Value Portfolio: investments seek maximum
long-term total return consistent with reasonable risk by investing in a
diversified group of large and medium-sized companies based outside of the
United States. Total return includes both income and capital appreciation.
<PAGE>
6
The Raytheon Common Stock Fund: investments consist of Raytheon Class
B common stock. However, contributions may be invested in the Vanguard Money
Market Reserves Prime Portfolio until a stock purchase is made.
Loan Provisions
Participants may obtain loans from their account balances in any of
the Vanguard Funds and/or the Raytheon Common Stock Fund. Loans bear interest at
the prime rate, as published in the Wall Street Journal on the last day of each
calendar quarter, plus one percentage point. Such interest rate is effective for
all loans during the subsequent quarter. All loans become part of the Loan Fund.
Interest charged on loans is credited to the participant's account and is
included in interest income on the statement of changes in net assets available
for benefits.
The maximum a participant can borrow is 50% of his/her account balance
up to a limit of $50,000. While a participant may borrow up to 50% of their
E-Systems, Inc. Employee Savings Plan account balance, loans cannot be funded
from the E-CAP, Company Matching or Optional Employer accounts. However, if the
participant had a loan outstanding within the previous 12 months, IRS rules
require that the $50,000 limit be reduced by their highest outstanding loan
balance during the 12 months before the current loan request.
Transfer Provisions
Participants are permitted to make unlimited transfers among
investment options, with the exception of transfers out of the Vanguard
Investment Contract Trust ("VICT"). The funds transferred out of the VICT may be
transferred into one of the equity funds at any time, but must remain in these
equity funds for a period of 90 days. After the 90-day period, the funds may be
transferred out of the equity funds and into either the Vanguard Money Market
Reserves Prime Portfolio or the Vanguard Short-Term Corporate Bond Portfolio.
Participants may only transfer funds from the VICT into fixed income
options once a year, during January. Fixed income options include the Vanguard
Money Market Reserves Prime Portfolio and the Vanguard Short-Term Corporate Bond
Portfolio. Participants may transfer up to $500 or 25% of their balance in the
VICT, whichever is higher, into the fixed income options.
Income Allocations
Each investment fund's gain or losses are determined and allocated by
its fund manager every business day.
Withdrawals
All distributions except distributions of the Raytheon Common Stock
Fund are made in cash. Participants are eligible for distributions upon
termination, retirement, disability, or hardship (as determined by the IRS).
Distributions may be made to the participant or beneficiary as a lump sum
payment or as an insured annuity. No in-service withdrawals of the company
matching, discretionary, or optional employer contributions are allowed.
<PAGE>
7
Plan Termination
Although the Company has not expressed any intention to do so, it has
the right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of a
termination of the Plan, all plan assets would be distributed in accordance with
the Plan.
2. Summary of Significant Accounting Policies:
The financial statements have been prepared on the accrual basis of
accounting.
Use of Estimates
The preparation of the Plan's financial statements in conformity with
generally accepted accounting principles requires the plan administrator to make
significant estimates and assumptions that affect the reported amounts of net
assets available for benefits at the date of the financial statements and the
changes in net assets available for benefits during the reporting period and,
when applicable, disclosures of contingent assets and liabilities at the date of
the financial statements. Actual results could differ from those estimates.
Risks and Uncertainties
The Plan provides for various investment options in any combination of
stocks, bonds, fixed income securities, mutual funds, and other investment
securities. Investment securities are exposed to various risks, such as interest
rate, market and credit risks. Due to the level of risk associated with certain
investment securities, it is at least reasonably possible that changes in the
values of investment securities will occur in the near term and that such
changes could materially affect participants' account balances and the amounts
reported in the statement of net assets available for plan benefits.
Investments
The valuation of the Plan's investments in all funds is based on the
market value of the assets held in the funds. The Plan's relative interest in
the funds is determined on a unit-method basis. The valuation of the Vanguard
Funds is based on the closing market price of the assets which comprise the
funds on the last business day of the Plan year. Investments in the Vanguard
Retirement Savings Trust are carried at market value (which equals original cost
plus accrued interest less any distribution). Market value approximates contract
value. The valuation of Class B common stock in the Raytheon Common Stock Fund
is based on closing market price as reported on the New York Stock Exchange on
the last business day of the Plan year. Purchases and sales of securities are
reflected on the trade-date basis. Dividend income is recognized on the
ex-dividend date.
The Plan presents in the statement of changes in net assets the net
appreciation (depreciation) in the fair value of its investments which consists
of the realized gains or losses and the unrealized appreciation (depreciation)
on those investments.
Administrative Expenses
The expenses incurred by the Plan are paid from Plan funds. Expenses
incurred in administering the Plan are generally allocated to the respective
fund to which they relate.
<PAGE>
8
3. Plan Amendments:
The Plan was amended effective January 1, 1997, to include employees
of Engineering Research Associates, Inc. Retirement Savings Plan ("ERA") and
authorized the transfer of ERA employees' accounts into the Plan. This amendment
also changed the distribution policy related to prior plan employer contribution
accounts from the ERA Plan.
4. Investments:
The Plan held the following investments at December 31, 1997 and 1996
(investments that represent 5% or more of the Plan's net assets are separately
identified):
Fair Value at December 31,
1997 1996
Raytheon Common Stock Fund $ 35,787,508 $ 33,545,329
Vanguard/Morgan Growth Fund 97,914,498 68,074,242
Vanguard/ Windsor Fund 226,774,736 173,891,032
Vanguard Money Market Reserves Prime Portfolio 91,047,417 95,347,229
Vanguard Short-Term Corporate Bond Portfolio 16,848,440 14,234,216
Vanguard Index Trust 500 Portfolio 134,265,332 84,493,315
Vanguard International Value Portfolio 14,883,787 13,172,565
Vanguard/Wellesley Income Fund 32,126,350 22,181,701
------------ ------------
649,648,068 504,939,629
Vanguard Retirement Savings Trust 61,180,556 56,821,945
Participant loans 22,992,597 22,858,010
------------ ------------
$733,821,221 $584,619,584
============ ============
5. Income Tax Status:
The IRS has determined and informed the Company by a letter dated
December 4, 1996 that the Plan is designed in accordance with applicable
sections of the IRC. The Plan has been amended since the date the IRS made its
tax determination; however, the Plan administrator believes the Plan is designed
and currently being operated in compliance with the applicable requirements of
the IRC.
<PAGE>
9
6. Combining Statements of Net Assets Available for Benefits and Changes in Net
Assets Available for Benefits:
Net assets available for benefits at December 31, 1997 are as follows:
<TABLE>
<CAPTION>
Raytheon Vanguard Vanguard/
Common Retirement Morgan Vanguard/ Vanguard Money
Stock Savings Growth Windsor Market Reserves
Total Fund Trust Fund Fund Prime Portfolio
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments at fair value:
Mutual funds $613,860,560 $ -- $ -- $ 97,914,498 $226,774,736 $ 91,047,417
Collective investment fund 61,180,556 -- 61,180,556 -- -- --
Raytheon Company stock fund 35,787,508 35,787,508 -- -- -- --
Participant loans 22,992,597 -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Total investments 733,821,221 35,787,508 61,180,556 97,914,498 226,774,736 91,047,417
------------ ------------ ------------ ------------ ------------ ------------
Receivables:
Contributions due from employees 2,135,509 141,251 161,840 301,542 629,130 219,638
Contributions due from employer 9,520,806 1,597,516 225,700 905,920 1,566,103 2,542,782
------------ ------------ ------------ ------------ ------------ ------------
Total receivables 11,656,315 1,738,767 387,540 1,207,462 2,195,233 2,762,420
Net assets available for benefits $745,477,536 $ 37,526,275 $ 61,568,096 $ 99,121,960 $228,969,969 $ 93,809,837
============ ============ ============ ============ ============ ============
<PAGE>
10
Vanguard Vanguard/ Vanguard
Vanguard Short Index Wellesley International
Term Corporate Trust 500 Income Value
Bond Portfolio Portfolio Fund Portfolio Loan Fund
Assets:
Investments at fair value:
Mutual funds $ 16,848,440 $134,265,332 $ 32,126,350 $ 14,883,787 $ --
Collective investment fund -- -- -- -- --
Raytheon Company stock fund -- -- -- -- --
Participant loans -- -- -- -- 22,992,597
------------ ------------ ------------ ------------ ------------
Total investments 16,848,440 134,265,332 32,126,350 14,883,787 22,992,597
------------ ------------ ------------ ------------ ------------
Contributions due from employees 61,411 434,798 109,353 76,546 --
Contributions due from employer 142,667 1,732,435 462,314 345,369 --
------------ ------------ ------------ ------------ ------------
Total receivables 204,078 2,167,233 571,667 421,915 --
Net assets available for benefits $ 17,052,518 $136,432,565 $ 32,698,017 $ 15,305,702 $ 22,992,597
============ ============ ============ ============ ============
</TABLE>
<PAGE>
11
Net assets available for benefits at December 31, 1996 are as follows:
<TABLE>
<CAPTION>
Raytheon Vanguard Vanguard/
Common Retirement Morgan Vanguard/ Vanguard Money
Stock Savings Growth Windsor Market Reserves
Total Fund Trust Fund Fund Prime Portfolio
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments at fair value:
Mutual funds $471,394,300 -- -- $ 68,074,242 $173,891,032 $ 95,347,229
Collective investment fund 56,821,945 -- $ 56,821,945 -- -- --
Raytheon Company stock fund 33,545,329 $ 33,545,329 -- -- -- --
Participant loans 22,858,010 -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Total investments 584,619,584 33,545,329 56,821,945 68,074,242 173,891,032 95,347,229
------------ ------------ ------------ ------------ ------------ ------------
Receivables:
Contributions due from employees 1,293,228 77,803 105,266 174,491 376,700 146,384
Contributions due from employer 8,599,589 1,706,924 209,032 774,618 1,375,791 2,168,315
------------ ------------ ------------ ------------ ------------ ------------
Total receivables 9,892,817 1,784,727 314,298 949,109 1,752,491 2,314,699
------------ ------------ ------------ ------------ ------------ ------------
Net assets available for benefits $594,512,401 $ 35,330,056 $ 57,136,243 $ 69,023,351 $175,643,523 $ 97,661,928
============ ============ ============ ============ ============ ============
<PAGE>
12
Vanguard Vanguard/ Vanguard
Vanguard Short- Index Wellesley International
Term Corporate Trust 500 Income Value
Bond Portfolio Portfolio Fund Portfolio Loan Fund
<S> <C> <C> <C> <C> <C>
Investments at fair value:
Mutual funds $ 14,234,216 $ 84,493,315 $ 22,181,701 $ 13,172,565 --
Collective investment fund -- -- -- -- --
Raytheon Company stock fund -- -- -- -- --
Participant loans -- -- -- -- $ 22,858,010
------------ ------------ ------------ ------------ ------------
Total investments 14,234,216 84,493,315 22,181,701 13,172,565 22,858,010
------------ ------------ ------------ ------------ ------------
Receivables:
Contributions due from employees 43,654 250,338 66,282 52,310 --
Contributions due from employer 135,064 1,484,826 398,529 346,490 --
------------ ------------ ------------ ------------ ------------
Total receivables 178,718 1,735,164 464,811 398,800 --
------------ ------------ ------------ ------------ ------------
Net assets available for benefits $ 14,412,934 $ 86,228,479 $ 22,646,512 $ 13,571,365 $ 22,858,010
============ ============ ============ ============ ============
</TABLE>
<PAGE>
13
6. Combining Statements of Net Assets Available for Benefits and Changes in
Net Assets Available for Benefits, continued:
Changes in net assets available for benefits for the year ended
December 31, 1997 are as follows:
<TABLE>
<CAPTION>
Vanguard
Raytheon Vanguard Vanguard/ Vanguard/ Money Market
Common Retirement Morgan Windsor Reserves Prime
Total Stock Fund Savings Trust Growth Fund Fund Portfolio
<S> <C> <C> <C> <C> <C> <C>
Net assets available for benefits,
January 1, 1997 $594,512,401 $ 35,330,056 $ 57,136,243 $ 69,023,351 $175,643,523 $ 97,661,928
------------ ------------ ------------ ------------ ------------ ------------
Additions:
Dividend income 54,412,625 634,222 -- 12,998,262 36,042,403 --
Interest income 14,947,020 -- 3,586,959 -- -- 4,912,252
Employee contributions 44,956,931 2,984,412 3,263,374 6,468,575 13,428,028 3,676,361
Employer contributions 17,568,486 2,164,068 866,470 2,037,203 3,929,947 3,313,724
Transfer to/from other
qualified plans 21,789,278 821,753 1,228,041 3,536,507 4,526,759 1,470,742
Other receipts
(disbursements) 537,578 13,884 21,468 30,872 70,085 339,066
------------ ------------ ------------ ------------ ------------ ------------
Total additions 154,211,918 6,618,339 8,966,312 25,071,419 57,997,222 13,712,145
------------ ------------ ------------ ------------ ------------ ------------
Deductions:
Administrative and other expenses 219,897 22,085 6,223 25,145 49,143 55,156
Benefits paid to participants 43,412,766 841,545 5,830,500 4,023,261 11,284,786 9,387,950
------------ ------------ ------------ ------------ ------------ ------------
Total deductions 43,632,663 863,630 5,836,723 4,048,406 11,333,929 9,443,106
------------ ------------ ------------ ------------ ------------ ------------
Transfers -- (5,655,890) 1,302,264 452,337 3,417,959 (8,121,130)
------------ ------------ ------------ ------------ ------------ ------------
Net appreciation (depreciation)
of investments 40,385,880 2,097,400 -- 8,623,259 3,245,194 --
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) 150,965,135 2,196,219 4,431,853 30,098,609 53,326,446 (3,852,091)
------------ ------------ ------------ ------------ ------------ ------------
Net assets available for benefits,
December 31, 1997 $745,477,536 $ 37,526,275 $ 61,568,096 $ 99,121,960 $228,969,969 $ 93,809,837
============ ============ ============ ============ ============ ============
<PAGE>
14
Vanguard Vanguard Vanguard/ Vanguard
Short-Term Index Wellesley International
Corporate Trust 500 Income Value
Bond Portfolio Portfolio Fund Portfolio Loan Fund
<S> <C> <C> <C> <C> <C>
Net assets available for benefits,
January 1, 1997 $14,412,934 $ 86,228,479 $22,646,512 $ 13,571,365 $ 22,858,010
Additions:
Dividend income -- 2,692,576 -- 2,045,162 --
Interest income 930,317 -- 3,382,496 -- 2,134,996
Employee contributions 1,341,287 9,532,053 2,400,639 1,862,202 --
Employer contributions 389,632 3,316,226 898,198 653,018 --
Transfer to/from other
qualified plans 1,009,628 5,378,213 2,503,615 1,151,048 162,972
Other receipts
(disbursements) 7,834 39,628 7,329 8,805 (1,393)
----------- ------------ ----------- ------------ ------------
Total additions 3,678,698 20,958,696 9,192,277 5,720,235 2,296,575
----------- ------------ ----------- ------------ ------------
Administrative and other expenses 4,990 39,711 11,053 6,391 --
Benefits paid to participants 1,297,902 7,042,765 1,487,423 883,988 1,332,646
----------- ------------ ----------- ------------ ------------
Total deductions 1,302,892 7,082,476 1,498,476 890,379 1,332,646
----------- ------------ ----------- ------------ ------------
Transfers 174,787 8,625,867 851,109 (217,961) (829,342)
----------- ------------ ----------- ------------ ------------
Net appreciation (depreciation)
of investments 88,991 27,701,999 1,506,595 (2,877,558) --
----------- ------------ ----------- ------------ ------------
Net increase (decrease) 2,639,584 50,204,086 10,051,505 1,734,337 134,587
----------- ------------ ----------- ------------ ------------
Net assets available for benefits,
December 31, 1997 $17,052,518 $136,432,565 $32,698,017 $ 15,305,702 $ 22,992,597
=========== ============ =========== ============ ============
</TABLE>
<PAGE>
15
6. Combining Statements of Net Assets Available for Benefits and
Changes in Net Assets Available for Benefits, continued:
Changes in net assets available for benefits for the year ended December 31,
1996 are as follows:
<TABLE>
<CAPTION>
Vanguard Vanguard/ Vanguard
Raytheon Retirement Morgan Vanguard/ Money Market
Common Savings Growth Windsor Reserves Prime
Total Stock Fund Trust Fund Fund Portfolio
<S> <C> <C> <C> <C> <C> <C>
Net assets available for benefits,
January 1, 1996 $500,554,494 $ 13,185,095 $ 53,401,234 $42,342,785 $124,660,848 $ 169,074,878
------------ ------------ ------------ ----------- ------------ -------------
Additions:
Dividend income 27,722,560 316,591 -- 6,461,821 16,617,514 --
Interest income 13,563,141 -- 3,225,136 -- -- 5,662,728
Employee contributions 38,892,568 1,951,850 3,596,336 5,180,985 12,436,860 3,523,422
Employer contributions 15,587,178 2,065,612 897,534 1,695,947 3,579,619 2,893,317
qualified plans 8,134,901 423,601 281,483 1,418,757 1,572,737 489,658
Other receipts (disbursements) 186,148 23,319 (5,798) 30,898 132,948 (40,319)
------------ ------------ ------------ ----------- ------------ -------------
Total additions 104,086,496 4,780,973 7,994,691 14,788,408 34,339,678 12,528,806
------------ ------------ ------------ ----------- ------------ -------------
Deductions:
Administrative and other expenses 197,893 19,018 8,396 21,363 49,281 51,805
Benefits paid to participants 44,538,255 606,895 5,501,619 3,024,269 8,065,342 19,039,033
------------ ------------ ------------ ----------- ------------ -------------
Total deductions 44,736,148 625,913 5,510,015 3,045,632 8,114,623 19,090,838
------------ ------------ ------------ ----------- ------------ -------------
Transfers -- 18,341,916 1,250,333 9,620,443 5,961,265 (64,850,918)
------------ ------------ ------------ ----------- ------------ -------------
Net appreciation (depreciation)
of investments 34,607,559 (352,015) -- 5,317,347 18,796,355 --
------------ ------------ ------------ ----------- ------------ -------------
Net increase (decrease) 93,957,907 22,144,961 3,735,009 26,680,566 50,982,675 (71,412,950)
------------ ----------- ------------ ----------- ------------ -------------
Net assets available for benefits,
December 31, 1996 $594,512,401 $ 35,330,056 $ 57,136,243 $69,023,351 $175,643,523 $ 97,661,928
============ ============ ============ =========== ============ =============
<PAGE>
16
Vanguard Vanguard Vanguard/ Vanguard
Short-Term Index Wellesley International
Corporate Trust 500 Income Value
Bond Portfolio Portfolio Fund Portfolio Loan Fund
<S> <C> <C> <C> <C> <C>
Net assets available for benefits,
January 1, 1996 $ 11,603,894 $ 44,579,839 $ 14,201,003 $ 6,644,206 $ 20,860,712
------------ ------------ ------------ ------------ ------------
Additions:
Dividend income -- 1,777,001 -- 2,549,633 --
Interest income 830,718 -- 1,785,544 -- 2,059,015
Employee contributions 1,375,434 7,078,147 2,141,832 1,607,702 --
Employer contributions 385,883 2,676,588 784,604 608,074 --
Transfer from other
qualified plans 440,632 2,512,291 713,862 263,937 17,943
Other receipts (disbursements) 4,695 30,859 5,294 4,295 (43)
------------ ------------ ------------ ------------ ------------
Total additions 3,037,362 14,074,886 5,431,136 5,033,641 2,076,915
------------ ------------ ------------ ------------ ------------
Deductions:
Administrative and other expenses 5,375 28,472 9,190 4,993 --
Benefits paid to participants 796,455 4,662,453 1,276,504 545,346 1,020,339
------------ ------------ ------------ ------------ ------------
Total deductions 801,830 4,690,925 1,285,694 550,339 1,020,339
------------ ------------ ------------ ------------ ------------
Transfers 772,960 19,806,330 4,199,218 3,957,731 940,722
------------ ------------ ------------ ------------ ------------
Net appreciation (depreciation)
of investments (199,452) 12,458,349 100,849 (1,513,874) --
------------ ------------ ------------ ------------ ------------
Net increase (decrease) 2,809,040 41,648,640 8,445,509 6,927,159 1,997,298
------------ ------------ ------------ ------------ ------------
Net assets available for benefits,
December 31, 1996 $ 14,412,934 $ 86,228,479 $ 22,646,512 $ 13,571,365 $ 22,858,010
============ ============ ============ ============ ============
</TABLE>
<PAGE>
17
<TABLE>
<CAPTION>
E-SYSTEMS, INC. EMPLOYEE SAVINGS PLAN
Item 27aSCHEDULE OF ASSETS HELD
FOR INVESTMENT PURPOSES
December 31, 1997
Name of Issuer and Title of Issue Interest Rate Shares Cost Market
<S> <C> <C> <C>
Vanguard Retirement Savings Trust 61,180,556 $ 61,180,556 $ 61,180,556
Vanguard/Morgan Growth Fund 5,582,355 83,538,031 97,914,498
Vanguard/Windsor Fund 13,355,403 208,193,444 226,774,736
Vanguard Money Market Reserves
Prime Portfolio 91,047,417 91,047,417 91,047,417
Vanguard Short-Term Corporate
Bond Portfolio 1,558,598 16,761,967 16,848,440
Vanguard Index Trust 500 Portfolio 1,490,678 95,498,167 134,265,332
Vanguard/Wellesley Income Fund 1,469,641 30,172,824 32,126,350
Raytheon Common Stock Fund 2,822,359 34,761,821 35,787,508
Vanguard International Value
Portfolio 657,411 19,180,678 14,883,787
------------ ------------
Total investments $640,334,905 $710,828,624
============ ============
Participant loans 6.97% -13.28% $ -- 22,992,597
============ ============
Raytheon Company and Vanguard investments denote parties-in-interest.
</TABLE>
<PAGE>
18
<TABLE>
<CAPTION>
E-SYSTEMS, INC. EMPLOYEE SAVINGS PLAN
Item 27dSCHEDULE OF REPORTABLE TRANSACTIONS
for the year ended December 31, 1997
Number of Cost of Number Cost Proceeds Gain (Loss)
Identity of Issue Purchases Purchases of Sales of Asset From Sales on Sales
Category (iii) - Series
of securities transactions
<S> <C> <C> <C> <C> <C> <C>
Vanguard/Windsor Fund 252 $84,330,904 253 $29,386,487 $34,762,479 $5,375,992
Vanguard/Morgan Growth Fund 248 $39,170,358 252 $15,960,298 $17,984,232 $2,023,934
Raytheon Common Stock Fund 238 $33,046,678 251 $31,760,123 $32,915,784 $1,155,661
Vanguard Money Market
Reserves Prime Portfolio 256 $60,738,093 253 $65,376,972 $65,376,972 $ -
Vanguard Index Trust 500 Portfolio 253 $57,221,134 253 $30,455,013 $35,190,744 $4,735,731
Vanguard Retirement Savings Trust 247 $22,195,710 250 $17,858,566 $17,858,566 $ -
There were no category (i), (ii) or (iv) reportable transactions during 1997.
Raytheon Company and Vanguard investments denote parties-in-interest.
</TABLE>
<PAGE>
1
EXHIBIT 99.5a
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Raytheon Company
We consent to the incorporation by reference in the Registration
Statement of Raytheon Company on Form S-8 (File No. 333-56117) of our report
dated May 29, 1998 on our audits of the financial statements of the E-Systems,
Inc. Employee Savings Plan as of December 31, 1997 and 1996 and for the year
ended December 31, 1997, which report is included in this annual report on Form
10-K/A.
Coopers & Lybrand LLP
Boston, Massachusetts
June 29, 1998
<PAGE>
1
EXHIBIT 99.6
RAYTHEON TI SYSTEMS SAVINGS PLAN
FINANCIAL STATEMENTS TO ACCOMPANY 1997 FORM 5500
ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN
UNDER ERISA OF 1974
FOR THE PERIOD FROM JULY 11, 1997 to DECEMBER 31, 1997
The supplemental schedules required to accompany the Plan's Form 5500
are not required since the Plan's assets are held in a Master Trust.
Accordingly, detailed financial information, including the supplemental
schedules, must be filed separately with the Department of Labor by the plan
administrator.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Raytheon Company:
We have audited the accompanying statement of net assets available for
plan benefits of the Raytheon TI Systems Savings Plan (the "Plan") as of
December 31, 1997, and the related statement of changes in net assets available
for plan benefits for the period from July 11, 1997 to December 31, 1997. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for plan benefits of
the Plan as of December 31, 1997 and the changes in net assets available for
plan benefits for the period from July 11, 1997 to December 31, 1997 in
conformity with generally accepted accounting principles.
Coopers & Lybrand LLP
Boston, Massachusetts
May 29, 1998
<PAGE>
2
RAYTHEON TI SYSTEMS SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
as of December 31, 1997
Assets:
Master trust Investments:
At contract value (Notes B, E and H) $ 27,129,250
At fair value (Notes B, F and H) 151,647,372
------------
178,776,622
------------
Receivables
Accrued investment income and
other receivables 528,072
Cash and cash equivalents 1,673,631
------------
Total assets 180,978,325
------------
Liabilities:
Payable for outstanding purchases 533,996
Accrued expenses and other payables 192,678
------------
Total liabilities 726,674
------------
Net assets available for plan benefits $180,251,651
============
The accompanying notes are an integral part of the financial statements.
<PAGE>
3
RAYTHEON TI SYSTEMS SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS
for the period from July 11, 1997 to December 31, 1997
Additions to net assets attributable to:
Investment income (Notes B, E, and H):
Net depreciation of investments $ (4,990,657)
Interest 1,304,618
Dividends 3,548,891
-------------
(137,148)
-------------
Contributions and deferrals:
Employee deferrals 29,221,374
Employer contributions 4,151,771
Transfers (Note G) 149,409,371
-------------
182,782,516
-------------
Total additions 182,645,368
-------------
Deductions from net assets attributable to:
Distributions to participants 2,367,783
Administrative expenses 14,904
Transfers (Note G) 11,030
-------------
Total deductions 2,393,717
-------------
Increase in net assets 180,251,651
Net assets available for plan
benefits, beginning of year --
-------------
Net assets available for plan
benefits, end of year $ 180,251,651
=============
The accompanying notes are an integral part of the financial statements.
<PAGE>
4
A. Description of Plan:
General
The following description of the Raytheon TI Systems Savings Plan (the
"Plan") provides only general information. Participants should refer to the plan
document for a complete description of the Plan's provisions. The Plan, which
was established on July 11, 1997, is a defined contribution plan covering
certain employees of Raytheon Company (the "Company"). Effective July 11, 1997,
employees assumed in the acquisition of the Texas Instruments defense business
and that participated in the Texas Instruments Defense Savings Plan, became
eligible to participate in the Plan. Participants have the option to rollover
amounts accumulated in plans sponsored by Texas Instruments to the Plan. Upon
election, amounts will be rolled over into funds selected by the participant. An
employee becomes eligible to participate in the Plan on the date he or she
becomes an employee and may enter the Plan any day thereafter during his or her
employment. The purpose of the Plan is to provide participants with a
tax-effective means of meeting both short- and long-term investment objectives.
The Plan is intended to be a "qualified cash or deferred arrangement" under
Sections 401(a) and 401(k) of the Internal Revenue Code (the "Code"). The Plan
is subject to the provisions of the Employee Retirement Income Security Act of
1974 (ERISA).
The Plan's investments are held in the Raytheon Company Master Trust
for Defined Contribution Plans ("Master Trust") with the assets of other defined
contribution plans of Raytheon Company and subsidiaries. The trustee of the
Master Trust maintains a separate account reflecting the equitable share in the
Trust of each plan.
Investment income and administrative expenses relating to the Master
Trust are allocated to the individual plans based upon average monthly balances
invested by each plan.
Contributions and Deferrals
Eligible employees are allowed to defer to the Plan up to 17% of their
salaries. The Company contributes amounts equal to 50% of each participant's
deferral, up to a maximum of 2% of the participant's salary. As of December 31,
1997, the annual employee deferral for a participant cannot exceed $7,000.
Rollover contributions from other qualified plans are accepted by the Plan.
Participants may invest their deferrals in any combination of nine funds: (a) a
Fixed Income Fund under which assets are invested primarily in contracts
providing for fixed rates of interest for specified periods of time, (b) an
Equity Fund which invests in shares of a mutual fund which consists primarily of
income-producing equity securities, (c) a Raytheon Common Stock Fund which
invests in shares of Raytheon Company Class B common stock, (d) a Stock Index
Fund which invests in a commingled pool consisting primarily of equity
securities and is designed to track the S&P 500 Index, (e a Balanced Fund which
invests in shares of a mutual fund which consists primarily of equity
securities, bonds and money market instruments, (f) the Magellan Fund, a growth
fund which invests primarily in equities of companies of all types and sizes,
(g) the Blue Chip Fund, a growth fund which invests primarily in equities of
well known and established companies, (h) the Templeton Foreign I Fund, a
long-term capital growth fund which invests in stocks and debt obligations of
companies and governments of any nation and (i) the Investment Grade Bond Fund
which invests primarily in U.S. government and corporate bonds including,
without limitation, index funds and mutual funds. Dividends and distributions
from investments of the Equity Fund, the Raytheon Common Stock Fund, the Stock
Index Fund, the Balanced Fund, the Magellan Fund, the Blue Chip Fund, the
Templeton Foreign I Fund and the Investment Grade Bond Fund are reinvested in
their respective funds; stock dividends, stock splits and similar changes are
also reflected in the funds.
<PAGE>
5
Participant Accounts
Each participant's account is credited with the participant's
deferral, the Company's contribution and an allocation of plan earnings. Plan
earnings are allocated based on account balances by fund.
Vesting
Participants are immediately vested in their voluntary deferrals plus
actual earnings thereon. Vesting requirements for employer contributions plus
earnings thereon may vary depending upon when an employee became eligible to
participate in the Plan. Vesting generally occurs upon the earliest of the
completion of five years of service or three years of plan participation or upon
retirement, death, disability, or attainment of normal retirement age.
Forfeitures of the nonvested portions of terminated participants' accounts are
used to reduce required contributions of the Company.
Distributions to Participants
A participant may withdraw all or a portion of deferrals, employer
contributions and related earnings upon attainment of age 59-1/2. For reasons of
financial hardship, as defined in the Plan document, a participant may withdraw
all or a portion of deferrals. On termination of employment, a participant will
receive a lump-sum distribution unless the vested account is valued in excess of
$3,500 and the participant elects to defer distribution. A retiree or a
beneficiary of a deceased participant may defer the distribution until January
of the year following attainment of age 65.
Loans to Participants
A participant may borrow against a portion of the balance in the
participant's account, subject to certain restrictions. The maximum amount of a
loan is the lesser of one-half of the participant's vested account balance or
$50,000. The minimum loan which may be granted is $500. The interest rate
applied is equal to the prime rate published in the Wall Street Journal on the
first business day in June and December of each year. Loans must be repaid over
a period of up to five years by means of payroll deductions. In certain cases,
the repayment period may be extended up to 15 years. Interest paid to the Plan
on loans to participants is credited to the borrower's account in the investment
fund to which repayments are made.
Administrative Expenses
Substantially all expenses of administering the Plan are paid by the
plan participants.
B. Summary of Significant Accounting Policies:
The accompanying financial statements are prepared on the accrual
basis of accounting.
<PAGE>
6
The Plan's investment contracts are fully benefit-responsive and are
therefore included in the financial statements at their contract value, defined
as net contributions and deferrals plus interest earned on the underlying
investments at contracted rates. Because the investment contracts are fully
benefit-responsive, contract values approximate fair value. Investments in
mutual funds and the commingled pool are valued at the closing net asset value
reported on the last business day of the year. Investments in securities (common
stocks) traded on a national securities exchange are valued at the last reported
sales price on the last business day of the year. Cash equivalents are
short-term money market instruments and are valued at cost which approximates
fair value.
Security transactions are recorded on trade date. Except for its
investment contracts (Note E), the Plan's investments are held by
bank-administered trust funds. Payables for outstanding security transactions
represent trades which have occurred but have not yet settled.
The Plan presents in the statement of changes in net assets the net
appreciation (depreciation) in the fair value of its investments which consists
of the realized gains or losses and the unrealized appreciation (depreciation)
on those investments.
Dividend income is recorded on the ex-dividend date. Income from other
investments is recorded as earned on an accrual basis.
Benefits are recorded when paid.
The preparation of the financial statements in conformity with
generally accepted accounting principles requires the plan administrator to make
significant estimates and assumptions that affect the reported amounts of net
assets and liabilities available for benefits at the date of the financial
statements and the changes in net assets available for benefits during the
reporting period and, when applicable, disclosures of contingent assets and
liabilities at the date of the financial statements. Actual results could differ
from the estimates included in the financial statements.
The Plan provides for various investment options in any combination of
stocks, bonds, fixed income securities, mutual funds and other investment
securities. Investment securities are exposed to various risks, such as interest
rate, market and credit risk. Due to the level of risk associated with certain
investment securities and the level of uncertainty related to changes in the
value of investment securities, it is at least reasonably possible that changes
in risks in the near term would materially affect participants' account balances
and the amounts reported in the statement of net assets available for plan
benefits and the statement of changes in net assets available for plan benefits.
C. Federal Income Tax Status:
Given that the Plan was established effective July 11, 1997, the Plan
has not received a tax determination letter to date. Raytheon Company has
submitted an application with the Internal Revenue Service under the 401(b)
regulation of the Internal Revenue Code and expects to receive the determination
letter by December 31, 1998. The plan administrator and the Plan's legal counsel
believe that the Plan is currently designed and being operated in compliance
with the applicable requirements of the Internal Revenue Code. Therefore, no
provision for income taxes has been included in the Plan's financial statements.
<PAGE>
7
D. Plan Termination:
Although it has not expressed any intention to do so, the Company
reserves the right under the Plan at any time or times to discontinue its
contributions and to terminate the Plan subject to the provisions of ERISA. In
the event of Plan termination, plan assets shall be distributed among all
participants in proportion to their interest and employee contributions shall be
distributed in accordance with the provisions contained in section 401(k)(10) of
the Internal Revenue Code.
E. Investment Contracts:
The Plan invests in collateralized fixed income investment portfolios
(with no expiration date), three of which are managed by insurance companies and
one of which is managed by an investment management firm. The credited interest
rates are adjusted semiannually to reflect the experienced and anticipated
yields to be earned on such investments, based on their book value. The
annualized average yield and credited interest rates were as follows:
Annualized Credited
Average Yield Interest Rate
For the year ended December 31, 1997:
Bankers Trust (WBS 92-485) 6.95% 6.95%
Metropolitan Life Insurance Company (GIC GA-12908) 6.86% 6.86%
Metropolitan Life Insurance Company (GIC GA-13659) 6.43% 6.43%
Prudential Asset Management Company (GIC 917163-001) 6.99% 6.99%
The contract values are subject to limitations in certain situations
including large workforce reductions and plan termination.
In the financial statements, the two Metropolitan Life Insurance
Company contracts are recorded as one investment option.
F. Related Party Transactions:
In accordance with the provisions of the Plan, Fidelity Management
Trust Company (the "Trustee") acts as the Plan's agent for purchases and sales
of shares of Raytheon Company Class B common stock. These transactions are
performed on the Master Trust level. For the Master Trust, purchases amounted to
$200,689,057 and sales amounted to $102,165,608 for the year ended December 31,
1997.
G. Transfers:
Transfers include transfers of participant accounts, individually
and/or in groups, between the Raytheon TI Systems Savings Plan and other plans
included in the Raytheon Company Master Trust for those participants, and/or
groups of participants, who changed plans during the year. Transfers also
include transfers of participant accounts, individually and/or in groups,
between the Raytheon TI Systems Savings Plan and similar savings plans of other
companies for those participants who changed companies during the year.
During the Plan year, the participants in the Texas Instruments
Defense Savings Plan voluntarily elected to transfer approximately $149 million
into the Plan. As of December 31, 1997, there are remaining participants that
have the option to make a rollover election in a future period.
<PAGE>
8
H. Fund Data:
The following is a summary of net assets available for plan benefits
by fund as of December 31, 1997:
<TABLE>
<CAPTION>
Raytheon
Fixed Equity Common Stock Balanced Magellan
Income Fund Fund Stock Fund Index Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust* $10,132,377
Prudential Insurance
Company of America 6,284,670
Metropolitan Life
Insurance Company* 10,712,203
At fair value:
Fidelity Equity Income Fund $8,254,100
Raytheon Company Common Stock* $ 62,818,459
BT Pyramid Equity Index Fund* $27,442,258
Fidelity Balanced Fund $7,638,642
Fidelity Magellan Fund $6,635,153
Fidelity Blue Chip Fund*
Templeton Foreign I Fund
Fidelity Investment Grade Bond Fund
Loans receivable from participants*
----------- ---------- ----------- ----------- ---------- ----------
Total investments 27,129,250 8,254,100 62,818,459 27,442,258 7,638,642 6,635,153
----------- ---------- ----------- ----------- ---------- ----------
Receivables:
Accrued investment income
and other receivables 462,345 65,727
Cash and cash equivalents 267,275 1,136,836 269,520
----------- ---------- ----------- ----------- ---------- ----------
Total assets 27,396,525 8,254,100 64,417,640 27,777,505 7,638,642 6,635,153
----------- ---------- ----------- ----------- ---------- ----------
Liabilities:
Payable for outstanding purchases 533,996
Accrued expenses and other
payables 124,723 67,955
----------- ---------- ----------- ----------- ---------- ----------
Total liabilities 658,719 67,955
----------- ---------- ----------- ----------- ---------- ----------
Net assets available for plan
benefits $27,396,525 $8,254,100 $63,758,921 $27,709,550 $7,638,642 $6,635,153
=========== ========== =========== =========== ========== ==========
*Represents more than 5% of net assets available for plan benefits
<PAGE>
9
Templeton Investment
Blue Chip Foreign I Grade
Fund Fund Bond Fund Loan Fund Total
<S> <C> <C> <C> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust* $ 10,132,377
Prudential Insurance
Company of America 6,284,670
Metropolitan Life
Insurance Company* 10,712,203
At fair value:
Fidelity Equity Income Fund 8,254,100
Raytheon Company Common Stock* 62,818,459
BT Pyramid Equity Index Fund* 27,442,258
Fidelity Balanced Fund 7,638,642
Fidelity Magellan Fund 6,635,153
Fidelity Blue Chip Fund* $18,760,639 18,760,639
Templeton Foreign I Fund $5,471,176 5,471,176
Fidelity Investment Grade Bond Fund $1,548,125 1,548,125
Loans receivable from participants* $13,078,820 13,078,820
----------- ---------- ---------- ----------- ------------
Total investments 18,760,639 5,471,176 1,548,125 13,078,820 178,776,622
----------- ---------- ---------- ----------- ------------
Receivables:
Accrued investment income
and other receivables 528,072
Cash and cash equivalents 1,673,631
----------- ---------- ---------- ----------- ------------
Total assets 18,760,639 5,471,176 1,548,125 13,078,820 180,978,325
----------- ---------- ---------- ----------- ------------
Liabilities:
Payable for outstanding purchases 533,996
Accrued expenses and other
payables 192,678
----------- ---------- ---------- ----------- ------------
Total liabilities 726,674
----------- ---------- ---------- ----------- ------------
Net assets available for plan
benefits $18,760,639 $5,471,176 $1,548,125 $13,078,820 $180,251,651
=========== ========== ========== =========== ============
*Represents more than 5% of net assets available for plan benefits
</TABLE>
<PAGE>
10
H. Fund Data, continued:
The following is a summary of changes in net assets available for plan benefits
by fund for the period from July 11, 1997 to December 31, 1997:
<TABLE>
<CAPTION>
Raytheon
Fixed Equity Common Stock Balanced Magellan
Income Fund Fund Stock Fund Index Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets attributable to:
Investment income:
Net appreciation (depreciation)
of investments $ 59,098 $(5,453,334) $1,652,781 $ (272,348) $ (143,992)
Interest $ 752,433 60,107 18,465
Dividends 280,543 936,370 709,881 263,518
----------- ---------- ----------- ----------- ---------- ----------
752,433 339,641 (4,456,857) 1,671,246 437,533 119,526
----------- ---------- ----------- ----------- ---------- ----------
Contributions and deferrals:
Employee deferrals 4,538,948 4,361,426 2,447,309 5,260,391 1,778,081 3,157,807
Employer contributions 661,139 592,171 309,044 764,911 224,194 424,971
Transfers 22,672,912 76,796,394 19,365,848 5,048,298
----------- ---------- ----------- ----------- ---------- ----------
27,872,999 4,953,597 79,552,747 25,391,150 7,050,573 3,582,778
----------- ---------- ----------- ----------- ---------- ----------
Total additions 28,625,432 5,293,238 75,095,890 27,062,396 7,488,106 3,702,304
----------- ---------- ----------- ----------- ---------- ----------
Deductions from net assets
attributable to:
Distributions to participants 454,270 19,334 1,216,475 244,815 38,207 25,676
Administrative expenses 2,444 416 7,063 2,257 609 321
Transfers 11,020 10
----------- ---------- ----------- ----------- ---------- ----------
Total deductions 456,714 19,750 1,234,558 247,082 38,816 25,997
----------- ---------- ----------- ----------- ---------- ----------
Interfund transfers (772,193) 2,980,612 (10,102,411) 894,236 189,352 2,958,846
----------- ---------- ----------- ----------- ---------- ----------
Increase (decrease) in net assets 27,396,525 8,254,100 63,758,921 27,709,550 7,638,642 6,635,153
Net assets available for plan
benefits, beginning of year
----------- ---------- ----------- ----------- ---------- ----------
Net assets available for plan
benefits, end of year $27,396,525 $8,254,100 $63,758,921 $27,709,550 $7,638,642 $6,635,153
=========== ========== =========== =========== ========== ==========
<PAGE>
11
Templeton Investment
Blue Chip Foreign I Grade
Fund Fund Bond Fund Loan Fund Total
<S> <C> <C> <C> <C> <C>
Additions to net assets attributable to:
Investment income:
Net appreciation (depreciation)
of investments $ (29,047) $ (826,396) $ 22,581 $ (4,990,657)
Interest $ 473,613 1,304,618
Dividends 772,525 549,717 36,337 3,548,891
----------- ---------- ---------- ----------- ------------
743,478 (276,679) 58,918 473,613 (137,148)
----------- ---------- ---------- ----------- ------------
Contributions and deferrals:
Employee deferrals 5,121,382 2,176,502 379,528 29,221,374
Employer contributions 801,233 330,882 43,226 4,151,771
Transfers 10,587,769 3,270,460 1,047,031 10,620,659 149,409,371
----------- ---------- ---------- ----------- ------------
16,510,384 5,777,844 1,469,785 10,620,659 182,782,516
----------- ---------- ---------- ----------- ------------
Total additions 17,253,862 5,501,165 1,528,703 11,094,272 182,645,368
----------- ---------- ---------- ----------- ------------
Deductions from net assets
attributable to:
Distributions to participants 183,388 21,473 13,063 151,082 2,367,783
Administrative expenses 1,415 297 82 14,904
Transfers 11,030
----------- ---------- ---------- ----------- ------------
Total deductions 184,803 21,770 13,145 151,082 2,393,717
----------- ---------- ---------- ----------- ------------
Interfund transfers 1,691,580 (8,219) 32,567 2,135,630 --
----------- ---------- ---------- ----------- ------------
Increase (decrease) in net assets 18,760,639 5,471,176 1,548,125 13,078,820 180,251,651
Net assets available for plan
benefits, beginning of year --
----------- ---------- ---------- ----------- ------------
Net assets available for plan
benefits, end of year $18,760,639 $5,471,176 $1,548,125 $13,078,820 $180,251,651
=========== ========== ========== =========== ============
</TABLE>
<PAGE>
12
I. Master Trust:
All plan investments are included under the Master Trust. At December
31, 1997, assets of the Plan represented 5.1% of the total assets under the
Master Trust. The following is a summary of net assets available for plan
benefits by fund under the Master Trust as of December 31, 1997:
<TABLE>
<CAPTION>
Raytheon
Fixed Common Stock Balanced Magellan
Income Fund Equity Fund Stock Fund Index Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $351,035,073
Prudential Insurance
Company of America* 217,731,699
Metropolitan Life
Insurance Company* 371,123,080
At fair value:
Fidelity Equity Income Fund* $782,799,011
Raytheon Company Common Stock* $745,980,294
BT Pyramid Equity Index Fund* $484,781,406
Fidelity Balanced Fund $117,556,481
Fidelity Magellan Fund $91,863,155
Fidelity Blue Chip Fund
Templeton Foreign I Fund
Fidelity Investment Grade
Bond Fund
Fidelity Retirement Money
Market Fund
Loans receivable from
participants
------------ ------------ ------------ ------------ ------------ -----------
Total investments 939,889,852 782,799,011 745,980,294 484,781,406 117,556,481 91,863,155
Receivables:
Employer contribution
Accrued investment income and
other receivables 5,489,592 1,161,112
Cash and cash equivalents 9,232,100 13,498,051 4,761,268
------------ ------------ ------------ ------------ ------------ -----------
Total assets 949,121,952 782,799,011 764,967,937 490,703,786 117,556,481 91,863,155
------------ ------------ ------------ ------------ ------------ -----------
Liabilities:
Payable for outstanding purchases 6,340,318
Accrued expenses and other
payables 1,480,875 1,200,471
------------ ------------ ------------ ------------ ------------ -----------
Total liabilities 7,821,193 1,200,471
------------ ------------ ------------ ------------ ------------ -----------
Net assets available for
plan benefits $949,121,952 $782,799,011 $757,146,744 $489,503,315 $117,556,481 $91,863,155
============ ============ ============ ============ ============ ===========
Percentage of Master Trust that
are plan assets of the Raytheon
TI Systems Savings Plan 2.9% 1.1% 8.4% 5.7% 6.5% 7.2%
*Represents more than 5% of net assets available for plan benefits.
N/A: The Retirement Money Market Fund is not available for the Raytheon TI
Systems Savings Plan.
<PAGE>
13
Templeton Investment Retirement
Blue Chip Foreign I Grade Money
Fund Fund Bond Fund Market Fund Loan Fund Total
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $ 351,035,073
Prudential Insurance
Company of America* 217,731,699
Metropolitan Life
Insurance Company* 371,123,080
At fair value:
Fidelity Equity Income Fund* 782,799,011
Raytheon Company Common Stock* 745,980,294
BT Pyramid Equity Index Fund* 484,781,406
Fidelity Balanced Fund 117,556,481
Fidelity Magellan Fund 91,863,155
Fidelity Blue Chip Fund $136,586,123 136,586,123
Templeton Foreign I Fund $5,471,176 5,471,176
Fidelity Investment Grade
Bond Fund $1,548,125 1,548,125
Fidelity Retirement Money
Market Fund $12,186,085 12,186,085
Loans receivable from
participants $166,395,767 166,395,767
------------ ---------- ---------- ----------- ------------ --------------
Total investments 136,586,123 5,471,176 1,548,125 12,186,085 166,395,767 3,485,057,475
Receivables:
Employer contribution 4,015,100 4,015,100
Accrued investment income and
other receivables 6,650,704
Cash and cash equivalents 27,491,419
------------ ---------- ---------- ----------- ------------ --------------
Total assets 136,586,123 5,471,176 1,548,125 16,201,185 166,395,767 3,523,214,698
------------ ---------- ---------- ----------- ------------ --------------
Liabilities:
Payable for outstanding purchases 6,340,318
Accrued expenses and other
payables 2,681,346
------------ ---------- ---------- ----------- ------------ --------------
Total liabilities 9,021,664
------------ ---------- ---------- ----------- ------------ --------------
Net assets available for
plan benefits $136,586,123 $5,471,176 $1,548,125 $16,201,185 $166,395,767 $3,514,193,034
============ ========== ========== =========== ============ ==============
Percentage of Master Trust that
are plan assets of the Raytheon
TI Systems Savings Plan 13.7% 100% 100% N/A 7.9% 5.1%
*Represents more than 5% of net assets available for plan benefits
N/A: The Retirement Money Market Fund is not available for the Raytheon TI
Systems Savings Plan.
</TABLE>
<PAGE>
14
I. Master Trust, continued:
The following is a summary of investment income by fund under the
Master Trust for the year ended December 31, 1997:
<TABLE>
<CAPTION>
Raytheon
Fixed Common Stock Balanced Magellan Blue Chip
Income Fund Equity Fund Stock Fund Index Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Net appreciation
(depreciation)of assets $ (191,924) $132,974,182 $30,715,963 $109,162,707 $ 6,388,316 $ 9,026,047 $15,474,118
Interest 62,319,073 673,934 312,511
Dividends 42,443,971 11,118,152 13,680,351 5,217,835 6,302,875
----------- ------------ ----------- ------------ ----------- ----------- -----------
Total investment income/(loss) $62,127,149 $175,418,153 $42,508,049 $109,475,218 $20,068,667 $14,243,882 $21,776,993
<PAGE>
15
Templeton Investment Retirement
Foreign I Grade Money Loan
Fund Bond Fund Market Fund Fund Total
<S> <C> <C> <C> <C> <C>
Investment income:
Net appreciation
(depreciation)of assets $(826,396) $22,581 $302,745,594
Interest $10,848,204 74,153,722
Dividends 549,717 36,337 $266,835 79,616,073
--------- ------- -------- ----------- ------------
Total investment income/(loss) $(276,679) $58,918 $266,835 $10,848,204 $456,515,389
</TABLE>
<PAGE>
1
EXHIBIT 99.6a
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Raytheon Company
We consent to the incorporation by reference in the Registration
Statement of Raytheon Company on Form S-8 (File No. 333-56117) of our report
dated May 29, 1998 on our audit of the financial statements of the Raytheon TI
Systems Savings Plan as of December 31, 1997 and for the period from July 11,
1997 to December 31, 1997, which report is included in this annual report on
Form 10-K/A.
Coopers & Lybrand LLP
Boston, Massachusetts
June 29, 1998
<PAGE>
1
EXHIBIT 99.7
RAYTHEON SALARIED SAVINGS AND INVESTMENT PLAN
FINANCIAL STATEMENTS
TO ACCOMPANY 1997 FORM 5500
ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN
UNDER ERISA OF 1974
FOR THE PERIOD FROM DECEMBER 17, 1997 TO DECEMBER 31, 1997
The supplemental schedules required to accompany the Plan's Form 5500
are not required since the Plan's assets are held in a Master Trust.
Accordingly, detailed financial information, including the supplemental
schedules, must be filed separately with the Department of Labor by the plan
administrator.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Raytheon Company:
We have audited the accompanying statement of net assets available for
plan benefits of the Raytheon Salaried Savings and Investment Plan (the "Plan")
as of December 31, 1997, and the related statement of changes in net assets
available for plan benefits for the period from December 17, 1997 to December
31, 1997. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for plan benefits of
the Plan as of December 31, 1997, and the changes in net assets available for
plan benefits for the period from December 17, 1997 to December 31, 1997 in
conformity with generally accepted accounting principles.
Coopers & Lybrand LLP
Boston, Massachusetts
May 29, 1998
<PAGE>
2
RAYTHEON SALARIED SAVINGS AND INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
as of December 31, 1997
Assets:
Master trust investments:
At contract value (Notes B, E and G) $ 126,113
At fair value (Notes B, F and G) 3,228,259
---------
3,354,372
---------
Receivables:
Accrued investment income and other receivables 8,765
Cash and cash equivalents 24,181
---------
Total assets 3,387,318
---------
Liabilities:
Payable for outstanding purchases 9,147
Accrued expenses and other payables 3,010
---------
Total liabilities 12,157
---------
Net assets available for plan benefits $3,375,161
==========
The accompanying notes are an integral part of the financial statements.
<PAGE>
3
RAYTHEON SALARIED SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR
PLAN BENEFITS
for the period from December 17, 1997 to December 31, 1997
Additions to net assets attributable to:
Investment income (Notes B, E and G):
Net appreciation of investments $ 69,196
Interest 1,407
Dividends 16,039
----------
86,642
----------
Contributions and deferrals:
Employee deferrals 2,300,458
Employer contributions 988,061
----------
3,288,519
----------
Total additions 3,375,161
----------
Increase in net assets 3,375,161
Net assets available for plan
benefits, beginning of year --
----------
Net assets available for plan
benefits, end of year $3,375,161
==========
The accompanying notes are an integral part of the financial statements.
<PAGE>
4
A. Description of Plan:
General
The following description of the Raytheon Salaried Savings and
Investment Plan (the "Plan") provides only general information. Participants
should refer to the plan document for a complete description of the Plan's
provisions. The Plan, which was established on December 17, 1997, is a defined
contribution plan covering certain employees of Raytheon Company (the
"Company"). Effective December 17, 1997, employees assumed in connection with
the merger of the defense business of Hughes Electronics Corporation with the
Company, that participated in the Hughes Salaried Employees' Thrift and
Savings Plan, became eligible to participate in the Plan. Participants have the
option to rollover amounts accumulated in plans sponsored by the defense
business of Hughes Electronics Corporation to the plan. The option to make a
rollover election will extend until December 1, 1998. Upon election, amounts
will be rolled over into funds selected by the participant. As of December 31,
1997, no rollovers had been made; however, the ultimate amount to be transferred
under this option cannot be estimated at this time. To participate in the Plan,
eligible employees must have three months of service and may enter the Plan only
on the first day of each month. The purpose of the Plan is to provide
participants with a tax-effective means of meeting both short- and long-term
investment objectives. The Plan is intended to be a "qualified cash or deferred
arrangement" under Sections 401(a) and 401(k) of the Internal Revenue Code (the
"Code"). The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
The Plan's investments are held in the Raytheon Company Master Trust
for defined contribution plans (the "Master Trust") with the assets of other
defined contribution plans of Raytheon Company and subsidiaries. The trustee of
the Master Trust maintains a separate account reflecting the equitable share in
the Trust of each plan.
Investment income and administrative expenses relating to the Master
Trust are allocated to the individual plan based upon average monthly balances
invested by each plan.
Contributions and Deferrals
Eligible employees are allowed to defer to the Plan up to 12% of their
salaries. The Company contributes amounts equal to 100% of each participant's
deferral, up to a maximum of 4% of the participant's salary. The contributions
are invested in Raytheon Company common stock for two full plan years following
the plan year for which the contributions are made, and are then allocated to
participants' accounts. As of December 31, 1997, the annual employee deferral
for a participant cannot exceed $9,500. Rollover contributions from other
qualified plans are accepted by the Plan. Participants may invest their
deferrals in increments of 1% in any combination of seven funds: (a) a Fixed
Income Fund under which assets are invested primarily in contracts providing for
fixed rates of interest for specified periods of time, (b) an Equity Fund which
invests in shares of a mutual fund which consists primarily of income-producing
equity securities, (c) a Raytheon Common Stock Fund which invests in shares of
Raytheon Company Class B common stock, (d) a Stock Index Fund which invests in a
commingled pool consisting primarily of equity securities and is designed to
track the S&P 500 Index, (e) a Balanced Fund which invests in shares of a mutual
fund which consists primarily of equity securities, bonds and money market
instruments, (f) the Magellan Fund, a growth fund which invests primarily in
equities of companies of all types and sizes, and (g) the Blue Chip Fund, a
growth fund which invests primarily in equities of well known and established
companies. Dividends and distributions from investments of the Equity Fund, the
Raytheon Common Stock Fund, the Stock Index Fund, the Balanced Fund, the
Magellan Fund and the Blue Chip Fund are reinvested in their respective funds;
stock dividends, stock splits and similar changes are also reflected in the
funds.
<PAGE>
5
Participant Accounts
Each participant's account is credited with the participant's
deferral, the Company's contribution and an allocation of plan earnings. Plan
earnings are allocated based on account balances by fund.
Vesting
Participants are immediately vested in their voluntary deferrals plus
actual earnings thereon. Vesting requirements for employer contributions plus
earnings thereon may vary depending upon when an employee became eligible to
participate in the plan. Vesting generally occurs upon the earliest of the
completion of five years of service or three years of Plan participation, or
upon retirement, death, disability, or attainment of normal retirement age.
Forfeitures of the nonvested portions of terminated participants' accounts are
used to reduce required contributions of the Company.
Distributions to Participants
A participant may withdraw all or a portion of deferrals, employer
contributions and related earnings upon attainment of age 59-1/2. For reasons of
financial hardship, as defined in the Plan document, a participant may withdraw
all or a portion of deferrals. On termination of employment, a participant will
receive a lump-sum distribution unless the vested account is valued in excess of
$3,500 and the participant elects to defer distribution. A retiree or a
beneficiary of a deceased participant may defer the distribution until January
of the year following attainment of age 65. There were no distributions to
participants during the year.
Loans to Participants
A participant may borrow against a portion of the balance in the
participant's account, subject to certain restrictions. The maximum amount of a
loan is the lesser of one-half of the participant's vested account balance or
$50,000. The minimum loan which may be granted is $500. The interest rate
applied is equal to the prime rate published in the Wall Street Journal on the
first business day in June and December of each year. Loans must be repaid over
a period of up to 5 years by means of payroll deductions. In certain cases, the
repayment period may be extended up to 15 years. Interest paid to the Plan on
loans to participants is credited to the borrower's account in the investment
fund to which repayments are made.
Administrative Expenses
Substantially all expenses of administering the Plan are paid by the
plan participants.
B. Summary of Significant Accounting Policies:
The accompanying financial statements are prepared on the accrual basis
of accounting.
<PAGE>
6
The Plan's investment contracts are fully benefit-responsive and are
therefore included in the financial statements at their contract value, defined
as net contributions and deferrals plus interest earned on the underlying
investments at contracted rates. Because the investment contracts are fully
benefit-responsive, contract values approximate fair value. Investments in
mutual funds and the commingled pool are valued at the closing net asset value
reported on the last business day of the year. Investments in securities (common
stocks) traded on a national securities exchange are valued at the last reported
sales price on the last business day of the year. Cash equivalents are
short-term money market instruments and are valued at cost which approximates
fair value.
Security transactions are recorded on trade date. Except for its
investment contracts (Note E), the Plan's investments are held by
bank-administered trust funds. Payables for outstanding security transactions
represent trades which have occurred but have not yet settled.
The Plan presents in the statement of changes in net assets the net
appreciation (depreciation) in the fair value of its investments which consists
of the realized gains or losses and the unrealized appreciation (depreciation)
on those investments.
Dividend income is recorded on the ex-dividend date. Income from other
investments is recorded as earned on an accrual basis.
Benefits are recorded when paid.
The preparation of the financial statements in conformity with
generally accepted accounting principles requires the plan administrator to make
significant estimates and assumptions that affect the reported amounts of net
assets and liabilities available for benefits at the date of the financial
statements and the change in net assets available for benefits during the
reporting period and, when applicable, disclosures of contingent assets and
liabilities at the date of the financial statements. Actual results could differ
from the estimates included in the financial statements.
The Plan provides for various investment options in any combination of
stocks, bonds, fixed income securities, mutual funds and other investment
securities. Investment securities are exposed to various risks, such as interest
rate, market and credit risk. Due to the level of risk associated with certain
investment securities and the level of uncertainty related to changes in the
value of investment securities, it is at least reasonably possible that changes
in risks in the near term would materially affect participants' account balances
and the amounts reported in the statement of net assets available for plan
benefits and the statement of changes in net assets available for plan benefits.
C. Federal Income Tax Status:
Given that the Plan was established effective December 17, 1997, the
Plan has not received a tax determination letter to date. Raytheon Company has
submitted an application with the Internal Revenue Service under the 401(b)
regulation of the Internal Revenue Code and expects to receive the determination
letter by December 31, 1998. The Plan administrator and the Plan's legal counsel
believe that the Plan is currently designed and being operated in compliance
with the applicable requirements of the Internal Revenue Code. Therefore, no
provision for income taxes has been included in the Plan's financial statements.
D. Plan Termination:
Although it has not expressed any intention to do so, the Company
reserves the right under the Plan at any time or times to discontinue its
contributions and to terminate the Plan subject to the provisions of ERISA. In
the event of Plan termination, amounts in participants' accounts will be
distributed in a single lump sum; if the participant does not consent to an
immediate distribution, the amount can be transferred to another defined
contribution plan sponsored by the Company.
<PAGE>
7
E. Investment Contracts:
The Plan invests in collateralized fixed income investment portfolios
(with no expiration date), three of which are managed by insurance companies and
one of which is managed by an investment management firm. The credited interest
rates are adjusted semiannually to reflect the experienced and anticipated
yields to be earned on such investments, based on their book value. The
annualized average yield and credited interest rates were as follows:
Annualized
Average Credited
Yield Interest Rate
For the year ended December 31, 1997:
Bankers Trust (WBS 92-485) 6.95% 6.95%
Metropolitan Life Insurance Company (GIC GA-12908) 6.86% 6.86%
Metropolitan Life Insurance Company (GIC GA-13659) 6.43% 6.43%
Prudential Asset Management Company (GIC 917163-001) 6.99% 6.99%
The contract values are subject to limitations in certain situations
including large workforce reductions and plan termination.
In the financial statements, the two Metropolitan Life Insurance
Company contracts are recorded as one investment option.
F. Related Party Transactions:
In accordance with the provisions of the Plan, Fidelity Management
Trust Company (the "Trustee") acts as the Plan's agent for purchases and sales
of shares of Raytheon Company Class B common stock. These transactions are
performed on the Master Trust level. For the Master Trust, purchases amounted to
$200,689,057 and sales amounted to $102,165,608 for the year ended December 31,
1997.
<PAGE>
8
G. Fund Data:
The following is a summary of net assets available for plan benefits
by fund as of December 31, 1997:
<TABLE>
<CAPTION>
Non-Participant
Participant-Directed Directed
Fixed Raytheon Stock Raytheon
Income Equity Common Index Balanced Magellan Blue Chip Common
Fund Fund Stock Fund Fund Fund Fund Fund Stock Fund Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust $ 47,101 $ 47,101
Prudential Insurance
Company of America 29,215 29,215
Metropolitan Life
Insurance Company 49,797 49,797
At fair value:
Fidelity Equity Income Fund* $534,021 534,021
Raytheon Company Common Stock* $ 92,888 $ 983,125 1,076,013
BT Pyramid Equity Index Fund* $353,515 353,515
Fidelity Balanced Fund* $236,387 236,387
Fidelity Magellan Fund* $616,257 616,257
Fidelity Blue Chip Fund* $412,066 412,066
-------- -------- ------- -------- -------- -------- -------- --------- ----------
Total investments 126,113 534,021 92,888 353,515 236,387 616,257 412,066 983,125 3,354,372
-------- -------- ------- -------- -------- -------- -------- --------- ----------
Receivables:
Accrued investment income and
other receivables 684 846 7,235 8,765
Cash and cash equivalents 1,239 1,681 3,469 17,792 24,181
-------- -------- ------- -------- -------- -------- -------- ---------- ----------
Total assets 127,352 534,021 95,253 357,830 236,387 616,257 412,066 1,008,152 3,387,318
-------- -------- ------- -------- -------- -------- -------- --------- ----------
Liabilities:
Payable for security purchases 790 8,357 9,147
Accrued expenses and other payables 184 874 1,952 3,010
-------- -------- ------- -------- -------- -------- -------- -------- ----------
Total liabilities 974 874 10,309 12,157
-------- -------- ------- -------- -------- -------- -------- -------- ----------
Net assets available for plan
benefits $127,352 $534,021 $ 94,279 $356,956 $236,387 $616,257 $412,066 $ 997,843 $3,375,161
======== ======== ======== ======== ======== ======== ======== ========= ==========
*Represents more than 5% of net assets available for plan benefits
</TABLE>
<PAGE>
9
G. Fund Data, continued:
The following is a summary of changes in net assets available for plan
benefits by fund for the period from December 17, 1997 to December 31, 1997:
<TABLE>
<CAPTION>
Non-Participant
Participant-Directed Directed
Fixed Raytheon Stock Raytheon
Income Equity Common Index Balanced Magellan Blue Chip Common
Fund Fund Stock Fund Fund Fund Fund Fund Stock Fund Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributable to:
Investment income:
Net appreciation
(depreciation)
of investments $ 17,629 $ (715) $ 12,604 $ 5,108 $ 24,196 $ 16,187 $ (5,813) $ 69,196
Interest 13 89 238 941 1,407
Dividends 1,385 14,654 16,039
-------- -------- ------- -------- -------- -------- -------- -------- ----------
139 17,629 759 12,842 5,108 24,196 16,187 9,782 86,642
-------- -------- ------- -------- -------- -------- -------- -------- ----------
Contributions and deferrals:
Employee deferrals 127,218 516,425 93,354 344,118 231,299 592,124 395,920 2,300,458
Employer contributions 988,061 988,061
-------- -------- ------- -------- -------- -------- -------- -------- ----------
127,218 516,425 93,354 344,118 231,299 592,124 395,920 988,061 3,288,519
-------- -------- ------- -------- -------- -------- -------- -------- ----------
Total additions 127,357 534,054 94,113 356,960 236,407 616,320 412,107 997,843 3,375,161
-------- -------- ------- -------- -------- -------- -------- -------- ----------
Interfund transfers (5) (33) 166 (4) (20) (63) (41) --
-------- -------- ------- -------- -------- -------- -------- -------- ----------
Increase in net assets 127,352 534,021 94,279 356,956 236,387 616,257 412,066 997,843 3,375,161
Net assets available for plan
benefits, beginning of year --
-------- -------- ------- -------- -------- -------- -------- -------- ----------
Net assets available for plan
benefits, end of year $127,352 $534,021 $94,279 $356,956 $236,387 $616,257 $412,066 $997,843 $3,375,161
======== ======== ======= ======== ======== ======== ======== ======== ==========
</TABLE>
<PAGE>
10
All plan investments are included under the Master Trust. At December
31, 1997, assets of the Plan represented less than 1% of the total assets under
the Master Trust. The following is a summary of net assets available for plan
benefits by fund under the Master Trust as of December 31, 1997:
<TABLE>
<CAPTION>
Fixed Raytheon
Income Equity Common Stock Stock Index Balanced Magellan
Fund Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $351,035,073
Prudential Insurance
Company of America* 217,731,699
Metropolitan Life
Insurance Company* 371,123,080
At fair value:
Fidelity Equity Income Fund* $782,799,011
Raytheon Company Common Stock* $745,980,294
BT Pyramid Equity Index Fund* $484,781,406
Fidelity Balanced Fund $117,556,481
Fidelity Magellan Fund $91,863,155
Fidelity Blue Chip Fund
Templeton Foreign I Fund
Fidelity Investment
Grade Bond Fund
Fidelity Retirement
Money Market Fund
Loans receivable from
participants
------------ ------------ ------------ ------------ ------------ -----------
Total investments 939,889,852 782,799,011 745,980,294 484,781,406 117,556,481 91,863,155
------------ ------------ ------------ ------------ ------------ -----------
Receivables:
Employer contributions
Accrued investment income and other
receivables 5,489,592 1,161,112
Cash and cash equivalents 9,232,100 13,498,051 4,761,268
------------ ------------ ------------ ------------ ------------ -----------
Total assets 949,121,952 782,799,011 764,967,937 490,703,786 117,556,481 91,863,155
Liabilities:
Payable for outstanding purchases 6,340,318
Accrued expenses and other payables 1,480,875 1,200,471
------------ ------------ ------------ ------------ ------------ -----------
Total liabilities 7,821,193 1,200,471
------------ ------------ ------------ ------------ ------------ -----------
Net assets available for plan benefits $949,121,952 $782,799,011 $757,146,744 $489,503,315 $117,556,481 $91,863,155
============ ============ ============ ============ ============ ===========
Percentage of Master Trust that
are plan assets of the Raytheon Salaried
Savings and Investment Plan ^ ^ ^ ^ ^ ^
*Represents more than 5% of net assets available for plan benefits
^Represents less than 1% of plan assets under the Master Trust
+ As of December 31, 1997, there were no loans outstanding in the Raytheon
Salaried Savings and Investment Plan.
N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund,
and Retirement Money Market Fund are not available to the
Raytheon Salaried Savings and Investment Plan.
<PAGE>
11
Templeton Investment Retirement
Blue Chip Foreign I Grade Money Market
Fund Fund Bond Fund Fund Loan Fund Total
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $351,035,073
Prudential Insurance
Company of America* 217,731,699
Metropolitan Life
Insurance Company* 371,123,080
At fair value:
Fidelity Equity Income Fund* 782,799,011
Raytheon Company Common Stock* 745,980,294
BT Pyramid Equity Index Fund* 484,781,406
Fidelity Balanced Fund 117,556,481
Fidelity Magellan Fund 91,863,155
Fidelity Blue Chip Fund $136,586,123 136,586,123
Templeton Foreign I Fund $5,471,176 5,471,176
Fidelity Investment
Grade Bond Fund $1,548,125 1,548,125
Fidelity Retirement
Money Market Fund $12,186,085 12,186,085
Loans receivable from
participants $166,395,767 166,395,767
------------ ---------- ---------- ----------- ------------ --------------
Total investments 136,586,123 5,471,176 1,548,125 12,186,085 166,395,767 3,485,057,475
------------ ---------- ---------- ----------- ------------ --------------
Receivables:
Employer contributions 4,015,100 4,015,100
Accrued investment income and other
receivables 6,550,704
Cash and cash equivalents 27,491,419
------------ ---------- ---------- ----------- ------------ --------------
Total assets 136,586,123 5,471,176 1,548,125 16,201,185 166,395,767 3,523,214,698
Liabilities:
Payable for outstanding purchases 6,340,318
Accrued expenses and other payables 2,681,346
------------ ---------- ---------- ----------- ------------ --------------
Total liabilities 9,021,664
------------ ---------- ---------- ----------- ------------ --------------
Net assets available for plan benefits $136,586,123 $5,471,176 $1,548,125 $16,201,185 $166,395,767 $3,514,193,034
============ ========== ========== =========== ============ ==============
Percentage of Master Trust that
are plan assets of the Raytheon Salaried
Savings and Investment Plan ^ N/A N/A N/A + ^
*Represents more than 5% of net assets available for plan benefits
^Represents less than 1% of plan assets under the Master Trust
+ As of December 31, 1997, there were no loans outstanding in the Raytheon
Salaried Savings and Investment Plan.
N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund,
and Retirement Money Market Fund are not available to the
Raytheon Salaried Savings and Investment Plan.
</TABLE>
<PAGE>
12
H. Master Trust, Continued:
The following is a summary of investment income by fund under the
Master Trust for the year ended December 31, 1997:
<TABLE>
<CAPTION>
Fixed Raytheon Stock
Income Equity Common Index Balanced Magellan Blue Chip
Fund Fund Stock Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Net appreciation (depreciation)
of investments $ (191,924) $132,974,182 $30,715,963 $109,162,707 $ 6,388,316 $ 9,026,047 $15,474,118
Interest 62,319,073 673,934 312,511
Dividends 42,443,971 11,118,152 13,680,351 5,217,835 6,302,875
----------- ------------ ----------- ------------ ----------- ----------- -----------
Total investment income/(loss) $62,127,149 $175,418,153 $42,508,049 $109,475,218 $20,068,667 $14,243,882 $21,776,993
=========== ============ =========== ============ =========== =========== ===========
<PAGE>
13
Templeton Investment Retirement
Foreign I Grade Money Market Loan
Fund Bond Fund Fund Fund Total
<S> <C> <C> <C> <C> <C>
Investment income:
Net appreciation (depreciation)
of investments $(826,396) $22,581 $302,745,594
Interest $10,848,204 74,153,722
Dividends 549,717 36,337 $266,835 79,616,073
--------- ------- -------- ----------- ------------
Total investment income/(loss) $(276,679) $58,918 $266,835 $10,848,204 $456,515,389
========= ======= ======== =========== ============
</TABLE>
<PAGE>
1
EXHIBIT 99.7a
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Raytheon Company
We consent to the incorporation by reference in the Registration
Statement of Raytheon Company on Form S-8 (File No. 333-56117) of our report
dated May 29, 1998 on our audit of the financial statements of the Raytheon
Salaried Savings and Investment Plan as of December 31, 1997 and for the period
from December 17, 1997 to December 31, 1997, which report is included in this
annual report on Form 10-K/A.
Coopers & Lybrand LLP
Boston, Massachusetts
June 29, 1998
<PAGE>
1
EXHIBIT 99.8
RAYTHEON CALIFORNIA HOURLY SAVINGS AND INVESTMENT PLAN
FINANCIAL STATEMENTS TO ACCOMPANY 1997 FORM 5500
ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN UNDER ERISA OF 1974
FOR THE PERIOD FROM DECEMBER 17, 1997 TO DECEMBER 31, 1997
The supplemental schedules required to accompany the Plan's Form 5500
are not required since the Plan's assets are held in a Master Trust.
Accordingly, detailed financial information, including the supplemental
schedules, must be filed separately with the Department of Labor by the plan
administrator.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Raytheon Company:
We have audited the accompanying statement of net assets available for
plan benefits of the Raytheon California Hourly Savings and Investment Plan (the
"Plan") as of December 31, 1997 and the related statement of changes in net
assets available for plan benefits for the period from December 17, 1997 to
December 31, 1997. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for plan benefits of
the Plan as of December 31, 1997, and the changes in net assets available for
plan benefits for the period from December 17, 1997 to December 31, 1997 in
conformity with generally accepted accounting principles.
Coopers & Lybrand LLP
Boston, Massachusetts
May 29, 1998
<PAGE>
2
RAYTHEON CALIFORNIA HOURLY SAVINGS AND INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
as of December 31, 1997
Assets:
Master trust investments:
At contract value (Notes B, E and G) $ 9,712
At fair value (Notes B, F and G) 123,623
--------
133,335
--------
Receivables:
Accrued investment income and other receivables 367
Cash and cash equivalents 1,025
--------
Total assets 134,727
--------
Liabilities:
Payable for outstanding purchases 405
Accrued expenses and other payables 112
--------
Total liabilities 517
--------
Net assets available for plan benefits $134,210
========
The accompanying notes are an integral part of the financial statements.
<PAGE>
3
RAYTHEON CALIFORNIA HOURLY SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
for the period from December 17, 1997 to December 31, 1997
Additions to net assets attributable to:
Investment income (Notes B, E and G):
Net appreciation of investments $ 2,358
Interest 61
Dividends 711
--------
3,130
--------
Contributions and deferrals:
Employee deferrals 89,670
Employer contributions 41,410
--------
131,080
--------
Total additions 134,210
--------
Increase in net assets 134,210
Net assets available for plan
benefits, beginning of year --
--------
Net assets available for plan
benefits, end of year $134,210
========
The accompanying notes are an integral part of the financial statements.
<PAGE>
4
A. Description of Plan:
General
The following description of the Raytheon California Hourly Savings
and Investment Plan (the "Plan") provides only general information. Participants
should refer to the plan document for a complete description of the Plan's
provisions. The Plan, which was established on December 17, 1997, is a defined
contribution plan covering certain employees of Raytheon Company (the
"Company"). Effective December 17, 1997, employees assumed in connection with
the merger of the defense business of Hughes Electronics Corporation with the
Company that participated in the Hughes California Hourly Employees' Thrift and
Savings Plan, became eligible to participate in the Plan. Participants have the
option to rollover amounts accumulated in plans sponsored by the defense
business of Hughes Electronics Corporation to the Plan. The option to make a
rollover election will extend until December 1, 1998. Upon election, amounts
will be rolled over into funds selected by the participant. As of December 31,
1997, no rollovers had been made; however, the ultimate amount to be transferred
under this option cannot be estimated at this time. To participate in the Plan,
eligible employees must have three months of service and may enter the Plan only
on the first day of each month. The purpose of the Plan is to provide
participants with a tax-effective means of meeting both short- and long-term
investment objectives. The Plan is intended to be a "qualified cash or deferred
arrangement" under Sections 401(a) and 401(k) of the Internal Revenue Code (the
"Code"). The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
The Plan's investments are held in the Raytheon Company Master Trust
for Defined Contribution Plans ("Master Trust") with the assets of other
defined contribution plans of Raytheon Company and subsidiaries. The trustee of
the Master Trust maintains a separate account reflecting the equitable share in
the Trust of each plan.
Investment income and administrative expenses relating to the Master
Trust are allocated to the individual plans based upon average monthly balances
invested by each plan.
<PAGE>
5
Contributions and Deferrals
Eligible employees are allowed to defer to the Plan up to 12% of their
salaries. The Company contributes amounts equal to 100% of each participant's
deferral, up to a maximum of 4% of the participant's salary. The contributions
are invested in Raytheon Company Class B common stock for two full plan years
following the plan year for which the contributions are made, and are then
allocated to participants' accounts. As of December 31, 1997, the annual
employee deferral for a participant cannot exceed $9,500. Rollover contributions
from other qualified plans are accepted by the Plan. Participants may invest
their deferrals in increments of 1% in any combination of seven funds: (a)a
Fixed Income Fund under which assets are invested primarily in contracts
providing for fixed rates of interest for specified periods of time, (b)an
Equity Fund which invests in shares of a mutual fund which consists primarily of
income-producing equity securities, (c)a Raytheon Common Stock Fund which
invests in shares of Raytheon Company Class B common stock, (d)a Stock Index
Fund which invests in a commingled pool consisting primarily of equity
securities and is designed to track the S&P 500 Index, (e) a Balanced Fund which
invests in shares of a mutual fund which consists primarily of equity
securities, bonds and money market instruments, (f) the Magellan Fund, a growth
fund which invests primarily in equities of companies of all types and sizes,
and (g) the Blue Chip Fund, a growth fund which invests primarily in equities of
well known and established companies. Dividends and distributions from
investments of the Equity Fund, the Raytheon Common Stock Fund, the Stock Index
Fund, the Balanced Fund, the Magellan Fund and the Blue Chip Fund are reinvested
in their respective funds; stock dividends, stock splits and similar changes are
also reflected in the funds.
Participant Accounts
Each participant's account is credited with the participant's
deferral, the Company's contribution and an allocation of plan earnings. Plan
earnings are allocated based on account balances by fund.
Vesting
Participants are immediately vested in their voluntary deferrals plus
actual earnings thereon. Vesting requirements for employer contributions plus
earnings thereon may vary depending upon when an employee became eligible to
participate in the Plan. Vesting generally occurs upon the earliest of the
completion of five years of service or three years of Plan participation or upon
retirement, death, disability, or attainment of normal retirement age.
Forfeitures of the nonvested portions of terminated participants' accounts are
used to reduce required contributions of the Company.
Distributions to Participants
A participant may withdraw all or a portion of deferrals, employer
contributions and related earnings upon attainment of age 59 1/2. For reasons of
financial hardship, as defined in the Plan document, a participant may withdraw
all or a portion of deferrals. On termination of employment, a participant will
receive a lump-sum distribution unless the vested account is valued in excess of
$3,500 and the participant elects to defer distribution. A retiree or a
beneficiary of a deceased participant may defer the distribution until January
of the year following attainment of age 65. There were no distributions to
participants during the year.
<PAGE>
6
Loans to Participants
A participant may borrow against a portion of the balance in the
participant's account, subject to certain restrictions. The maximum amount of a
loan is the lesser of one-half of the participant's vested account balance or
$50,000. The minimum loan which may be granted is $500. The interest rate
applied is equal to the prime rate published in the Wall Street Journal on the
first business day in June and December of each year. Loans must be repaid over
a period of up to 5 years by means of payroll deductions. In certain cases, the
repayment period may be extended up to 15 years. Interest paid to the Plan on
loans to participants is credited to the borrower's account in the investment
fund to which repayments are made.
Administrative Expenses
Substantially all expenses of administering the Plan are paid by the
plan participants.
B. Summary of Significant Accounting Policies:
The accompanying financial statements are prepared on the accrual
basis of accounting.
The Plan's investment contracts are fully benefit-responsive and are
therefore included in the financial statements at their contract value, defined
as net contributions and deferrals plus interest earned on the underlying
investments at contracted rates. Because the investment contracts are fully
benefit-responsive, contract values approximate fair value. Investments in
mutual funds and the commingled pool are valued at the closing net asset value
reported on the last business day of the year. Investments in securities (common
stocks) traded on a national securities exchange are valued at the last reported
sales price on the last business day of the year. Cash equivalents are
short-term money market instruments and are valued at cost which approximates
fair value.
Security transactions are recorded on trade date. Except for its
investment contracts (Note E), the Plan's investments are held by
bank-administered trust funds. Payables for outstanding security transactions
represent trades which have occurred but have not yet settled.
The Plan presents in the statement of changes in net assets the net
appreciation (depreciation) in the fair value of its investments which consists
of the realized gains or losses and the unrealized appreciation (depreciation)
on those investments.
Dividend income is recorded on the ex-dividend date. Income from other
investments is recorded as earned on an accrual basis.
Benefits are recorded when paid.
<PAGE>
7
The preparation of the financial statements in conformity with
generally accepted accounting principles requires the plan administrator to make
significant estimates and assumptions that affect the reported amounts of net
assets and liabilities available for benefits at the date of the financial
statements and the change in net assets available for benefits during the
reporting period and, when applicable, disclosures of contingent assets and
liabilities at the date of the financial statements. Actual results could differ
from the estimates included in the financial statements.
The Plan provides for various investment options in any combination of
stocks, bonds, fixed income securities, mutual funds and other investment
securities. Investment securities are exposed to various risks, such as interest
rate, market and credit risk. Due to the level of risk associated with certain
investment securities and the level of uncertainty related to changes in the
value of investment securities, it is at least reasonably possible that changes
in risks in the near term would materially affect participants' account balances
and the amounts reported in the statement of net assets available for plan
benefits and the statement of changes in net assets available for plan benefits.
C. Federal Income Tax Status:
Given that the Plan was established effective December 17, 1997, the
Plan has not received a tax determination letter to date. Raytheon Company has
submitted an application with the Internal Revenue Service under the 401(b)
regulation of the Internal Revenue Code and expects to receive the determination
letter by December 31, 1998. The Plan administrator and the Plan's legal counsel
believe that the Plan is currently designed and being operated in compliance
with the applicable requirements of the Internal Revenue Code. Therefore, no
provision for income taxes has been included in the Plan's financial statements.
D. Plan Termination:
Although it has not expressed any intention to do so, the Company
reserves the right under the Plan at any time or times to discontinue its
contributions and to terminate the Plan subject to the provisions of ERISA. In
the event of plan termination, amounts in participants' accounts will be
distributed in a single lump sum; if the participant does not consent to an
immediate distribution, the amount can be transferred to another defined
contribution plan sponsored by the Company.
E. Investment Contracts:
The Plan invests in collateralized fixed income investment portfolios
(with no expiration date), three of which are managed by insurance companies and
one of which is managed by an investment management firm. The credited interest
rates are adjusted semiannually to reflect the experienced and anticipated
yields to be earned on such investments, based on their book value. The
annualized average yield and credited interest rates were as follows:
<PAGE>
8
Annualized Credited
Average Interest
Yield Rate
For the year ended December 31, 1997:
Bankers Trust (WBS 92-485) 6.95% 6.95%
Metropolitan Life Insurance Company (GIC GA-12908) 6.86% 6.86%
Metropolitan Life Insurance Company (GIC GA-13659) 6.43% 6.43%
Prudential Asset Management Company (GIC 917163-001) 6.99% 6.99%
The contract values are subject to limitations in certain situations
including large workforce reductions and plan termination.
In the financial statements, the two Metropolitan Life Insurance
Company contracts are recorded as one investment option.
F. Related Party Transactions:
In accordance with the provisions of the Plan, Fidelity Management
Trust Company (the "Trustee") acts as the Plan's agent for purchases and sales
of shares of Raytheon Company Class B common stock. These transactions are
performed on the Master Trust level. For the Master Trust, purchases amounted to
$200,689,057 and sales amounted to $102,165,608 for the year ended December 31,
1997.
<PAGE>
9
G. Fund Data:
The following is a summary of net assets available for plan benefits
by fund as of December 31, 1997:
<TABLE>
<CAPTION>
Non-Participant
Participant-Directed Directed
Fixed Raytheon Stock Raytheon
Income Equity Common Index Balanced Magellan Blue Chip Common
Fund Fund Stock Fund Fund Fund Fund Fund Stock Fund Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust $3,627 $3,627
Prudential Insurance
Company of America 2,250 2,250
Metropolitan Life
Insurance Company 3,835 3,835
At fair value:
Fidelity Equity Income Fund* $21,159 21,159
Raytheon Company Common Stock* $6,484 $41,198 47,682
BT Pyramid Equity Index Fund* $6,823 6,823
Fidelity Balanced Fund* $9,931 9,931
Fidelity Magellan Fund* $23,519 23,519
Fidelity Blue Chip Fund* $14,509 14,509
------ ------- ------ ------ ------ ------- ------- ------- --------
Total investments 9,712 21,159 6,484 6,823 9,931 23,519 14,509 41,198 133,335
------ ------- ------ ------ ------ ------- -------- ------- --------
Receivables:
Accrued investment income
and other receivables 48 16 303 367
Cash and cash equivalents 95 117 67 746 1,025
------ ------- ------ ------ ------ ------- ------- ------- --------
Total assets 9,807 21,159 6,649 6,906 9,931 23,519 14,509 42,247 134,727
------ ------- ------ ------ ------ ------- ------- ------- --------
Liabilities:
Payable for security purchases 55 350 405
Accrued expenses and other
payables 13 17 82 112
------ ------- ------ ------ ------ ------- ------- ------- --------
Total liabilities 68 17 432 517
------ ------- ------ ------ ------ ------- ------- ------- --------
Net assets available for plan
benefits $9,807 $21,159 $6,581 $6,889 $9,931 $23,519 $14,509 $41,815 $134,210
====== ======= ====== ====== ====== ======= ======= ======= ========
*Represents more than 5% of net assets available for plan benefits
</TABLE>
<PAGE>
10
G. Fund Data, continued:
The following is a summary of changes in net assets available for plan
benefits by fund for the period from December 17, 1997 to December 31, 1997:
<TABLE>
<CAPTION>
Non-Participant
Participant-Directed Directed
Fixed Raytheon Stock Raytheon
Income Equity Common Index Balanced Magellan Blue Chip Common
Fund Fund Stock Fund Fund Fund Fund Fund Stock Fund Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributable to:
Investment income:
Net appreciation
(depreciation)
of investments $ 699 $ (40) $ 238 $ 214 $ 925 $ 570 $ (248) $ 2,358
Interest $ 10 7 5 39 61
Dividends 97 614 711
------ ------- ------ ------ ------ ------- ------- ------ --------
10 699 64 243 214 925 570 405 3,130
------ ------- ------ ------ ------ ------- ------- ------ --------
Contributions and deferrals:
Employee deferrals 9,797 20,460 6,517 6,646 9,717 22,594 13,939 89,670
Employer contributions 41,410 41,410
------ ------- ------ ------ ------ ------- ------- ------- --------
9,797 20,460 6,517 6,646 9,717 22,594 13,939 41,410 131,080
------ ------- ------ ------ ------ ------- ------- ------- --------
Total additions 9,807 21,159 6,581 6,889 9,931 23,519 14,509 41,815 134,210
------ ------- ------ ------ ------ ------- ------- ------- --------
Increase in net assets 9,807 21,159 6,581 6,889 9,931 23,519 14,509 41,815 134,210
Net assets available for plan
benefits, beginning of year --
------ ------- ------ ------ ------ ------- ------- ------- --------
benefits, end of year $9,807 $21,159 $6,581 $6,889 $9,931 $23,519 $14,509 $41,815 $134,210
====== ======= ====== ====== ====== ======= ======= ======= ========
</TABLE>
<PAGE>
11
H. Master Trust:
All plan investments are included under the Master Trust. At December
31, 1997, assets of the Plan represented less than 1% of the total assets under
the Master Trust. The following is a summary of net assets available for plan
benefits by fund under the Master Trust as of December 31, 1997:
<TABLE>
<CAPTION>
Fixed Raytheon Stock
Income Equity Common Index Balanced Magellan Blue Chip
Fund Fund Stock Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $351,035,073
Prudential Insurance
Company of America* 217,731,699
Insurance Company* 371,123,080
Fidelity Equity
Income Fund* $782,799,011
Raytheon Company
Common Stock* $745,980,294
BT Pyramid Equity
Index Fund* $484,781,406
Fidelity Balanced Fund $117,556,481
Fidelity Magellan Fund $91,863,155
Fidelity Blue Chip Fund $136,586,123
Templeton Foreign I Fund
Fidelity Investment
Grade Bond Fund
Money Market Fund
Loans receivable from
participants
------------ ------------ ------------ ------------ ------------ ----------- ------------
Total investments 939,889,852 782,799,011 745,980,294 484,781,406 117,556,481 91,863,155 136,586,123
------------ ------------ ------------ ------------ ------------ ----------- ------------
Receivables:
Employer contribution
Accrued investment income
and other receivables 5,489,592 1,161,112
Cash and cash equivalents 9,232,100 13,498,051 4,761,268
------------ ------------ ------------ ------------ ------------ ----------- ------------
Total assets 949,121,952 782,799,011 764,967,937 490,703,786 117,556,481 91,863,155 136,586,123
------------ ------------ ------------ ------------ ------------ ----------- ------------
Liabilities:
Payables for outstanding
purchases 6,340,318
other payables 1,480,875 1,200,471
------------ ------------ ------------ ------------ ------------ ----------- ------------
Total liabilities 7,821,193 1,200,471
------------ ------------ ------------ ------------ ------------ ----------- ------------
Net assets available for
plan benefits $949,121,952 $782,799,011 $757,146,744 $489,503,315 $117,556,481 $91,863,155 $136,586,123
============ ============ ============ ============ ============ =========== ============
Percentage of Master Trust ^ ^ ^ ^ ^ ^ ^
that are plan assets of the
Raytheon California Hourly
Savings and Investment Plan
*Represents more than 5% of net assets available for plan benefits
^Represents less than 1% of plan assets under the Master Trust
+ As of December 31, 1997, there were no loans outstanding in the
Raytheon California Hourly Savings and Investment Plan.
N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund, and
Retirement Money Market Fund are not available for the Raytheon
California Hourly Savings and Investment Plan.
<PAGE>
12
Templeton Investment Retirement
Foreign I Grade Money Loan
Fund Bond Fund Market Fund Fund Total
<S> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $ 351,035,073
Prudential Insurance
Company of America* 217,731,699
Metropolitan Life
Insurance Company* 371,123,080
At fair value:
Fidelity Equity
Income Fund* 782,799,011
Raytheon Company
Common Stock* 745,980,294
BT Pyramid Equity
Index Fund* 484,781,406
Fidelity Balanced Fund 117,556,481
Fidelity Magellan Fund 91,863,155
Fidelity Blue Chip Fund 136,586,123
Templeton Foreign I Fund $5,471,176 5,471,176
Fidelity Investment
Grade Bond Fund $1,548,125 1,548,125
Fidelity Retirement
Money Market Fund $12,186,085 12,186,085
Loans receivable from
participants $166,395,767 166,395,767
---------- ---------- ----------- ------------ --------------
Total investments 5,471,176 1,548,125 12,186,085 166,395,767 3,485,057,475
---------- ---------- ----------- ------------ --------------
Receivables:
Employer contribution 4,015,100 4,015,100
Accrued investment income
and other receivables 6,650,704
Cash and cash equivalents 27,491,419
---------- ---------- ----------- ------------ --------------
Total assets 5,471,176 1,548,125 16,201,185 166,395,767 3,523,214,698
---------- ---------- ----------- ------------ --------------
Liabilities:
Payables for outstanding
purchases 6,340,318
Accrued expenses and
other payables 2,681,346
---------- ---------- ----------- ------------ --------------
Total liabilities 9,021,664
---------- ---------- ----------- ------------ --------------
Net assets available for
plan benefits $5,471,176 $1,548,125 $16,201,185 $166,395,767 $3,514,193,034
========== ========== =========== ============ ==============
N/A N/A N/A + ^
*Represents more than 5% of net assets available for plan benefits
^Represents less than 1% of plan assets under the Master Trust
+ As of December 31, 1997, there were no loans outstanding in the
Raytheon California Hourly Savings and Investment Plan.
N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund, and
Retirement Money Market Fund are not available for the Raytheon
California Hourly Savings and Investment Plan.
</TABLE>
<PAGE>
13
H. Master Trust, continued:
The following is a summary of investment income by fund under the
Master Trust for the year ended December 31, 1997:
<TABLE>
<CAPTION>
Fixed Raytheon
Income Common Stock Balanced Magellan Blue Chip
Fund Equity Fund Stock Fund Index Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Net appreciation (depreciation)
of assets $ (191,924) $132,974,182 $30,715,963 $109,162,707 $ 6,388,316 $ 9,026,047 $15,474,118
Interest 62,319,073 673,934 312,511
Dividends 42,443,971 11,118,152 13,680,351 5,217,835 6,302,875
----------- ------------ ----------- ------------ ----------- ----------- -----------
Total investment income/(loss) $62,127,149 $175,418,153 $42,508,049 $109,475,218 $20,068,667 $14,243,882 $21,776,993
=========== ============ =========== ============ =========== =========== ===========
<PAGE>
14
Templeton Investment Retirement
Foreign I Grade Money Loan
Fund Bond Fund Market Fund Fund Total
<S> <C> <C> <C> <C> <C>
Investment income:
Net appreciation (depreciation)
of assets $(826,396) $22,581 $302,745,594
Interest $10,848,204 74,153,722
Dividends 549,717 36,337 $266,835 79,616,073
--------- ------- ------- ----------- ------------
Total investment income/(loss) $(276,679) $58,918 $266,835 $10,848,204 $456,515,389
========= ======= ======== =========== ============
</TABLE>
<PAGE>
1
EXHIBIT 99.8a
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Raytheon Company
We consent to the incorporation by reference in the Registration
Statement of Raytheon Company on Form S-8 (File No. 333-56117) of our report
dated May 29, 1998 on our audit of the financial statements of the Raytheon
California Hourly Savings and Investment Plan as of December 31, 1997 and for
the period from December 17, 1997 to December 31, 1997, which report is included
in this annual report on Form 10-K/A.
Coopers & Lybrand LLP
Boston, Massachusetts
June 29, 1998
<PAGE>
1
EXHIBIT 99.9
RAYTHEON TUCSON BARGAINING SAVINGS AND INVESTMENT PLAN
FINANCIAL STATEMENTS
TO ACCOMPANY 1997 FORM 5500
ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN
UNDER ERISA OF 1974
FOR THE PERIOD FROM DECEMBER 17, 1997 TO DECEMBER 31, 1997
The supplemental schedules required to accompany the Plan's Form 5500
are not required since the Plan's assets are held in a Master Trust.
Accordingly, detailed financial information, including the supplemental
schedules, must be filed separately with the Department of Labor by the plan
administrator.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Raytheon Company:
We have audited the accompanying statement of net assets available for
plan benefits of the Raytheon Tucson Bargaining Savings and Investment Plan
("the Plan") as of December 31, 1997, and the related statement of changes in
net assets available for plan benefits for the period from December 17, 1997 to
December 31, 1997. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for plan benefits of
the Plan as of December 31, 1997, and the changes in net assets available for
plan benefits for the period from December 17, 1997 to December 31, 1997 in
conformity with generally accepted accounting principles.
Coopers & Lybrand LLP
Boston, Massachusetts
May 29, 1998
<PAGE>
2
RAYTHEON TUCSON BARGAINING SAVINGS AND INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
as of December 31, 1997
Assets:
Master trust investments:
At contract value (Notes B, E and G) $ 4,511
At fair value (Notes B, F and G) 84,493
-------
89,004
-------
Receivables:
Accrued investment income and
other receivables 240
Cash and cash equivalents 657
-------
Total assets 89,901
-------
Liabilities:
Payable for outstanding purchases 260
Accrued expenses and other payables 76
-------
Total liabilities 336
-------
Net assets available for plan benefits $89,565
=======
The accompanying notes are an integral part of the financial statements.
<PAGE>
3
RAYTHEON TUCSON BARGAINING SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR
PLAN BENEFITS
for the period from December 17, 1997 to December 31, 1997
Additions to net assets attributable to:
Investment income (Notes B, E and G):
Net appreciation of investments $ 1,689
Interest 38
Dividends 455
-------
2,182
-------
Contributions and deferrals:
Employee deferrals 59,762
Employer contributions 27,621
-------
87,383
-------
Total additions 89,565
-------
Increase in net assets 89,565
Net assets available for plan
benefits, beginning of year --
-------
Net assets available for plan
benefits, end of year $89,565
=======
The accompanying notes are an integral part of the financial statements.
<PAGE>
4
A. Description of Plan:
General
The following description of the Raytheon Tucson Bargaining Savings
and Investment Plan (the "Plan") provides only general information. Participants
should refer to the plan document for a complete description of the Plan's
provisions. The Plan, which was established on December 17, 1997, is a defined
contribution plan covering certain employees of Raytheon Company (the
"Company"). Effective December 17, 1997, employees assumed in connection with
the merger of the defense business of Hughes Electronics Corporation with the
Company that participated in the Hughes Tucson Bargaining Employees' Thrift and
Savings Plan, became eligible to participate in the Plan. Participants have the
option to rollover amounts accumulated in plans sponsored by the defense
business of Hughes Electronics Corporation to the Plan. The option to make a
rollover election will extend until December 1, 1998. Upon election, amounts
will be rolled over into funds selected by the participant. As of December 31,
1997, no rollovers had been made; however, the ultimate amount to be transferred
under this option cannot be estimated at this time. To participate in the Plan,
eligible employees must have three months of service and may enter the Plan only
on the first day of each month. The purpose of the Plan is to provide
participants with a tax-effective means of meeting both short- and long-term
investment objectives. The Plan is intended to be a "qualified cash or deferred
arrangement" under Sections 401(a) and 401(k) of the Internal Revenue Code (the
"Code"). The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
The Plan's investments are held by the Raytheon Company Master Trust
for Defined Contribution Plans ("Master Trust") with the assets of other defined
contribution plans of Raytheon Company and subsidiaries. The trustee of the
Master Trust maintains a separate account reflecting the equitable share in the
Trust of each plan.
Investment income and administrative expenses relating to the Master
Trust are allocated to the individual plans based upon average monthly balances
invested by each plan.
Contributions and Deferrals
Eligible employees are allowed to defer to the Plan up to 12% of their
salaries. The Company contributes amounts equal to 100% of each participant's
deferral, up to a maximum of 4% of the participant's salary. The contributions
are invested in Raytheon Company Class B common stock for two full plan years
following the plan year for which the contributions are made, and are then
allocated to participants' accounts. As of December 31, 1997, the annual
employee deferral for a participant cannot exceed $9,500. Rollover contributions
from other qualified plans are accepted by the Plan. Participants may invest
their deferrals in increments of 1% in any combination of seven funds: (a)a
Fixed Income Fund under which assets are invested primarily in contracts
providing for fixed rates of interest for specified periods of time, (b)an
Equity Fund which invests in shares of a mutual fund which consists primarily of
income-producing equity securities, (c)a Raytheon Common Stock Fund which
invests in shares of Raytheon Company Class B common stock, (d)a Stock Index
Fund which invests in a commingled pool consisting primarily of equity
securities and is designed to track the S&P 500 Index, (e) a Balanced Fund which
invests in shares of a mutual fund which consists primarily of equity
securities, bonds and money market instruments, (f) the Magellan Fund, a growth
fund which invests primarily in equities of companies of all types and sizes,
and (g) the Blue Chip Fund, a growth fund which invests primarily in equities of
well known and established companies. Dividends and distributions from
investments of the Raytheon Common Stock Fund, the Equity Fund, the Stock Index
Fund, the Balanced Fund, the Magellan Fund and the Blue Chip Fund are reinvested
in their respective funds; stock dividends, stock splits and similar changes are
also reflected in the funds.
<PAGE>
5
Participant Accounts
Each participant's account is credited with the participant's
deferral, the Company's contribution and an allocation of plan earnings. Plan
earnings are allocated based on account balances by fund.
Vesting
Participants are immediately vested in their voluntary deferrals plus
actual earnings thereon. Vesting requirements for employer contributions plus
earnings thereon may vary depending upon when an employee became eligible to
participate in the Plan. Vesting generally occurs upon the earliest of the
completion of five years of service or three years of Plan participation or upon
retirement, death, disability, or attainment of normal retirement age.
Forfeitures of the nonvested portions of terminated participants' accounts are
used to reduce required contributions of the Company.
Distributions to Participants
A participant may withdraw all or a portion of deferrals, employer
contributions and related earnings upon attainment of age 59-1/2. For reasons of
financial hardship, as defined in the Plan document, a participant may withdraw
all or a portion of deferrals. On termination of employment, a participant will
receive a lump-sum distribution unless the vested account is valued in excess of
$3,500 and the participant elects to defer distribution. A retiree or a
beneficiary of a deceased participant may defer the distribution until January
of the year following attainment of age 65. There were no distributions to
participants during the year.
Loans to Participants
A participant may borrow against a portion of the balance in the
participant's account, subject to certain restrictions. The maximum amount of a
loan is the lesser of one-half of the participant's vested account balance or
$50,000. The minimum loan which may be granted is $500. The interest rate
applied is equal to the prime rate published in the Wall Street Journal on the
first business day in June and December of each year. Loans must be repaid over
a period of up to 5 years by means of payroll deductions. In certain cases, the
repayment period may be extended up to 15 years. Interest paid to the Plan on
loans to participants is credited to the borrower's account in the investment
fund to which repayments are made.
Administrative Expenses
Substantially all expenses of administering the Plan are paid by the
plan participants.
<PAGE>
6
B. Summary of Significant Accounting Policies:
The accompanying financial statements are prepared on the accrual
basis of accounting.
The Plan's investment contracts are fully benefit-responsive and are
therefore included in the financial statements at their contract value, defined
as net contributions and deferrals plus interest earned on the underlying
investments at contracted rates. Because the investment contracts are fully
benefit-responsive, contract values approximate fair value. Investments in
mutual funds and the commingled pool are valued at the closing net asset value
reported on the last business day of the year. Investments in securities (common
stocks) traded on a national securities exchange are valued at the last reported
sales price on the last business day of the year. Cash equivalents are
short-term money market instruments and are valued at cost which approximates
fair value.
Security transactions are recorded on trade date. Except for its
investment contracts (Note E), the Plan's investments are held by
bank-administered trust funds. Payables for outstanding security transactions
represent trades which have occurred but have not yet settled.
The Plan presents in the statement of changes in net assets the net
appreciation (depreciation) in the fair value of its investments which consists
of the realized gains or losses and the unrealized appreciation (depreciation)
on those investments.
Dividend income is recorded on the ex-dividend date. Income from other
investments is recorded as earned on an accrual basis.
Benefits are recorded when paid.
The preparation of the financial statements in conformity with
generally accepted accounting principles requires the plan administrator to make
significant estimates and assumptions that affect the reported amounts of net
assets and liabilities available for benefits at the date of the financial
statements and the change in net assets available for benefits during the
reporting period and, when applicable, disclosures of contingent assets and
liabilities at the date of the financial statements Actual results could differ
from the estimates included in the financial statements.
The Plan provides for various investment options in any combination of
stocks, bonds, fixed income securities, mutual funds and other investment
securities. Investment securities are exposed to various risks, such as interest
rate, market and credit risk. Due to the level of risk associated with certain
investment securities and the level of uncertainty related to changes in the
value of investment securities, it is at least reasonably possible that changes
in risks in the near term would materially affect participants' account balances
and the amounts reported in the statement of net assets available for plan
benefits and the statement of changes in net assets available for plan benefits.
<PAGE>
7
C. Federal Income Tax Status:
Given that the Plan was established effective December 17, 1997, the
Plan has not received a tax determination letter to date. Raytheon Company has
submitted an application with the Internal Revenue Service under the 401(b)
regulation of the Internal Revenue Code and expects to receive the determination
letter by December 31, 1998. The Plan administrator and the Plan's legal counsel
believe that the Plan is currently designed and being operated in compliance
with the applicable requirements of the Internal Revenue Code. Therefore, no
provision for income taxes has been included in the Plan's financial statements.
D. Plan Termination:
Although it has not expressed any intention to do so, the Company
reserves the right under the Plan at any time or times to discontinue its
contributions and to terminate the Plan subject to the provisions of ERISA. In
the event of plan termination, amounts in participants' accounts will be
distributed in a single lump sum; if the participant does not consent to an
immediate distribution, the amount can be transferred to another defined
contribution plan sponsored by the Company.
E. Investment Contracts:
The Plan invests in collateralized fixed income investment portfolios
(with no expiration date), three of which are managed by insurance companies and
one of which is managed by an investment management firm. The credited interest
rates are adjusted semiannually to reflect the experienced and anticipated
yields to be earned on such investments, based on their book value. The
annualized average yield and credited interest rates were as follows:
Annualized
Average Credited
Yield Interest Rate
For the year ended December 31, 1997:
Bankers Trust (WBS 92-485) 6.95% 6.95%
Metropolitan Life Insurance Company (GIC GA-12908) 6.86% 6.86%
Metropolitan Life Insurance Company (GIC GA-13659) 6.43% 6.43%
Prudential Asset Management Company (GIC 917163-001) 6.99% 6.99%
The contract values are subject to limitations in certain situations
including large workforce reductions and plan termination.
In the financial statements, the two Metropolitan Life Insurance
Company contracts are recorded as one investment option.
F. Related Party Transactions:
In accordance with the provisions of the Plan, Fidelity Management
Trust Company (the "Trustee") acts as the Plan's agent for purchases and sales
of shares of Raytheon Company Class B common stock. These transactions are
performed on the Master Trust Level. For the Master Trust, purchases amounted to
$200,689,057 and sales amounted to $102,165,608 for the year ended December 31,
1997.
<PAGE>
8
G. Fund Data:
The following is a summary of net assets available for plan benefits
by fund as of December 31, 1997:
<TABLE>
<CAPTION>
Non-Participant
Participant-Directed Directed
Fixed Raytheon Stock Raytheon
Income Equity Common Index Balanced Magellan Blue Chip Common
Fund Fund Stock Fund Fund Fund Fund Fund Stock Fund Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust $1,685 $ 1,685
Prudential Insurance
Company of America 1,045 1,045
Metropolitan Life
Insurance Company 1,781 1,781
At fair value:
Fidelity Equity Income Fund* $18,557 18,557
Raytheon Company Common Stock* $3,075 27,479 30,554
BT Pyramid Equity Index Fund* $6,028 6,028
Fidelity Balanced Fund* $5,772 5,772
Fidelity Magellan Fund* $15,517 15,517
Fidelity Blue Chip Fund* $8,065 8,065
------ ------- ------ ------ ------ ------- ------ ------- -------
Total investments 4,511 18,557 3,075 6,028 5,772 15,517 8,065 27,479 89,004
------ ------- ------ ------ ------ ------- ------ ------- -------
Receivables:
Accrued investment income and
other receivables 23 14 203 240
Cash and cash equivalents 45 56 59 497 657
------ ------- ------ ------ ------ ------- ------ ------- -------
Total assets 4,556 18,557 3,154 6,101 5,772 15,517 8,065 28,179 89,901
------ ------- ------ ------ ------ ------- ------ ------- -------
Liabilities:
Payable for security purchases 26 234 260
Accrued expenses and other payables 6 15 55 76
------ ------- ------ ------ ------ ------- ------ ------- -------
Total liabilities 32 15 289 336
------ ------- ------ ------ ------ ------- ------ ------- -------
Net assets available for
plan benefits $4,556 $18,557 $3,122 $6,086 $5,772 $15,517 $8,065 $27,890 $89,565
====== ======= ====== ====== ====== ======= ====== ======= =======
*Represents more than 5% of net assets
available for plan benefits
</TABLE>
<PAGE>
9
G. Fund Data, continued:
The following is a summary of changes in net assets available for plan
benefits by fund for the period from December 17, 1997 to December 31, 1997:
<TABLE>
<CAPTION>
Non-Participant
Participant-Directed Directed
Fixed Raytheon Stock Raytheon
Income Equity Common Index Balanced Magellan Blue Chip Common
Fund Fund Stock Fund Fund Fund Fund Fund Stock Fund Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributable to:
Investment income:
Net appreciation (depreciation)
of investments $ 612 $ (18) $ 211 $ 125 $ 608 $ 317 $ (166) $ 1,689
Interest $ 5 3 4 26 38
Dividends 46 409 455
------ ------- ------ ------ ------ ------- ------ ------ -------
5 612 31 215 125 608 317 269 2,182
------ ------- ------ ------ ------ ------- ------ ------ -------
Contributions and deferrals:
Employee deferrals 4,551 17,945 3,091 5,871 5,647 14,909 7,748 59,762
Employer contributions 27,621 27,621
------ ------- ------ ------ ------ ------- ------ ------ -------
4,551 17,945 3,091 5,871 5,647 14,909 7,748 27,621 87,383
------ ------- ------ ------ ------ ------- ------ ------ -------
Total additions 4,556 18,557 3,122 6,086 5,772 15,517 8,065 27,890 89,565
------ ------- ------ ------ ------ ------- ------ ------ -------
Increase in net assets 4,556 18,557 3,122 6,086 5,772 15,517 8,065 27,890 89,565
Net assets available for plan
benefits, beginning of year --
------ ------- ------ ------ ------ ------- ------ ------ -------
Net assets available for plan
benefits, end of year $4,556 $18,557 $3,122 $6,086 $5,772 $15,517 $8,065 $27,890 $89,565
====== ======= ====== ====== ====== ======= ====== ======= =======
</TABLE>
<PAGE>
10
H. Master Trust:
All plan investments are included under the Master Trust. At December
31, 1997, assets of the Plan represented less than 1% of the total assets under
the Master Trust. The following is a summary of net assets available for plan
benefits by fund under the Master Trust as of December 31, 1997:
<TABLE>
<CAPTION>
Fixed Raytheon Stock
Income Equity Common Index Balanced Magellan Blue Chip
Fund Fund Stock Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $351,035,073
Prudential Insurance
Company of America* 217,731,699
Metropolitan Life
Insurance Company* 371,123,080
At fair value:
Fidelity Equity
Income Fund* $782,799,011
Raytheon Company
Common Stock* $745,980,294
BT Pyramid Equity
Index Fund* $484,781,406
Fidelity Balanced Fund $117,556,481
Fidelity Magellan Fund $91,863,155
Fidelity Blue Chip Fund $136,586,123
Templeton Foreign I Fund
Fidelity Investment
Grade Bond Fund
Fidelity Retirement
Money Market Fund
Loans receivables from
participants
------------ ------------ ------------ ------------ ------------ ----------- ------------
Total investments 939,889,852 782,799,011 745,980,294 484,781,406 117,556,481 91,863,155 136,586,123
------------ ------------ ------------ ------------ ------------ ----------- ------------
Receivables:
Employer contributions
Accrued investment income
and other receivables 5,489,592 1,161,112
Cash and cash equivalents 9,232,100 13,498,051 4,761,268
------------ ------------ ------------ ------------ ------------ ----------- ------------
Total assets 949,121,952 782,799,011 764,967,937 490,703,786 117,556,481 91,863,155 136,586,123
------------ ------------ ------------ ------------ ------------ ----------- ------------
Liabilities:
Payable for outstanding
purchases 6,340,318
Accrued expenses and
other payables 1,480,875 1,200,471
------------ ------------ ------------ ------------ ------------ ----------- ------------
Total liabilities 7,821,193 1,200,471
------------ ------------ ------------ ------------ ------------ ----------- ------------
Net assets available for plan
benefits $949,121,952 $782,799,011 $757,146,744 $489,503,315 $117,556,481 $91,863,155 $136,586,123
============ ============ ============ ============ ============ =========== ============
^ ^ ^ ^ ^ ^ ^
Percentage of Master Trust that
are plan assets of the Raytheon Tucson
Bargaining Savings and Investment Plan
*Represents more than 5% of net assets available for plan benefits
^Represents less than 1% plan assets under the Master Trust
+ As of December 31, 1997, there were no loans outstanding in the
Raytheon Tucson Bargaining Savings and Investment Plan.
N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund and
Retirement Money Market Fund are not available for the Raytheon Tucson
Bargaining Savings and Investment Plan.
<PAGE>
11
Templeton Investment Retirement
Foreign I Grade Money Loan
Fund Bond Fund Market Fund Fund Total
<S> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $351,035,073
Prudential Insurance
Company of America* 217,731,699
Metropolitan Life
Insurance Company* 371,123,080
At fair value:
Fidelity Equity
Income Fund* 782,799,011
Raytheon Company
Common Stock* 745,980,294
BT Pyramid Equity
Index Fund* 484,781,406
Fidelity Balanced Fund 117,556,481
Fidelity Magellan Fund 91,863,155
Fidelity Blue Chip Fund 136,586,123
Templeton Foreign I Fund $5,471,176 5,471,176
Fidelity Investment
Grade Bond Fund $1,548,125 1,548,125
Fidelity Retirement
Money Market Fund $12,186,085 12,186,085
Loans receivables from
participants $166,395,767 166,395,767
---------- ---------- ----------- ------------ --------------
Total investments 5,471,176 1,548,125 12,186,085 166,395,767 3,485,057,475
---------- ---------- ----------- ------------ --------------
Receivables:
Employer contributions 4,015,100 4,015,100
Accrued investment income
and other receivables 6,650,704
Cash and cash equivalents 27,491,419
---------- ---------- ----------- ------------ --------------
Total assets 5,471,176 1,548,125 16,201,185 166,395,767 3,523,214,698
---------- ---------- ----------- ------------ --------------
Liabilities:
Payable for outstanding
purchases 6,340,318
Accrued expenses and
other payables 2,681,346
---------- ---------- ----------- ------------ --------------
Total liabilities 9,021,664
---------- ---------- ----------- ------------ --------------
Net assets available for plan
benefits $5,471,176 $1,548,125 $16,201,185 $166,395,767 $3,514,193,034
========== ========== =========== ============ ==============
N/A N/A N/A + ^
Percentage of Master Trust that
are plan assets of the Raytheon Tucson
Bargaining Savings and Investment Plan
*Represents more than 5% of net assets available for plan benefits
^Represents less than 1% plan assets under the Master Trust
+ As of December 31, 1997, there were no loans outstanding in the
Raytheon Tucson Bargaining Savings and Investment Plan.
N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund and
Retirement Money Market Fund are not available for the Raytheon Tucson
Bargaining Savings and Investment Plan.
<PAGE>
12
H. Master Trust, continued:
The following is a summary of investment income by fund under the
Master Trust for the year ended December 31, 1997:
</TABLE>
<TABLE>
<CAPTION>
Fixed Raytheon Stock
Income Equity Common Index Balanced Magellan Blue Chip
Fund Fund Stock Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Net appreciation
(depreciation) of assets $ (191,924) $132,974,182 $30,715,963 $109,162,707 $ 6,388,316 $ 9,026,047 $15,474,118
Interest 62,319,073 673,934 312,511
Dividends 42,443,971 11,118,152 13,680,351 5,217,835 6,302,875
----------- ------------ ----------- ------------ ----------- ----------- -----------
Total investment income/(loss) $62,127,149 $175,418,153 $42,508,049 $109,475,218 $20,068,667 $14,243,882 $21,776,993
=========== ============ =========== ============ =========== =========== ===========
<PAGE>
13
Templeton Investment Retirement
Foreign I Grade Money
Fund Bond Fund Market Fund Loan Fund Total
<S> <C> <C> <C> <C> <C>
Investment income:
Net appreciation
(depreciation) of assets $(826,396) $22,581 $302,745,594
Interest $10,848,204 74,153,722
Dividends 549,717 36,337 $266,835 79,616,073
--------- ------- -------- ----------- ------------
Total investment income/(loss) $(276,679) $58,918 $266,835 $10,848,204 $456,515,589
========= ======= ======== =========== ============
</TABLE>
<PAGE>
1
EXHIBIT 99.9a
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Raytheon Company
We consent to the incorporation by reference in the Registration
Statement of Raytheon Company on Form S-8 (File No. 333-56117) of our report
dated May 29, 1998 on our audit of the financial statements of the Raytheon
Tucson Bargaining Savings and Investment Plan as of December 31, 1997 and for
the period from December 17, 1997 to December 31, 1997, which report is included
in this annual report on Form 10-K/A.
Coopers & Lybrand LLP
Boston, Massachusetts
June 29, 1998
<PAGE>
1
EXHIBIT 99.10
RAYTHEON SAVINGS AND INVESTMENT PLAN (10014)
FINANCIAL STATEMENTS
TO ACCOMPANY 1997 FORM 5500
ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN
UNDER ERISA OF 1974
FOR THE PERIOD FROM DECEMBER 17, 1997 TO DECEMBER 31, 1997
The supplemental schedules required to accompany the Plan's Form 5500
are not required since the Plan's assets are held in a Master Trust.
Accordingly, detailed financial information, including the supplemental
schedules, must be filed separately with the Department of Labor by the plan
administrator.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Raytheon Company:
We have audited the accompanying statement of net assets available for
plan benefits of the Raytheon Savings and Investment Plan (10014) (the "Plan")
as of December 31, 1997, and the related statement of changes in net assets
available for plan benefits for the period from December 17, 1997 to December
31, 1997. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for plan benefits of
the Plan as of December 31, 1997, and the changes in net assets available for
plan benefits for the period from December 17, 1997 to December 31, 1997 in
conformity with generally accepted accounting principles.
Coopers & Lybrand LLP
Boston, Massachusetts
May 29, 1998
<PAGE>
2
RAYTHEON SAVINGS AND INVESTMENT PLAN (10014)
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
as of December 31, 1997
Assets:
Master trust investments:
At contract value (Notes B, E and G) $ 2,280
At fair value (Notes B, F and G) 59,325
-------
61,605
-------
Receivables:
Accrued investment income and
other receivables 155
Cash and cash equivalents 426
-------
Total assets 62,186
-------
Liabilities:
Payable for outstanding purchases 165
Accrued expenses and other payables 51
-------
Total liabilities 216
-------
Net assets available for plan benefits $61,970
=======
The accompanying notes are an integral part of the financial statements.
<PAGE>
3
RAYTHEON SAVINGS AND INVESTMENT PLAN (10014)
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
for the period from December 17, 1997 to December 31, 1997
Additions to net assets attributable to:
Investment income (Notes B, E and G):
Net appreciation of investments $ 1,301
Interest 26
Dividends 289
-------
1,616
Contributions and deferrals:
Employee deferrals 44,616
Employer contributions 15,738
-------
60,354
-------
Total additions 61,970
-------
Increase in net assets 61,970
Net assets available for plan
benefits, beginning of year --
-------
Net assets available for plan
benefits, end of year $61,970
=======
The accompanying notes are an integral part of the financial statements.
<PAGE>
4
A. Description of Plan:
General
The following description of the Raytheon Savings and Investment Plan
(10014)(the "Plan") provides only general information. Participants should refer
to the plan document for a complete description of the Plan's provisions. The
Plan, which was established on December 17, 1997, is a defined contribution plan
covering certain employees of Raytheon Company (the "Company"). Effective
December 17, 1997, employees assumed in connection with the merger of the
defense business of Hughes Electronics Corporation with the Company that
participated in the Hughes Thrift and Savings Plan, became eligible to
participate in the Plan. Participants have the option to rollover amounts
accumulated in plans sponsored by the defense business of Hughes Electronics
Corporation to the Plan. The option to make a rollover election will extend
until December 1, 1998. Upon election, amounts will be rolled over into funds
selected by the participant. As of December 31, 1997, no rollovers had been
made; however, the ultimate amount to be transferred under this option cannot be
estimated at this time. To participate in the Plan, eligible employees must have
three months of service and may enter the Plan only on the first day of each
month. The purpose of the Plan is to provide participants with a tax-effective
means of meeting both short- and long-term investment objectives. The Plan is
intended to be a "qualified cash or deferred arrangement" under Sections 401(a)
and 401(k) of the Internal Revenue Code (the "Code"). The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
The Plan's investments are held in the Raytheon Company Master Trust
for Defined Contribution Plans ("Master Trust") with the assets of other
defined contribution plans of Raytheon Company and subsidiaries. The trustee of
the Master Trust maintains a separate account reflecting the equitable share in
the Trust of each plan.
Investment income and administrative expenses relating to the Master
Trust are allocated to the individual plans based upon average monthly balances
invested by each plan.
Contributions and Deferrals
Eligible employees are allowed to defer to the Plan up to 10% of their
salaries. The Company contributes amounts equal to 50% of each participant's
deferral, up to a maximum of 3% of the participant's salary. The contributions
are invested in Raytheon Company Class B common stock for two full plan years
following the plan year for which the contributions are made, and are then
allocated to the participants' accounts. As of December 31, 1997, the annual
employee deferral for a participant cannot exceed $9,500. Rollover contributions
from other qualified plans are accepted by the Plan. Participants may invest
their deferrals in increments of 1% in any combination of seven funds: (a)a
Fixed Income Fund under which assets are invested primarily in contracts
providing for fixed rates of interest for specified periods of time, (b)an
Equity Fund which invests in shares of a mutual fund which consists primarily of
income-producing equity securities, (c) a Raytheon Common Stock Fund which
invests in shares of Raytheon Company Class B common stock, (d) a Stock Index
Fund which invests in a commingled pool consisting primarily of equity
securities and is designed to track the S&P 500 Index, (e) a Balanced Fund which
invests in shares of a mutual fund which consists primarily of equity
securities, bonds and money market instruments, (f) the Magellan Fund, a growth
fund which invests primarily in equities of companies of all types and sizes,
and (g) the Blue Chip Fund, a growth fund which invests primarily in equities of
well known and established companies. Dividends and distributions from
investments of the Equity Fund, the Raytheon Common Stock Fund, the Stock Index
Fund, the Balanced Fund, the Magellan Fund and the Blue Chip Fund are
reinvested in their respective funds; stock dividends, stock splits and
similar changes are also reflected in the funds.
<PAGE>
5
Participant Accounts
Each participant's account is credited with the participant's
deferral, the Company's contribution and an allocation of plan earnings. Plan
earnings are allocated based on account balances by fund.
Vesting
Participants are immediately vested in their voluntary deferrals plus
actual earnings thereon. Vesting requirements for employer contributions plus
earnings thereon may vary depending upon when an employee became eligible to
participate in the Plan. Vesting generally occurs upon the earliest of the
completion of five years of service or three years of Plan participation or upon
retirement, death, disability, or attainment of normal retirement age.
Forfeitures of the nonvested portions of terminated participants' accounts are
used to reduce required contributions of the Company.
Distributions to Participants
A participant may withdraw all or a portion of deferrals, employer
contributions and related earnings upon attainment of age 59-1/2. For reasons of
financial hardship, as defined in the Plan document, a participant may withdraw
all or a portion of deferrals. On termination of employment, a participant will
receive a lump-sum distribution unless the vested account is valued in excess of
$3,500 and the participant elects to defer distribution. A retiree or a
beneficiary of a deceased participant may defer the distribution until January
of the year following attainment of age 65. There were no distributions to
participants during the year.
Loans to Participants
A participant may borrow against a portion of the balance in the
participant's account, subject to certain restrictions. The maximum amount of a
loan is the lesser of one-half of the participant's vested account balance or
$50,000. The minimum loan which may be granted is $500. The interest rate
applied is equal to the prime rate published in the Wall Street Journal on the
first business day in June and December of each year. Loans must be repaid over
a period of up to 5 years by means of payroll deductions. In certain cases, the
repayment period may be extended up to 15 years. Interest paid to the Plan on
loans to participants is credited to the borrower's account in the investment
fund to which repayments are made.
Administrative Expenses
Substantially all expenses of administering the Plan are paid by the
plan participants.
B. Summary of Significant Accounting Policies:
The accompanying financial statements are prepared on the accrual
basis of accounting.
<PAGE>
6
The Plan's investment contracts are fully benefit-responsive and are
therefore included in the financial statements at their contract value, defined
as net contributions and deferrals plus interest earned on the underlying
investments at contracted rates. Because the investment contracts are fully
benefit-responsive, contract values approximate fair value. Investments in
mutual funds and the commingled pool are valued at the closing net asset value
reported on the last business day of the year. Investments in securities (common
stocks) traded on a national securities exchange are valued at the last reported
sales price on the last business day of the year. Cash equivalents are
short-term money market instruments and are valued at cost which approximates
fair value.
Security transactions are recorded on trade date. Except for its
investment contracts (Note E), the Plan's investments are held by
bank-administered trust funds. Payables for outstanding security transactions
represent trades which have occurred but have not yet settled.
The Plan presents in the statement of changes in net assets the net
appreciation (depreciation) in the fair value of its investments which consists
of the realized gains or losses and the unrealized appreciation (depreciation)
on those investments.
Dividend income is recorded on the ex-dividend date. Income from other
investments is recorded as earned on an accrual basis.
Benefits are recorded when paid.
The preparation of the financial statements in conformity with
generally accepted accounting principles requires the plan administrator to make
significant estimates and assumptions that affect the reported amounts of net
assets and liabilities available for benefits at the date of the financial
statements and the changes in net assets available for benefits during the
reporting period and, when applicable, disclosures of contingent assets and
liabilities at the date of the financial statements. Actual results could differ
from the estimates included in the financial statements.
The Plan provides for various investment options in any combination of
stocks, bonds, fixed income securities, mutual funds and other investment
securities. Investment securities are exposed to various risks, such as interest
rate, market and credit risk. Due to the level of risk associated with certain
investment securities and the level of uncertainty related to changes in the
value of investment securities, it is at least reasonably possible that changes
in risks in the near term would materially affect participants' account balances
and the amounts reported in the statement of net assets available for plan
benefits and the statement of changes in net assets available for plan benefits.
C. Federal Income Tax Status:
Given that the Plan was established effective December 17, 1997, the
Plan has not received a tax determination letter to date. Raytheon Company has
submitted an application with the Internal Revenue Service under the 401(b)
regulation of the Internal Revenue Code and expects to receive the determination
letter by December 31, 1998. The plan administrator and the Plan's legal counsel
believe that the Plan is currently designed and being operated in compliance
with the applicable requirements of the Internal Revenue Code. Therefore, no
provision for income taxes has been included in the Plan's financial statements.
<PAGE>
7
D. Plan Termination:
Although it has not expressed any intention to do so, the Company
reserves the right under the Plan at any time or times to discontinue its
contributions and to terminate the Plan subject to the provisions of ERISA. In
the event of plan termination, amounts in participants' accounts will be
distributed in a single lump sum; if the participant does not consent to an
immediate distribution, the amount can be transferred to another defined
contribution plan sponsored by the Company.
E. Investment Contracts:
The Plan invests in collateralized fixed income investment portfolios
(with no expiration date), three of which are managed by insurance companies and
one of which is managed by an investment management firm. The credited interest
rates are adjusted semiannually to reflect the experienced and anticipated
yields to be earned on such investments, based on their book value. The
annualized average yield and credited interest rates were as follows:
Annualized
Average Credited
Yield Interest Rate
For the year ended December 31, 1997:
Bankers Trust (WBS 92-485) 6.95% 6.95%
Metropolitan Life Insurance Company (GIC GA-12908) 6.86% 6.86%
Metropolitan Life Insurance Company (GIC GA-13659) 6.43% 6.43%
Prudential Asset Management Company (GIC 917163-001) 6.99% 6.99%
The contract values are subject to limitations in certain situations
including large workforce reductions and plan termination.
In the financial statements, the two Metropolitan Life Insurance
Company contracts are recorded as one investment option.
F. Related Party Transactions:
In accordance with the provisions of the Plan, Fidelity Management
Trust Company (the "Trustee") acts as the Plan's agent for purchases and sales
of shares of Raytheon Company common stock. These transactions are performed on
the Master Trust level. For the Master Trust, purchases amounted to $200,689,057
and sales amounted to $102,165,608 for the year ended December 31, 1997.
<PAGE>
8
G. Fund Data:
The following is a summary of net assets available for plan benefits
by fund as of December 31, 1997:
<TABLE>
<CAPTION>
Non-Participant
Participant-Directed Directed
Fixed Raytheon Stock Raytheon
Income Equity Common Index Balanced Magellan Blue Chip Common Stock
Fund Fund Stock Fund Fund Fund Fund Fund Fund Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust $ 852 $ 852
Prudential Insurance
Company of America 528 528
Metropolitan Life
Insurance Company 900 900
At fair value:
Fidelity Equity Income* $8,617 8,617
Raytheon Company Common Stock* $3,715 $15,666 19,381
BT Pyramid Equity Index Fund* $5,307 5,307
Fidelity Balanced Fund* $4,183 4,183
Fidelity Magellan Fund* $13,244 13,244
Fidelity Blue Chip Fund* $8,593 8,593
------ ------ ------ ------ ------ ------- ------ ------- -------
Total investments 2,280 8,617 3,715 5,307 4,183 13,244 8,593 15,666 61,605
------ ------ ------ ------ ------ ------- ------ ------- -------
Receivables:
Accrued investment income and
other receivables 27 12 116 155
Cash and cash equivalents 23 67 52 284 426
------ ------ ------ ------ ------ ------- ------ ------- -------
Total assets 2,303 8,617 3,809 5,371 4,183 13,244 8,593 16,066 62,186
------ ------ ------ ------ ------ ------- ------ ------- -------
Liabilities:
Payable for security purchases 32 133 165
Accrued expenses and other payables 7 13 31 51
------ ------ ------ ------ ------ ------- ------ ------- -------
Total liabilities 39 13 164 216
------ ------ ------ ------ ------ ------- ------ ------- -------
Net assets available for plan benefits $2,303 $8,617 $3,770 $5,358 $4,183 $13,244 $8,593 $15,902 $61,970
====== ====== ====== ====== ====== ======= ====== ======= =======
* Represents more than 5% of net assets available for plan benefits
</TABLE>
<PAGE>
9
G. Fund Data, continued:
The following is a summary of changes in net assets available for plan
benefits by fund for the period from December 17, 1997 to December 31, 1997:
<TABLE>
<CAPTION>
Non-Participant
Participant-Directed Directed
Fixed Raytheon Stock Raytheon
Income Equity Common Index Balanced Magellan Blue Chip Common Stock
Fund Fund Stock Fund Fund Fund Fund Fund Fund Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributable to:
Investment income:
Net appreciation (depreciation)
of investments $ 285 $ (35) $ 185 $ 90 $ 522 $ 338 $ (84) $ 1,301
Interest $ 3 4 4 15 26
Dividends 56 233 289
------ ------ ------ ------ ------ ------- ------ ------- -------
3 285 25 189 90 522 338 164 1,616
------ ------ ------ ------ ------ ------- ------ ------- -------
Contributions and deferrals:
Employee deferrals 2,300 8,332 3,745 5,169 4,093 12,722 8,255 44,616
Employer contributions 15,738 15,738
------ ------ ------ ------ ------ ------- ------ ------- -------
2,300 8,332 3,745 5,169 4,093 12,722 8,255 15,738 60,354
------ ------ ------ ------ ------ ------- ------ ------- -------
Total additions 2,303 8,617 3,770 5,358 4,183 13,244 8,593 15,902 61,970
------ ------ ------ ------ ------ ------- ------ ------- -------
Increase in net assets 2,303 8,617 3,770 5,358 4,183 13,244 8,593 15,902 61,970
Net assets, beginning of year
------ ------ ------ ------ ------ ------- ------ ------- -------
Net assets, end of year $2,303 $8,617 $3,770 $5,358 $4,183 $13,244 $8,593 $15,902 $61,970
====== ====== ====== ====== ====== ======= ====== ======= =======
</TABLE>
<PAGE>
10
H. Master Trust:
All plan investments are included under the Master Trust. At December
31, 1997, assets of the Plan represented less than 1% of the total assets under
the Master Trust. The following is a summary of net assets available for plan
benefits by fund under the Master Trust as of December 31, 1997:
<TABLE>
<CAPTION>
Fixed Raytheon Stock
Income Equity Common Index Balanced Magellan Blue Chip
Fund Fund Stock Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $351,035,073
Prudential Insurance
Company of America* 217,731,699
Metropolitan Life
Insurance Company* 371,123,080
At fair value:
Fidelity Equity
Income Fund* $782,799,011
Raytheon Company
Common Stock* $745,980,294
BT Pyramid Equity
Index Fund* $484,781,406
Fidelity Balance Fund $117,556,481
Fidelity Magellan Fund $91,863,155
Fidelity Blue Chip Fund $136,586,123
Templeton Foreign I Fund
Fidelity Investment
grade Bond Fund
Fidelity Retirement
Money Market Fund
Loans receivable from
participants
------------ ------------ ------------ ------------ ------------ ----------- ------------
Total investments 939,889,852 782,799,011 745,980,294 484,781,406 117,556,481 91,863,155 136,586,123
------------ ------------ ------------ ------------ ------------ ----------- ------------
Receivables:
Employer contribution
Accrued Investment income
and other receivables 5,489,592 1,161,112
Cash and cash equivalents 9,232,100 13,498,051 4,761,268
------------ ------------ ------------ ------------ ------------ ----------- ------------
Total assets 949,121,952 782,799,011 764,967,937 490,703,786 117,556,481 91,863,155 136,586,123
------------ ------------ ------------ ------------ ------------ ----------- ------------
Liabilities:
Payables for outstanding
purchases 6,340,318
Accrued expenses and
other payables 1,480,875 1,200,471
------------ ------------ ------------ ------------ ------------ ----------- ------------
Total Liabilities 7,821,193 1,200,471
------------ ------------ ------------ ------------ ------------ ----------- ------------
Net assets available for
plan benefits $949,121,952 $782,799,011 $757,146,744 $489,503,315 $117,556,481 $91,863,155 $136,586,123
============ ============ ============ ============ ============ =========== ============
Percentage of Master Trust that ^ ^ ^ ^ ^ ^ ^
are plan assets of the Raytheon
Savings and Investment Plan
*Represents more than 5% of net assets available for plan benefits
^Represents less than 1% of plan assets under the Master Trust
+ As of December 31, 1997, there were no loans outstanding in the
Raytheon Savings and Investment Plan (10014).
N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund, and
Retirement Money Market Fund are not available for the Raytheon
Savings and Investment Plan (10014).
<PAGE>
11
Templeton Investment Retirement
Foreign I Grade Money Loan
Fund Bond Fund Market Fund Fund Total
<S> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $ 351,035,073
Prudential Insurance
Company of America* 217,731,699
Metropolitan Life
Insurance Company* 371,123,080
At fair value:
Fidelity Equity
Income Fund* 782,799,011
Raytheon Company
Common Stock* 745,980,294
BT Pyramid Equity
Index Fund* 484,781,406
Fidelity Balance Fund 117,556,481
Fidelity Magellan Fund 91,863,155
Fidelity Blue Chip Fund 136,586,123
Templeton Foreign I Fund $5,471,176 5,471,176
Fidelity Investment
grade Bond Fund $1,548,125 1,548,125
Fidelity Retirement
Money Market Fund $12,186,085 12,186,085
Loans receivable from
participants $166,395,767 166,395,767
---------- ---------- ----------- ------------ --------------
Total investments 5,471,176 1,548,125 12,186,085 166,395,767 3,485,057,475
---------- ---------- ----------- ------------ --------------
Receivables:
Employer contribution 4,015,100 4,015,100
Accrued Investment income
and other receivables 6,650,704
Cash and cash equivalents 27,491,419
---------- ---------- ----------- ------------ --------------
Total assets 5,471,176 1,548,125 16,201,185 166,395,767 3,523,214,698
---------- ---------- ----------- ------------ --------------
Liabilities:
Payables for outstanding
purchases 6,340,318
Accrued expenses and
other payables 2,681,346
---------- ---------- ----------- ------------ --------------
Total Liabilities 9,021,664
---------- ---------- ----------- ------------ --------------
Net assets available for
plan benefits $5,471,176 $1,548,125 $16,201,185 $166,395,767 $3,514,193,034
========== ========== =========== ============ ==============
N/A N/A N/A + ^
Percentage of Master Trust that are
plan assets of the Raytheon Savings
and Investment Plan (10014)
*Represents more than 5% of net assets available for plan benefits
^Represents less than 1% of plan assets under the Master Trust
+ As of December 31, 1997, there were no loans outstanding in the
Raytheon Savings and Investment Plan (10014).
N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund, and
Retirement Money Market Fund are not available for the Raytheon
Savings and Investment Plan (10014).
</TABLE>
<PAGE>
12
I. Master Trust, continued:
The following is a summary of investment income by fund under the
Master Trust for the year ended December 31, 1997:
<TABLE>
<CAPTION>
Fixed Raytheon
Income Common Stock Balanced Magellan Blue Chip
Fund Equity Fund Stock Fund Index Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Net appreciation (depreciation)
of assets $ (191,924) $132,974,182 $30,715,963 $109,162,707 $ 6,388,316 $ 9,026,047 $15,474,118
Interest 62,319,073 673,934 312,511
Dividends 42,443,971 11,118,152 13,680,351 5,217,835 6,302,875
----------- ------------ ----------- ------------ ----------- ----------- -----------
Total investment income/(loss) $62,127,149 $175,418,153 $42,508,049 $109,475,218 $20,068,667 $14,243,882 $21,776,993
=========== ============ =========== ============ =========== =========== ===========
<PAGE>
13
Templeton Investment Retirement
Foreign I Grade Money Loan
Fund Bond Fund Market Fund Fund Total
<S> <C> <C> <C> <C> <C>
Investment income:
Net appreciation (depreciation)
of assets $(826,396) $22,581 $302,745,594
Interest $10,848,204 74,153,722
Dividends 549,717 36,337 $266,835 79,616,073
--------- ------- ------- ----------- ------------
Total investment income/(loss) $(276,679) $58,918 $266,835 $10,848,204 $456,515,389
========= ======= ======== =========== ============
</TABLE>
<PAGE>
1
EXHIBIT 99.10a
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Raytheon Company
We consent to the incorporation by reference in the Registration
Statement of Raytheon Company on Form S-8 (File No. 333-56117) of our report
dated May 29, 1998 on our audit of the financial statements of the Raytheon
Savings and Investment Plan (10014) as of December 31, 1997 and for the period
from December 17, 1997 to December 31, 1997, which report is included in this
annual report on Form 10-K/A.
Coopers & Lybrand LLP
Boston, Massachusetts
June 29, 1998
